Vol. 77 Wednesday, No. 234 December 5, 2012
Pages 72195–72680
OFFICE OF THE FEDERAL REGISTER
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Contents Federal Register Vol. 77, No. 234
Wednesday, December 5, 2012
Agency for International Development Jeffery J. Becker, D.D.S., and Jeffery J. Becker, D.D.S., NOTICES Affordable Care, 72387–72408 Privacy Act; Systems of Records, 72319–72321 Importers of Controlled Substances: Fisher Clinical Services, Inc.; Application, 72409 Agricultural Marketing Service Mylan Pharmaceuticals, Inc.; Application, 72409 RULES Manufacturers of Controlled Substances: Pears Grown in Oregon and Washington: ISP Inc.; Application, 72410 Assessment Rate Decrease for Processed Pears, 72197– Siemens Healthcare Diagnostics, Inc.; Application, 72199 72409–72410 PROPOSED RULES Pears Grown in Oregon and Washington: Committee Membership Reapportionment for Processed Economic Development Administration Pears, 72245–72247 NOTICES Meetings: Agriculture Department National Advisory Council on Innovation and See Agricultural Marketing Service Entrepreneurship, 72322 See Food and Nutrition Service See Procurement and Property Management Office, Energy Department Agriculture Department See Energy Efficiency and Renewable Energy Office Army Department See Federal Energy Regulatory Commission NOTICES NOTICES Injury Assessment Plans; Availability, etc.: Privacy Act; Systems of Records, 72336–72337 Hanford Site, Richland, WA, 72337 Centers for Medicare & Medicaid Services NOTICES Energy Efficiency and Renewable Energy Office Agency Information Collection Activities; Proposals, NOTICES Submissions, and Approvals, 72351–72352 Competitions: Apps for Vehicles Challenge, 72337–72341 Children and Families Administration NOTICES Agency Information Collection Activities; Proposals, Environmental Protection Agency Submissions, and Approvals: RULES Child Support Enforcement Program Expenditure Report, Approvals, Disapprovals and Promulgations of Air Quality etc., 72352 Implementation Plans: Arizona; Regional Haze State and Federal Implementation Commerce Department Plans, 72512–72580 See Economic Development Administration Pesticide Tolerances: See Industry and Security Bureau Clodinafop–propargyl, 72223–72226 See International Trade Administration Dodine, 72232–72237 See Minority Business Development Agency Picoxystrobin, 72226–72232 See National Oceanic and Atmospheric Administration PROPOSED RULES Approvals and Promulgations of Implementation Plans: Consumer Product Safety Commission Florida; 110(a)(2)(D)(i)(II) Infrastructure Requirement for RULES 1997 and 2006 Fine Particulate Matter National Testing and Labeling Pertaining to Product Certification: Ambient Air Quality Standards, 72287–72290 Representative Samples for Periodic Testing of Children’s Region 4 States; Section 110(a)(2)(D)(i)(II) Infrastructure Products, 72205–72219 Requirement for 1997 and 2006 Fine Particulate Matter National Ambient Air Quality Standards, Defense Department 72284–72287, 72291–72294 See Army Department Reconsideration of Certain New Source and Startup/ NOTICES Shutdown Issues: Agency Information Collection Activities; Proposals, National Emission Standards for Hazardous Air Submissions, and Approvals, 72332–72336 Pollutants from Coal- and Oil-Fired Electric Utility Steam Generating Units, etc., 72294 Department of Transportation NOTICES See Pipeline and Hazardous Materials Safety Pesticide Products; Registration Applications, 72342–72343 Administration Requests to Voluntarily Cancel Certain Pesticide Registrations, 72343–72346 Drug Enforcement Administration NOTICES Decisions and Orders: Executive Office of the President Amy S. Benjamin, N.P., 72408–72409 See Presidential Documents
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Export-Import Bank Fiscal Service NOTICES PROPOSED RULES Meetings: Sale and Issue of Marketable Book-Entry Treasury Bills, Sub-Saharan Africa Advisory Committee, 72346 Notes, and Bonds, 72278–72283
Federal Aviation Administration Food and Drug Administration PROPOSED RULES RULES Airworthiness Directives: New Animal Drugs: Lycoming Engines and Continental Motors, Inc. Updating Tolerances for Residues of New Animal Drugs Reciprocating Engines, 72203–72205 in Food, 72254–72268 NOTICES The Boeing Company Airplanes, 72200–72203 Agency Information Collection Activities; Proposals, PROPOSED RULES Airworthiness Directives: Submissions, and Approvals: Cessna Aircraft Company Airplanes, 72250–72252 Applications for Approval to Market New Drug; Revision Reims Aviation S.A. Airplanes, 72252–72254 of Postmarketing Reporting Requirements; NOTICES Discontinuance, 72353–72355 Petitions for Exemptions; Summaries of Petitions Received, Experimental Study of Graphic Cigarette Warning Labels, 72432 72355–72356 Meetings: Animal Drug User Fee Act, 72356–72359 Federal Communications Commission Animal Generic Drug User Fee Act, 72359–72361 RULES Policies to Promote Rural Radio Service and to Streamline Food and Nutrition Service Allotment and Assignment Procedures, 72237–72242 NOTICES PROPOSED RULES Agency Information Collection Activities; Proposals, Hearing Aid Compatibility Regulations: Submissions, and Approvals: Comment Deadline Extended for Public Notice Seeking Supplemental Form for Collecting Taxpayer Identifying Updated Information and Comment on Review, Numbers, 72321 72294–72295 Revision of Commission’s Program Access Rules, 72295– Health and Human Services Department 72296 See Centers for Medicare & Medicaid Services NOTICES See Children and Families Administration Agency Information Collection Activities; Proposals, See Food and Drug Administration Submissions, and Approvals, 72346–72348 See National Institutes of Health Exemption Dismissals and Obligation to Begin Providing NOTICES Closed Captioning, 72348–72349 Delegations of Authorities, 72350–72351
Federal Energy Regulatory Commission Housing and Urban Development Department NOTICES RULES Combined Filings, 72341–72342 Federal Housing Administration: Initial Market-Based Rate Filings Including Requests for Prohibited Sources of Minimum Cash Investment under Blanket Section 204 Authorizations: National Housing Act, 72219–72223 NDR Energy Group, LLC, 72342 NOTICES Shipley Choice, LLC, 72342 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Tax Credit Assistance Program, 72367–72368 Federal Highway Administration Privacy Act; Systems of Records, 72368–72370 NOTICES Regulatory Waiver Requests Granted for Third Quarter of Buy America Waivers, 72432–72435 Calendar Year 2012, 72370–72383
Federal Housing Finance Agency Indian Affairs Bureau PROPOSED RULES RULES Rules of Practice and Procedure: Residential, Business, and Wind and Solar Resource Leases Enterprise and Federal Home Loan Bank Housing Goals on Indian Land, 72440–72509 Related Enforcement Amendment, 72247–72249 Industry and Security Bureau NOTICES Federal Maritime Commission Orders Denying Export Privileges: NOTICES Kue Sang Chun, 72322–72323 Agreements Filed, 72349 Filings of Complaints and Assignments: Interior Department SBI International, Inc. v. Mr. Howard Finkel C/O Cosco See Indian Affairs Bureau Container Lines, 72349 See Land Management Bureau
Federal Reserve System Internal Revenue Service NOTICES PROPOSED RULES Agency Information Collection Activities; Proposals, Net Investment Income Tax, 72612–72652 Submissions, and Approvals, 72349–72350 Rules Relating to Additional Medicare Tax, 72268–72277
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International Trade Administration National Oceanic and Atmospheric Administration NOTICES RULES Countervailing Duty Administrative Reviews; Results, Fisheries of the Exclusive Economic Zone Off Alaska: Extensions, Amendments, etc.: Reallocation of Pacific Cod in Bering Sea and Aleutian Certain Kitchen Appliance Shelving and Racks from Islands Management Area, 72243–72244 People’s Republic of China, 72324 Fisheries of the Northeastern United States: Citric Acid and Certain Citrate Salts from People’s Northeast Multispecies Fishery; White Hake Trimester Republic of China, 72323–72324 Total Allowable Catch Area Closure for Common Export Trade Certificates of Review, 72324–72325 Pool Fishery, 72242–72243 North American Free Trade Agreement, Article 1904 PROPOSED RULES Binational Panel Reviews, 72325–72326 Fisheries of the Exclusive Economic Zone Off Alaska: Gulf of Alaska; Proposed 2013 and 2014 Harvest International Trade Commission Specifications for Groundfish, 72297–72318 NOTICES Fisheries of the Northeastern United States: Five-year Reviews: Targeted Acadian Redfish Fishery for Sector Vessels, Lemon Juice from Argentina and Mexico, 72384–72385 72297 Investigations: NOTICES Certain Coenzyme Q10 Products and Methods of Making Permits: Same, 72385–72386 Endangered Species; File No. 17381, 72326 Honey from China, 72385 Takes of Marine Mammals Incidental to Specified Activities: Justice Department Rocky Intertidal Monitoring Surveys along Oregon and See Drug Enforcement Administration California Coasts, 72327–72331 NOTICES Proposed Consent Decrees and Proposed Stipulated Nuclear Regulatory Commission Judgments and Permanent Injunctions, 72386 RULES Technical Corrections; Correction, 72199–72200 Labor Department See Occupational Safety and Health Administration Occupational Safety and Health Administration NOTICES NOTICES Agency Information Collection Activities; Proposals, Agency Information Collection Activities; Proposals, Submissions, and Approvals: Submissions, and Approvals: Unemployment Insurance Title XII Advances and Standard on Personal Protective Equipment for Shipyard Voluntary Repayment Process, 72410–72411 Employment, 72411–72412
Land Management Bureau Personnel Management Office NOTICES PROPOSED RULES Alaska Native Claims Selection, 72383–72384 Patient Protection and Affordable Care Act: Establishment of Multi-State Plan Program for Affordable Minority Business Development Agency Insurance Exchanges, 72582–72609 PROPOSED RULES Petition for Inclusion of Arab-American Community in Pipeline and Hazardous Materials Safety Administration Groups Eligible for MBDA Services, 72254 NOTICES Pipeline Safety: National Highway Traffic Safety Administration Using Meaningful Metrics in Conducting Integrity PROPOSED RULES Management Program Evaluations, 72435–72438 U.S.–Canada Regulatory Cooperation Council Motor Vehicles Working Group: Postal Regulatory Commission Public Meeting, 72296–72297 NOTICES International Mail Contracts, 72412–72413 National Institutes of Health NOTICES Presidential Documents Agency Information Collection Activities; Proposals, PROCLAMATIONS Submissions, and Approvals: Special Observances: Generic Clearance for Collection of Qualitative Feedback Critical Infrastructure Protection and Resilience Month on Agency Service Delivery, 72361–72362 (Proc. 8910), 72673–72676 Meetings: Minority Enterprise Development Week (Proc. 8912), Center for Scientific Review, 72362, 72367 72679–72680 National Institute of Allergy and Infectious Diseases, National Impaired Driving Prevention Month (Proc. 72364, 72366 8911), 72677–72678 National Institute of Biomedical Imaging and World AIDS Day (Proc. 8909), 72195–72196 Bioengineering, 72365–72366 National Institute of Neurological Disorders and Stroke, Procurement and Property Management Office, 72362–72363 Agriculture Department National Institute of Nursing Research, 72363 PROPOSED RULES National Institute on Drug Abuse, 72365–72366 Designation of Product Categories for Federal Procurement, National Library of Medicine, 72363–72367 72654–72672
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Public Debt Bureau See Internal Revenue Service See Fiscal Service Veterans Affairs Department Securities and Exchange Commission NOTICES NOTICES Meetings: Applications: Clinical Science Research and Development Service Foreside Advisor Services, LLC, et al., 72416–72423 Cooperative Studies Scientific Evaluation Committee, William Blair and Co., LLC and William Blair Funds, 72438 72413–72416 Self-Regulatory Organizations; Proposed Rule Changes: International Securities Exchange, LLC, 72426–72428 Separate Parts In This Issue National Stock Exchange, Inc., 72423–72425 NYSE Arca, Inc., 72425–72426, 72429 Part II Interior Department, Indian Affairs Bureau, 72440–72509 Small Business Administration NOTICES Part III Disaster Declarations: Environmental Protection Agency, 72512–72580 New Jersey; Amendment 1, 72429–72430 Exemptions under Section 312 of Small Business Part IV Investment Act, Conflicts of Interest: Personnel Management Office, 72582–72609 Salem Investment Partners III, L.P., 72430 Part V State Department Treasury Department, Internal Revenue Service, 72612– NOTICES 72652 Applications: Presidential Permit to Operate and Maintain Pipeline Part VI Facilities on Border of United States and Canada, Agriculture Department, Procurement and Property 72430–72431 Management Office, Agriculture Department, 72654– Meetings: 72672 Shipping Coordinating Committee, 72431–72432 Part VII Transportation Department Presidential Documents, 72673–72680 See Federal Aviation Administration See Federal Highway Administration See National Highway Traffic Safety Administration Reader Aids See Pipeline and Hazardous Materials Safety Consult the Reader Aids section at the end of this page for Administration NOTICES phone numbers, online resources, finding aids, reminders, Applications: and notice of recently enacted public laws. Boutique Air, Inc. for Commuter Air Carrier Authority, To subscribe to the Federal Register Table of Contents 72432 LISTSERV electronic mailing list, go to http:// listserv.access.gpo.gov and select Online mailing list Treasury Department archives, FEDREGTOC-L, Join or leave the list (or change See Fiscal Service settings); then follow the instructions.
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CFR PARTS AFFECTED IN THIS ISSUE
A cumulative list of the parts affected this month can be found in the Reader Aids section at the end of this issue.
3 CFR 50 CFR Proclamations: 648...... 72242 8909...... 72195 679...... 72243 8910...... 72675 Proposed Rules: 8911...... 72677 648...... 72297 8912...... 72679 679...... 72297 7 CFR 927...... 72197 Proposed Rules: 927...... 72245 3201...... 72654 10 CFR 171...... 72199 12 CFR Proposed Rules: 1209...... 72247 14 CFR 39 (2 documents) ...... 72200, 72203 Proposed Rules: 39 (2 documents) ...... 72250, 72252 15 CFR Proposed Rules: 1400...... 72254 16 CFR 1107...... 72205 21 CFR Proposed Rules: 500...... 72254 520...... 72254 522...... 72254 524...... 72254 529...... 72254 556...... 72254 558...... 72254 24 CFR 203...... 72219 25 CFR 162...... 72240 26 CFR Proposed Rules: 1 (2 documents) ...... 72268, 72612 31...... 72268 31 CFR Proposed Rules: 356...... 72278 40 CFR 52...... 72512 180 (3 documents) ...... 72223, 72232 Proposed Rules: 52 (3 documents) ...... 72284, 72287, 72291 60...... 72294 63...... 72294 45 CFR Proposed Rules: 800...... 72582 47 CFR 73...... 72237 Proposed Rules: 20...... 72294 76...... 72295 49 CFR Proposed Rules: 571...... 72296
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Federal Register Presidential Documents Vol. 77, No. 234
Wednesday, December 5, 2012
Title 3— Proclamation 8909 of November 29, 2012
The President World AIDS Day, 2012
By the President of the United States of America
A Proclamation On World AIDS Day, more than 30 years after the first cases of this tragic illness were reported, we join the global community once more in standing with the millions of people who live with HIV/AIDS worldwide. We also recommit to preventing the spread of this disease, fighting the stigma associ- ated with infection, and ending this pandemic once and for all. In 2010, my Administration released the National HIV/AIDS Strategy, our Nation’s first comprehensive plan to fight the domestic epidemic. The Strat- egy aims to reduce new infections, increase access to care, reduce health disparities, and achieve a more coordinated national response to HIV/AIDS here in the United States. To meet these goals, we are advancing HIV/ AIDS education; connecting stakeholders throughout the public, private, and non-profit sectors; and investing in promising research that can improve clinical outcomes and reduce the risk of transmission. Moving forward, we must continue to focus on populations with the highest HIV disparities— including gay men, and African American and Latino communities—and scale up effective, evidence-based interventions to prevent and treat HIV. We are also implementing the Affordable Care Act, which has expanded access to HIV testing and will ensure that all Americans, including those living with HIV/AIDS, have access to health insurance beginning in 2014. These actions are bringing us closer to an AIDS-free generation at home and abroad—a goal that, while ambitious, is within sight. Through the President’s Emergency Plan for AIDS Relief (PEPFAR), we are on track to meet the HIV prevention and treatment targets I set last year. We are working with partners at home and abroad to reduce new infections in adults, help people with HIV/AIDS live longer, prevent mother-to-child trans- mission, and support the global effort to eliminate new infections in children by 2015. And thanks to bipartisan action to lift the entry ban on persons living with HIV, we were proud to welcome leaders from around the world to the 19th International AIDS Conference in Washington, D.C. Creating an AIDS-free generation is a shared responsibility. It requires com- mitment from partner countries, coupled with support from donors, civil society, people living with HIV, faith-based organizations, the private sector, foundations, and multilateral institutions. We stand at a tipping point in the fight against HIV/AIDS, and working together, we can realize our historic opportunity to bring that fight to an end. Today, we reflect on the strides we have taken toward overcoming HIV/ AIDS, honor those who have made our progress possible, and keep in our thoughts all those who have known the devastating consequences of this illness. The road toward an AIDS-free generation is long—but as we mark this important observance, let us also remember that if we move forward every day with the same passion, persistence, and drive that has brought us this far, we can reach our goal. We can beat this disease. On World AIDS Day, in memory of those no longer with us and in solidarity with all who carry on the fight, let us pledge to make that vision a reality. NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution
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and the laws of the United States do hereby proclaim December 1, 2012, as World AIDS Day. I urge the Governors of the States and the Commonwealth of Puerto Rico, officials of the other territories subject to the jurisdiction of the United States, and the American people to join me in appropriate activities to remember those who have lost their lives to AIDS and to provide support and comfort to those living with this disease. IN WITNESS WHEREOF, I have hereunto set my hand this twenty-ninth day of November, in the year of our Lord two thousand twelve, and of the Independence of the United States of America the two hundred and thirty-seventh.
[FR Doc. 2012–29466 Filed 12–4–12; 8:45 am] Billing code 3295–F3
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Rules and Regulations Federal Register Vol. 77, No. 234
Wednesday, December 5, 2012
This section of the FEDERAL REGISTER the Federal Register and will be handler subject to an order may file contains regulatory documents having general available for public inspection in the with USDA a petition stating that the applicability and legal effect, most of which Office of the Docket Clerk during regular order, any provision of the order, or any are keyed to and codified in the Code of business hours, or can be viewed at: obligation imposed in connection with Federal Regulations, which is published under http://www.regulations.gov. All the order is not in accordance with law 50 titles pursuant to 44 U.S.C. 1510. comments submitted in response to this and request a modification of the order The Code of Federal Regulations is sold by rule will be included in the record and or to be exempted therefrom. Such the Superintendent of Documents. Prices of will be made available to the public. handler is afforded the opportunity for new books are listed in the first FEDERAL Please be advised that the identity of the a hearing on the petition. After the REGISTER issue of each week. individuals or entities submitting the hearing, USDA would rule on the comments will be made public on the petition. The Act provides that the Internet at the address provided above. district court of the United States in any DEPARTMENT OF AGRICULTURE FOR FURTHER INFORMATION CONTACT: district in which the handler is an Teresa Hutchinson or Gary Olson, inhabitant, or has his or her principal Agricultural Marketing Service Northwest Marketing Field Office, place of business, has jurisdiction to Marketing Order and Agreement review USDA’s ruling on the petition, 7 CFR Part 927 Division, Fruit and Vegetable Program, provided an action is filed not later than [Doc. No. AMS–FV–12–0031; FV12–927–2 AMS, USDA; Telephone: (503) 326– 20 days after the date of the entry of the IR] 2724, Fax: (503) 326–7440, or Email: ruling. [email protected] or This rule decreases the assessment Pears Grown in Oregon and [email protected]. rate established for the Committee for Washington; Assessment Rate Small businesses may request the 2012–2013 and subsequent fiscal Decrease for Processed Pears information on complying with this periods from $7.73 to $7.00 per ton for AGENCY: Agricultural Marketing Service, regulation by contacting Laurel May, summer/fall processed pears handled. USDA. Marketing Order and Agreement The assessment rate for ‘‘winter’’ and ACTION: Interim rule with request for Division, Fruit and Vegetable Program, ‘‘other’’ pears for processing would comments. AMS, USDA, 1400 Independence remain unchanged at a zero rate. Avenue SW., STOP 0237, Washington, The order provides authority for the SUMMARY: This rule decreases the DC 20250–0237; Telephone: (202) 720– Committee, with USDA approval, to assessment rate established for the 2491, Fax: (202) 720–8938, or Email: formulate an annual budget of expenses Processed Pear Committee (Committee) [email protected]. and to collect assessments from for the 2012–2013 and subsequent fiscal SUPPLEMENTARY INFORMATION: This rule handlers to administer the processed periods from $7.73 to $7.00 per ton of is issued under Marketing Order No. pear program. The members of the summer/fall processed pears. The 927, as amended (7 CFR part 927), Committee are producers, handlers, and Committee locally administers the regulating the handling of pears grown processors of Oregon-Washington marketing order which regulates the in Oregon and Washington, hereinafter processed pears. They are familiar with handling of processed pears grown in referred to as the ‘‘order.’’ The order is the Committee’s needs and with the Oregon and Washington. Assessments effective under the Agricultural costs for goods and services in their upon handlers of Oregon-Washington Marketing Agreement Act of 1937, as local area and are thus in a position to processed pears are used by the amended (7 U.S.C. 601–674), hereinafter formulate an appropriate budget and Committee to fund reasonable and referred to as the ‘‘Act.’’ assessment rate. The assessment rate is necessary expenses of the program. The The Department of Agriculture formulated and discussed at a public fiscal period begins July 1 and ends June (USDA) is issuing this rule in meeting. Thus, all directly affected 30. The assessment rate will remain in conformance with Executive Order persons have an opportunity to effect indefinitely unless modified, 12866. participate and provide input. suspended, or terminated. This rule has been reviewed under For the 2011–2012 and subsequent DATES: Effective December 6, 2012. Executive Order 12988, Civil Justice fiscal periods, the Committee Comments received by February 4, Reform. Under the marketing order now unanimously recommended, and USDA 2013, will be considered prior to in effect, Oregon-Washington pear approved, the following three base rates issuance of a final rule. handlers are subject to assessments. of assessment: (a) $7.73 per ton for any ADDRESSES: Interested persons are Funds to administer the order are or all varieties or subvarieties of pears invited to submit written comments derived from such assessments. It is for canning classified as ‘‘summer/fall,’’ concerning this rule. Comments must be intended that the assessment rate as excluding pears for other methods of sent to the Docket Clerk, Marketing issued herein will be applicable to all processing; (b) $0.00 per ton for any or Order and Agreement Division, Fruit assessable summer/fall processed pears all varieties or subvarieties of pears for and Vegetable Program, AMS, USDA, beginning July 1, 2012, and continue processing classified as ‘‘winter’’; and 1400 Independence Avenue SW., STOP until amended, suspended, or (c) $0.00 per ton for any or all varieties 0237, Washington, DC 20250–0237; Fax: terminated. or subvarieties of pears for processing (202) 720–8938; or Internet: http:// The Act provides that administrative classified as ‘‘other.’’ The assessment www.regulations.gov. Comments should proceedings must be exhausted before rate for ‘‘summer/fall’’ pears applies reference the document number and the parties may file suit in court. Under only to pears for canning and excludes date and page number of this issue of section 608c(15)(A) of the Act, any pears for other methods of processing as
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defined in § 927.15, which includes The assessment rate established in Based on the number of processed pear pears for concentrate, freezing, this rule will continue in effect producers in the Oregon and dehydrating, pressing, or in any other indefinitely unless modified, Washington, the average gross revenue way to convert pears into a processed suspended, or terminated by USDA for each producer can be estimated at product. This rate would continue in upon recommendation and information approximately $23,543. Furthermore, effect from fiscal period to fiscal period submitted by the Committee or other based on Committee records, the unless modified, suspended, or available information. Committee has estimated that all of the terminated by USDA upon Although this assessment rate is Oregon-Washington pear handlers recommendation and information effective for an indefinite period, the currently ship less than $7,000,000 submitted by the Committee or other Committee will continue to meet prior worth of processed pears each on an information available to USDA. to or during each fiscal period to annual basis. From this information, it The Committee met on May 30, 2012, recommend a budget of expenses and is concluded that the majority of and unanimously recommended 2012– consider recommendations for producers and handlers of Oregon and 2013 expenditures of $842,137 and an modification of the assessment rate. The Washington processed pears may be assessment rate of $7.00 per ton for dates and times of Committee meetings classified as small entities. summer/fall processed pears handled. are available from the Committee or There are three pear processing plants In comparison, last year’s budgeted USDA. Committee meetings are open to in the production area, all located in expenditures were $926,933. The the public and interested persons may Washington. All three pear processors assessment rate of $7.00 is $0.73 lower express their views at these meetings. would be considered large entities than the 2011–2012 rate. The Committee USDA will evaluate Committee under the SBA’s definition of small recommended the assessment rate recommendations and other available businesses. decrease because of the 2012–2013 information to determine whether This rule decreases the assessment summer/fall processed pear promotion modification of the assessment rate is rate established for the Committee and budget reduction. needed. Further rulemaking will be collected from handlers for the 2012– The major expenditures undertaken as necessary. The 2013 and subsequent fiscal periods from recommended by the Committee for the Committee’s 2012–2013 budget and $7.73 to $7.00 per ton of processed 2012–2013 fiscal period include those for subsequent fiscal periods will pears handled. The Committee $654,000 for promotion and paid be reviewed and, as appropriate, unanimously recommended 2012–2013 advertising, $137,447 for research approved by USDA. expenditures of $842,137 and an programs, $24,000 for contracted assessment rate of $7.00 per ton of administration by Washington State Initial Regulatory Flexibility Analysis summer/fall processed pears handled. Fruit Commission, and $12,500 for Pursuant to requirements set forth in The assessment rate of $7.00 is $0.73 market access and trade policy. In the Regulatory Flexibility Act (RFA) (5 lower than the 2011–2012 rate. The comparison, major expenses for the U.S.C. 601–612), the Agricultural Committee recommended the 2011–2012 fiscal period included Marketing Service (AMS) has assessment rate decrease because of the $759,000 for promotion and paid considered the economic impact of this 2012–2013 summer/fall processed pear advertising, $117,243 for research rule on small entities. Accordingly, promotion budget reduction. programs, $24,000 for contracted AMS has prepared this initial regulatory The quantity of assessable summer/ administration by Washington State flexibility analysis. fall processed pears for the 2012–2013 Fruit Commission, and $12,500 for The purpose of the RFA is to fit fiscal period is estimated at 120,000 market access and trade policy. regulatory actions to the scale of tons. Thus, the $7.00 rate should The Committee based its business subject to such actions in order provide $840,000 in assessment income. recommended assessment rate for that small businesses will not be unduly Income derived from summer/fall processed pears on the 2012–2013 or disproportionately burdened. processed pear handler assessments, summer/fall processed pear crop Marketing orders issued pursuant to the monetary reserve, and interest and other estimate, the 2012–2013 program Act, and the rules issued thereunder, are income would be adequate to cover the expenditure needs, and the current and unique in that they are brought about budgeted expenses. projected size of its monetary reserve. through group action of essentially The major expenditures Applying the $7.00 per ton rate to the small entities acting on their own recommended by the Committee for the Committee’s 120,000 ton summer/fall behalf. 2012–2013 fiscal period include processed pear crop estimate should There are approximately 1,500 $654,000 for promotion and paid provide $840,000 in assessment income. producers of processed pears in the advertising, $137,442 for research Thus, income derived from summer/fall regulated production area and programs, $24,000 for contracted processed pear handler assessments, approximately 50 handlers of processed administration by Washington State and interest and other income ($500) pears subject to regulation under the Fruit Commission, and $12,500 for plus $1,637 from the Committee’s order. Small agricultural producers are market access and trade policy. monetary reserve would be adequate to defined by the Small Business Budgeted expenses for these items in cover the recommended $842,137 Administration (SBA)(13 CFR 121.201) the 2011–2012 fiscal period were budget for 2012–2013. The Committee as those having annual receipts of less $759,000, $117,243, $24,000, and estimates that it will have a monetary than $750,000, and small agricultural $12,500, respectively. reserve of $618,804 on June 30, 2012. service firms are defined as those whose The Committee discussed alternate During 2012–2013, the Committee annual receipts are less than $7,000,000. rates of assessment, but determined that estimates that $1,637 will be deducted According to the Noncitrus Fruits and the recommended assessment rate from the reserve for an estimated reserve Nuts 2011 Preliminary Summary issued would be sufficient to fund the 2012– of $617,167 on June 30, 2013, which in March 2012 by the National 2013 summer/fall processed pear would be within the maximum Agricultural Statistics Service, the total programs. permitted by the order of approximately farm-gate value of summer/fall A review of historical information and one fiscal period’s operational expenses processed pears grown in Oregon and preliminary information pertaining to (§ 927.42). Washington for 2011 was $35,315,000. the upcoming fiscal period indicates
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that the Oregon-Washington producer guide should be sent to Laurel May at excluding pears for other methods of price for the 2012–2013 fiscal period the previously mentioned address in the processing; could average $246 per ton of summer/ FOR FURTHER INFORMATION CONTACT * * * * * fall processed pears. Therefore, the section. Dated: November 29, 2012. estimated assessment revenue for the After consideration of all relevant David R. Shipman, 2012–2013 fiscal period as a percentage material presented, including the of total producer revenue is 2.85 information and recommendation Administrator, Agricultural Marketing Service. percent. submitted by the Committee and other This action decreases the assessment available information, it is hereby found [FR Doc. 2012–29428 Filed 12–4–12; 8:45 am] obligation imposed on handlers. that this rule, as hereinafter set forth, BILLING CODE 3410–02–P Assessments are applied uniformly on will tend to effectuate the declared all handlers, and some of the costs may policy of the Act. be passed on to producers. However, Pursuant to 5 U.S.C. 553, it is also NUCLEAR REGULATORY decreasing the assessment rate reduces found and determined upon good cause the burden on handlers, and may reduce COMMISSION that it is impracticable, unnecessary, the burden on producers. 10 CFR Part 171 In addition, the Committee’s meeting and contrary to the public interest to give preliminary notice prior to putting was widely publicized throughout the [NRC–2012–0092] Oregon-Washington pear industry and this rule into effect, and that good cause exists for not postponing the effective all interested persons were invited to RIN 3150–AJ16 attend the meeting and participate in date of this rule until 30 days after publication in the Federal Register Committee deliberations on all issues. Technical Corrections; Correction Like all Committee meetings, the May because: (1) The 2012–2013 fiscal 30, 2012, meeting was a public meeting period begins on July 1, 2012, and the AGENCY: Nuclear Regulatory and all entities, both large and small, marketing order requires that the rate of Commission. were able to express views on this issue. assessment for each fiscal period apply ACTION: Final rule; correcting Finally, interested persons are invited to to all assessable processed pears amendment. submit comments on this interim rule, handled during such fiscal period; (2) including the regulatory and this action decreases the assessment rate SUMMARY: The U.S. Nuclear Regulatory informational impacts of this action on for assessable processed pears beginning Commission (NRC) is correcting a final small businesses. with the 2012–2013 fiscal period; (3) rule that was published in the Federal In accordance with the Paperwork handlers are aware of this action which Register on July 6, 2012 (77 FR 39899), Reduction Act of 1995 (44 U.S.C. was unanimously recommended by the and effective on August 6, 2012. That Chapter 35), the order’s information Committee at a public meeting and is final rule amended the NRC regulations collection requirements have been similar to other assessment rate actions to make technical corrections, including previously approved by the Office of issued in past years; and (4) this interim updating the street address for the Management and Budget (OMB) and rule provides a 60-day comment period, Region I office, correcting authority assigned OMB No. 0581–0189, Generic and all comments timely received will citations and typographical and spelling Fruit Crops. No changes in those be considered prior to finalization of errors, and making other edits and requirements as a result of this action this rule. conforming changes. This correcting are anticipated. Should any changes List of Subjects in 7 CFR Part 927 amendment is necessary to correct the become necessary, they would be statutory authority that is cited in one submitted to OMB for approval. Marketing agreements, Pears, of the authority citations in the final This action imposes no additional Reporting and recordkeeping rule. reporting or recordkeeping requirements requirements. DATES: The correction is effective on on either small or large Oregon- For the reasons set forth in the December 5, 2012. Washington processed pear handlers. As preamble, 7 CFR part 927 is amended as FOR FURTHER INFORMATION CONTACT: with all Federal marketing order follows: programs, reports and forms are Cindy Bladey, Chief, Rules, Announcements, and Directives Branch, periodically reviewed to reduce PART 927—PEARS GROWN IN Office of Administration, U.S. Nuclear information requirements and OREGON AND WASHINGTON duplication by industry and public Regulatory Commission, Washington, DC 20555–0001; telephone: 301–492– sector agencies. ■ 1. The authority citation for 7 CFR 3667 or email: [email protected]. AMS is committed to complying with part 927 continues to read as follows: the E-Government Act, to promote the SUPPLEMENTARY INFORMATION: On July 6, Authority: 7 U.S.C. 601–674. use of the Internet and other 2012 (77 FR 39899), the NRC published information technologies to provide ■ 2. In § 927.237, the introductory text a final rule in the Federal Register increased opportunities for citizen and paragraph (a) are revised to read as amending its regulations to make access to Government information and follows: technical corrections. This document is services, and for other purposes. necessary to correct the statutory § 927.237 Processed pear assessment authority that is cited in the authority USDA has not identified any relevant rate. Federal rules that duplicate, overlap, or citation for part 171 of Title 10 of the conflict with this rule. On and after July 1, 2012, the Code of Federal Regulations (10 CFR). A small business guide on complying following base rates of assessment for The authority citation for 10 CFR part with fruit, vegetable, and specialty crop pears for processing are established for 171 referred to section 6101 of the marketing agreements and orders may the Processed Pear Committee: Consolidated Omnibus Budget be viewed at: www.ams.usda.gov/ (a) $7.00 per ton for any or all Reconciliation Act. The authority MarketingOrdersSmallBusinessGuide. varieties or subvarieties of pears for citation should refer to section 7601 of Any questions about the compliance canning classified as ‘‘summer/fall’’ the Act.
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Rulemaking Procedure Dated at Rockville, Maryland, this 29th day • Hand Delivery: U.S. Department of of November, 2012. Transportation, Docket Operations, M– Because this amendment constitutes a Cindy Bladey, 30, West Building Ground Floor, Room minor technical correction to the NRC’s Chief, Rules, Announcements, and Directives W12–140, 1200 New Jersey Avenue SE., regulations and the authority citation for Branch, Division of Administrative Services, Washington, DC 20590, between 9 a.m. the prior technical corrections Office of Administration. and 5 p.m., Monday through Friday, rulemaking, the Commission finds that [FR Doc. 2012–29348 Filed 12–4–12; 8:45 am] except Federal holidays. the notice and comment provisions of BILLING CODE 7590–01–P For service information identified in the Administrative Procedure Act are this AD, contact Boeing Commercial unnecessary and is exercising its Airplanes, Attention: Data & Services authority under 5 U.S.C. 553(b)(3)(B) to DEPARTMENT OF TRANSPORTATION Management, P. O. Box 3707, MC 2H– publish these amendments as a final 65, Seattle, WA 98124–2207; telephone Federal Aviation Administration rule. These amendments do not require 206–544–5000, extension 1; fax 206– action by any person or entity regulated 766–5680; Internet https:// 14 CFR Part 39 by the NRC. Also, the final rule does not www.myboeingfleet.com. You may change the substantive responsibilities [Docket No. FAA–2012–1220; Directorate review copies of the referenced service of any person or entity regulated by the Identifier 2012–NM–208–AD; Amendment information at the FAA, Transport NRC. 39–17277; AD 2012–24–07] Airplane Directorate, 1601 Lind Avenue SW., Renton, Washington. For List of Subjects in 10 CFR Part 171 RIN 2120–AA64 information on the availability of this Annual charges, Byproduct material, Airworthiness Directives; The Boeing material at the FAA, call 425–227–1221. Company Airplanes Holders of certificates, Registrations, Examining the AD Docket Approvals, Intergovernmental relations, AGENCY: Federal Aviation Non-payment penalties, Nuclear Administration (FAA), DOT. You may examine the AD docket on the Internet at http:// materials, Nuclear power plants and ACTION: Final rule; request for www.regulations.gov; or in person at the reactors, Source material, Special comments. nuclear material. Docket Management Facility between 9 SUMMARY: We are adopting a new a.m. and 5 p.m., Monday through For the reasons set out in the airworthiness directive (AD) for certain Friday, except Federal holidays. The AD preamble and under the authority of the The Boeing Company Model 787–8 docket contains this AD, the regulatory Atomic Energy Act of 1954, as amended; airplanes. This AD requires ensuring evaluation, any comments received, and the Energy Reorganization Act of 1974, that lockwire is installed correctly on other information. The street address for as amended; and 5 U.S.C. 552 and 553, the engine fuel feed manifold couplings. the Docket Office (phone: 800–647– 10 CFR part 171 is corrected by making This AD also requires inspecting the 5527) is in the ADDRESSES section. the following correcting amendment. assembly of the engine fuel feed Comments will be available in the AD manifold rigid and full flexible docket shortly after receipt. PART 171—ANNUAL FEES FOR couplings. This AD was prompted by REACTOR LICENSES AND FUEL FOR FURTHER INFORMATION CONTACT: reports of fuel leaks due to improperly Sherry Vevea, Aerospace Engineer, CYCLE LICENSES AND MATERIAL assembled engine fuel feed manifold LICENSES, INCLUDING HOLDERS OF Propulsion Branch, ANM–140S, FAA, couplings. We are issuing this AD to Seattle Aircraft Certification Office, CERTIFICATES OF COMPLIANCE, detect and correct improperly 1601 Lind Avenue SW., Renton, WA REGISTRATIONS, AND QUALITY assembled couplings, which could 98057–3356; phone: 425–917–6514; fax: ASSURANCE PROGRAM APPROVALS result in fuel leaks and consequent fuel 425–917–6590; email: AND GOVERNMENT AGENCIES exhaustion, engine power loss or [email protected]. LICENSED BY THE NRC shutdown, or leaks on hot engine parts that could lead to a fire. SUPPLEMENTARY INFORMATION: ■ 1. Revise the authority citation for part DATES: This AD is effective December 5, Discussion 171 to read as follows: 2012. Authority: Consolidated Omnibus Budget The Director of the Federal Register We have received reports of fuel leaks Reconciliation Act sec. 7601 Pub. L. 99–272, approved the incorporation by reference on two different in-service airplanes, as amended by sec. 5601, Pub. L. 100–203 as of a certain publication listed in the AD and the subsequent discovery of several amended by sec. 3201, Pub. L. 101–239, as as of December 5, 2012. improperly assembled engine fuel feed amended by sec. 6101, Pub. L. 101–508, as We must receive comments on this manifold couplings on in-service and amended by sec. 2903a, Pub. L. 102–486 (42 AD by January 22, 2013. production airplanes. The improper U.S.C. 2213, 2214), and as amended by Title ADDRESSES: You may send comments, coupling installations, which occurred IV, Pub. L. 109–103 (42 U.S.C. 2214); Atomic using the procedures found in 14 CFR during production, have included Energy Act sec. 161(w), 223, 234 (42 U.S.C. 11.43 and 11.45, by any of the following couplings with missing or improperly 2201(w), 2273, 2282); Energy Reorganization methods: installed lockwire, parts within the Act sec. 201 (42 U.S.C. 5841); Government • Federal eRulemaking Portal: Go to couplings installed in the wrong Paperwork Elimination Act sec. 1704 (44 http://www.regulations.gov. Follow the locations, incorrect parts installed in the U.S.C. 3504 note); Energy Policy Act of 2005 instructions for submitting comments. couplings, and couplings that have extra sec. 651(e), Pub. L. 109–58 (42 U.S.C. 2014, • Fax: 202–493–2251. parts installed. These conditions, if not 2021, 2021b, 2111). • Mail: U.S. Department of corrected, could result in fuel leaks, For the Nuclear Regulatory Commission. Transportation, Docket Operations, M– which could lead to fuel exhaustion, 30, West Building Ground Floor, Room engine power loss or shutdown, or leaks W12–140, 1200 New Jersey Avenue SE., on hot engine parts that could lead to a Washington, DC 20590. fire.
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Relevant Service Information Message MOM–MOM–12–0838– engine fuel feed manifold couplings We reviewed Boeing Multi Operator 01B(R2), including Attachment A, dated could result in fuel leaks and Message MOM–MOM–12–0838– November 25, 2012, recommends consequent fuel exhaustion, engine 01B(R2), including Attachment A, dated accomplishment of all actions specified power loss or shutdown, or leaks on hot November 25, 2012. For information on in Action 1) within 7 days. This AD, engine parts that could lead to a fire. the procedures and compliance times, however, requires only that operators Therefore, we find that notice and see this service information at http:// ensure the correct lockwire installation opportunity for prior public comment www.regulations.gov by searching for within 7 days; the compliance time for are impracticable and that good cause Docket No. FAA–2012–1220. the remaining actions is 21 days. We exists for making this amendment have determined that the additional effective in less than 30 days. FAA’s Determination time for the remaining actions is We are issuing this AD because we warranted, based on the assurance that Comments Invited evaluated all the relevant information the lockwire is installed correctly. In addition, for engine fuel feed This AD is a final rule that involves and determined the unsafe condition requirements affecting flight safety and described previously is likely to exist or manifold full flexible couplings that have been previously inspected, Boeing was not preceded by notice and an develop in other products of the same opportunity for public comment. type design. Multi Operator Message MOM–MOM– 12–0838–01B(R2), including However, we invite you to send any AD Requirements Attachment A, dated November 25, written data, views, or arguments about This AD requires accomplishing the 2012, specifies that operators do not this AD. Send your comments to an actions specified in the service need to re-inspect these couplings if address listed under the ADDRESSES information described previously, review of the airplane maintenance section. Include the docket number except as discussed under ‘‘Differences records conclusively demonstrates that FAA–2012–1220 and Directorate Between the AD and the Service the corresponding actions are equivalent Identifier 2012–NM–208–AD at the Information.’’ to steps 1 through 6 of Action 1) of beginning of your comments. We The phrase ‘‘related investigative Boeing Multi Operator Message MOM– specifically invite comments on the actions’’ might be used in this AD. MOM–12–0838–01B(R2), including overall regulatory, economic, ‘‘Related investigative actions’’ are Attachment A, dated November 25, environmental, and energy aspects of follow-on actions that (1) are related to 2012. We have determined that the this AD. We will consider all comments the primary actions, and (2) further potential for not identifying incorrect received by the closing date and may investigate the nature of any condition parts during prior inspection of the full amend this AD because of those found. Related investigative actions in flexible coupling warrants re-inspecting comments. an AD could include, for example, these couplings; this AD therefore We will post all comments we inspections. requires inspection of these full flexible receive, without change, to http:// In addition, the phrase ‘‘corrective couplings. www.regulations.gov, including any actions’’ might be used in this AD. These differences have been personal information you provide. We ‘‘Corrective actions’’ are actions that coordinated with Boeing. will also post a report summarizing each correct or address any condition found. FAA’s Justification and Determination substantive verbal contact we receive Corrective actions in an AD could of the Effective Date about this AD. include, for example, repairs. An unsafe condition exists that Costs of Compliance Differences Between the AD and the requires the immediate adoption of this Service Information AD. The FAA has found that the risk to We estimate that this AD affects 3 For engine fuel feed manifold the flying public justifies waiving notice airplanes of U.S. registry. We estimate couplings that have not been previously and comment prior to adoption of this the following costs to comply with this inspected, Boeing Multi Operator rule because improperly assembled AD:
ESTIMATED COSTS
Cost per Cost on U.S. Action Labor cost Parts cost product operators
Coupling inspection, o-ring replacement, retainer ring instal- 10 work-hours × $85 per hour $54 $904 $2,712 lation, blade seal inspection, and lockwire installation. = $850.
We have received no definitive data detail the scope of the Agency’s because it addresses an unsafe condition that would enable us to provide cost authority. that is likely to exist or develop on estimates for the on-condition actions We are issuing this rulemaking under products identified in this rulemaking specified in this proposed AD. the authority described in Subtitle VII, action. Authority for This Rulemaking Part A, Subpart III, Section 44701: Regulatory Findings ‘‘General requirements.’’ Under that Title 49 of the United States Code section, Congress charges the FAA with This AD will not have federalism specifies the FAA’s authority to issue promoting safe flight of civil aircraft in implications under Executive Order rules on aviation safety. Subtitle I, air commerce by prescribing regulations 13132. This AD will not have a section 106, describes the authority of for practices, methods, and procedures substantial direct effect on the States, on the FAA Administrator. ‘‘Subtitle VII: the Administrator finds necessary for the relationship between the national Aviation Programs’’ describes in more safety in air commerce. This regulation government and the States, or on the is within the scope of that authority distribution of power and
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responsibilities among the various assembled couplings, which could result in 14, 2012, which is not incorporated by levels of government. fuel leaks and consequent fuel exhaustion, reference in this AD: The actions specified in For the reasons discussed above, I engine power loss or shutdown, or leaks on paragraph (g)(2) of this AD are not required certify that this AD: hot engine parts that could lead to a fire. for the rigid fuel couplings only. However, the actions specified in paragraph (g)(2) of (f) Compliance (1) Is not a ‘‘significant regulatory this AD are required for the full flexible action’’ under Executive Order 12866, Comply with this AD within the couplings, even if inspected prior to the (2) Is not a ‘‘significant rule’’ under compliance times specified, unless already effective date of this AD as specified in DOT Regulatory Policies and Procedures done. Boeing Multi Operator Message MOM– (44 FR 11034, February 26, 1979), (g) Inspection MOM–12–0838–01B, dated November 11, (3) Will not affect intrastate aviation 2012, which is not incorporated by reference Except as provided by paragraph (h) of this in this AD; or Boeing Multi Operator Message in Alaska, and AD: Do the actions specified in paragraphs (4) Will not have a significant MOM–MOM–12–0838–01B(R1), dated (g)(1) and (g)(2) of this AD, in accordance November 14, 2012, which is not economic impact, positive or negative, with Action 1) of Boeing Multi Operator incorporated by reference in this AD. on a substantial number of small entities Message MOM–MOM–12–0838–01B(R2), under the criteria of the Regulatory including Attachment A, dated November 25, (i) No Reporting Requirement Flexibility Act. 2012. Boeing Multi Operator Message MOM– (1) Within 7 days after the effective date of MOM–12–0838–01B(R2), including List of Subjects in 14 CFR Part 39 this AD, ensure that the lockwire installation Attachment A, dated November 25, 2012, Air transportation, Aircraft, Aviation on the rigid and full flexible couplings is specifies reporting to Boeing any anomalies correct. safety, Incorporation by reference, found during inspection of the assembly of (2) Within 21 days after the effective date the rigid and full flexible couplings, Safety. of this AD, inspect the rigid and full flexible including anomalies of the lockwire Adoption of the Amendment couplings for correct assembly, including installation. This AD does not require any replacement of the o-rings with new o-rings, report. Accordingly, under the authority confirmation that the proper retainer rings delegated to me by the Administrator, are installed in the full flexible coupling, a (j) Special Flight Permit the FAA amends 14 CFR part 39 as general visual inspection for damage of the Special flight permits may be issued in follows: blade seals, and all applicable corrective accordance with sections 21.197 and 21.199 actions. Do all applicable corrective actions of the Federal Aviation Regulations (14 CFR PART 39—AIRWORTHINESS before further flight. 21.197 and 21.199) to operate the airplane to a location where the airplane can be DIRECTIVES (h) Requirements Based on Previous modified, provided the lockwire is correctly Accomplishment ■ 1. The authority citation for part 39 installed on the engine fuel feed manifold (1) For airplanes on which the fuel rigid and full flexible couplings in continues to read as follows: couplings have been inspected before the accordance with paragraph (g)(1) of this AD. Authority: 49 U.S.C. 106(g), 40113, 44701. effective date of this AD as specified in ‘‘Method 1: AMM Method’’ of Boeing Multi (k) Alternative Methods of Compliance § 39.13 [Amended] Operator Message MOM–MOM–12–0838– (AMOCs) ■ 2. The FAA amends § 39.13 by adding 01B, dated November 11, 2012, which is not (1) The Manager, Seattle Aircraft incorporated by reference in this AD; or Certification Office (ACO), FAA, has the the following new airworthiness Boeing Multi Operator Message MOM– authority to approve AMOCs for this AD, if directive (AD): MOM–12–0838–01B(R1), dated November requested using the procedures found in 14 2012–24–07 The Boeing Company: 14, 2012, which is not incorporated by CFR 39.19. In accordance with 14 CFR 39.19, Amendment 39–17277; Docket No. reference in this AD: A review of the airplane send your request to your principal inspector FAA–2012–1220; Directorate Identifier maintenance records is acceptable for or local Flight Standards District Office, as 2012–NM–208–AD. compliance with the requirements of appropriate. If sending information directly paragraph (g)(1) of this AD, if the records to the manager of the ACO, send it to the (a) Effective Date conclusively demonstrate that lockwire was attention of the person identified in the This AD is effective December 5, 2012. installed correctly using a method equivalent Related Information section of this AD. to step 6.a. of Action 1) of Boeing Multi Information may be emailed to: 9-ANM- (b) Affected ADs Operator Message MOM–MOM–12–0838– [email protected]. None. 01B(R2), including Attachment A, dated (2) Before using any approved AMOC, November 25, 2012. notify your appropriate principal inspector, (c) Applicability (2) For airplanes on which the fuel or lacking a principal inspector, the manager This AD applies to The Boeing Company couplings have been inspected before the of the local flight standards district office/ Model 787–8 airplanes, certificated in any effective date of this AD as specified in certificate holding district office. category, serial numbers 34485, 34486, ‘‘Method 2: Non-Invasive Method’’ of Boeing (3) An AMOC that provides an acceptable 34488, 34490, 34493, 34494, 34497, 34502, Multi Operator Message MOM–MOM–12– level of safety may be used for any repair 34506 through 34508 inclusive, 34514, 0838–01B, dated November 11, 2012, which required by this AD if it is approved by the 34515, 34521, 34744 through 34747 is not incorporated by reference in this AD; Boeing Commercial Airplanes Organization inclusive, 34822, 34824, 34829, 34832, 34834 or Boeing Multi Operator Message MOM– Designation Authorization (ODA) that has through 34838 inclusive, 35938, 36276 MOM–12–0838–01B(R1), dated November been authorized by the Manager, Seattle through 36278 inclusive, 38319, 38320, 14, 2012, which is not incorporated by ACO, to make those findings. For a repair 38330, 38466, 38471, 40748, and 40899. reference in this AD: The actions specified in method to be approved, the repair must meet paragraph (g)(1) of this AD are not required. the certification basis of the airplane, and the (d) Subject (3) For airplanes on which the rigid fuel approval must specifically refer to this AD. Joint Aircraft System Component (JASC)/ couplings have been inspected before the Air Transport Association (ATA) of America effective date of this AD as specified in (l) Related Information Code 28, Fuel. ‘‘Method 1: AMM Method’’ or ‘‘Method 2: (1) For more information about this AD, Non-Invasive Method’’ of Boeing Multi contact Sherry Vevea, Aerospace Engineer, (e) Unsafe Condition Operator Message MOM–MOM–12–0838– Propulsion Branch, ANM–140S, FAA, Seattle This AD was prompted by reports of fuel 01B, dated November 11, 2012, which is not Aircraft Certification Office, 1601 Lind leaks due to improperly assembled engine incorporated by reference in this AD; or Avenue SW., Renton, WA 98057–3356; fuel feed manifold couplings. We are issuing Boeing Multi Operator Message MOM– phone: 425–917–6514; fax: 425–917–6590; this AD to detect and correct improperly MOM–12–0838–01B(R1), dated November email: [email protected].
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(2) For service information identified in DEPARTMENT OF TRANSPORTATION Washington, DC 20590, between 9 a.m. this AD, contact Boeing Commercial and 5 p.m., Monday through Friday, Airplanes, Attention: Data & Services Federal Aviation Administration except Federal holidays. Management, P. O. Box 3707, MC 2H–65, For service information identified in Seattle, WA 98124–2207; telephone 206– 14 CFR Part 39 this AD, contact Hartzell Engine 544–5000, extension 1; fax 206–766–5680; Technologies, LLC, 2900 Selma [Docket No. FAA–2012–1245; Directorate Internet https://www.myboeingfleet.com. You Identifier 2012–NE–41–AD; Amendment 39– Highway, Montgomery, AL 36108, may review copies of the referenced service 17279; AD 2012–24–09] phone: 334–386–5400; fax: 334–386– information at the FAA, Transport Airplane 5450; internet: http:// Directorate, 1601 Lind Avenue SW., Renton, RIN 2120–AA64 www.hartzellenginetech.com. You may Washington. For information on the view this service information at the Airworthiness Directives; Lycoming availability of this material at the FAA, call FAA, 12 New England Executive Park, Engines and Continental Motors, Inc. 425–227–1221. Burlington, MA. For information on the Reciprocating Engines (m) Material Incorporated by Reference availability of this material at the FAA, AGENCY: Federal Aviation call 781–238–7125. (1) The Director of the Federal Register Administration (FAA), DOT. approved the incorporation by reference Examining the AD Docket ACTION: (IBR) of the service information listed in this Final rule; request for You may examine the AD docket on paragraph under 5 U.S.C. 552(a) and 1 CFR comments. the Internet at http:// part 51. SUMMARY: We are adopting a new www.regulations.gov; or in person at the (2) You must use this service information airworthiness directive (AD) for Docket Management Facility between 9 as applicable to do the actions required by a.m. and 5 p.m., Monday through this AD, unless the AD specifies otherwise. Lycoming Engines TSIO–540–AK1A, and Continental Motors, Inc. TSIO–360– Friday, except Federal holidays. The AD (i) Boeing Multi Operator Message MOM– docket contains this AD, the regulatory MOM–12–0838–01B(R2), including MB, TSIO–360–SB, and TSIO–360–RB reciprocating engines, with certain evaluation, any comments received, and Attachment A, dated November 25, 2012. other information. The street address for The document number and issue date are Hartzell Engine Technologies (HET) turbochargers, model TA0411, part the Docket Office (phone: 800–647– identified on page 1 of Boeing Multi Operator 5527) is in the ADDRESSES section. Message MOM–MOM–12–0838–01B(R2), number (P/N) 466642–0001; 466642– 0002; 466642–0006; 466642–9001; Comments will be available in the AD including Attachment A, dated November 25, docket shortly after receipt. 2012, and on each page of Attachment A; no 466642–9002; or 466642–9006, or with FOR FURTHER INFORMATION CONTACT: other page of this document contains this certain HET model TA0411 Christopher Richards, Aerospace information. turbochargers overhauled or repaired Engineer, Chicago Aircraft Certification (ii) Reserved. since August 29, 2012. This AD requires Office, FAA, 2300 E. Devon Ave., Des (3) For service information identified in removing the affected turbochargers Plaines, IL 60018; phone: 847–294– this AD, contact Boeing Commercial from service before further flight. This 7156; fax: 847–294–7834; email: Airplanes, Attention: Data & Services AD was prompted by a report of a [email protected]. Management, P. O. Box 3707, MC 2H–65, turbocharger turbine wheel that failed a Seattle, WA 98124–2207; telephone 206– static strength test at its manufacturing SUPPLEMENTARY INFORMATION: facility. We are issuing this AD to 544–5000, extension 1; fax 206–766–5680; Discussion Internet https://www.myboeingfleet.com. prevent turbocharger turbine wheel (4) You may view this service information failure, reduction or complete loss of We received a report of an HET at FAA, Transport Airplane Directorate, 1601 engine power, loss of engine oil, oil fire, turbocharger turbine wheel that failed a Lind Avenue SW., Renton, Washington. For and damage to the airplane. static strength test at its manufacturing facility. Subsequent tests showed that information on the availability of this DATES: This AD is effective December nearly all turbine wheels, P/N 410188– material at the FAA, call 425–227–1221. 20, 2012. 0019, had significant cracking under the (5) You may view this service information The Director of the Federal Register surface of a critical weld joint between that is incorporated by reference at the approved the incorporation by reference the turbine wheel head and shaft that National Archives and Records of a certain publication listed in the AD occurred during manufacturing. HET Administration (NARA). For information on as of December 20, 2012. has identified by serial number (S/N) the availability of this material at NARA, call We must receive comments on this the turbochargers shipped from the 202–741–6030, or go to http:// AD by January 22, 2013. www.archives.gov/federal-register/cfr/ibr- factory with this unsafe condition. HET ADDRESSES: locations.html. You may send comments, has also identified the S/N range of using the procedures found in 14 CFR affected turbine wheels. Some of the Issued in Renton, Washington, on 11.43 and 11.45, by any of the following affected turbine wheels became November 28, 2012. methods: available for overhaul or field repair • Ali Bahrami, Federal eRulemaking Portal: Go to since August 29, 2012, and may have Manager, Transport Airplane Directorate, http://www.regulations.gov. Follow the been installed. This condition, if not Aircraft Certification Service. instructions for submitting comments. corrected, could result in turbocharger • [FR Doc. 2012–29405 Filed 12–4–12; 8:45 am] Fax: 202–493–2251. turbine wheel failure, reduction or • BILLING CODE 4910–13–P Mail: U.S. Department of complete loss of engine power, loss of Transportation, Docket Operations, M– engine oil, oil fire, and damage to the 30, West Building Ground Floor, Room airplane. W12–140, 1200 New Jersey Avenue SE., Washington, DC 20590. Relevant Service Information • Hand Delivery: U.S. Department of We reviewed HET Alert Service Transportation, Docket Operations, M– Bulletin (ASB) No. 048, dated November 30, West Building Ground Floor, Room 16, 2012. The ASB lists the known serial W12–140, 1200 New Jersey Avenue SE., numbers of affected turbochargers.
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FAA’s Determination Authority for This Rulemaking § 39.13 [Amended] ■ 2. The FAA amends § 39.13 by adding We are issuing this AD because we Title 49 of the United States Code the following new airworthiness evaluated all the relevant information specifies the FAA’s authority to issue directive (AD): and determined the unsafe condition rules on aviation safety. Subtitle I, described previously is likely to exist or section 106, describes the authority of 2012–24–09 Lycoming Engines and develop in other products of the same the FAA Administrator. ‘‘Subtitle VII: Continental Motors, Inc. Reciprocating type design. Aviation Programs’’ describes in more Engines: Amendment 39–17279; Docket detail the scope of the Agency’s No. FAA–2012–1245; Directorate AD Requirements authority. Identifier 2012–NE–41–AD. (a) Effective Date This AD requires removing the We are issuing this rulemaking under affected turbochargers from service the authority described in Subtitle VII, This AD is effective December 20, 2012. before further flight. Part A, Subpart III, Section 44701: (b) Affected ADs ‘‘General requirements.’’ Under that FAA’s Justification and Determination section, Congress charges the FAA with None. of the Effective Date promoting safe flight of civil aircraft in (c) Applicability air commerce by prescribing regulations This AD applies to Lycoming Engines An unsafe condition exists that for practices, methods, and procedures TSIO–540–AK1A, and Continental Motors, requires the immediate adoption of this the Administrator finds necessary for Inc. TSIO–360–MB, TSIO–360–SB, and AD. The FAA has found that the risk to safety in air commerce. This regulation TSIO–360–RB reciprocating engines with any the flying public justifies waiving notice is within the scope of that authority of the following turbochargers installed: and comment prior to adoption of this because it addresses an unsafe condition (1) Hartzell Engine Technologies (HET) rule because HET cannot confirm the model TA0411 turbochargers, part numbers that is likely to exist or develop on (P/Ns) 466642–0001; 466642–0002; 466642– affected turbochargers can safely be products identified in this rulemaking used. Therefore, we find that notice and 0006; 466642–9001; 466642–9002; and action. 466642–9006, with serial numbers (S/Ns) opportunity for prior public comment Regulatory Findings listed in Table 2 of HET Alert Service are impracticable and that good cause Bulletin No. 048, dated November 16, 2012, exists for making this amendment This AD will not have federalism installed. effective in less than 30 days. implications under Executive Order (2) HET model TA0411 turbochargers 13132. This AD will not have a having a turbine wheel, P/N 410188–0019, Comments Invited with any of the turbine wheel S/Ns H120716 substantial direct effect on the States, on through H121988, installed. This AD is a final rule that involves the relationship between the national (3) HET model TA0411 turbochargers requirements affecting flight safety and government and the States, or on the overhauled or repaired since August 29, was not preceded by notice and an distribution of power and 2012, using a turbine wheel, P/N 410188– opportunity for public comment. responsibilities among the various 0019, with any of the turbine wheel S/Ns However, we invite you to send any levels of government. H120716 through H121988, installed. written data, views, or arguments about For the reasons discussed above, I (d) Unsafe Condition this AD. Send your comments to an certify that this AD: This AD was prompted by a report of a address listed under the ADDRESSES (1) Is not a ‘‘significant regulatory turbocharger turbine wheel that failed a static section. Include the docket number action’’ under Executive Order 12866, strength test at its manufacturing facility. We FAA–2012–1245 and Directorate (2) Is not a ‘‘significant rule’’ under are issuing this AD to prevent turbocharger Identifier 2012–NE–41–AD at the DOT Regulatory Policies and Procedures turbine wheel failure, reduction or complete beginning of your comments. We (44 FR 11034, February 26, 1979), loss of engine power, loss of engine oil, oil specifically invite comments on the fire, and damage to the airplane. (3) Will not affect intrastate aviation overall regulatory, economic, in Alaska, and (e) Compliance environmental, and energy aspects of Before further flight, remove from service this AD. We will consider all comments (4) Will not have a significant economic impact, positive or negative, the turbochargers identified in paragraph (c) received by the closing date and may of this AD, unless already done. amend this AD because of those on a substantial number of small entities comments. under the criteria of the Regulatory (f) Special Flight Permits Flexibility Act. Special flight permits are permitted We will post all comments we List of Subjects in 14 CFR Part 39 provided that: receive, without change, to http:// (1) The flight is limited to three hours. www.regulations.gov, including any Air transportation, Aircraft, Aviation (2) The turbocharger boost is set to ‘‘Off’’ personal information you provide. We safety, Incorporation by reference, in the cockpit (if applicable). will also post a report summarizing each Safety. (3) The wastegate for the turbocharger is substantive verbal contact we receive safety wired in the locked open position. Adoption of the Amendment about this AD. (g) Alternative Methods of Compliance Costs of Compliance Accordingly, under the authority (AMOCs) delegated to me by the Administrator, The Manager, Chicago Aircraft We estimate that this AD affects 56 the FAA amends 14 CFR part 39 as Certification Office, FAA, may approve airplanes of U.S. registry with affected follows: AMOCs for this AD. Use the procedures turbochargers installed. We also found in 14 CFR 39.19 to make your request. PART 39—AIRWORTHINESS estimate that it will take about 4 hours (h) Related Information DIRECTIVES to remove a turbocharger from service. For more information about this AD, The average labor rate is $85 per hour. ■ 1. The authority citation for part 39 contact Christopher Richards, Aerospace Based on these figures, we estimate the Engineer, Chicago Aircraft Certification total cost of the AD to U.S. operators to continues to read as follows: Office, FAA, 2300 E. Devon Ave., Des be $19,040. Authority: 49 U.S.C. 106(g), 40113, 44701. Plaines, IL 60018; phone: 847–294–7156; fax:
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847–294–7834; email: associated with the testing of amendment, requires, in relevant part, [email protected]. representative samples. that we establish protocols and (i) Material Incorporated by Reference DATES: To coincide with the effective standards for ‘‘ensuring that a children’s (1) The Director of the Federal Register date of 16 CFR part 1107, the final rule product tested for compliance with a approved the incorporation by reference of is effective on February 8, 2013, and it children’s product safety rule is subject the service information listed in this applies to products manufactured after to testing periodically and when there paragraph under 5 U.S.C. 552(a) and 1 CFR that date.1 has been a material change in the part 51. FOR FURTHER INFORMATION CONTACT: product’s design or manufacturing (2) You must use this service information Randy Butturini, Project Manager, process, including the sourcing of as applicable to do the actions required by Office of Hazard Identification and component parts,’’ and the ‘‘testing of this AD, unless the AD specifies otherwise. Reduction, Consumer Product Safety random samples to ensure continued (i) Hartzell Engine Technologies Alert compliance.’’ Service Bulletin No. 048, dated November 16, Commission, 4330 East West Highway, 2012. Bethesda, MD 20814; telephone (301) In the Federal Register of May 20, (ii) Reserved. 504–7562; email [email protected]. 2010 (75 FR 28336), we published a (3) For service information identified in SUPPLEMENTARY INFORMATION: proposed rule on ‘‘Testing and Labeling this AD, contact Hartzell Engine I. Introduction Pertaining to Product Certification.’’ The Technologies, LLC, 2900 Selma Highway, proposed rule was intended to Montgomery, AL 36108, phone: 334–386– A. What is the purpose of the final rule? implement parts of what was then 5400; fax: 334–386–5450; internet: http:// www.hartzellenginetech.com. The final rule amends 16 CFR 1107.21 known as section 14(d)(2)(B) of the (4) You may view this service information and 1107.26 of the Commission’s CPSA (now renumbered section at the FAA, 12 New England Executive Park, regulation on testing and labeling 14(i)(2)(B)) and to implement parts of Burlington, MA. For information on the pertaining to product certification in section 14(a) of the CPSA. Proposed availability of this material at the FAA, call order to implement the statutory § 1107.22, ‘‘Random Samples,’’ would 781–238–7125. requirement in section 14(i)(2)(B) of the have implemented the testing of random (5) You may view this service information CPSA for the periodic testing of samples’ requirement in the CPSA, by at the National Archives and Records representative samples of children’s requiring each manufacturer of a Administration (NARA). For information on children’s product to select samples for the availability of this material at NARA, call products, as well as associated 202 741 6030, or go to: http:// recordkeeping. periodic testing by using a process that assigns each sample in the production www.archives.gov/federal-register/cfr/ B. What does the law require? ibr_locations.html. population an equal probability of being Section 14(a)(2) of the CPSA, 15 selected (75 FR at 28349 through 28350, Issued in Burlington, Massachusetts, on November 29, 2012. U.S.C. 2063(a)(2), requires 28365). manufacturers, including importers, and Colleen M. D’Alessandro, On August 12, 2011, the President private labelers of any children’s signed into law Public Law 112–28. Assistant Manager, Engine & Propeller product that is subject to a children’s Directorate, Aircraft Certification Service. Among other things, Public Law 112–28 product safety rule, to submit sufficient [FR Doc. 2012–29472 Filed 12–4–12; 8:45 am] changed the obligation for the testing of samples of the product, or samples that ‘‘random samples’’ to the testing of BILLING CODE 4910–13–P are identical in all material respects to ‘‘representative samples.’’ Additionally, the product, to a third party conformity Public Law 112–28 corrected an assessment body whose accreditation editorial error in section 14 of the CPSA, CONSUMER PRODUCT SAFETY has been accepted by the CPSC, to be by renumbering section 14(d) of the COMMISSION tested for compliance with such CPSA, ‘‘Additional Regulations for children’s product safety rule. Based on Third Party Testing,’’ as section 14(i) of 16 CFR Part 1107 that testing, the manufacturer or private the CPSA. labeler must issue a certificate, which [CPSC Docket No. CPSC–2011–0082] certifies that such children’s product On November 8, 2011, we published complies with the children’s product a final rule in the Federal Register (76 Testing and Labeling Pertaining to FR 69482) for the testing and labeling Product Certification Regarding safety rule. 15 U.S.C. 2063(a)(2)(B). A children’s product certifier must issue a rule, 16 CFR part 1107, on those aspects Representative Samples for Periodic of the rule left unchanged by Public Law Testing of Children’s Products separate certificate for each applicable children’s product safety rule, or a 112–28. However, because Public Law AGENCY: Consumer Product Safety combined certificate that certifies 112–28 amended section 14(i)(2)(B)(ii) Commission. compliance with all applicable of the CPSA to require the testing of ‘‘representative samples,’’ the ACTION: Final rule. children’s product safety rules, and specifies each rule. This certificate is Commission deleted § 1107.22 from the SUMMARY: The Consumer Product Safety called a Children’s Product Certificate final rule on testing and labeling, and it Commission (CPSC, Commission, or we) (CPC). issued a proposed rule (76 FR 69586), is issuing a final rule to amend its Section 14(i)(2)(B) of the CPSA, 15 also on November 8, to implement the regulations on testing and labeling U.S.C. 2063(i)(2)(B), as originally new statutory requirement for the pertaining to product certification. provided in section 102 of the testing of representative samples. Pursuant to section 14(i)(2)(B)(ii) of the Consumer Product Safety Improvement The Commission is now issuing a Consumer Product Safety Act (CPSA), Act of 2008 (CPSIA) prior to final rule amending 16 CFR 1107.21(f) the final rule requires the testing of and 1107.26(a)(4) to implement the representative samples to ensure 1 The Commission voted 2–1 to publish this final requirement to test ‘‘representative continued compliance of children’s rule in the Federal Register. Chairman Inez M. samples,’’ pursuant to section Tenenbaum and Commissioner Robert S. Adler 14(i)(2)(B)(ii) of the CPSA, as well as our products with all applicable children’s voted to publish the final rule. Commissioner product safety rules. The final rule also Nancy A. Nord voted against publication of the implementing authority under section 3 establishes a recordkeeping requirement final rule. of the CPSIA.
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C. How does the final rule implement levers) as other handlebars produced, certification for the first periodic test the law? then that handlebar sample can be interval), the manufacturer can infer the The final rule amends § 1107.21(f) to considered representative of the compliance of the untested units. population of handlebars for the require a manufacturer to select 2. Determining Continued Compliance representative product samples to be purpose of complying with the For the purposes of periodic testing, submitted to a third party conformity handlebar stem test in 16 CFR passing test results means the samples assessment body for periodic testing. 1512.18(g). tested are in compliance with the The procedure used to select Other methods may be used to applicable children’s product safety representative product samples for establish that samples selected for rule. Most children’s product safety periodic testing must provide a basis for periodic testing are representative— rules require each product sample inferring compliance about the with respect to compliance—of the submitted to pass the prescribed tests. population of untested products population of products manufactured For example, each pacifier subjected to produced during the applicable periodic since the last periodic test. Examples of the guard and shield testing specified in testing interval. The number of samples such methods include: Inspecting 16 CFR 1511.3 must pass the test. In a selected for the sampling procedure incoming raw materials or component similar manner, each infant walker must be sufficient to ensure continuing parts; generating process control data submitted for testing must pass the tests compliance with all applicable during product manufacture; and using prescribed in 16 CFR part 1216. children’s product safety rules. manufacturing techniques with intrinsic manufacturing uniformity, such as die However, for some children’s product Moreover, a manufacturer must standards, compliance with the document the procedure used to select casting. Random sampling is another way of standard can include individual test representative product samples for selecting representative samples that results that exceed a specified periodic testing and the basis for provides a basis for inferring the maximum. For example, for children’s inferring the compliance of the product compliance of untested product units products tested for compliance to 16 manufactured during the periodic from the tested product units. The CFR part 1611, Standard for the testing interval from the results of the conditions that allow for the inference flammability of vinyl plastic film, the tested samples. burn rate of 10 samples is averaged to The final rule also amends of compliance concerning untested determine if the average exceeds the § 1107.26(a)(4) to require a manufacturer units versus tested units may be met by maximum burn rate of 1.2 inches per of a children’s product subject to an a range of probability-based sampling second, as specified in 16 CFR 1611.3. applicable children’s product safety rule designs, including, but not limited to, Because the maximum burn rate to maintain records documenting the simple random sampling, cluster requirement in part 1611 applies to the testing of representative samples, sampling, systematic sampling, average burn rate of the 10 samples including the number of representative stratified sampling, and multistage tested, it is possible for one or more of samples selected and the procedure sampling. These methods allow the used to select representative samples. manufacturer the flexibility to select a the tested samples to exceed the Records also must include the basis for random sampling procedure that is most maxiumum burn rate when tested. In inferring compliance of the product appropriate for the manufacturer’s this example, if the average burn rate manufactured during the periodic product production setting but still does not exceed 1.2 inches per second, testing interval from the results of the allow for the inference about the the samples are considered to be in compliance of the population of product tested samples. Existing § 1107.26(b) conformance with the standard and units. For example, alternative sampling requires that records be maintained for have passed the test. procedures—like systematic sampling As another example, small carpets five years. (where a starting unit is randomly and rugs that are children’s products are D. How do I comply with the selected and then every kth unit after subject to the requirements for periodic requirement to periodically test that is selected) or multistage sampling testing. For small carpets and rugs, at representative samples? (where units are grouped in clusters, least seven of the eight samples tested such as pallets, the clusters are for compliance to 16 CFR part 1631, 1. Selecting Representative Samples randomly selected, and then units Standard for the surface flammability of Under the final rule, various methods within the selected clusters are small carpets and rugs (FF 2–70), must can be used to determine that the randomly drawn)—can be employed for meet the test criterion specified in selected samples are representative, products for which such sampling § 1631.3(b). Alternatively, a small carpet depending upon on the rule, ban, procedures would be beneficial. Even or rug that does not meet the test standard, or regulation being evaluated. though every unit produced does not criterion must be permanently labeled For example, for the chemical tests, a have the same probability of selection prior to its introduction into commerce. sample selected from a homogeneous for testing in these examples, these Small carpets and rugs that meet either material, such as a well-mixed container techniques can be used to infer the condition would be considered to be in of paint, could be considered compliance of the untested units. It compliance with 16 CFR part 1631 and representative of the entire container. should be noted, however, that just deemed to have passed the periodic For discretely produced products, because random sampling can be used tests. information indicating uniform as one method of conducting materials and dimensional control could representative testing, it is by no means 3. Creating and Maintaining Required be used to indicate that a sample is the only method to meet the new Records representative of the product for broader ‘‘representative’’ sampling Manufacturers must document mechanical tests. For example, if a requirement in Public Law 112–28. periodic testing of representative bicycle handlebar sample is With evidence that the samples samples. Documentation must include manufactured from the same grade of submitted to a third party conformity the number of representative samples steel and with the same dimensions assessment body are representative of selected, how the samples were (e.g., wall thickness, length, shape, the children’s product produced since selected, and the manufacturer’s basis placement of holes for attaching brake the last periodic test (or since product for inferring compliance of the untested
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units during the testing interval, based misunderstanding in the implementation of samples on the basis provided by the on testing of the sampled units. Such the regulation. It is suggested that a clear manufacturer. The Commission documentation must be maintained for definition of ‘‘representative samples’’ considered the commenter’s alternative should be given so that the representative definition but regards this definition of five years. samples can be selected in a convenient and applicable way. Only in this way can the ‘‘representative sampling’’ as an attempt II. Comments on the Proposed Rule and to prove a negative, which cannot be CPSC’s Responses implementation of the regulation be more effective. done. A ‘‘not known to be different’’ form of representative sampling does A. How many comments were received (Response 2)—We agree with the not provide a basis for knowing that the about the proposed rule? commenter that a clear understanding of samples tested are similar to the The comment period for the proposed ‘‘representative samples’’ will help to untested units of the product. Without rule closed on January 23, 2012. Eight implement the required periodic testing that basis, the testing results can commenters responded. A summary of of such samples effectively. For this indicate only the compliance of the these comments and the Commission’s reason, we define a ‘‘representative samples actually tested and not the responses are set forth below in section sample’’ in proposed § 1107.21(f) as one compliance of the untested product II.B of this preamble. Additionally, on that provides the manufacturer with a units. Without a means to infer November 8, 2011, a request for basis for inferring the compliance of the compliance of the untested product untested units of the product population comments titled, Application of Third units, the testing of ‘‘not known to be from the tested units. In other words, Party Testing Requirements; Reducing different’’ representative samples cannot the manufacturer must have a basis for Third Party Testing Burdens, Docket ensure continued compliance, as thinking that the units making up the CPSC–2011–0081, was published in the required by section 14(i)(2)(B)(ii) of the sample to be tested (or the Federal Register (76 FR 69596). Some of CPSA. representative sample) are like the the comments received in that docket To ensure continued compliance, the untested units of the children’s product also address the testing of representative Commission’s approach is to require a with respect to compliance to the samples. We summarize and respond to manufacturer to have knowledge of the applicable children’s product safety those comments in section II.B, as well, similarity of the tested samples to the rule. The final rule maintains this to ensure that all comments on untested units because the absence of definition, which places responsibility representative samples were considered knowledge of their differences is not on the manufacturer to choose as part of this rulemaking, in addition sufficient to ensure continued representative samples in a manner that to any suggestions for amending the compliance. Knowledge of the similarity provides a basis for inferring the final rule. After consideration of all the of tested samples may come from prior compliance of the untested product comments, however, no changes were testing, the manufacturer’s knowledge of units. made to the final rule. its product, production processes, (Comment 3)—A commenter opines quality control procedures, a production B. What comments did the Commission that the proposed rule defines testing program, the materials used in receive? ‘‘representative’’ in a rigid way, and the product, and/or the design of the thereby re-creates the effect of A summary of the commenters’ topics product. So long as the manufacturer ‘‘random’’ as in the original wording of is presented below, followed by staff’s has a rational basis for inferring the the CPSIA. The commenter asserts that responses. For ease of reading, each similarity of the untested product to the the word ‘‘representative’’ does not comment will be prefaced with a tested samples, and documents this require any clarification. The numbered ‘‘Comment’’; and each rationale, the manufacturer has met the commenter suggests that the common response will be prefaced by a requirements in the final rule. numbered ‘‘Response.’’ The numbering meaning of the word ‘‘representative’’ is (Comment 4)—A commenter suggests is for identification purposes only and that the sample stands for the body of that the CPSC define ‘‘representative does not imply the importance of the product being tested, and further samples’’ based on what they are not. comment or the order in which it was suggests the following as an alternate The commenter states that as long as a received. definition of ‘‘representative’’: sample is not a ‘‘golden sample,’’ 1. General Comments and Comments on a sample is ‘‘representative’’ when it is meaning that it was not manufactured to (a) produced in a manufacturing lot not Definitions be different in any way from the rest of known to be produced in a materially the produced samples, then it should be (Comment 1)—A commenter different manner than other production lots considered to be representative. welcomes the change from random of the same item, The commenter reasons that sampling (in the 16 CFR part 1107 NPR) (b) produced according to the usual, typical manufacturing procedures, noncompliant outliers may exist even in to representative sampling in the (c) selected without attempting to ‘‘game’’ the most homogenous of manufacturing proposed rule because the proposed rule the testing protocol, and practices, and manufacturers may not be includes a variety of methods to assure (d) is not otherwise known by the able to prove why a single test result compliance. manufacturer to be unrepresentative in any was an outlier. However, the commenter (Response 1)—As long as the test material way which might result in adds that it is much easier to prove that results from the representative samples misleading testing results. the manufacturer performed the due can infer compliance of the untested (Response 3)—No change to the final diligence necessary to ensure they did units of the children’s product, a variety rule was made based on this comment. everything possible to prevent the of means can be employed, at the The commenter’s proposed definition outlier from being created. manufacturer’s discretion, to select characterizes ‘‘representative’’ samples The commenter opines that this samples for testing under the final rule. as those units that are ‘‘not known to be clarification would in no way change (Comment 2)—A commenter asserts different’’ from the untested units, as the CPSC’s definition of a that: opposed to the Commission’s ‘‘representative sample.’’ According to There is no definition of ‘‘representative’’’ characterization, which is that the commenter, all manufacturers in 16 CFR Part 1107.26 (sic) of the notified ‘‘representative’’ samples are those units would still have to be able to prove that draft Regulation, so it would likely lead to a that are ‘‘known to be like’’ the untested a test result is representative of their
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entire product line. Moreover, adds the children’s product safety rule. Further the testing would serve no purpose commenter, such a clarification will investigation is needed for the other than to demonstrate the give manufacturers the assurance manufacturer to determine whether the compliance of the tested units. needed to rely on their individual manufacturer can still have a high However, the final rule does not rule out remedial action plans if a failure occurs degree of assurance that the untested the use of ‘‘process.’’ In fact, ‘‘process’’ due to an outlier that does not represent units are compliant. This investigation can show that the samples selected for the entire product line. The commenter might include examining the testing testing are like the untested units. For predicts that this interpretation will procedures, calibrating the test example, a process that manages the lots protect manufacturers from having to instrumentation, testing additional or batches of constituent materials of a destroy many more products that may samples, or other actions. children’s product can be used as a still be compliant, should testing reveal (Comment 5)—A commenter states basis for inferring homogeneity of the a noncompliance. that the CPSC interprets the need to products with respect to the chemical (Response 4)—The Commission ‘‘ensure’’ compliance to mean that no tests for lead and phthalates. As another considered this alternative definition exercise of judgment or good faith is example, a process that creates but regards this definition of allowed and that regulated companies uniformly spaced holes in the crib rails ‘‘representative sampling’’ as an attempt must always be able to prove for the uniformly constructed crib slats to prove a negative, which cannot be compliance. The commenter adds that can be used as a basis for inferring the done. A ‘‘not a golden sample’’ form of the proposed rule rules out reliance on homogeneity of that portion of the representative sampling does not ‘‘process,’’ or even the absence of product when conducting the provide a basis for knowing that the contrary indicators, to support a component spacing test of ASTM samples tested are similar to the conclusion that samples are F1169–10. untested units of the product. Without ‘‘representative.’’ Standing alone, the absence of that basis, the testing results can (Response 5)—No changes to the final contrary indicators is not sufficient to indicate the compliance only of the rule were made based on this comment infer compliance of the untested samples actually tested and not the because the final rule does indeed allow production units from the tested compliance of the untested product and require manufacturers to exercise samples because this could include units. Without a means to infer judgment and good faith in selecting willful ignorance of the potential compliance of the untested product representative samples. In fact, the differences between the untested units units, the testing of ‘‘not a golden entire third party testing regime set forth and the tested samples. Such an sample’’ representative samples cannot in 16 CFR parts 1107 and 1109 depends approach would not likely meet ensure continued compliance, as upon the exercise of ‘‘due care’’ by all minimum due care requirements. required by section 14(i)(2)(B)(ii) of the certifiers. ‘‘Due care’’ is a flexible 2. Selecting Representative Samples CPSA. concept, defined as ‘‘the degree of care The term ‘‘golden sample’’ would that a prudent and competent person (Comment 6)—A commenter desires seem to suggest a sample that is: (1) Not engaged in the same line of business or that the CPSC continue to consider known to be similar to the population endeavor would exercise under similar random sampling to be a subset of of units produced, and (2) would have circumstances. Due care does not permit representative sampling. The a greater likelihood of passing the willful ignorance.’’ 16 CFR 1107.2 & commenter asserts that including required tests. However, the absence of 1109.4(g). random sampling methods allows the those two traits does not make a sample Because of the multitude of different manufacturer the flexibility to select a representative based on the definition in industries and children’s products, the random sampling procedure that is most the final rule. For example, if a sample Commission adopted a flexible appropriate for the manufacturer’s was taken of the first 400 items from a performance standard in implementing product production setting but still production run of 100,000, the sample third party testing requirements. allows for the inference about the selector may have no greater confidence Determining what constitutes ‘‘a high compliance of the population of product before the test that these items would degree of assurance,’’ and ‘‘the exercise units. The commenter further states that pass the test than items selected from of due care,’’ requires the exercise of many companies proactively later in the run or throughout the run. business judgment in all aspects of implemented random testing programs The first 400 items may be testing. The Commission stated when the CPSC first proposed and representative samples, however, if the numerous times throughout the final supported such programs in December manufacturer has a basis for inferring testing rule that manufacturers are 2008, and the commenter wants the that the units are representative of the required to know about their products CPSC to continue to recognize this as an remaining 99,600 units. Absent some and they must implement a testing acceptable means of representative independent basis for knowing that the program accordingly. Sections sampling. remaining 99,600 units are similar to the 1107.20(b) and (d), 1107.21(b)(2), (Response 6)—No change to the final first 400 units of product from the run, 1107.21(c)(1), and 1107.23(a) of 16 CFR rule arises out of this comment because this could be a sampling approach that part 1107, all refer to the manufacturer’s the final rule allows random sampling could fail to be representative. knowledge of the product and its as a means to ensure representative A single test failure in a number of fabrication in implementing sampling sampling. The Commission agrees that samples tested does not automatically and testing plans, as well as other random samples are a form of mean that the production lot from manufacturer actions intended to representative sampling because the test which the samples were selected is not provide a high degree of assurance of results of the tested units can be used compliant, and therefore, must be compliance to the applicable children’s to infer the compliance of the untested reworked or destroyed. A failing test product safety rules. units of the children’s product. The result means that the manufacturer does The final rule requires regulated preamble to the proposed rule not have a high degree of assurance that companies to be able to provide a basis specifically states: all of the units from the production lot for inferring the compliance of the Random sampling is another means of from which the sample was taken are untested production units from the selecting representative samples that provide compliant with the applicable tested samples. Without such a basis, a basis for inferring the compliance of
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untested product units from the tested If the source of component parts subject to a children’s product safety product units. The conditions that allow for changes (either a new supplier of a rule, it must be accompanied by a the inference of compliance concerning currently used component part or a Children’s Product Certificate based on untested units versus tested units may be met component part that had not been used testing by a CPSC-accepted third party by a range of probability-based sampling designs, including, but not limited to, simple before), that would be a material change, conformity assessment body. random sampling, cluster sampling, necessitating certification testing to the If, by ‘‘managed properly,’’ the systematic sampling, stratified sampling, and children’s product safety rules that commenter means that the imported multistage sampling. These methods allow could be affected by the material products are homogeneous with respect the manufacturer the flexibility to select a change. to compliance, then the first customs random sampling procedure that is most Another method of conducting clearance article, assuming that it was appropriate for the manufacturer’s product periodic testing could involve random tested by a CPSC-accepted third party production setting but still allow for the sampling and testing of the continued conformity assessment body, can be inference about the compliance of the population of product units. production of component parts or of the regarded as a representative sample. finished product. Random sampling is Under the final rule, the manufacturer 76 FR 69586, 69587 (Nov. 8, 2011). an acceptable means of selecting a or importer must be able to provide a (Comment 7)—One commenter is representative sample. basis for why it believes its products are having difficulty understanding how to If varying combinations of component homogeneous. A demonstration of select a representative sample for parts can affect the compliance of the homogeneity with respect to compliance periodic testing. The commenter’s finished product, then those would serve as a basis to show that the products consist of sets of component combinations of component parts representative samples chosen for parts, each produced on a different date. represent a material change that requires testing are like the untested production Some of the finished products contain certification testing for each units. component parts that were combination that is materially different. For example, if a manufacturer manufactured more than a year ago. The (Comment 8)—This comment was injection molded an item using plastic commenter adds that their finished received in Docket CPSC–2011–0081. A pellets from the same lot or batch, the products consist of multiple variations commenter believes that knowledge manufacturer would be assured that, of component parts from many from first party testing and/or second with respect to the chemical tests, the production lots, resulting in no more party testing can be used to develop plastic items were homogeneous. As than a few with the same set of sampling plans for third party testing another example, if a manufacturer component parts. that reduce the overall test burden, produced small balls, and the (Response 7)—The purpose of while still allowing the compliance of production process included an periodic testing is to ensure compliance untested products to be inferred from automatic test to reject balls small with all the applicable children’s the products tested by the third party enough to pose a small parts hazard product safety rules for continued conformity assessment body. (perhaps by falling through a hole into production of a children’s product. (Response 8)—We interpret ‘‘first a reject bin), then the manufacturer Previously tested lots or batches of party testing’’ as testing conducted by would have demonstrated homogeneity component parts do not require periodic the manufacturer and ‘‘second party with respect to the small balls testing. If a lot or batch of component testing’’ as testing conducted by a requirement. Because an imported parts was sampled and tested for retailer to whom a manufacturer sells children’s product must comply with all certification purposes, those test reports children’s products. We agree with the of the applicable children’s product remain valid for the remainder of the commenter that the manufacturer’s safety rules, an importer, wishing to use particular lot or batch. Continued knowledge of a product, the applicable the first customs clearance article as a production or importation of newly children’s product safety rules, and the representative sample, must also show produced component parts (assuming manufacturing process, combined with how that sample is representative for all no material changes) are subject to first or second party testing, can be used of the applicable tests, including those periodic testing. If a manufacturer or to determine the procedure for selecting for which the finished product is importer conducted certification testing representative samples. The required to assess compliance. on each new lot or batch of component combination of the factors listed above (Comment 10)—This comment was parts, that testing would constitute, in can be used to infer the compliance of received in Docket CPSC–2011–0081. essence, recertification of the finished the untested production units from the Two commenters state that the CPSC product, based on tests of each batch or samples tested by a third party should clarify that importers are not lot of the components, and therefore, conformity assessment body. required to determine ‘‘representative periodic testing requirements might not sampling’’ procedures. One commenter apply. 3. Imported Products recommends that the CPSC look at the Continuing production of the (Comment 9)—A commenter states definition of ‘‘manufacturer’’ used in the component parts can have that if the manufacturing process of a Testing and Labeling Pertaining to representative samples selected for children’s product is ‘‘managed Product Certification rulemaking. The periodic testing purposes. For example, properly,’’ then the first customs commenter notes that 16 CFR 1107.2 if a component part continues to be clearance article should be regarded as defines ‘‘manufacturer’’ as ‘‘the parties produced or imported, and it is a representative sample. responsible for certification of a included in a children’s product, (Response 9)—We are not sure what consumer product pursuant to 16 CFR representative samples of the the commenter means by ‘‘first customs 1110.’’ According to § 1110.7(a), when component part could be tested to clearance article,’’ but we will assume, products are manufactured outside of comply with the periodic testing for the purposes of this answer, that it the United States, the importer must requirements. Alternatively, means the first article manufactured issue a certificate of conformity. The representative samples of continued outside of the United States that is commenters believe that some could production of the finished product cleared for entry and consumption by read this to mean that a ‘‘representative could be selected for periodic testing U.S. Customs and Border Patrol. If the sampling’’ procedure must be purposes. article is a finished children’s product determined by the importer, even if
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component part testing is conducted by is testing conducted on continuing taken into account when selecting a suppliers. These commenters explain production of a previously certified representative sample for periodic that many testing decisions are made children’s product. If each imported lot testing purposes. The method used for upstream in the supply chain. Now that or batch of a children’s product is third selecting representative samples must the CPSC accepts component part party tested and certified, then the be one that provides a basis for inferring testing, these commenters contend that periodic testing requirements might not the compliance of the untested decisions related to testing intervals and apply. Lots or batches that are tested production units from the test results of sample size are appropriately made by and certified would not represent the tested samples. The manufacturer or the manufacturer ultimately responsible continued production, even if the name importer of a children’s product subject for production samples to be tested, or model number of the children’s to a children’s product safety rule regardless of the importation method. product did not change. retains the responsibility to ensure that The commenters argue that while it is 4. Periodic Testing of Component Parts periodic tests are conducted on important that the finished product representative samples. Representative certifier exercises due care in their (Comment 11)—A commenter sample selection and testing may be reliance on supplier certifications, this suggests that the frequency of testing contracted to another party. If so should not mean that the finished component parts needs to be considered contracted, the other party (e.g., a product certifier should necessarily with respect to the level of control foreign manufacturer or distributor) dictate its suppliers’ sampling exerted over product safety from other must provide the basis for inferring the procedures or that the importer of regulations with stricter limits on lead compliance of the untested production record should require duplicative and heavy metals, and with respect to units based on testing of the selected testing. the business relationships they have representative samples. The (Response 10)—If the importer is the with their suppliers. For example, the manufacturer or importer issuing the party that issues the Children’s Product commenter considers it sufficient to test Children’s Product Certificate must still Certificate for a product, it is that for conformity to ASTM F963, exercise due care in relying on another importer’s responsibility to ensure that ‘‘Standard Consumer Safety party’s test reports or certifications. Specification for Toy Safety,’’ and total periodic testing is performed on the (Comment 13)—A commenter who lead once every 2 years as a children’s products they import that are manufactures multiple products from a consequence of the strict specification subject to an applicable children’s set of common component parts states on the raw materials used in their product safety rule. Under the that the proposal for testing component parts. component part testing rule, 16 CFR representative samples has an advantage part 1109, an importer can rely on test (Response 11)—If the commenter’s phrase ‘‘strict specification on the raw for this product type. The representative reports or certificates from another party sample can be assembled from common as long as they (the importer) exercise materials used in their component parts’’ means a production testing plan components across the product lines due care. and each component tested according to If an importer relies on certificates for as described in 16 CFR 1107.21(c)(2), the relevant safety concerns under the component parts or finished products then submitting representative samples CPSIA. that are supplied by another party, such to a third party conformity assessment as a foreign manufacturer or a supplier, body for periodic testing every 2 years (Response 13)—This practice is then it is the voluntary certifier of the is allowable, as long as it provides a acceptable under the final rule for tests component part or finished product high degree of assurance of compliance that do not require the finished product who is responsible for periodic testing with all applicable children’s product for testing. For example, determining of representative samples for the safety rules. Unless the manufacturer compliance to the use and abuse testing component parts or finished products implements and documents a of toys described in §§ 1500.50, 1500.51, they certify, and not the importer. The production testing plan (or uses an ISO/ 1500.52, and 1500.53 on representative importer must exercise due care to IEC 17025:2005-accredited first party samples of common component parts is ensure that applicable testing is testing laboratory for testing to ensure likely to be unacceptable to determine completed in an appropriate manner. continued compliance), the maximum compliance of a finished product to that However, if the importer arranges for testing interval for periodic tests is one standard. For the use and abuse tests, a periodic testing itself, the importer year. These periods are the maximum finished product is necessary to conduct retains the responsibility for selecting allowed interval. Periodic testing should the tests. and testing representative samples be conducted at a frequency which, However, component part testing of periodically to ensure continued when combined with the manufacturer’s representative samples for compliance compliance. Periodic testing, including other efforts at assuring continued to all children’s product safety rules that representative sample selection, may be compliance, gives the manufacturer a do not require the finished product to contracted to another party. If so high degree of assurance of continued assess compliance (such as the chemical contracted, the other party, called the compliance. tests) can be conducted. The passing test ‘‘testing party’’ in the component part (Comment 12)—This comment was results for those component parts may testing rule, 16 CFR part 1109 (e.g., a received in Docket CPSC–2011–0081. A be used to support children’s product foreign manufacturer or distributor) commenter states that the manufacturer, certification for finished products must provide the basis that the samples working together with the factory, employing those component parts. selected for testing are representative. should determine representative (Comment 14)—A commenter A manufacturer or importer issuing sampling of products with a substantial recommends that 16 CFR 1107.21(c)(1) the Children’s Product Certificate must number of different components, based be amended to include explicit language still exercise due care in relying on on knowledge of the products, the allowing the use of component part another party’s test reports or applicable product safety standard, and testing for periodic testing purposes. certifications. the manufacturing processes that go into The commenter states that specific The Commission reminds the making the products. regulatory language needs to be inserted commenter that representative samples (Response 12)—We agree that the into the text, or the commenter’s are selected for periodic testing, which above-mentioned factors should be customers may not include component
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part testing in their contractual 5. Testing Costs children’s products are too complicated relationships with the commenter. (Comment 16)—This comment was and costly, and that compliance with (Response 14)—Section 16 CFR received in Docket CPSC–2011–0081. the rules is practically impossible. The 1107.21(a) states: ‘‘Component part One commenter states that changing the commenter fears that ‘‘[t]he power of the testing pursuant to 16 CFR part 1109 ‘‘random’’ sampling requirement to agency to use violations of its rules to may be used to support the periodic ‘‘representative’’ sampling will reduce levy excessive fines and even attack via testing requirements of this section.’’ the testing burden because, for some injunction ensures that it can dictate Because the use of component part manufacturers, particularly suppliers of any outcome it wants.’’ testing is allowed explicitly in raw materials or components, or (Response 18)—This rulemaking is § 1107.21(a), repetition of this in manufacturers of simple products, limited to the use of representative § 1107.21(c)(1) is unnecessary. substantially similar products may be samples for periodic testing of (Comment 15)—The following children’s products covered by an comments on using component parts as representative of the whole body of product to be certified. applicable children’s product safety representative samples were received in rule. The final rule is intended to aid Docket CPSC–2011–0081. One (Response 16)—The Commission agrees that changing ‘‘random’’ industry and the regulated community commenter suggests that if a product in understanding what is expected for can be proven to be composed of the sampling to ‘‘representative’’ sampling has the potential to reduce the testing the periodic testing of children’s same material throughout the end products. product, then a component could be burden for manufacturers because more submitted as a representative sample. techniques for sample selection are 6. Recordkeeping Requirements available that can leverage the The commenter adds that traceability (Comment 19)—A commenter opines manufacturer’s knowledge of the would be important as there are ways that the recordkeeping requirements of product and its production processes. that raw materials could be the proposed rule are excessive, Component part testing of raw materials contaminated in the assembly. uneconomical, and unreasonable. The for periodic testing purposes is one A second commenter provides an commenter asserts: ‘‘There is absolutely means by which a representative sample example of a representative sample with no safety benefit to this recordkeeping, can be selected. For example, if the sampling from a construction set of 50 nor will the records maintain (sic) help same lots or batches of raw materials different physical component the agency figure out if there is a safety were used to create several children’s configurations injection molded with issue with the affected product.’’ four different colors of polyvinyl products, the results of the chemical (Response 19)—The Commission chloride resin. The commenter states tests for one of the products could be disagrees with the assertion that no that a sample could be considered used to support the certification safety benefit comes from representative as long as all four colors requirements of the other products. recordkeeping. Because failure in the of material were sampled and (Comment 17)—A commenter states certification system of children’s compliance with the lead substrate or that implementation of the new rules products could occur in many ways, phthalate limits could be established. will impose a significant compliance recordkeeping can provide data to help A third commenter opines that as long cost on his company. The commenter identify the source of the failure. A as representative materials or asserts that the additional costs will not safety benefit of the recordkeeping components used in finished result in increased safety of his requirement is that, if noncompliant production can be sampled, such a company’s products and states that products are found in the marketplace, process should be maintained as ‘‘they were already safe.’’ The information is readily available that suitable for determining compliance commenter’s additional compliance cost might help the manufacturer and the with the lead-in-paint, lead substrate, concerns pertain to rules promulgated CPSC determine how such and phthalate limits for toys and other since the CPSIA, in particular, 16 CFR noncompliance occurred and its extent. child care articles. The commenter part 1107, on testing and labeling Requiring manufacturers to provide a asserts that Congress clearly recognized pertaining to children’s product rationale for why their samples were the advantage of permissive use of certification, and not specifically to the chosen for periodic testing may help ‘‘representative sampling’’ for the proposed rule regarding the use of determine whether that rationale could purpose of certifying compliance for representative samples for periodic have been a contributing factor in the like materials and components to these testing. incidence of noncompliant children’s (Response 17)—No change to the final requirements. products being introduced into (Response 15)—The commenters are rule was made based on this comment. commerce. describing forms of component part Congress provided the CPSC with a (Comment 20)—A commenter testing used to meet the requirements of third party testing regime to improve the suggests that the Commission prove periodic testing. These practices are safety of children’s products. The final that: allowed by 16 CFR part 1109. For the rule implements part of this testing chemical content tests, component part regime. The Commission acknowledges (a) Congress wanted all manufacturers to testing can be used for periodic test that the cost of the testing required by ESTABLISH that each and every sample was purposes. If the raw materials are tested 16 CFR part 1107 can be significant for ‘representative,’ (b) the required recordkeeping for proof for lead (and phthalates, if appropriate), some companies. The Commission also that each testing sample is ‘‘representative’’ then any products made from those raw is considering other means to reduce bears a rational relationship to the agency’s materials can use the raw material test third party testing burdens pursuant to mandate to keep the citizenry safe, reports to support the products’ section 14(i)(3) of the CPSA, which (c) the devotion of resources to the Children’s Product Certificates. requires the Commission to seek and activities described in the rule actually Component part testing is not allowed consider comments on opportunities to makes anyone safer, and for tests that require a finished product, reduce third party testing burdens (d) the benefits of the new rule outweigh such as use and abuse testing of toys consistent with assuring compliance. its costs. described in §§ 1500.50, 1500.51, (Comment 18)—A commenter states (Response 20)—Section 2(a)(1) of 1500.52, and 1500.53. that the CPSC’s rules for testing Public Law 112–28 amended section
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14(i)(2)(B)(ii) of the CPSA to state that applicable children’s product safety comply with the applicable children’s the Commission shall, by regulation, rule. However, the Commission will product safety rules, then the units not establish protocols and standards ‘‘for consider the request for public meetings selected will also comply. In order to the testing of representative samples to or other guidance regarding the ensure compliance of all units ensure continued compliance.’’ Because implementation of 16 CFR part 1107, as produced, one must be able to infer the the text of the CPSA in this section necessary, beyond the efforts taken, to compliance of the untested units of a explicitly calls for regulations to date. product from tests performed on the establish standards, we interpret that III. Environmental Considerations sampled units. phrase to include establishing standards for representative samples. Generally, the Commission’s B. Comments on the Initial Regulatory With regard to the commenter’s regulations are considered to have little Flexibility Act suggestion regarding the relationship or no potential for affecting the human We received several comments between recordkeeping and ‘‘keeping environment, and environmental regarding the initial regulatory the citizenry safe,’’ the safety benefits of assessments and impact statements are flexibility analysis (IRFA), which we the recordkeeping requirement are not usually required. See 16 CFR respond to below. described in the response to Comment 1021.5(a). The final rule sets forth the (Comment 23)—One commenter states 19 above. The recordkeeping Commission’s regulation for meeting the that the initial regulatory flexibility requirements are intended to help requirement in section 14(i)(2)(B)(ii) of analysis was a ‘‘[s]ham.’’ The prevent children’s products from the CPSA to test ‘‘representative commenter argues that the ‘‘regulatory samples.’’ As such, the final rule is not creating an unreasonable risk of death or cost analysis is a whitewash, not a true expected to have an adverse impact on injury for consumers. arm’s length analysis’’ and that ‘‘no the environment. The rule falls within By enacting section 14(i)(2)(B)(ii) of company will be able to keep up with the categorical exclusion in 16 CFR the CPSA, Congress determined that these rules, big or small.’’ The 1021.5(c)(2). Accordingly, no establishing protocols and standards for commenter further states: ‘‘[t]he new environmental assessment or periodic testing of representative rules cannot be afforded by any but the environmental impact statement is samples of children’s products are biggest companies—and yet, it’s the big required. worthy of resources and they strengthen companies that have caused the most the safety of children’s products. IV. Regulatory Flexibility Analysis notorious and dangerous recalls of The Commission has provided an The Regulatory Flexibility Act (RFA), Children’s Products.’’ The commenter assessment of the impact of the rule on opines that it is the small companies small businesses under the Regulatory 5 U.S.C. 601–612, generally requires that agencies review proposed rules for that will be impacted most adversely by Flexibility Act, but it is not required to the new rule. The commenter finally conduct a cost-benefit analysis. their potential economic impact on small entities, including small argues: ‘‘[h]aving devoted pages to 7. Comments Considered Outside the businesses. The RFA calls for agencies toting up how many companies would Scope of the Rulemaking to prepare and make available for public be affected by the rule and meaningless (Comment 21)—A commenter comment, an initial regulatory and inaccurate data on revenues of proposes that they provide a Certificate flexibility analysis describing the those companies, the authors then punt of Conformity to the CPSC for each impact of the proposed rule on small on the impact of the law.’’ finished product distributed to the U.S. entities and identifying impact-reducing (Response 23)—The Commission market that requires certification under alternatives. 5 U.S.C. 603. The RFA disagrees with the assertion that the the CPSIA. The commenter wants the further requires agencies to consider IRFA for the proposed rule, which CPSC to determine whether the comments they receive on the initial would establish requirements for the commenter acted with due diligence regulatory flexibility analysis and selection of representative samples, is a with respect to product safety. The prepare a final regulatory flexibility sham. As the commenter noted, the certificate would include references to analysis describing the impact of the IRFA described the number and types of component part tests. final rule on small entities and small entities that could be impacted by (Response 21)—The final rule is identifying alternatives that could the proposed rule, the requirements that limited to the testing of representative reduce that impact. Id. 604. This section the rule would impose on small entities, samples for periodic testing of summarizes the Commission’s final and the types of costs small businesses children’s products. A request for the regulatory flexibility analysis for the might incur in meeting the CPSC to evaluate certificates of final rule on representative samples for requirements. However, the proposed conformity regarding due diligence is periodic testing of children’s products. rule did not specify the procedure that beyond the scope of this proposal. firms must use for selecting (Comment 22)—A commenter A. Objective of the Final Rule representative samples: It only required recommends that the Commission have The objective of the final rule is to firms to use a procedure that would a series of public meetings to review the reduce the risk of injury from consumer provide a basis for inferring compliance concept of representative samples products, especially from products about the population of products because of the enormous range of intended for children age 12 years and manufactured during that period. children’s products subject to the rule. younger. The final rule will accomplish Because the Commission did not know The commenter predicts that this objective by requiring what procedures firms would use to Commission guidance on an industry manufacturers (including private meet the requirements of the proposed basis, over the range of products, would labelers and importers of products rule, or know to what extent the materially assist its member companies manufactured by foreign manufacturers) procedures used would differ from the to comply. to select the samples of children’s procedures that firms would have used (Response 22)—This rulemaking is products for periodic testing (which is to select samples for periodic testing in limited to the use of representative be required by 16 CFR 1107.21), using the absence of the proposed rule, we samples for periodic testing of a procedure that provides a basis for were not able to quantify further the children’s products covered by an inferring that if the selected samples costs that the rule would have on small
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businesses. The IRFA specifically (Comment 25)—One commenter states the potential costs associated with the requested comments on this issue. that the rule will have a tremendous recordkeeping requirements of the The only revenue data that was negative economic impact on a proposed rule. included in the IRFA was the average substantial number of small entities, Although alternatives for reducing the revenue reported by the U.S. Bureau of and that generally, when agencies costs associated with third party testing the Census for the very small, request information regarding economic are not being addressed in this nonemployer businesses that could be impact on small entities, cost and time rulemaking, the Commission is impacted by the proposed rule. It is not estimates are provided. The commenter examining alternatives for further known to what the commenter is ‘‘believe[s] that these costs will reducing the costs associated with third referring when the commenter states outweigh the paperwork and necessity party testing. Any alternatives that are that the IRFA contained meaningless of testing products that are well within identified may be addressed in future and inaccurate data on the revenues of the limits based on component part rulemakings, as needed. testing.’’ The commenter further the affected companies. We agree that C. Description of the Number of Small provides: ‘‘The Commission needs to the proposed rule could have a Entities to Which the Final Rule Will consider alternative testing strategies disproportionate impact on small Apply businesses. However, the commenter that allow the small business to seems to be discussing the impacts of incorporate and use current testing By regulation (16 CFR part 1110), the the general rule on testing and labeling protocols that meet the same end goal: Commission has determined that the pertaining to product certification, Ensuring that all products meet both the domestic manufacturer or importer is which was published in the Federal lead and phthalate content limits, as responsible for ensuring that a Register on November 8, 2011. The applicable.’’ consumer product is properly tested, current rulemaking pertains only to the (Response 25)—We agree that the and, based on the testing results, selection of samples for periodic testing final rule could have a negative certifying that it conforms to all and not to the requirements for testing economic impact on some small applicable consumer product safety and certification, in general. entities. The IRFA described the rules. Therefore, it is the domestic requirements of the proposed rule and manufacturer or importer who will be (Comment 24)—One commenter notes the types of costs that firms subject to responsible for ensuring that that two industries were omitted from the rule might incur. However, because representative samples of children’s the list of industries that could be the proposed rule did not specify the products that are subject to one or more impacted by the proposed rule in the procedure that firms must use for children’s product safety rules are tested IRFA. The two omitted industries were selecting representative samples, and to ensure continued compliance. The ‘‘screen printing’’ (NAICS code 323113) because we did not know what definition of a children’s product is and ‘‘digital printing’’ (NAICS code procedures firms would use to meet the broad and includes bicycles, furniture, 323115). requirements of the proposed rule or to apparel, jewelry, televisions, electronic (Response 24)—We agree that some what extent the procedures used would games, toys, and so on, if designed or manufacturers in the two industries differ from the procedures that firms intended primarily for a child 12 years referred to by the commenter could be would have used to select samples for of age or younger. Virtually all impacted by the final rule. These periodic testing in the absence of the children’s products are subject to one or industries have been added to the proposed rule, we were not able to more children’s product safety rules. A relevant table in the final regulatory quantify further the costs that the rule full list of the children’s product safety flexibility analysis. Additionally, the would have on small businesses. The rules for which third party testing and tables have been updated to reflect the notice of proposed rulemaking also certification will be required is provided most current available data. contained an additional discussion of in Table 1.
TABLE 1—PRODUCT SAFETY RULES APPLICABLE TO CHILDREN’S PRODUCTS
16 CFR Part No. (or test method or standard) Description
1420 ...... All-Terrain Vehicles. 1203 ...... Bicycle Helmets. 1512 ...... Bicycles. 1513 ...... Bunk Beds. 1500.86(a)(5) ...... Clacker Balls. 1500.86(a)(7) and (8) ...... Dive Sticks and Other Similar Articles. 1505 ...... Electrically Operated Toys or Articles. 1615 ...... Flammability of Children’s Sleepwear, Sizes 0 through 6X. 1616 ...... Flammability of Children’s Sleepwear, Sizes 7 through 14. 1610 ...... Flammability of Clothing Textiles. 1632 ...... Flammability of Mattresses and Mattress Pads. 1633 ...... Flammability (Open-Flame) of Mattress Sets. 1611 ...... Flammability of Vinyl Plastic Film. 1219 ...... Full-Size Cribs. 1215 ...... Infant Bath Seats. 1216 ...... Infant Walkers. Sec. 101 of CPSIA (Test Method CPSC–CH–E1001–08, CPSC–CH– Lead Content in Children’s Metal Jewelry. E1001–08.1 or 2005 CPSC Laboratory SOP). Sec. 101 of CPSIA (Test Method CPSC–CH–E1001–08 or CPSC–CH– Lead Content in Children’s Metal Products. E1001–08.1). Sec. 101 of CPSIA (Test Method CPSC–CH–E1002–08 and/or CPSC– Lead Content in Children’s Non-Metal Products. CH–E1002–08.1). 1303 ...... Lead Paint.
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TABLE 1—PRODUCT SAFETY RULES APPLICABLE TO CHILDREN’S PRODUCTS—Continued
16 CFR Part No. (or test method or standard) Description
1220 ...... Non-Full-Size Cribs. 1511 ...... Pacifiers. Sec. 108 of CPSIA (Test Method CPSC–CH–C1001–09.3 ) ...... Phthalate Content of Children’s Toys and Child Care Articles. 1510 ...... Rattles. 1224 ...... Portable Bed Rails. 1501 ...... Small Parts Rule. 1630 ...... Surface Flammability of Carpets and Rugs. 1631 ...... Surface Flammability of Small Carpets and Rugs. 1217 ...... Toddler Beds. (ASTM F963) ...... Toys.
The number of firms that could be NAICS category for importers. Firms than 26,000 manufacturers that would impacted was estimated by reviewing that import products might be classified be considered small in these categories, every industry in the North American as manufacturers, wholesalers, or not all of these firms are engaged in Industrial Classification System retailers. manufacturing children’s products (NAICS) and selecting industries with 1. Manufacturers subject to a children’s product safety firms that could manufacture or sell any rule. It would be expected that most of According to the criteria established children’s product that could be covered the firms engaged in Doll, Toy, and by the U.S. Small Business by a consumer product safety rule. Game manufacturing produce some Administration (SBA), manufacturers Firms are classified in the NAICS are generally considered to be small products that are intended for children category that describes their primary entities if they have fewer than 500 age 12 and younger. On the other hand, activity. Therefore, firms that might employees. Table 2 shows the number the category Surgical Appliance and manufacture or import consumer of manufacturing firms by the NAICS Supplies Manufacturing includes crash products covered by a safety rule as a categories that cover most children’s helmets, but most of the other products secondary or tertiary activity may not products subject to a children’s product in this category are not under the have been counted. There is no separate safety rule. Although there are more CPSC’s jurisdiction.
TABLE 2—NUMBER OF MANUFACTURING FIRMS IN SELECTED PRODUCT CATEGORIES
NAICS Small Total Code Description firms firms
31411 ...... Carpet and Rug Mills ...... 241 258 315 ...... Apparel Manufacturing ...... 7,508 7,565 316211 ...... Rubber and Plastic Footwear Manufacturing ...... 38 40 316212 ...... House Slipper Manufacturing ...... 2 2 316219 ...... Other Footwear Manufacturing ...... 45 46 323113 ...... Commercial Screen Printing ...... 4,464 4,488 323115 ...... Digital Printing ...... 2,326 2,357 326299 ...... All Other Rubber Product Manufacturing ...... 583 626 336991 ...... Motorcycle, Bicycle, and Parts Manufacturing ...... 417 422 33712 ...... Household and Institutional Furniture Manufacturing ...... 5,145 5,227 33791 ...... Mattress Manufacturing ...... 398 410 339113 ...... Surgical Appliance and Supplies Manufacturing ...... 1,772 1,866 33991 ...... Jewelry and Silverware Manufacturing ...... 2,369 2,382 33992 ...... Sporting and Athletic Goods Manufacturing ...... 1,619 1,652 33993 ...... Doll, Toy and Game Manufacturing ...... 649 660 339942 ...... Lead Pencil and Art Good Manufacturing ...... 123 129 339999 ...... All Other Miscellaneous Manufacturing ...... 3,798 3,841
Total Manufacturers ...... 31,497 31,971 Source: U.S. Department of Commerce, Bureau of the Census, 2009 County Business Patterns, Number of Firms, Number of Establishments, Employment, and Annual Payroll by Enterprise Employment Size for the United States, All Industries: 2009. (available at http://www2.census.gov/ econ/susb/data/2009/us_6digitnaics_2009.xls. Last accessed on 28 February 2012.)
In addition to the manufacturers in employees. They are generally sole businesses classified other Table 2, there were 25,184 nonemployer proprietorships and may or may not be miscellaneous manufacturers were businesses classified in NAICS 315 the owner’s principal source of income. about $41,000.2 There is no information (Apparel Manufacturing), 27,645 The average receipts for the regarding the number of nonemployer classified in NAICS 3231 (Printing and nonemployer businesses classified in Related Support Activities), and 61,180 apparel manufacturing were about 2 U.S. Department of Commerce, Bureau of the classified in NAICS 3399 (Other $31,000; for those classified in printing Census, ‘‘Revised 2008 Nonemployer Statistics Miscellaneous Manufacturers) in 2008. and related support activities, the Table.’’ Available at http://www.census.gov/econ/ nonemployer/Revised%202008%20Data%20With Nonemployer businesses are generally average revenue was $49,424; and the %202009%20Methodology%20Applied.xls (last very small businesses with no average receipts for the nonemployer accessed 16 August 2011).
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businesses that actually manufacture responsible for certifying the products. subject to a children’s product safety children’s products. Table 3 shows the number of rule. A significant proportion of the wholesalers by NAICS code that would 2. Wholesalers firms classified as Toy and Hobby cover most children’s products that are Goods and Supplies Merchant Wholesalers would be impacted by subject to a children’s product safety Wholesalers probably import at least the final rule if they import any rule. According to the SBA criteria, some children’s products. However, the children’s product that is subject to a wholesalers are generally considered to only firms classified as Motor Vehicle children’s product safety rule. be small entities if they have fewer than and Motor Vehicle Parts and Suppliers Wholesalers who obtain their products 100 employees. Although there are more that would be impacted by the final rule strictly from domestic manufacturers or than 78,000 wholesalers that would be are those that import all-terrain vehicles from other wholesalers would not be considered small in these categories, not that are intended for children 12 year impacted by the final rule because the all of these firms are engaged in old or younger. manufacturer or importer would be importing children’s products that are
TABLE 3—NUMBER OF WHOLESALERS IN SELECTED PRODUCT CATEGORIES
NAICS Code Description Small firms Total firms
4231 ...... Motor Vehicle and Motor Vehicle Parts and Suppliers ...... 16,815 17,776 4232 ...... Furniture and Home Furnishing Merchant Wholesalers ...... 10,574 10,974 42362 ...... Electrical and Electronic Appliance, Television, and Radio Set Merchant Wholesalers ...... 2,368 2,512 42391 ...... Sporting and Recreational Goods and Supplies Merchant Wholesalers ...... 4,693 4,845 42392 ...... Toy and Hobby Goods and Supplies Merchant Wholesalers ...... 2,068 2,138 42394 ...... Jewelry, Watch, Precious Stone, and Precious Metal Merchant Wholesalers ...... 7,162 7,234 42399 ...... Other Miscellaneous Durable Goods Merchant Wholesalers ...... 8,816 9,054 42432 ...... Men’s and Boy’s Clothing and Furnishings Merchant Wholesalers ...... 3,375 3,515 42433 ...... Women’s, Children’s, and Infant’s Clothing, and Accessories Merchant Wholesalers ...... 6,655 6,859 42434 ...... Footwear Merchant Wholesalers ...... 1,435 1,498 42499 ...... Other Miscellaneous Nondurable Goods Merchant Wholesalers ...... 10,812 11,058
Total Wholesalers ...... 74,773 77,463 Source: U.S. Department of Commerce, Bureau of the Census, 2009 County Business Patterns, Number of Firms, Number of Establishments, Employment, and Annual Payroll by Enterprise Employment Size for the United States, All Industries: 2009. (available at http://www2.census.gov/ econ/susb/data/2009/us_6digitnaics_2009.xls. Last accessed on 28 February 2012.)
In addition to the wholesalers impacted by the final rule because the depending on the specific NAICS tabulated in Table 3, the U.S. Census manufacturers or wholesalers would be category. Because of the way in which Bureau estimated that there were responsible for the testing and the data were reported by the Bureau of 206,072 nonemployer businesses certification of the children’s products. the Census, the estimates of the number classified in NAICS categories that However, there are some retailers who of small firms in each category in Table could include wholesalers of children’s manufacture or directly import some 4 are based on similar, but different products. As noted above, nonemployer products, and therefore, will be criteria. Although there are more than businesses are generally very small sole responsible for ensuring that these 100,000 firms that would be considered proprietorships. The average receipts for products are properly tested and to be small businesses in these the nonemployer business wholesalers certified. The number of such retailers categories, it is not known how many of were about $86,000.3 An unknown is not known. Table 4 shows the number these firms are engaged in importing or number of nonemployer wholesalers of retailers by NAICS code that would manufacturing children’s products. could import children’s products. cover most children’s products. Many of these firms probably obtain all 3. Retailers According to SBA size standards, of their products from domestic Retailers who obtain all of their retailers are generally considered to be wholesalers or manufacturers and products from domestic manufacturers small entities if their annual sales are would not be directly impacted by the or wholesalers will not be directly less than $7 million to $30 million, final rule.
TABLE 4—NUMBER OF RETAILERS FOR SELECTED PRODUCT CATEGORIES
Criteria used SBA size for estimate of standard small firms NAICS Code Description (millions of (millions of Small firms Total firms dollars of dollars of annual sales) annual sales)
441221 ...... Motorcycle, ATV, and Personal Watercraft Dealers ...... <30 <25 4,794 4,879 4421 ...... Furniture Stores ...... <19 <10 16,033 16,611 44813 ...... Children’s and Infant’s Clothing Stores ...... <30 <25 2,057 2,074 44814 ...... Family Clothing Stores ...... <25.5 <25 6,588 6,684 44815 ...... Clothing Accessories Stores ...... <14 <10 2,757 2,774 44819 ...... Other Clothing Stores ...... <19 <10 6,331 6,393
3 U.S. Department of Commerce, Bureau of the Table.’’ Available at http://www.census.gov/econ/ With%202009%20Methodology%20Applied.xls Census, ‘‘Revised 2008 Nonemployer Statistics nonemployer/Revised%202008%20Data%20 (last accessed 16 August 2011).
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TABLE 4—NUMBER OF RETAILERS FOR SELECTED PRODUCT CATEGORIES—Continued
Criteria used SBA size for estimate of standard (mil- small firms NAICS Code Description lions of dollars (millions of Small firms Total firms of dollars of annual sales) annual sales)
4482103 ...... Children’s & Juveniles’ Shoe Stores ...... <25.5 <25 227 230 4482104 ...... Family Shoe Stores ...... <25 .5 <25 2,905 2,941 45111 ...... Sporting Goods Stores ...... <14 <10 14,388 14,545 45112 ...... Hobby, Toy, & Game Stores ...... <25.5 <25 4,612 4,629 452 ...... General Merchandise Stores ...... <30 <25 6,873 6,971 45322 ...... Gift, Novelty, and Souvenir Stores ...... <30 <25 19,297 19,339 454111 ...... Electronic Shopping ...... <30 <25 11,374 11,646 454113 ...... Mail Order Houses ...... <35.5 <25 5,281 5,645 4542 ...... Vending Machine Operators ...... <10 <10 3,796 3,887
Total Retailers ...... 107.313 124,700 Source: U.S. Census Bureau, 2007 Economic Census, Retail Trade, Summary Statistics by Sales Size of Firms for the United States, Release date 11/02/2010.
In addition to the retailers tabulated children’s product safety rules, then one may be maintained in languages other in Table 4, the U.S. Census Bureau can infer the compliance of the untested than English, if they can be provided estimated that there were 324,918 units in the population. In many cases, immediately to the CPSC, upon request, nonemployer businesses classified in a manufacturer’s knowledge of the and as long as the manufacturer can NAICS categories that could include manufacturing processes or materials translate the records into English retailers of children’s products. As used may provide such information. For accurately within 48 hours of a request noted above, nonemployer businesses example, if the manufacturer knows that to do so by the CPSC, or any longer are generally very small sole a product or component is period negotiated with CPSC staff. proprietorships. The average receipts for manufactured using the same grade of There will be some costs associated the nonemployer business retailers were material as all of the other units, and the with developing and implementing about $40,000.4 An unknown number of production processes are controlled sampling procedures that will result in nonemployer retailers could import such that all of the dimensions are the the selection of representative samples. children’s products. same as all other units, then that Some knowledge of subjects, such as product or component could be D. Compliance, Reporting, and statistics and quality control techniques, considered representative of all other Recordkeeping Requirements may be necessary to develop the units produced during the interval. procedure. Some manufacturers may The final rule requires that children’s Information that can be used to establish have these skills in-house; others may product manufacturers select samples that a sample is representative can come need to hire consultants with these required for third party periodic testing from a variety of sources, including skills. There also may be some ongoing (required by 16 CFR 1107.21) using a inspection of, or tests on, incoming costs associated with selecting the procedure that provides a basis for materials or components and representative samples once the inferring compliance about the inspection, tests, and process-control procedures have been developed. There population of untested products data generated during production. will also be some costs associated with produced during the applicable periodic Other methods of selecting documenting the procedure and testing interval. The final rule requires representative samples include various maintaining the records that are further that the number of samples probability-based sampling methods. required by the final rule. However, selected must be sufficient to ensure These methods include simple random because there are potentially a wide continuing compliance with all of the sampling, cluster sampling, systematic range of methods for selecting applicable children’s product safety sampling, stratified sampling, and representative samples, and we do not rules. multistage sampling. Probability-based know which methods will be used by In order to be able to infer the sampling methods allow statistical firms, the magnitude of the costs cannot compliance of the untested products, inferences to be made about the be estimated. the samples selected must be population of the products, based upon representative of the untested or results of tests on the selected samples. E. Federal Rules That May Duplicate, unselected units in the population of The final rule requires that Overlap, or Conflict With the Final Rule products produced during the periodic manufacturers document the procedures The final rule establishes testing interval. In other words, used to select the product samples for requirements that must be met in children’s product manufacturers must periodic testing and note the basis for selecting the samples of children’s have a basis for believing that if the their belief that the samples are products for the periodic testing samples selected for periodic testing representative of the untested product required by 16 CFR 1107.21. It does not show compliance with the applicable produced during the periodic testing duplicate, overlap, or conflict with other interval. The records must be federal rules. 4 U.S. Department of Commerce, Bureau of the maintained for five years. The records Census, ‘‘Revised 2008 Nonemployer Statistics can be maintained electronically or in F. Steps Taken To Minimize the Adverse Table.’’ Available at http://www.census.gov/econ/ Economic Impact on Small Businesses nonemployer/Revised%202008%20Data%20 hardcopy. The manufacturer must make With%202009%20Methodology%20Applied.xls the records available for inspection by The final rule establishes a (last accessed 16 August 2011). the CPSC, upon request. The records performance standard rather than
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mandates a specific procedure for November 8, 2011, Federal Register lower than the average. We do not selecting samples for periodic testing notice regarding the proposed rule (76 believe that the commenter provided that all manufacturers must use. FR 69586, 69592–93), we described the sufficient information to change our Manufacturers may use any procedure information collection and the annual approach for estimating the hourly cost they choose for selecting samples for reporting burden. Our estimate includes of producing the records for periodic testing as long as the procedure the time for reviewing instructions, documenting the selection of provides a basis for inferring searching existing data sources, representative samples. However, the compliance about the entire population gathering and maintaining the data hourly cost estimate is being updated to of products manufactured during the needed, and completing and reviewing reflect the most recent estimate reported applicable interval. Manufacturers are each collection of information. by the Bureau of Labor Statistics, which also free to change the procedures that We invited comment on: (1) Whether is $50.41, as of September 2011. they use to select samples, if they the collection of information is We agree with the commenter that determine that a procedure different necessary for the proper performance of some manufacturers may determine that from the one they are using would be the CPSC’s functions, including whether they need to develop a separate less costly, provided that the new the information will have practical sampling procedure for each children’s procedure provides a basis for inferring utility; (2) the accuracy of the CPSC’s product that they manufacture. The compliance about the population of estimate of the burden of the proposed discussion in the notice of proposed untested products produced during the collection of information, including the rulemaking allowed for this possibility applicable period. validity of the method and assumptions when it stated that in some cases, ‘‘a As discussed in the initial regulatory used; (3) ways to enhance the quality, manufacturer might have only one flexibility analysis, we considered less utility, and clarity of the information to product in a particular product line.’’ 76 stringent alternatives for selecting be collected; and (4) ways to minimize FR 69592. However, we believe that representative samples, such as the burden of the collection of other manufacturers may have multiple allowing manufacturers to select the information on respondents, including products in their product lines and samples using any procedure, provided through the use of automated collection determine that the same sampling that the procedure used would not techniques, when appropriate, and other procedure may be used for groups of purposively lead to the selection of forms of information technology. similar or closely related products or samples that the manufacturer knows We received one comment on the product lines. As stated in the notice of are more likely to comply with a burden estimates contained in the proposed rulemaking, we do ‘‘not have standard or requirement than other proposed rule. information on the number of closely samples (often referred to as ‘‘golden (Comment 26)—One commenter related products or product lines that samples’’). We reexamined these agrees with our estimate that it might manufacturers offer or the average alternatives during review of the public take 4 hours per product or group of number of individual models within comments submitted in response to the products to prepare the records required each set of closely related products or notice of proposed rulemaking. Such by the rule to document the procedures product lines.’’ Id. Therefore, a range of alternatives were not adopted because used to select representative samples possible values was used in estimating we generally believe that it is necessary and the basis for inferring the the recordkeeping burden, and the for manufacturers to have a positive compliance of the untested products notice of proposed rulemaking invited basis for believing that the samples manufactured during the period. comments from manufacturers and selected for periodic testing are, in fact, However, the commenter states that the others to gain better insight on the representative of the entire population estimated hourly cost of $50.08 was potential recordkeeping burden of the of units produced during the applicable probably low and that a more accurate proposed rule. This comment was the periodic testing interval. Using a ‘‘not a estimate was $75 per hour, given the only one that addressed this issue. golden sample’’ form of representative likely involvement of lawyers and other However, it did not provide sufficient sampling would require manufacturers professionals. The commenter also information to change the assumptions to prove a negative, which cannot be questions the assumption that we used in the notice of proposed implemented or enforced. The approach manufacturers would use the same rulemaking for estimating the does not provide a basis for knowing sampling plan for similar or closely recordkeeping burden. that the samples tested are similar to the related products or product lines. The The commenter’s statement that an untested units of the product. Without commenter states that they thought it additional 4 hours would be required that basis, the testing results can would be much more likely that a plan for each test sample selected appears to indicate the compliance only of the would be developed and documented be a reference to the amount of time samples actually tested and not the for each item. The commenter also associated with the other recordkeeping compliance of the untested product states that another 4 hours would be requirements of the final rule on testing units. Without a means to infer required for each test sample selected. and labeling pertaining to product compliance of the untested product (Response 26)—The hourly cost certification (16 CFR part 1107), which units, the testing of ‘‘not a golden estimate of $50.08 in the proposed rule was published in the Federal Register sample’’ representative samples cannot was based upon the average hourly cost on November 8, 2011. Those ensure continued compliance, as for total employee compensation for all recordkeeping costs were discussed in required by section 14(i)(2)(B)(ii) of the management, professional, and related the Federal Register notice associated CPSA. workers in private industry, as reported with that rulemaking (76 FR 69537–40) by the Bureau of Labor Statistics as part and are not related to the current final V. Paperwork Reduction Act of the ‘‘Employer Costs for Employee rule on selecting representative samples. The final rule contains information Compensation data series. Therefore, The information collection collection requirements that are subject the cost estimate we used assumed requirement associated with the final to public comment and review by the appropriately that the work would be rule is summarized below. Office of Management and Budget done by management and professional Title: Amendment to Regulation on (OMB) under the Paperwork Reduction employees. Of course, the costs for any Testing and Labeling Pertaining to Act of 1995 (44 U.S.C. 3501–3520). In a particular businesses may be higher or Product Certification Regarding
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Representative Samples for Periodic set of closely related children’s products manufacturer has changed an existing Testing of Children’s Products or children’s product lines rather than product line to the extent that a new Description of Respondents: each individual product. For example, a sampling plan is required, introduced a Manufacturers of children’s products. manufacturer of die-cast toy cars might new product line, or because a new Description: The final rule would offer 50 different models, but if each one manufacturer has entered the market. If require records that describe how the is manufactured using the same this is the case, then the ongoing samples for periodic testing are selected, manufacturing processes and the same recordkeeping costs associated with the the number of samples that will be materials, one sampling plan for all die- final rule would be 25,600 hours selected, and an explanation of why the cast cars by this manufacturer might be (128,000 hours × 0.2) to 128,000 hours procedure described will result in the sufficient. We do not have information (640,000 hours × 0.2) annually or selection of representative samples, on the number of closely related approximately $1.3 million (25,600 such that one can infer that the untested products or product lines that hours × $50.41 per hour) to units produced during the periodic manufacturers offer or the average approximately $6.5 million (128,000 testing interval comply with the number of individual models within hours × $50.41 per hour) annually. applicable children’s product safety each set of closely related products or Another potential ongoing rules if the samples selected comply. product lines. In some cases, a recordkeeping cost might result if We estimate the burden of this manufacturer might have only one manufacturers make adjustments or collection of information as follows: product in a particular product line. revisions to their sampling plans or Although it might take a manufacturer Some large manufacturers may offer procedures for their existing product several hours, perhaps several days to several hundred models or styles within lines. This might occur if manufacturers analyze its products and manufacturing some product lines. find that their initial procedures are processes to determine its options for A starting point to estimate the difficult to implement or if they come selecting representative samples (and recordkeeping burden of the final rule is up with more efficient methods of some might need to hire consultants for to assume that each product line selecting representative samples. We do this purpose), the actual documentation averages 10 to 50 individual product not have any information that could be models or styles. If each product line of the procedure and basis for inferring used to estimate how often averages 50 individual models or styles, compliance will probably take less time. manufacturers will revise these plans. then a total of 32,000 individual On the assumption that because this For purposes of this analysis, we will sampling plans (1.6 million children’s document is required by regulation, assume that this, too, would amount to products ÷ 50 models or styles) would manufacturers will make sure that the about 20 percent of the burden need to be developed and documented. document is reviewed and edited estimated for the initial year, or This would require 128,000 hours properly, it could take an average of 4 approximately $1.3 million to $6.5 (32,000 plans × 4 hours per plan) at a hours to prepare this document, once million annually. the procedure that will be used is total cost of approximately $6.5 million × decided and the number of samples has (128,000 hours $50.41 per hour). If VI. Executive Order 12988 (Preemption) each product line averages 10 been determined. Developing the Executive Order 12988 (February 5, sampling procedure and documenting it individual models or styles, then a total of 160,000 different sampling plans (1.6 1996), requires agencies to state in clear are managerial or professional ÷ language the preemptive effect, if any, of functions. According to the Bureau of million children’s products 10 models or styles) would need to be documented. new regulations. The final rule would Labor Statistics, as of September 2011, be issued under the authority of the total compensation for management, This would require 640,000 hours (160,000 plans × 4 hours per plan), at a CPSA and the CPSIA. The CPSA professional, and related occupations provision on preemption appears at for all workers in private industry was total cost of approximately $32.3 million (640,000 hours × $50.41 per section 26 of the CPSA. The CPSIA $50.41 an hour. Therefore, the cost of provision on preemption appears at creating the record documenting a hour). Once a sampling plan is developed section 231 of the CPSIA. The procedure for selecting representative and documented, manufacturers will preemptive effect of this rule would be samples could be estimated to be about probably not incur the full cost of determined in an appropriate $202 ($50.41 × 4 hours).5 documenting their sampling plans in proceeding by a court of competent In developing the estimates of the subsequent years because the same plan jurisdiction. recordkeeping burden associated with and documentation should be valid. the testing and labeling pertaining to the VII. Effective Date However, each year, it is expected that certification of a children’s products manufacturers will retire some product The Administrative Procedure Act rule, we estimated that there were about lines and introduce new ones. (APA) generally requires that the 1.6 million children’s products. Moreover, some manufacturers will effective date of a rule be at least 30 However, manufacturers probably will leave the market, and other days after publication of a final rule. 5 not need to develop and document a manufacturers will enter the market. U.S.C. 553(d). The Commission stated in separate sampling procedure for each Therefore, there will be some ongoing the proposed rule, at 76 FR 69593, that product. It might be more reasonable to costs associated with documenting a final rule would become effective on believe that manufacturers will be able sampling plans. the same date as the rule on ‘‘Testing to use the same sampling plan for We do not have data on the number and Labeling Pertaining to Certification’’ similar or closely related products or of new product lines introduced because §§ 1107.21(f) and 1107.26(a)(4) product lines. Therefore, manufacturers annually, whether from existing on representative sampling are an may need to develop and document manufacturers or from new amendment to that rule. Accordingly, separate sampling procedures for each manufacturers entering a market. For the effective date of the final rule is purposes of this analysis, we will February 8, 2013, and it applies to 5 Bureau of Labor Statistics, Employer Costs for Employee Compensation, Table 9 (September 2011). assume that about 20 percent of the products manufactured after this date, Available at: http://www.bls.gov/news.release/ children’s product lines are new each to coincide with the effective date of 16 archives/ecec_12072011.htm. year, either because an existing CFR part 1107.
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List of Subjects in 16 CFR Part 1107 Dated November 29, 2012. Housing and Urban Development, 451 Todd A. Stevenson, 7th Street SW., Room 10276, Business and industry, Children, Secretary, Consumer Product Safety Washington, DC 20410–0500. Consumer protection, Imports, Product Commission. 2. Electronic Submission of testing and certification, Records, [FR Doc. 2012–29204 Filed 12–4–12; 8:45 am] Comments. Interested persons may Record retention, Toys. BILLING CODE 6355–01–P submit comments electronically through Accordingly, the Commission amends the Federal eRulemaking Portal at www.regulations.gov. HUD strongly 16 CFR part 1107 as follows: DEPARTMENT OF HOUSING AND encourages commenters to submit PART 1107—TESTING AND LABELING URBAN DEVELOPMENT comments electronically. Electronic PERTAINING TO PRODUCT submission of comments allows the CERTIFICATION 24 CFR Part 203 commenter maximum time to prepare and submit a comment, ensures timely [Docket No. FR–5679–N–01] ■ receipt by HUD, and enables HUD to 1. The authority citation for part 1107 make them immediately available to the Federal Housing Administration: continues to read as follows: public. Comments submitted Prohibited Sources of Minimum Cash Authority: 15 U.S.C. 2063, Sec. 3, 102 Pub. electronically through the Investment Under the National L. 110–314, 122 Stat. 3016, 3017, 3022. www.regulations.gov Web site can be Housing Act—Interpretive Rule viewed by other commenters and Subpart C—Certification of Children’s AGENCY: Office of the General Counsel, interested members of the public. Products HUD. Commenters should follow the ACTION: Interpretive rule. instructions provided on that site to ■ 2. Add paragraph (f) to § 1107.21 to submit comments electronically. read as follows: SUMMARY: HUD is issuing this Note: To receive consideration as public interpretive rule to clarify the scope of comments, comments must be submitted § 1107.21 Periodic testing. the provision in the National Housing through one of the two methods specified * * * * * Act that prohibits certain sources of a above. Again, all submissions must refer to the docket number and title of the rule. (f) A manufacturer must select homebuyer’s funds for the required representative product samples to be minimum cash investment for single No Facsimile Comments. Facsimile submitted to the third party conformity family mortgages to be insured by the (FAX) comments are not acceptable. assessment body for periodic testing. Federal Housing Administration (FHA). Public Inspection of Public The procedure used to select Uncertainty has arisen as to the effect of Comments. All properly submitted representative product samples for this provision on State and local comments and communications governments and their agencies’ and submitted to HUD will be available for periodic testing must provide a basis for instrumentalities’ homeownership public inspection and copying between inferring compliance about the programs that provide funds for the 8 a.m. and 5 p.m. weekdays at the above population of untested products minimum cash investment. This rule address. Due to security measures at the produced during the applicable periodic provides HUD’s interpretation that this HUD Headquarters building, an testing interval. The number of samples statutory provision does not remove the appointment to review the public selected for the sampling procedure availability of FHA insurance for use in comments must be scheduled in must be sufficient to ensure continuing conjunction with State and local advance by calling the Regulations compliance with all applicable government programs that provide Division at 202–708–3055 (this is not a children’s product safety rules. The funds toward the required minimum toll-free number). Individuals with manufacturer must document the cash investment. Although interpretive speech or hearing impairments may procedure used to select the product rules are exempt from public comment access this number via TTY by calling samples for periodic testing and the under the Administrative Procedure the Federal Relay Service at 800–877– basis for inferring the compliance of the Act, HUD nevertheless invites public 8339. Copies of all comments submitted product manufactured during the comment on the interpretation provided are available for inspection and periodic testing interval from the results in this rule. downloading at www.regulations.gov. of the tested samples. DATES: Effective Date: November 29, FOR FURTHER INFORMATION CONTACT: * * * * * 2012. Comment Due Date: January 4, Millicent Potts, Associate General Counsel for Insured Housing, Office of ■ 3. Add paragraph (a)(4) to § 1107.26 to 2013. General Counsel, U.S. Department of read as follows: ADDRESSES: Interested persons are invited to submit comments regarding Housing and Urban Development Room § 1107.26 Recordkeeping. this rule to the Regulations Division, 9226, 202–708–2212. Hearing or speech impaired individuals may access these (a) * * * Office of General Counsel, Department of Housing and Urban Development, numbers via TTY by calling the toll free (4) Records documenting the testing 451 7th Street SW., Room 10276, Federal Relay Service at 800–877–8339. of representative samples, as set forth in Washington, DC 20410–0500. SUPPLEMENTARY INFORMATION: § 1107.21(f), including the number of Communications must refer to the above I. Background representative samples selected and the docket number and title. There are two procedure used to select representative methods for submitting public A. The National Housing Act samples. Records also must include the comments. All submissions must refer Prohibition on Certain Sources of Cash basis for inferring compliance of the to the above docket number and title. Investment product manufactured during the 1. Submission of Comments by Mail. To qualify a mortgage for FHA periodic testing interval from the results Comments may be submitted by mail to mortgage insurance, section 203(b)(9)(A) of the tested samples; the Regulations Division, Office of of the National Housing Act (12 U.S.C. * * * * * General Counsel, Department of 1709(b)(9)) requires the homebuyer to
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pay ‘‘in cash or equivalent on account requirements of government assistance successful homeowners.’’ 5 A majority of of the property an amount equal to not programs would place these those programs—in 2011, 88 percent (45 less than 3.5 percent of the appraised governments and instrumentalities in an of 51) of State HFAs—include minimum value of the property.’’ Some untenable position of having cash investment as a part of advancing homebuyers obtain this minimum governmental authority to provide their mission.6 Federally backed amount from sources other than their assistance toward the minimum cash mortgage insurance is also a critical part own earnings or savings; for example, a investment on the one hand, but being of the HFAs’ strategy. Of HFA loan relative may give or loan them this unable to use FHA-insured mortgage production in 2011, 86 percent involved money or some part of it. However, financing on the other. To do so would FHA, Veterans Administration (VA), or section 203(b)(9)(C) of the National also frustrate the statutory purpose of Rural Housing Service loan or loan Housing Act provides that no part of these programs and of the FHA to insurance programs. this required minimum investment may encourage and support Many HFAs administer other State consist of funds provided by the seller homeownership.1 and Federal housing assistance of the property or any other person or C. Other Government Funded programs such as homeless assistance, entity who benefits financially from the Homeownership Assistance Programs CDBG, and State housing trust funds. sale of the property, or any person who Local housing finance agencies operate is reimbursed by any such person or Another key source of similarly but at the county, city, or other entity. homeownership assistance programs, municipal-entity level. In many cases, a such as assistance with closing costs, or local agency may be the local B. Federally Funded Homeownership rehabilitation, is provided by State and Programs government itself. HFAs provide various local governments, primarily through services to assist citizens within their Governments—Federal, State, and housing finance agencies (HFAs). jurisdictions in attaining affordable local—and their agencies and According to the National Council of housing options. These services include instrumentalities have provided State Housing Finance Agencies, HFAs providing access to affordable mortgage assistance toward the minimum cash are generally State-chartered authorities loans for purchasing a home, investment as part of homeownership established by State governments to counseling, money and other resources programs from various public funds, help meet the affordable housing needs for closing costs, and assistance for any 2 including appropriated funds, operating of State residents. Although HFAs vary required investment in the mortgaged tax revenues, taxable and tax-exempt widely in characteristics such as their property. Such funds come from general obligation bonds, and surplus relationship to State government, most numerous sources. Program revenues (for example, excess reserves). are independent entities that operate beneficiaries are usually low- and Federal homeownership assistance under the direction of a board of moderate-income individuals and programs that have a cash investment directors appointed by their respective families who have gone through component include HUD’s State governors. They administer a wide homeownership counseling through Neighborhood Stabilization Program, range of affordable housing and which they receive training on money Community Development Block Grant 3 community development programs. management, use of credit, and home (CDBG) program, and HOME Investment Using housing bonds, low-income maintenance. Partnerships program, as well as the housing tax credits, HOME program Department of Veterans Affairs Home funds, and other Federal and State D. FHA and Minimum Cash Investment Loan Guaranty Service and U.S. resources, HFAs have crafted hundreds Requirements Department of Agriculture’s Rural of housing programs, including Since its enactment, the National Development Housing and Community homeownership, rental, and all types of Housing Act (NHA) has required the Facilities program. These Federal special-needs housing. HFAs have mortgagor to have a minimum homeownership assistance programs provided affordable mortgages to 2.6 investment in the property being have specified public purposes, such as million families to buy their first homes purchased. For many years, the required revitalizing communities affected by through mortgage revenue bond minimum investment was 3 percent of foreclosures and vacancy, increasing the 4 programs. the cost of acquisition, and is currently homeownership rate in particular A recent study of HFAs found that 3.5 percent of the home’s appraised geographies, making homeownership 100 percent of the 51 HFAs surveyed value. Prior to 2008, the statute and affordable to underserved populations said that part of their mission is ‘‘to and in high-cost markets. regulations regarding the required assist low- and moderate-income investment were silent, with minor For these Federal assistance programs, residents to purchase homes and be Congress has authorized funds to be exceptions, as to permissible sources of the mortgagor’s required investment. distributed from the Treasury, often 1 In providing an overview of the Housing and through State and local governments or Economic Recovery Act if 2008 (HERA), the However, FHA’s single family mortgage 7 their instrumentalities, for purposes of Congressional Research Service in an August 19, credit handbook, Handbook 4155.1, supporting homeownership programs. 2008 report for Congress on HERA [RL34623] notes provided administrative guidance to that HERA authorizes $4 billion for state and local approved mortgagees as to permissible At the same time, section 203(b)(9)(C) of governements to purchase and rehabilitate the National Housing Act raises the abandoned and foreclosed houisng and that this sources of the funds that a homebuyer question whether the distribution of housing would be sold or rented to low- and could use for the required minimum these same Federal funds would cause moderate-income individuals and families. See investment. HUD’s policy under the http://assets.opencrs.com/rpts/ handbook provisions was to permit the the mortgages originated on the basis of _ RL34623 20080819.pdf. minimum cash investment to be support from such funds not to qualify 2 See http://answers.usa.gov/system/self for FHA insurance. Reading the service.controller?CONFIGURATION=1000& financed by sources including a family prohibition in section 203(b)(9)(C) to PARTITION_ID=1&CMD=VIEW_ARTICLE& USERTYPE=1&LANGUAGE=en&COUNTRY=US& 5 See http://www.chfainfo.com/documents/HFA_ include other Federal agencies, State ARTICLE_ID=10182. HEC_Report_March2012.pdf at 1. and local governments, or their 3 See http://www.ncsha.org/about-hfas/hfa- 6 Id. at 1. instrumentalities disbursing government programs. 7 See http://www.hud.gov/offices/adm/hudclips/ funds in accordance with the 4 See http://www.ncsha.org/about-hfas. handbooks/hsgh/4155.1/41551HSGH.pdf.
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member, the borrower’s employer or by sellers continued to be a source of proposed to prohibit cash investment labor union, a governmental entity, a concern following the withdrawal of the amounts that consists, in whole or in charitable organization, or a close friend proposed rule. In 2005, the Government part, of funds provided by any of the with a clearly defined and documented Accountability Office (GAO) published following parties before, during or after interest in the borrower. HUD’s policies a report on the risks raised by the closing of the property sale: ‘‘(1) The have always expressly prohibited the reimbursement of nonprofit entities by seller, or any other person or entity that seller from financing or providing a gift sellers.12 The GAO findings noted that financially benefits from the transaction; of the required investment. sales prices were increased or (2) any third party or entity * * * In the 1990s, several nonprofit entities commensurately to cover the cost that is reimbursed directly or indirectly developed an approach to funding incurred by the seller, and thus resulted by any of the parties listed in clause homebuyers’ cash investments that in homeowners having less actual (1).’’ 20 Once again, the May 2007 circumvented the handbook prohibition. equity in the newly acquired home.13 proposed rule expressly exempted funds These entities obtained charitable status The GAO report also found that the from ‘‘a federal, state, or local from the Internal Revenue Service, and default and claim rate for homes government agency or instrumentality’’ then encouraged home sellers to use purchased with charitable gifts where from the category of prohibited sources their services and provided homebuyers the nonprofit entity was reimbursed by for funds toward the required minimum with all or part of the required cash the seller was much higher than in those investment.21 HUD published its final investment amount. After the funds cases where the homebuyer provided rule on October 1, 2007.22 On the were provided by the nonprofit entity to his or her own money for the required effective date of the rule, a lawsuit the homebuyer, the seller made a investment.14 challenging the rule was filed against donation to the nonprofit entity of the Moreover, the IRS found that HUD in the U.S. district court for the amount of the assistance plus a fee. The organizations claiming to be charities Eastern District of California, and in donated funds were directed to were being used to funnel money from February 2008 the court set aside the subsequent homebuyers for the cash sellers to buyers through self-serving, final rule.23 investment on their homes. The circular-financing arrangements, and The 2005 GAO report, the 2006 IRS nonprofit does not conduct broad-based that in a typical scheme, there is a direct Ruling, and the judicial invalidation of fundraising but instead relies on sellers correlation between the amount of the HUD’s final rule eventually led to and other businesses in real estate for funds provided to the buyer and the congressional action on the issue in financial support. In effect, sellers and payment received from the seller.15 On 2008. Section 2113 of the Housing and other donors were indirectly funding May 4, 2006, the IRS issued Revenue Economic Recovery Act of 2008 (HERA), the homebuyer’s required minimum Ruling 2006–27, which determined that signed into law on July 30, 2008, investment by reimbursing the nonprofit organizations that indirectly provide amended the NHA with language that is entity for each transaction.8 cash investments funded by sellers to identical in relevant part to the language As the prevalence of channeling funds homebuyers do not qualify as tax- in HUD’s 2007 final rule. Section 2113 from sellers through nonprofit entities exempt charities.16 In the press of HERA amended section 203(b)(9) of increased, FHA became concerned that announcement accompanying the the NHA to provide that mortgages this practice as applied to homebuyers ruling, the IRS stated that the ruling eligible for FHA insurance must ‘‘[b]e with FHA-insured mortgages could makes clear that organizations operating executed by a mortgagor who shall have result in FHA insuring riskier loans. In seller-funded programs are not charities paid in cash or its equivalent, on response, FHA published a proposed because they do not meet the account of the property an amount equal rule in 1999 to prohibit this source of requirements of section 501(c)(3) of the to not less than 3.5 percent of the the minimum cash investment.9 Under Internal Revenue Code.17 The IRS also appraised value of the property or such the proposed rule, a gift of the buyer’s found that the seller pays the larger amount as the Secretary may required minimum cash investment organization only if the sale closes, and determine.’’ Section 203(b)(9) was also would disqualify the loan from FHA the organization usually charges an amended to include a new subparagraph insurance if the entity providing the gift additional fee for its services.18 (9)(C), which specifies prohibited received funds directly or indirectly On May 11, 2007, HUD again sources for a mortgagor’s minimum from the seller of the property. published a proposed rule that investment. Section 203(b)(9)(C) of the However, the proposed rule expressly prohibited funds provided by the seller NHA states: as a source for the minimum cash included funds provided by a ‘‘State or PROHIBITED SOURCES.—In no case shall local government agency or investment.19 This provision, entitled ‘‘Restrictions on Seller Funding,’’ the funds required by subparagraph (A) instrumentality’’ in the category of consist, in whole or in part, of funds permissible sources of funds that the provided by any of the following parties homebuyer can apply toward the 12 See United States Government Accountability before, during, or after closing of the property Office, ‘‘Mortgage Finance—Additional Action 10 sale: minimum investment requirement. Needed to Manage Risk of FHA-Insured Loans with HUD withdrew the rule in January 2001 Down Payment Assistance,’’ (Nov. 2005) available (i) The seller or any other person or entity in light of widespread opposition to the at http://www.gao.gov/new.items/d0624.pdf. that financially benefits from the transaction. 13 (ii) Any third party or entity that is rule as proposed.11 See id. at 25. 14 reimbursed, directly or indirectly, by any of The direct and indirect financing of See id. at 3–4. 15 the parties described in clause (i). homebuyers’ minimum cash investment See http://www.irs.gov/Charities-&-Non-Profits/ Seller-Funded-Down-Payment-Assistance-Programs Since HERA’s enactment, FHA has -Are-Not-Tax-Exempt. not replaced the regulation that was 8 See IRS Ruling 2006–27, available at http:// 16 See http://www.irs.gov/pub/irs-drop/rr-06- www.irs.gov/pub/irs-drop/rr-06–27.pdf. 27.pdf. 9 See Sources of Homeowner Downpayment, 64 17 See http://www.irs.gov/uac/IRS-Targets-Down- 20 See id. at 27049. FR 49956 (proposed Sept. 14, 1999). Payment-Assistance-Scams;-Seller-Funded- 21 See id. at 27051. 10 See id. at 49958. Programs-Do-Not-Qualify-As-Tax-Exempt. 22 See Standards for Mortgagor’s Investment in 11 See Withdrawal of Proposed Rule on Sources 18 Id. Mortgaged Property, 72 FR 56002 (final Oct. 1, of Homeowner Downpayment Pursuant to Section 19 See Standards for Mortgagor’s Investment in 2007). 203 of the National Housing Act, 66 FR 2851 Mortgaged Property, 72 FR. 27048 (proposed May 23 See Nehemiah Corp. of America v. Jackson, 546 (January 12, 2001). 11, 2007). F. Supp. 2d 830, 848 (E.D. Cal. 2008).
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vacated by the district court in February State, or local governments, or their Second, the legislative history of the 2008. However, Mortgagee Letter 2008– agencies or instrumentalities as part of amendment to section 203(b)(9)(C) also 23 provides notification of the statutory their respective homeownership supports HUD’s interpretation that it revisions to the cash investment programs. does not exclude State and local requirements imposed by HERA.24 HUD finds support for this government home ownership programs Instead of 3 percent of the cost of interpretation in the surrounding from FHA insurance eligibility. In a acquisition, the required investment provisions in HERA and in the statement supporting the amendment to was changed by HERA to 3.5 percent of legislative history of the amendment to section 203(b)(9)(C), Senator Dodd the appraised value of the property. section 203(b)(9). First, HERA itself explained that ‘‘this bill eliminates the Aside from the statement that closing authorized governmental seller-funded downpayment assistance costs (i.e., the present allowed seller homeownership programs that include a program.’’ 28 There is no indication that incentive of 6 percent) could not be cash investment component, and State and local governments or their used to meet the 3.5 percent appraised interpreting section 203(b)(9)(C) to deny agencies or instrumentalities were to be value minimum investment FHA insurance to mortgages resulting within the scope of the amendment. The requirement, the Mortgagee Letter is from such programs would frustrate Senate Committee Report accompanying silent regarding the source of the their statutory purpose. In section 2301 a 2007 bill containing statutory required cash investment by the of HERA, Congress authorized the first language 29 identical to what was mortgagor. increment of funding for the eventually enacted in HERA further II. This Interpretive Issue Neighborhood Stabilization Program support this interpretation. The report (NSP). NSP provides funds to low- and explained that the ‘‘section also A. Conjunction of Government Housing moderate-income homebuyers for the prohibits seller-funded downpayment Assistance Programs and FHA-Insured cash investment on purchasing lender- entities from providing any of this Mortgages foreclosed single family properties required cash investment.’’ 30 It noted It is HUD’s interpretation that section when the property will be the buyer’s that ‘‘[s]ince this legislation was passed 203(b)(9)(C) of the NHA does not primary residence and is located in an by the Committee, HUD has prohibit FHA from insuring mortgages eligible target area. NSP funds are promulgated a regulation that also originated as part of the homeownership distributed through State and local prohibits these entities from providing programs of Federal, State, or local government agencies and downpayment assistance funds.’’ 31 As governments or their agencies or instrumentalities. NSP funds are also discussed above, the 2007 HUD rule to instrumentalities when such agencies or used to purchase vacant or distressed which the Senate Report refers instrumentalities also directly provide properties, which may then be resold by expressly excluded State and local funds toward the required minimum the purchasing agency or government agencies and cash investment.25 The addition of a instrumentality to low- or moderate- instrumentalities from the category statutory provision on prohibited income buyers with funds toward the prohibited sources for the minimum sources of cash investment funds, as minimum cash investment. Access to cash investment. The report’s part of the amendments to section FHA mortgage insurance is often identification of ‘‘seller-funded 203(b)(9) of the NHA enacted in HERA, essential to making such programs downpayment entities’’ as the targets of 26 was intended to preclude the abuse of work. Thus, an interpretation of both HUD’s proposed rule and of the the program where a seller (or other section 203(b)(9)(C) that precludes bill indicates that the provision, which interested or related party) funded the governments and their agencies and is identical to what was enacted in homebuyer’s cash investment after the instrumentalities government agencies HERA, does not include State and local closing by reimbursing third-party from providing funding toward the governments or their agencies or entities and added the cost of this minimum cash investment for an FHA- instrumentalities. reimbursement to the sales price of the insured mortgage would undercut a home, thus inflating the price of the central purpose of NSP and similar B. Scope of Interpretive Rule home beyond its market value. It is Federal, State, and local government programs.27 Under section 203(b)(9)(A) of the HUD’s interpretation that the amended NHA, the homebuyer’s investment in section 203(b)(9) does not exclude as a 26 HERA was enacted in 2008. FHA data shows the property must be at least 3.5 percent permissible source of cash investment, of its appraised value. So long as the funds provided directly by Federal, that in that year, there was a dramatic increase in FHA’s market share. From 2005 through 2007, homebuyer makes this minimum FHA’s market share ranged from 2.6 to 3.9% of the required investment from his or her own 24 See Mortgagee Letter 2008–23, available at national mortgage market. In 2008, it rose to almost http://portal.hud.gov/hudportal/documents/ 20% of the market share. See ‘‘FHA-Insured Single (or other approved) funds, any person, huddoc?id=DOC_19737.pdf. Family Mortgage Originations and Market Share even one associated with the 25 In Mortgagee Letter 94–2, FHA defined a Report, 2009–Q4, http://portal.hud.gov/hudportal/ transaction, may contribute additional government agency or instrumentality for purposes documents/huddoc?id=DOC_16681.pdf (last visited funds towards the borrower’s costs of section 528 of the NHA. See http:// 7–3–2012). See also FHA’s Annual Report to portal.hud.gov/hudportal/documents/ Congress on the Fiscal Year 2012 Financial Status without violating section 203(b)(9)(C). huddoc?id=DOC_16755.txt. This definition applies of the FHA Mutual Mortgage Insurance Fund, This interpretive rule only applies to here. That definition provides that the entity must issued November 16, 2012, which has updated funds that constitute all or part of the have been established by a governmental body or information on FHA’s market share, at http:// with governmental approval or under special law to portal.hud.gov/hudportal/HUD?src=/press/ 28 serve a particular public purpose or designated as press_releases_media_advisories/2012/HUDNo.12- See 154 Cong. Rec. S6354–S6356 (July 7, 2008) an instrumentality by law (statute or court opinion) 171. available at http://www.gpo.gov/fdsys/pkg/CREC- and the majority of governing board and/or 27 See United Savings Ass’n v. Timbers of Inwood 2008-07-07/html/CREC-2008-07-07-pt1-PgS6354- principal officers named or approved by Forest Assocs., Ltd., 484 U.S. 365, 371 (1988) 2.htm. governmental body/officials, or the government (statutory provisions should be interpreted to avoid 29 See FHA Modernization Act of 2007, S. 2338, body approves all major decisions and/or interpreting inconsistencies between provisions); (2007) § 103. expenditures, or the government body provides see also Babitt v. Sweet Home Chapter of 30 S. Rep. No. 110–227, at 6 (Nov.13, 2007), funds through direct appropriations/grants/loans, Communities for a Great Oregon, 515 U.S. 687 available at http://www.gpo.gov/fdsys/pkg/CRPT- with related controls applicable to all activities of (1995); Gade v. Nat’l Solid Waste Management 110srpt227/pdf/CRPT-110srpt227.pdf. entity. Ass’n, 505 U.S. 88, 100–01 (1992). 31 Id. (emphasis added).
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3.5 percent minimum investment NW., Washington, DC 20460–0001. The OPP–2012–0202 in the subject line on requirement. Public Reading Room is open from 8:30 the first page of your submission. All a.m. to 4:30 p.m., Monday through objections and requests for a hearing C. Conclusion Friday, excluding legal holidays. The must be in writing, and must be Accordingly, HUD interprets NHA telephone number for the Public received by the Hearing Clerk on or section 203(b)(9)’s ‘‘prohibited sources’’ Reading Room is (202) 566–1744, and before February 4, 2013. Addresses for provision in subsection (C) as not the telephone number for the OPP mail and hand delivery of objections including funds provided directly by Docket is (703) 305–5805. Please review and hearing requests are provided in 40 Federal, State, or local governments, or the visitor instructions and additional CFR 178.25(b). their agencies and instrumentalities in information about the docket available In addition to filing an objection or connection with their respective at http://www.epa.gov/dockets. hearing request with the Hearing Clerk homeownership programs. FOR FURTHER INFORMATION CONTACT: as described in 40 CFR part 178, please submit a copy of the filing (excluding D. Solicitation of Comment Mindy Ondish, Registration Division (7505P), Office of Pesticide Programs, any Confidential Business Information This interpretive rule represents Environmental Protection Agency, 1200 (CBI)) for inclusion in the public docket. HUD’s interpretation of section Pennsylvania Ave. NW., Washington, Information not marked confidential 203(b)(9)(C) and is exempt from the DC 20460–0001; telephone number: pursuant to 40 CFR part 2 may be notice and comment requirements of the (703) 605–0723; email address: disclosed publicly by EPA without prior Administrative Procedure Act. See 5 [email protected]. notice. Submit the non-CBI copy of your U.S.C. 553(b)(3)(A). Nevertheless, HUD objection or hearing request, identified is interested in receiving feedback from SUPPLEMENTARY INFORMATION: by docket ID number EPA–HQ–OPP– the public on this interpretation, I. General Information 2012–0202, by one of the following specifically with respect to clarity and methods: scope. A. Does this action apply to me? • Federal eRulemaking Portal: http:// Dated: November 29, 2012. You may be potentially affected by www.regulations.gov. Follow the online instructions for submitting comments. Helen R. Kanovsky, this action if you are an agricultural Do not submit electronically any General Counsel. producer, food manufacturer, or pesticide manufacturer. The following information you consider to be [FR Doc. 2012–29361 Filed 12–4–12; 8:45 am] list of North American Industrial Confidential Business Information (CBI) BILLING CODE 4210–67–P Classification System (NAICS) codes is or other information whose disclosure is not intended to be exhaustive, but rather restricted by statute. • provides a guide to help readers Mail: OPP Docket, Environmental ENVIRONMENTAL PROTECTION determine whether this document Protection Agency Docket Center (EPA/ AGENCY applies to them. Potentially affected DC), (28221T), 1200 Pennsylvania Ave. entities may include: NW., Washington, DC 20460–0001. 40 CFR Part 180 • • Crop production (NAICS code 111). Hand Delivery: To make special [EPA–HQ–OPP–2012–0202; FRL–9371–6] • Animal production (NAICS code arrangements for hand delivery or 112). delivery of boxed information, please Clodinafop-Propargyl; Pesticide • Food manufacturing (NAICS code follow the instructions at http:// Tolerance 311). www.epa.gov/dockets/contacts.htm. • Pesticide manufacturing (NAICS Additional instructions on AGENCY: Environmental Protection code 32532). commenting or visiting the docket, Agency (EPA). along with more information about ACTION: Final rule. B. How can I get electronic access to dockets generally, is available at other related information? http://www.epa.gov/dockets. SUMMARY: This regulation reduces the You may access a frequently updated established tolerance for residues of II. Summary of Petitioned-for Tolerance electronic version of EPA’s tolerance clodinafop-propargyl in or on wheat, regulations at 40 CFR part 180 through In the Federal Register of October 17, grain. Syngenta Crop Protection, LLC the Government Printing Office’s e-CFR 2012 (77 FR 63782) (FRL–9366–2), EPA requested this tolerance change under site at http://ecfr.gpoaccess.gov/cgi/t/ issued a document pursuant to FFDCA the Federal Food, Drug, and Cosmetic text/text-idx?&c=ecfr&tpl=/ecfrbrowse/ section 408(d)(3), 21 U.S.C. 346a(d)(3), Act (FFDCA). Title40/40tab_02.tpl. To access the announcing the filing of a pesticide DATES: This regulation is effective OCSPP test guidelines referenced in this petition (PP 1F7955) by Syngenta Crop December 5, 2012. Objections and document electronically, please go to Protection, LLC, P.O. Box 18300, requests for hearings must be received http://www.epa.gov/ocspp and select Greensboro, NC 27419–8300. The on or before February 4, 2013 and must ‘‘Test Methods and Guidelines.’’ petition requested that 40 CFR 180.559 be filed in accordance with the be amended by lowering the established instructions provided in 40 CFR part C. How can I file an objection or hearing tolerance for residues of the herbicide 178 (see also Unit I.C. of the request? clodinafop-propargyl in or on wheat, SUPPLEMENTARY INFORMATION). Under FFDCA section 408(g), 21 grain from 0.1 to 0.02 parts per million ADDRESSES: The docket for this action, U.S.C. 346a, any person may file an (ppm). That document referenced a identified by docket identification (ID) objection to any aspect of this regulation summary of the petition prepared by number EPA–HQ–OPP–2012–0202, is and may also request a hearing on those Syngenta Crop Protection, LLC, the available at http://www.regulations.gov objections. You must file your objection registrant, which is available in the or at the Office of Pesticide Programs or request a hearing on this regulation docket, http://www.regulations.gov. Regulatory Public Docket (OPP Docket) in accordance with the instructions Comments were received on the notice in the Environmental Protection Agency provided in 40 CFR part 178. To ensure of filing. EPA’s response to these Docket Center (EPA/DC), EPA West proper receipt by EPA, you must comments is discussed in Unit IV.C. Bldg., Rm. 3334, 1301 Constitution Ave. identify docket ID number EPA–HQ– Finally, EPA is revising the tolerance
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expression for the reasons explained in water exposure assessment, or non- not been submitted for clodinafop- Unit IV.D. dietary exposure assessment was propargyl. The absence of this study is conducted. unlikely to result in retention of an III. Aggregate Risk Assessment and Except as supplemented by the additional safety factor. EPA has only Determination of Safety information described in this unit, EPA retained an additional safety factor Section 408(b)(2)(A)(i) of FFDCA is relying on the safety finding in the when there is a data gap for allows EPA to establish a tolerance (the 2000 rulemaking and the risk immunotoxicity where the database legal limit for a pesticide chemical assessment underlying that action in shows clear evidence of immunotoxicity residue in or on a food) only if EPA amending the tolerance for wheat grain. and immunotoxic effects were seen at determines that the tolerance is ‘‘safe.’’ Further information regarding the safety the LOAEL that defined the point of Section 408(b)(2)(A)(ii) of FFDCA finding for the last rulemaking can be departure (POD). For clodinafop- defines ‘‘safe’’ to mean that ‘‘there is a found in the Federal Register of June propargyl, there is evidence in the reasonable certainty that no harm will 22, 2000, at http://www.epa.gov/ current toxicological database that result from aggregate exposure to the fedrgstr/EPA-PEST/2000/June/Day-22/ clodinafop-propargyl may perturb pesticide chemical residue, including p15715.htm. Although significant new immune function but this evidence is all anticipated dietary exposures and all data have been received since the 2000 not strong and it did not affect the other exposures for which there is rulemaking, as discussed in this unit, choice of the POD. In the subchronic reliable information.’’ This includes these data do not indicate that risk from oral toxicity study in rats, treatment- exposure through drinking water and in exposure to clodinafop-propargyl were related effects were observed (37% residential settings, but does not include understated. To the contrary, these new decrease in thymus weight and occupational exposure. Section data suggest that EPA’s prior risk increased thymic atrophy). Thymus 408(b)(2)(C) of FFDCA requires EPA to assessment overstated clodinafop- effects were observed only in males at give special consideration to exposure propargyl risks. Further information the highest treatment-dose (71 mg/kg/ of infants and children to the pesticide about EPA’s risk assessment and day), and were fully reversed after a 4- chemical residue in establishing a determination of safety for this action week recovery period. No thymus tolerance and to ‘‘ensure that there is a can be found at http:// effects were observed in the chronic reasonable certainty that no harm will www.regulations.gov in document toxicity/carcinogenicity study in rats. result to infants and children from ‘‘Clodinafop-propargyl. Human Health No other indicators of structural aggregate exposure to the pesticide Risk Assessment for Clodinafop- immunotoxicity were observed in the chemical residue * * *.’’ propargyl to Reduce the Established current database. While an Consistent with FFDCA section Tolerance on Wheat Grain’’ in docket ID immunotoxicity study is required to 408(b)(2)(D), and the factors specified in number EPA–HQ–OPP–2012–0202. complete the database, the absence of FFDCA section 408(b)(2)(D), EPA has For the 2000 rulemaking, the toxicity this study is not expected to alter the reviewed the available scientific data database for clodinafop-propargyl was aRfD or cRfD for clodinafop-propargyl. and other relevant information in considered incomplete. Acute Hence, by relying on the 2000 risk support of this action. EPA has neurotoxicity, subchronic neurotoxicity, assessment and the additional safety sufficient data to assess the hazards of developmental neurotoxicity, and in factors retained in that assessment, EPA and to make a determination on vitro cytogenetic studies were required. has taken a conservative approach that aggregate exposure for clodinafop- The absence of these studies, along with is likely to overstate the estimated risk propargyl including exposure resulting quantitative and qualitative evidence of of clodinafop-propargyl. from the tolerance established by this increased susceptibility, and evidence The EPA has determined that the action. EPA’s assessment of exposures of potential endocrine disruption, led results of the neurotoxicity studies and risks associated with clodinafop- EPA to retain an additional safety factor adequately elucidate the hazard but do propargyl follows. for the protection of infants and not affect EPA’s derivation of In the Federal Register of June 22, children as provided by FFDCA section clodinafop-propargyl’s acute reference 2000 (65 FR 38765) (FRL–6590–7), EPA 408(b)(2)(C) (i.e., 10X for acute risk for dose (aRfD) or chronic reference dose published a final rule establishing females 13+ and chronic risk; 3X for (cRfD). The NOAELs for adverse effects tolerances for combined residues of the acute risk for infants and children). seen in the neurotoxicity studies are herbicide clodinafop-propargyl and its With the exception of the cytogenetic well above the NOAELs in the studies acid metabolite in or on wheat (forage, studies, the required studies have since used as PODs. Thus, the PODs used in grain, hay, and straw) based upon EPA’s been submitted and found acceptable. the risk assessment for the 2000 conclusion that aggregate exposure to Studies were submitted which removed rulemaking for clodinafop-propargyl, as clodinafop-propargyl is safe for the mutagenicity concerns and thus the well as the aRfD and the cRfD derived general population, including infants cytogenetic studies were no longer from those PODs, are protective of all and children. Since 2000, there have required. effects, including neurotoxicity, been no additional tolerance actions for In all likelihood, the submission of observed in the neurotoxicity studies. clodinafop-propargyl. these data will lead EPA to remove the Previously, EPA considered This action decreases the established additional safety factor for the clodinafop-propargyl as likely to be tolerance for residues of clodinafop- protection of infants and children when carcinogenic to humans based on propargyl in or on the commodity it formally revises the clodinafop- increased incidences of prostate tumors wheat, grain from 0.1 to 0.02 ppm, propargyl risk assessment. The absence in male rats, ovarian adenomas in based upon a change to an enforcement of these data was the primary reason for female rats, liver tumors in male and method (Method MS 247) with a lower retaining that additional factor. female mice, and blood vessel tumors in limit of quantitation (LOQ) on wheat Currently, there is a data gap for an female mice and estimated cancer risk grain than the current methods. Since immunotoxicity study. In 2007 changes using a linear (non-threshold) approach. an established tolerance is being to 40 CFR part 158 imposed new data Since that time, additional data have reduced, which is expected to have no requirements for immunotoxicity testing been submitted, including a re- significant exposure effect, no new (OPPTS Guideline 870.7800) for evaluation of the proliferative lesions in dietary exposure assessment, drinking pesticide registration. This study has the rat ovary and prostate as well as
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mode of action data for mouse liver methods (REM 138.01 for clodinafop- assumed that the commenter tumors. In 2006, EPA revised its cancer propargyl and REM 138.10 for misinterpreted the proposed petition determination on clodinafop-propargyl clodinafop) for the determination of and would have no objections concluding that the evidence was no residues of clodinafop-propargyl (CGA– otherwise. The commenter made greater than suggestive of carcinogenic 184927) and its metabolite clodinafop additional comments proposing to potential and thus did not support the (CGA–193469) in or on wheat eliminate tolerances and pesticides finding that clodinafop-propargyl was commodities. Method MS 247 was altogether. The Agency understands the likely to be carcinogenic to humans. adequately validated using fortified commenter’s concerns and recognizes That conclusion was based on the samples of wheat grain, forage, and that some individuals believe that following: straw. certain pesticide chemicals should not 1. Prostate tumors (driven mainly by The current enforcement methods be permitted in our food. However, the adenomas) were seen in one sex (male) (REM 138.01 for clodinafop-propargyl existing legal framework provided by of one species (rat) at the high dose and REM 138.10 for clodinafop) can section 408 of the Federal Food, Drug only. serve as confirmatory methods for and Cosmetic Act (FFDCA) states that 2. There is no mutagenicity concern Method MS 247 on wheat grain since tolerances may be set when persons for clodinafop-propargyl. they use a different detection system. seeking such tolerances or exemptions 3. The weight-of-evidence supports Therefore, the LC/MS/MS Method MS have demonstrated that the pesticide activation of peroxisome proliferator- 247 is adequate as an enforcement meets the safety standard imposed by activated receptor alpha (PPAR’’) as the analytical method for determination of that statute. When new or amended mode of action for clodinafop-induced residues of clodinafop-propargyl and its tolerances are requested for residues of hepatocarcinogenesis in mice. While the metabolite clodinafop in wheat grain at a pesticide in food or feed, the Agency, PPAR mode of action for liver tumors in 0.02 ppm (0.01 ppm for each analyte). as is required by section 408 of the mice is theoretically plausible in The methods referenced in this unit FFDCA, estimates the risk of the humans, hepatocarcinogenesis by this may be requested from: Chief, potential exposure to these residues. mode of action is quantitatively Analytical Chemistry Branch, The Agency has concluded after this implausible and unlikely to take place Environmental Science Center, 701 assessment that there is a reasonable in humans based on quantitative species Mapes Rd., Ft. Meade, MD 20755–5350; certainty that no harm will result from differences in PPAR’’ activation and telephone number: (410) 305–2905; aggregate human exposure to toxicokinetics. email address: clodinafop-propargyl. 4. Ovarian tumors in the rat and [email protected]. EPA received a second anonymous vascular tumors in the mouse were not B. International Residue Limits comment in response to the Notice of considered to be treatment-related in the Filing which urged that regulations in Second Report of the Cancer In making its tolerance decisions, EPA general be stopped because they are Assessment Review Committee. seeks to harmonize U.S. tolerances with killing small businesses. This comment Given this limited evidence of international standards whenever is considered irrelevant to this action carcinogenic effects in animals or effects possible, consistent with U.S. food because the safety standard for unlikely to be relevant to humans, the safety standards and agricultural approving tolerances under section 408 use of a linear (non-threshold) approach practices. EPA considers the of FFDCA focuses on potential harm to for assessing cancer risk is no longer international maximum residue limits human health and does not permit appropriate. Instead, EPA has (MRLs) established by the Codex consideration of effects on any type of determined that the chronic threshold- Alimentarius Commission (Codex), as businesses. based risk assessment (i.e., the cRfD required by FFDCA section 408(b)(4). D. Revisions to Petitioned-for approach) will be protective of any The Codex Alimentarius is a joint Tolerances cancer risk. United Nations Food and Agriculture Based upon the 2000 rulemaking and Organization/World Health Finally, the EPA is revising the the other information discussed in this Organization food standards program, tolerance expression to: unit, EPA concludes that there is a and it is recognized as an international 1. Clarify that, as provided in FFDCA reasonable certainty that no harm will food safety standards-setting section 408(a)(3), the tolerance covers result to the general population and to organization in trade agreements to metabolites and degradates of infants and children from aggregate which the United States is a party. EPA clodinafop-propargyl not specifically exposure to clodinafop residues. EPA may establish a tolerance that is mentioned; and relies upon those risk assessments and different from a Codex MRL; however, 2. Clarify that compliance with the the findings made in the Federal FFDCA section 408(b)(4) requires that specified tolerance levels is to be Register document in support of this EPA explain the reasons for departing determined by measuring only the action. from the Codex level. specific compounds mentioned in the The Codex has not established MRLs tolerance expression. IV. Other Considerations for clodinafop-propargyl in or on any V. Conclusion A. Analytical Enforcement Methodology commodities. Therefore, the established tolerance C. Response to Comments An analytical method using high- for residues of clodinafop-propargyl in performance liquid chromatography EPA received an anonymous or on wheat, grain is reduced from 0.1 with tandem mass spectrometry comment in response to the Notice of to 0.02 ppm. detection (LC/MS/MS), Enviro-Test Filing that objected to the proposed Laboratories Report No. MS 247 tolerance petition. The commenter VI. Statutory and Executive Order (Method MS 247) was submitted in stated that the objection was to the Reviews support of reducing the tolerance for ‘‘Syngenta application to increase [the This final rule establishes tolerances wheat grain. tolerance] from .01 to .02 ppm’’. under FFDCA section 408(d) in This LC/MS/MS method has a lower Because this action is to decrease the response to a petition submitted to the LOQ than the current HPLC–UV tolerance from 0.1 to 0.02 ppm, it is Agency. The Office of Management and
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Budget (OMB) has exempted these types 12(d) of the National Technology ENVIRONMENTAL PROTECTION of actions from review under Executive Transfer and Advancement Act of 1995 AGENCY Order 12866, entitled ‘‘Regulatory (NTTAA) (15 U.S.C. 272 note). Planning and Review’’ (58 FR 51735, 40 CFR Part 180 VII. Congressional Review Act October 4, 1993). Because this final rule [EPA–HQ–OPP–2010–0458; FRL–9370–8] has been exempted from review under Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), EPA will Executive Order 12866, this final rule is Picoxystrobin; Pesticide Tolerances not subject to Executive Order 13211, submit a report containing this rule and entitled ‘‘Actions Concerning other required information to the U.S. AGENCY: Environmental Protection Regulations That Significantly Affect Senate, the U.S. House of Agency (EPA). Energy Supply, Distribution, or Use’’ (66 Representatives, and the Comptroller ACTION: Final rule. FR 28355, May 22, 2001) or Executive General of the United States prior to Order 13045, entitled ‘‘Protection of publication of the rule in the Federal SUMMARY: This regulation establishes Children from Environmental Health Register. This action is not a ‘‘major tolerances for residues of picoxystrobin Risks and Safety Risks’’ (62 FR 19885, rule’’ as defined by 5 U.S.C. 804(2). in or on multiple commodities which April 23, 1997). This final rule does not List of Subjects in 40 CFR Part 180 are identified and discussed later in this contain any information collections document. E.I. du Pont de Nemours & subject to OMB approval under the Environmental protection, Company requested these tolerances Paperwork Reduction Act (PRA) (44 Administrative practice and procedure, under the Federal Food, Drug, and U.S.C. 3501 et seq.), nor does it require Agricultural commodities, Pesticides Cosmetic Act (FFDCA). and pests, Reporting and recordkeeping any special considerations under DATES: requirements. This regulation is effective Executive Order 12898, entitled December 5, 2012. Objections and ‘‘Federal Actions to Address Dated: November 27, 2012. requests for hearings must be received Environmental Justice in Minority G. Jeffrey Herndon, on or before February 4, 2013, and must Populations and Low-Income Acting Director, Registration Division, Office be filed in accordance with the Populations’’ (59 FR 7629, February 16, of Pesticide Programs. instructions provided in 40 CFR part 1994). Therefore, 40 CFR chapter I is 178 (see also Unit I.C. of the Since tolerances and exemptions that amended as follows: SUPPLEMENTARY INFORMATION). are established on the basis of a petition ADDRESSES: The docket for this action, under FFDCA section 408(d), such as PART 180—[AMENDED] the tolerance in this final rule, do not identified by docket identification (ID) require the issuance of a proposed rule, ■ 1. The authority citation for part 180 number EPA–HQ–OPP–2010–0458, is the requirements of the Regulatory continues to read as follows: available at http://www.regulations.gov Flexibility Act (RFA) (5 U.S.C. 601 et or at the Office of Pesticide Programs Authority: 21 U.S.C. 321(q), 346a and 371. Regulatory Public Docket (OPP Docket) seq.), do not apply. ■ 2. In § 180.559, in paragraph (a), This final rule directly regulates in the Environmental Protection Agency revise the introductory text; and in the growers, food processors, food handlers, Docket Center (EPA/DC), EPA West table, revise the entry for ‘‘Wheat, grain’’ and food retailers, not States or tribes, Bldg., Rm. 3334, 1301 Constitution Ave. to read as follows: nor does this action alter the NW., Washington, DC 20460–0001. The relationships or distribution of power § 180.559 Clodinafop-propargyl; Public Reading Room is open from 8:30 and responsibilities established by tolerances for residues. a.m. to 4:30 p.m., Monday through Congress in the preemption provisions (a) General. Tolerances are Friday, excluding legal holidays. The of FFDCA section 408(n)(4). As such, established for clodinafop-propargyl, telephone number for the Public the Agency has determined that this including its metabolites and Reading Room is (202) 566–1744, and action will not have a substantial direct degradates, in or on the commodities in the telephone number for the OPP effect on States or tribal governments, the following table. Compliance with Docket is (703) 305–5805. Please review on the relationship between the national the tolerance levels specified in the the visitor instructions and additional government and the States or tribal following table is to be determined by information about the docket available governments, or on the distribution of measuring only clodinafop-propargyl at http://www.epa.gov/dockets. power and responsibilities among the [(2R)-2-[4-[(5-chloro-3-fluoro-2- FOR FURTHER INFORMATION CONTACT: various levels of government or between pyridinyl)oxy]phenoxy]propanoic acid, Grant Rowland, Registration Division the Federal Government and Indian 2-propynyl ester] and its metabolite (7505P), Office of Pesticide Programs, tribes. Thus, the Agency has determined clodinafop [(2R)-2-[4-[(5-chloro-3- Environmental Protection Agency, 1200 that Executive Order 13132, entitled fluoro-2- Pennsylvania Ave. NW., Washington, ‘‘Federalism’’ (64 FR 43255, August 10, pyridinyl)oxy]phenoxy]propanoic acid]. DC 20460–0001; telephone number: 1999) and Executive Order 13175, (703) 347–0254; email address: entitled ‘‘Consultation and Coordination Commodity Parts per [email protected]. with Indian Tribal Governments’’ (65 FR million SUPPLEMENTARY INFORMATION: 67249, November 9, 2000) do not apply to this final rule. In addition, this final I. General Information ***** rule does not impose any enforceable A. Does this action apply to me? duty or contain any unfunded mandate Wheat, grain ...... 0.02 as described under Title II of the You may be potentially affected by Unfunded Mandates Reform Act of 1995 ***** this action if you are an agricultural (UMRA) (2 U.S.C. 1501 et seq.). producer, food manufacturer, or This action does not involve any pesticide manufacturer. The following technical standards that would require * * * * * list of North American Industrial Agency consideration of voluntary [FR Doc. 2012–29248 Filed 12–4–12; 8:45 am] Classification System (NAICS) codes is consensus standards pursuant to section BILLING CODE 6560–50–P not intended to be exhaustive, but rather
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provides a guide to help readers • Hand Delivery: To make special result from aggregate exposure to the determine whether this document arrangements for hand delivery or pesticide chemical residue, including applies to them. Potentially affected delivery of boxed information, please all anticipated dietary exposures and all entities may include: follow the instructions at http:// other exposures for which there is • Crop production (NAICS code 111). www.epa.gov/dockets/contacts.htm. reliable information.’’ This includes • Animal production (NAICS code Additional instructions on exposure through drinking water and in 112). commenting or visiting the docket, residential settings, but does not include • Food manufacturing (NAICS code along with more information about occupational exposure. Section 311). dockets generally, is available at 408(b)(2)(C) of FFDCA requires EPA to • Pesticide manufacturing (NAICS http://www.epa.gov/dockets. give special consideration to exposure code 32532). II. Summary of Petitioned-for Tolerance of infants and children to the pesticide chemical residue in establishing a B. How can I get electronic access to In the Federal Register of June 23, tolerance and to ‘‘ensure that there is a other related information? 2010 (75 FR 35801) (FRL–8831–3), EPA reasonable certainty that no harm will issued a notice pursuant to FFDCA You may access a frequently updated result to infants and children from section 408(d)(3), 21 U.S.C. 346a(d)(3), electronic version of EPA’s tolerance aggregate exposure to the pesticide announcing the filing of a pesticide regulations at 40 CFR part 180 through chemical residue * * *.’’ petition (PP 0F7722) by E.I. du Pont de Consistent with FFDCA section the Government Printing Office’s e-CFR Nemours & Company 1007 Market site at http://ecfr.gpoaccess.gov/cgi/t/ 408(b)(2)(D), and the factors specified in Street, Wilmington, DE 19898, proposed FFDCA section 408(b)(2)(D), EPA has text/text-idx?&c=ecfr&tpl=/ecfrbrowse/ to establish tolerances in 40 CFR part Title40/40tab_02.tpl. reviewed the available scientific data 180 for residues of the fungicide and other relevant information in C. How can I file an objection or hearing picoxystrobin, in or on the cereal grains support of this action. EPA has request? crop group (crop group 15) except rice sufficient data to assess the hazards of at 0.2 parts per million(ppm); the cereal Under FFDCA section 408(g), 21 and to make a determination on forage and fodder crop group (crop aggregate exposure for picoxystrobin, U.S.C. 346a, any person may file an group 16) except rice at 13.0 ppm; cereal objection to any aspect of this regulation including exposure resulting from the grain aspirated grain fractions at 4.5 tolerances established by this action. and may also request a hearing on those ppm; cereal grain oil at 1.5 ppm; the dry objections. You must file your objection EPA’s assessment of exposures and risks legume vegetables crop subgroup (crop associated with picoxystrobin follows. or request a hearing on this regulation group 6, subgroup C) except soybean at in accordance with the instructions 0.1 ppm; the legume vegetable foliage A. Toxicological Profile provided in 40 CFR part 178. To ensure crop group (crop group 7) at 18.0 ppm; EPA has evaluated the available proper receipt by EPA, you must soybean seed at 0.05 ppm; soybean toxicity data and considered its validity, identify docket ID number EPA–HQ– forage at 0.8 ppm; soybean hay at 2.5 completeness, and reliability as well as OPP–2010–0458 in the subject line on ppm; soybean aspirated grain fractions the relationship of the results of the the first page of your submission. All at 3.2 ppm; soybean hulls at 10.0 ppm; studies to human risk. EPA has also objections and requests for a hearing soybean oil at 0.05 ppm; canola seed at considered available information must be in writing, and must be 0.05 ppm; meat and meat byproducts concerning the variability of the received by the Hearing Clerk on or except liver of cattle, goat, hog, horse, sensitivities of major identifiable before February 4, 2013. Addresses for and sheep at 0.01 ppm; fat of cattle, subgroups of consumers, including mail and hand delivery of objections goat, hog, horse, and sheep at 0.05 ppm; infants and children. and hearing requests are provided in 40 liver of cattle, goat, hog, horse, and The most consistently observed CFR 178.25(b). sheep at 0.8 ppm; meat, meat effects of picoxystrobin exposure across In addition to filing an objection or byproducts, fat, and eggs of poultry at species, genders, and treatment hearing request with the Hearing Clerk 0.01 ppm; milk at 0.01 ppm, and cream, durations were decreased body weight, as described in 40 CFR part 178, please at 0.03 ppm. That notice referenced a body weight gain and food submit a copy of the filing (excluding summary of the petition prepared by E.I. consumption, and diarrhea. The effects any Confidential Business Information du Pont de Nemours & Company, the on body weight and food consumption (CBI)) for inclusion in the public docket. registrant, which is available in the were consistent with the commonly Information not marked confidential docket, http://www.regulations.gov. observed findings for compounds which pursuant to 40 CFR part 2 may be There were no comments received in disrupt mitochondria respiration system disclosed publicly by EPA without prior response to the notice of filing. and the resulting disruption of energy notice. Submit the non-CBI copy of your Based upon review of the data production. Similar to some other objection or hearing request, identified supporting the petition, EPA has revised strobilurins, picoxystrobin causes by docket ID number EPA–HQ–OPP– the proposed tolerance levels for several intestinal disturbance as indicated by 2010–0458, by one of the following commodities. The reasons for these increased incidence of diarrhea or methods: changes are explained in Unit IV.C. duodenum mucosal thickening. These • Federal eRulemaking Portal: http:// intestinal effects appeared to be related www.regulations.gov. Follow the online III. Aggregate Risk Assessment and to the irritating action on the mucus instructions for submitting comments. Determination of Safety membranes as demonstrated by the Do not submit electronically any Section 408(b)(2)(A)(i) of FFDCA severe eye irritation effect seen in the information you consider to be CBI or allows EPA to establish a tolerance (the primary eye irritation study on other information whose disclosure is legal limit for a pesticide chemical picoxystrobin. restricted by statute. residue in or on a food) only if EPA Picoxystrobin caused changes in • Mail: OPP Docket, Environmental determines that the tolerance is ‘‘safe.’’ behavioral effects in both the acute and Protection Agency Docket Center (EPA/ Section 408(b)(2)(A)(ii) of FFDCA subchronic neurotoxicity studies with DC), (28221T), 1200 Pennsylvania Ave. defines ‘‘safe’’ to mean that ‘‘there is a no neuropathological findings. The NW., Washington, DC 20460–0001. reasonable certainty that no harm will effects observed with acute exposure
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were transient (i.e. lasted for a day) and assessment of carcinogenicity of that have a threshold below which there consisted of low arousal and decreased picoxystrobin. There is no mutagenic is no appreciable risk, the toxicological motor activities in males and decreased concern. Based on these data, EPA has POD is used as the basis for derivation rearing in females, and, with subchronic concluded that quantification of cancer of reference values for risk assessment. exposure, included decreased male risk based on a non-linear approach PODs are developed based on a careful forelimb grip and increased female (i.e., reference dose (RfD) will analysis of the doses in each hindlimb splay. In the absence of any adequately account for all chronic toxicological study to determine the neuropathological findings, the toxicity, including carcinogenicity, that dose at which no adverse effects are behavioral effects were attributed to which could result from exposure to observed (the NOAEL) and the lowest general malaise (probably related to picoxystrobin. Specific information on dose at which adverse effects of concern energy production perturbations) as the studies received and the nature of are identified (the LOAEL). Uncertainty/ evidenced by the associated decreased the adverse effects caused by safety factors are used in conjunction body weight and body weight gain. picoxystrobin as well as the no- with the POD to calculate a safe In the rat and rabbit developmental observed-adverse-effect-level (NOAEL) exposure level—generally referred to as toxicity studies, developmental toxicity and the lowest-observed-adverse-effect- a population-adjusted dose (PAD) or a was expressed as skeletal variations at level (LOAEL) from the toxicity studies reference dose (RfD)—and a safe margin doses causing maternal toxicity (i.e. can be found at http:// of exposure (MOE). For non-threshold diarrhea, decreased body weight, body www.regulations.gov in document, risks, the Agency assumes that any weight gain, food consumption, and ‘‘Picoxystrobin: Human Health Risk amount of exposure will lead to some clinical signs of toxicity). In the Assessment for Proposed Uses on degree of risk. Thus, the Agency reproduction study, parental/systemic Canola, Cereal Grains Except Rice, Dried estimates risk in terms of the probability toxicity manifested as decreased body Shelled Peas and Beans, and Soybeans.’’ of an occurrence of the adverse effect weight and body weight gain in both the at pages 17–22 in docket ID number expected in a lifetime. For more parents and offspring; no reproductive EPA–HQ–OPP–2010–0458. information on the general principles toxicity was seen. EPA uses in risk characterization and a B. Toxicological Points of Departure/ Picoxystrobin induced a treatment- complete description of the risk Levels of Concern related increase in testicular interstitial assessment process, see http:// cell benign tumors only in the high dose Once a pesticide’s toxicological www.epa.gov/pesticides/factsheets/ male rats. No tumors were seen in profile is determined, EPA identifies riskassess.htm. A summary of the females; no treatment related-increase in toxicological points of departure (POD) toxicological endpoints for any type of tumor incidence was seen in and levels of concern to use in picoxystrobin used for human risk male and female mice at doses that were evaluating the risk posed by human assessment is shown in Table 1 of this considered to be adequate for the exposure to the pesticide. For hazards unit.
TABLE 1—SUMMARY OF TOXICOLOGICAL DOSES AND ENDPOINTS FOR PICOXYSTROBIN FOR USE IN HUMAN HEALTH RISK ASSESSMENT
Point of departure and RfD, PAD, LOC for risk Exposure/scenario uncertainty/safety factors assessment Study and toxicological effects
Acute dietary (Females 13–49 There were no appropriate toxicological effects attributable to a single exposure (dose) observed in avail- years of age). able toxicity studies. Therefore, a dose and endpoint were not identified for this risk assessment.
Acute dietary (General population LOAEL = 200 mg/kg/day ...... aRfD = 0.2 mg/kg/day ...... Acute Neurotoxicity—Rat including infants and children). UFA = 10x ...... aPAD = 0.2 mg/kg/day ...... LOAEL = 200 mg/kg/day based UFH = 10x ...... on low arousal and decreased FQPA SF = 10x ...... motor activities in males, de- creased rearing in females, in addition to decreased body- weight gain and food consump- tion in both sexes on Day 1. Chronic dietary (All populations) ... NOAEL= 4.6 mg/kg/day ...... cRfD = 0.046 mg/kg/day ...... Chronic Toxicity—Dog UFA = 10x ...... cPAD = 0.046 mg/kg/day ...... LOAEL = 15.7 mg/kg/day based UFH = 10x ...... on decreased body weights, FQPA SF = 1x ...... weight gains, and food con- sumption in both sexes.
Cancer (Oral, dermal, inhalation) .. Classification: ‘‘Suggestive evidence of Carcinogenic Potential’’ based on tumors in one species and one sex: A treatment-related increase in testicular interstitial cell benign tumors in high dose male rats. Quan- tification of cancer is based on a non-linear (i.e. RfD) approach. FQPA SF = Food Quality Protection Act Safety Factor. LOAEL = lowest-observed-adverse-effect-level. LOC = level of concern mg/kg/day = milligram/kilogram/day. NOAEL = no-observed-adverse-effect-level. PAD = population adjusted dose (a = acute, c = chronic). RfD = reference dose. UF = uncertainty factor. UFA = extrapolation from animal to human (interspecies). UFH = potential variation in sensitivity among members of the human population (intraspecies).
C. Exposure Assessment considered exposure under the i. Acute exposure. Quantitative acute petitioned-for tolerances. EPA assessed dietary exposure and risk assessments 1. Dietary exposure from food and dietary exposures from picoxystrobin in are performed for a food-use pesticide, feed uses. In evaluating dietary food as follows: if a toxicological study has indicated the exposure to picoxystrobin, EPA possibility of an effect of concern
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occurring as a result of a 1-day or single 408(b)(2)(E) of FFDCA authorizes EPA specific use patterns that would result exposure. to use available data and information on in residential exposure. Such effects were identified for the anticipated residue levels of 4. Cumulative effects from substances picoxystrobin. In estimating acute pesticide residues in food and the actual with a common mechanism of toxicity. dietary exposure for the general levels of pesticide residues that have Section 408(b)(2)(D)(v) of FFDCA population, including infants and been measured in food. If EPA relies on requires that, when considering whether children, EPA used food consumption such information, EPA must require to establish, modify, or revoke a information from the U.S. Department of pursuant to FFDCA section 408(f)(1) tolerance, the Agency consider Agriculture (USDA) National Health and that data be provided 5 years after the ‘‘available information’’ concerning the Nutrition Examination Survey, What We tolerance is established, modified, or cumulative effects of a particular Eat in America, (NHANES/WWEIA). As left in effect, demonstrating that the pesticide’s residues and ‘‘other to residue levels in food, EPA’s levels in food are not above the levels substances that have a common assumption of this dietary assessment anticipated. For the present action, EPA mechanism of toxicity.’’ included total highest field trial total will issue such data call-ins as are EPA has not found picoxystrobin to residues (parent and metabolite) for all required by FFDCA section 408(b)(2)(E) share a common mechanism of toxicity proposed crops. In addition, 100 percent and authorized under FFDCA section with any other substances, and crop treated (PCT) was assumed. Dietary 408(f)(1). Data will be required to be picoxystrobin does not appear to Exposure Evaluation Model (DEEM) submitted no later than 5 years from the produce a toxic metabolite produced by version 7.81 default processing factors date of issuance of these tolerances. other substances. For the purposes of were assumed except for where 2. Dietary exposure from drinking this tolerance action, therefore, EPA has tolerances were established for water. The Agency used screening level assumed that picoxystrobin does not processed commodities or when water exposure models in the dietary have a common mechanism of toxicity processing studies showed no exposure analysis and risk assessment with other substances. For information concentration. A separate tolerance was for picoxystrobin in drinking water. regarding EPA’s efforts to determine set for wheat bran, wheat germ, barley These simulation models take into which chemicals have a common bran and corn oil. Tolerance levels were account data on the physical, chemical, mechanism of toxicity and to evaluate used for livestock commodities. and fate/transport characteristics of the cumulative effects of such chemicals, see EPA’s Web site at http:// ii. Chronic exposure. In conducting picoxystrobin. Further information the chronic dietary exposure assessment www.epa.gov/pesticides/cumulative. regarding EPA drinking water models EPA used the food consumption data used in pesticide exposure assessment D. Safety Factor for Infants and from the USDA 1994–1996 and 1998 can be found at http://www.epa.gov/ Children Continuing Survey of Food Intake by oppefed1/models/water/index.htm. Individuals (CSFII). As to residue levels 1. In general. Section 408(b)(2)(C) of The drinking water assessment used a in food, EPA used total highest average FFDCA provides that EPA shall apply field trial total residues (parent and total toxic residue approach to include an additional tenfold (10X) margin of metabolite) for all proposed crops. In parent and the major environmental safety for infants and children in the addition, 100 PCT was assumed. DEEM degradates: Compound 2, Compound 3, case of threshold effects to account for version 7.81 default processing factors Compound 7, and Compound 8. Based prenatal and postnatal toxicity and the were assumed except for where on the Pesticide Root Zone Model/ completeness of the database on toxicity tolerances were established for Exposure Analysis Modeling System and exposure unless EPA determines processed commodities. Tolerance and Screening Concentration in Ground based on reliable data that a different levels were used for livestock Water models, the estimated drinking margin of safety will be safe for infants commodities. water concentrations of picoxystrobin and children. This additional margin of iii. Cancer. EPA determines whether for: safety is commonly referred to as the • quantitative cancer exposure and risk Acute exposures are estimated to be FQPA Safety Factor (SF). In applying assessments are appropriate for a food- 7.95 parts per billion (ppb) for surface this provision, EPA either retains the use pesticide based on the weight of the water and 0.041 ppb for ground water. default value of 10X, or uses a different evidence from cancer studies and other • Chronic exposures for non-cancer additional safety factor when reliable relevant data. Cancer risk is quantified assessments are estimated to be 2.41 data available to EPA support the choice using a linear or nonlinear approach. If ppb for surface water and 0.041 ppb for of a different factor. sufficient information on the ground water. 2. Prenatal and postnatal sensitivity. carcinogenic mode of action is available, Modeled estimates of drinking water The prenatal and postnatal toxicity a threshold or nonlinear approach is concentrations were directly entered studies include rat and rabbit prenatal used and a cancer RfD is calculated into the dietary exposure model. For development studies, in addition to based on an earlier noncancer key event. acute dietary risk assessment, the water reproduction and fertility effects studies If carcinogenic mode of action data is concentration value of 7.95 ppb was in rats. No evidence of increased not available, or if the mode of action used to assess the contribution to qualitative or quantitative data determines a mutagenic mode of drinking water. For chronic dietary risk susceptibility/sensitivity was seen in action, a default linear cancer slope assessment, the water concentration of any of these studies. factor approach is utilized. Based on the value 2.41 ppb was used to assess the 3. Conclusion. EPA has determined data summarized in Unit III.A., EPA has contribution to drinking water. that reliable data show the safety of concluded that a nonlinear RfD 3. From non-dietary exposure. The infants and children would be approach is appropriate for assessing term ‘‘residential exposure’’ is used in adequately protected if the FQPA Safety cancer risk for picoxystrobin. Cancer this document to refer to non- factor were reduced to 1X for chronic risk was assessed using the same occupational, non-dietary exposure dietary exposure. For acute dietary exposure estimates as discussed in Unit (e.g., for lawn and garden pest control, exposures for the general population, III.C.1.ii., chronic exposure. indoor pest control, termiticides, and including infants and children where iv. Anticipated residue and percent flea and tick control on pets). the acute neurotoxicity is study used as crop treated (PCT) information. Section Picoxystrobin is not registered for any an endpoint for risk assessment, EPA is
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retaining a 10X FQPA safety factor. That the cPAD for children 1–2 years old, the C. Revisions to Petitioned-for Tolerances decision is based on the following population group receiving the greatest The Agency has revised several of the findings: exposure. There are no residential uses commodity definitions and modified the i. Although all required toxicity for picoxystrobin. levels for which tolerances are being studies for picoxystrobin have been 3. Short- and intermediate—term established as follows: Vegetable, submitted, the acute neurotoxicity study risks. Short- and intermediate— term legume, dried shelled, except soybean, used for acute dietary risk assessment risk aggregate exposures take into (group 6C) at 0.1 ppm is revised to pea did not demonstrate a NOAEL, and a account residential exposure plus and bean, dried shelled, except soybean, LOAEL was used as an endpoint. chronic exposure to food and water subgroup 6C at 0.06 ppm; soybean Therefore, the 10X FQPA safety factor (considered to be a background forage at 0.08 ppm is revised to soybean, was retained for use of a LOAEL to exposure level). Because no short-term forage at 1.0 ppm; soybean hay at 2.5 extrapolate a NOAEL. or intermediate-term adverse effects ppm is revised to soybean, hay at 3.0 ii. There is no indication that were identified, picoxystrobin is not picoxystrobin is a neurotoxic chemical ppm; soybean hulls at 10 ppm is revised expected to pose a short- or to soybean, hulls at 0.2 ppm; canola, and there is no need for a intermediate— term risk. developmental neurotoxicity study or seed at 0.05 ppm is revised to rapeseed 4. Aggregate cancer risk for U.S. subgroup 20A at 0.08 ppm; barley, grain additional UFs to account for population. The Agency considers the neurotoxicity. which was proposed as crop group 15 chronic aggregate risk assessment, at 0.2 ppm is revised to barley, grain at iii. There is no evidence that making use of the cPAD, to be protective picoxystrobin results in increased 0.3 ppm. Tolerance for soybeans oil was of any aggregate cancer risk. proposed at 0.8 ppm, but EPA has susceptibility in in utero rats or rabbits 5. Determination of safety. Based on in the prenatal developmental studies or determined that a tolerance is not these risk assessments, EPA concludes needed. These tolerances have been in young rats in the 2-generation that there is a reasonable certainty that reproduction study. revised based on the use of the no harm will result to the general Organization for Economic Co-operation iv. There are no residual uncertainties population or to infants and children identified in the exposure databases. and development tolerance calculation from aggregate exposure to procedure (OECD TCP). Further, EPA The dietary food exposure assessments picoxystrobin residues. were performed based on 100 PCT, total determined that the proposed tolerance highest field trial total residues for acute IV. Other Considerations for crop group 15 (grain, cereal, except rice), and crop subgroup 7A group/ exposures, total highest average field A. Analytical Enforcement Methodology trial total residues for chronic subgroup (vegetable, foliage of legume) exposures, and tolerance levels for Adequate enforcement methodology, each be modified and established as livestock commodities. EPA made (a liquid chromatography tandem mass follows: Grain, cereal, group 15, except conservative (protective) assumptions in spectrometry method (LC/MS/MS), is rice and barley at 0.04 ppm; vegetable, the ground and surface water modeling available to enforce the tolerance foliage of legume, except soybean, used to assess exposure to picoxystrobin expression. subgroup 7A at 40.0 ppm. Crop group in drinking water. These assessments The method may be requested from: 16 (grain, cereal, forage and fodder will not underestimate the exposure and Chief, Analytical Chemistry Branch, except rice) however, should each be risks posed by picoxystrobin. Environmental Science Center, 701 broken up and established with Mapes Rd., Ft. Meade, MD 20755–5350; individual tolerances. These tolerances E. Aggregate Risks and Determination of telephone number: (410) 305–2905; are revised as follows: Grain, cereal, Safety email address: forage, fodder, and straw, group 16, EPA determines whether acute and [email protected]. straw at 2.0 ppm; grain, cereal, forage fodder, and straw, group 16, stover at chronic dietary pesticide exposures are B. International Residue Limits safe by comparing aggregate exposure 10.0 ppm; grain, cereal, forage, fodder estimates to the acute PAD (aPAD) and In making its tolerance decisions, EPA and straw group 16, hay at 5.0 ppm; chronic PAD (cPAD). For linear cancer seeks to harmonize U.S. tolerances with grain, cereal forage, fodder, and straw, risks, EPA calculates the lifetime international standards whenever group 16, forage at 15.0 ppm; probability of acquiring cancer given the possible, consistent with U.S. food Based on the corn processing study, estimated aggregate exposure. Short-, safety standards and agricultural the proposed tolerance for cereal grain intermediate-, and chronic-term risks practices. EPA considers the oil at 1.5 ppm is revised to corn, field, are evaluated by comparing the international maximum residue limits refined oil at 0.07 ppm. estimated aggregate food, water, and (MRLs) established by the Codex The proposed tolerance for cereal residential exposure to the appropriate Alimentarius Commission (Codex), as (wheat), aspirated grain fractions at 4.5 PODs to ensure that an adequate MOE required by FFDCA section 408(b)(4). ppm is being established as grain, exists. The Codex Alimentarius is a joint aspirated grain fractions at 10 ppm; 1. Acute risk. Using the exposure United Nations Food and Agriculture soybean, aspirated grain fractions at 3.2 assumptions discussed in this unit for Organization/World Health ppm is revised to grain, aspirated grain acute exposure, the acute dietary Organization food standards program, fractions at 10 ppm as well. exposure from food and water to and it is recognized as an international Though not proposed, the Agency has picoxystrobin will occupy 1.3% of the food safety standards-setting determined it was appropriate to aPAD for children 1–2 years old, the organization in trade agreements to establish tolerances for wheat, bran at population group receiving the greatest which the United States is a party. EPA 0.06 ppm; wheat, germ at 0.09 ppm; and exposure. may establish a tolerance that is barely, bran at 0.5 ppm. 2. Chronic risk. Using the exposure different from a Codex MRL; however, EPA also revised livestock tolerances assumptions described in this unit for FFDCA section 408(b)(4) requires that as follows, based on the calculated chronic exposure, EPA has concluded EPA explain the reasons for departing dietary burden to account for the that chronic exposure to picoxystrobin from the Codex level. No Codex MRLs transfer of residues to livestock matrices from food and water will utilize 2.8% of have been established for picoxystrobin. (tissues and milk): Cattle, fat from 0.05
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ppm to 0.01 ppm; goat, fat from 0.05 VI. Statutory and Executive Order as described under Title II of the ppm to 0.01 ppm; hog, fat from 0.05 Reviews Unfunded Mandates Reform Act of 1995 ppm to 0.01 ppm. horse, fat from 0.5 This final rule establishes tolerances (UMRA) (2 U.S.C. 1501 et seq.). ppm to 0.01 ppm; sheep, fat from 0.05 under FFDCA section 408(d) in This action does not involve any ppm to 0.01 ppm; horse, liver at 0.8 response to a petition submitted to the technical standards that would require ppm and horse, meat byproduct, except Agency. The Office of Management and Agency consideration of voluntary liver at 0.01 ppm were combined as Budget (OMB) has exempted these types consensus standards pursuant to section horse, meat byproduct at 0.01 ppm. of actions from review under Executive 12(d) of the National Technology Sheep, liver at 0.8 ppm and sheep, meat Order 12866, entitled ‘‘Regulatory Transfer and Advancement Act of 1995 byproducts, except liver at 0.01 ppm Planning and Review’’ (58 FR 51735, (NTTAA) (15 U.S.C. 272 note). were combined as sheep, meat October 4, 1993). Because this final rule VII. Congressional Review Act byproducts, at 0.01 ppm. Goat, liver at has been exempted from review under Pursuant to the Congressional Review 0.8 ppm and goat, meat byproducts, Executive Order 12866, this final rule is Act (5 U.S.C. 801 et seq.), EPA will except liver at 0.01 ppm were combined not subject to Executive Order 13211, submit a report containing this rule and as goat, meat byproducts at 0.01 ppm.; entitled ‘‘Actions Concerning other required information to the U.S. hog, liver at 0.8 ppm and hog, meat Regulations That Significantly Affect Senate, the U.S. House of byproducts, except liver at 0.01 were Energy Supply, Distribution, or Use’’ (66 Representatives, and the Comptroller combined as hog, meat byproducts at FR 28355, May 22, 2001) or Executive General of the United States prior to 0.01 ppm. Cattle, liver at 0.8 ppm and Order 13045, entitled ‘‘Protection of publication of the rule in the Federal cattle, meat byproduct, except liver at Children from Environmental Health Register. This action is not a ‘‘major 0.01 ppm were combined as cattle, meat Risks and Safety Risks’’ (62 FR 19885, rule’’ as defined by 5 U.S.C. 804(2). byproducts at 0.01 ppm. Finally a April 23, 1997). This final rule does not tolerance was proposed on cream at 0.03 contain any information collections List of Subjects in 40 CFR Part 180 ppm; however EPA has determined that subject to OMB approval under the Environmental protection, no tolerance is needed. Paperwork Reduction Act (PRA) (44 Administrative practice and procedure, U.S.C. 3501 et seq.), nor does it require V. Conclusion Agricultural commodities, Pesticides any special considerations under and pests, Reporting and recordkeeping Executive Order 12898, entitled Therefore, tolerances are established requirements. ‘‘Federal Actions to Address for residues of picoxystrobin, methyl Environmental Justice in Minority Dated: November 26, 2012. (aE)-a-(methoxymethylene)-2-[[[6- Populations and Low-Income Steven Bradbury, (trifluoromethyl)-2- Populations’’ (59 FR 7629, February 16, Director, Office of Pesticides Programs. pyridinyl]oxy]methyl]benzeneacetate in 1994). or on barley, bran at 0.5 ppm; barley, Therefore, 40 CFR chapter I is Since tolerances and exemptions that amended as follows: grain at 0.3 ppm; rapeseed subgroup are established on the basis of a petition 20A at 0.08 ppm; cattle, fat at 0.01 ppm; under FFDCA section 408(d), such as PART 180—[AMENDED] cattle, meat at 0.01 ppm; cattle, meat the tolerance in this final rule, do not byproducts, at 0.01 ppm; corn, field, require the issuance of a proposed rule, ■ 1. The authority citation for part 180 refined oil at 0.07 ppm; goat, fat at 0.01 the requirements of the Regulatory continues to read as follows: ppm; goat, meat at 0.01 ppm; goat meat Flexibility Act (RFA) (5 U.S.C. 601 et Authority: 21 U.S.C. 321(q), 346a and 371. byproduct, at 0.01 ppm; grain, aspirated seq.), do not apply. ■ grain fractions at 10 ppm; grain, cereal, This final rule directly regulates 2. Add § 180.669 to subpart C to read group 15, except rice and barely at 0.04 growers, food processors, food handlers, as follows: ppm; grain, cereal, forage, fodder, and and food retailers, not States or tribes, § 180.669 Picoxystrobin; tolerances for straw, group 16, hay at 5.0 ppm; grain, nor does this action alter the residues. cereal, forage, fodder, and straw, group relationships or distribution of power (a) General. Tolerances are 16, forage at 15 ppm; grain, cereal, and responsibilities established by forage, fodder, and straw group 16, established for residues of the fungicide Congress in the preemption provisions picoxystrobin, including its metabolites stover at 10 ppm; grain, cereal, forage, of FFDCA section 408(n)(4). As such, and degradates, in or on the fodder, and straw, group 16, straw at 2 the Agency has determined that this commodities listed below. Compliance ppm; hog, fat at 0.01 ppm; hog, meat at action will not have a substantial direct with the tolerance levels specified 0.01 ppm; hog, meat byproducts, at 0.01 effect on States or tribal governments, below is to be determined by measuring ppm; horse, fat at 0.01 ppm; horse, meat on the relationship between the national only picoxystrobin, methyl (aE)-a- at 0.01 ppm; horse, meat byproducts, at government and the States or tribal (methoxymethylene)-2-[[[6- 0.01 ppm; milk at 0.01 ppm; pea and governments, or on the distribution of (trifluoromethyl)-2- bean, dried shelled, except soybean, power and responsibilities among the pyridinyl]oxy]methyl]benzeneacetate. subgroup 6C at 0.06 ppm; eggs at 0.01 various levels of government or between ppm; poultry, fat at 0.01 ppm; poultry, the Federal Government and Indian Parts per meat at 0.01 ppm; poultry, meat tribes. Thus, the Agency has determined Commodity million byproducts at 0.01 ppm; sheep, fat at that Executive Order 13132, entitled 0.01 ppm; sheep, meat at 0.01 ppm; ‘‘Federalism’’ (64 FR 43255, August 10, Barley, bran ...... 0.5 sheep, meat byproducts, at 0.01 ppm; 1999) and Executive Order 13175, Barley, grain ...... 0.3 soybean, forage at 1 ppm; soybean, hay entitled ‘‘Consultation and Coordination Cattle, fat ...... 0.01 Cattle, meat ...... 0.01 at 3 ppm; soybean, hulls at 0.2 ppm; with Indian Tribal Governments’’ (65 FR Cattle, meat byproducts ...... 0.01 soybean, seed at 0.05 ppm; vegetable, 67249, November 9, 2000) do not apply Corn, field, refined oil ...... 0.07 foliage of legume, except soybean, to this final rule. In addition, this final Eggs ...... 0 .01 subgroup 7A at 40 ppm; wheat, bran at rule does not impose any enforceable Goat, fat ...... 0.01 0.06 ppm; and wheat, germ at 0.09 ppm. duty or contain any unfunded mandate Goat, meat ...... 0 .01
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Parts per LLC requested these tolerances under the Government Printing Office’s e-CFR Commodity million the Federal Food, Drug, and Cosmetic site at http://ecfr.gpoaccess.gov/cgi/t/ Act (FFDCA). text/text-idx?&c=ecfr&tpl=/ecfrbrowse/ Goat, meat byproducts ...... 0.01 _ DATES: Title40/40tab 02.tpl. Grain, aspirated grain frac- This regulation is effective tions ...... 10 December 5, 2012. Objections and C. How can I file an objection or hearing Grain, cereal, forage, fodder, requests for hearings must be received request? and straw, group 16, forage 15 on or before February 4, 2013, and must Under FFDCA section 408(g), 21 Grain, cereal, forage, fodder, be filed in accordance with the and straw, group 16, hay .... 5 instructions provided in 40 CFR part U.S.C. 346a, any person may file an objection to any aspect of this regulation Grain, cereal, forage, fodder, 178 (see also Unit I.C. of the and may also request a hearing on those and straw, group 16, stover 10 SUPPLEMENTARY INFORMATION). Grain, cereal, forage, fodder, objections. You must file your objection and straw, group 16, straw 2 ADDRESSES: The docket for this action, or request a hearing on this regulation Grain, cereal, group 15, ex- identified by docket identification (ID) in accordance with the instructions cept rice and barley ...... 0.04 number EPA–HQ–OPP–2011–0743, is provided in 40 CFR part 178. To ensure Hog, fat ...... 0 .01 available at http://www.regulations.gov proper receipt by EPA, you must Hog, meat ...... 0.01 or at the Office of Pesticide Programs identify docket ID number EPA–HQ– Hog, meat byproducts ...... 0 .01 Regulatory Public Docket (OPP Docket) Horse, fat ...... 0.01 OPP–2011–0743 in the subject line on in the Environmental Protection Agency the first page of your submission. All Horse, meat ...... 0.01 Docket Center (EPA/DC), EPA West Horse, meat byproducts ...... 0.01 objections and requests for a hearing Milk ...... 0 .01 Bldg., Rm. 3334, 1301 Constitution Ave. must be in writing, and must be Pea and bean, dried shelled, NW., Washington, DC 20460–0001. The received by the Hearing Clerk on or except soybean, subgroup Public Reading Room is open from 8:30 before February 4, 2013. Addresses for 6C ...... 0.06 a.m. to 4:30 p.m., Monday through mail and hand delivery of objections Poultry, fat ...... 0.01 Friday, excluding legal holidays. The and hearing requests are provided in 40 Poultry, meat ...... 0.01 telephone number for the Public CFR 178.25(b). Poultry, meat byproducts ...... 0.01 Reading Room is (202) 566–1744, and In addition to filing an objection or Rapeseed subgroup 20A ...... 0 .08 the telephone number for the OPP hearing request with the Hearing Clerk Sheep, fat ...... 0 .01 Docket is (703) 305–5805. Please review Sheep, meat ...... 0.01 as described in 40 CFR part 178, please Sheep, meat byproducts ...... 0 .01 the visitor instructions and additional submit a copy of the filing (excluding Soybean, forage ...... 1 information about the docket available any Confidential Business Information Soybean, hay ...... 3 at http://www.epa.gov/dockets. (CBI)) for inclusion in the public docket. Soybean, hulls ...... 0 .2 FOR FURTHER INFORMATION CONTACT: Information not marked confidential Soybean, seed ...... 0.05 Tamue L. Gibson, Registration Division pursuant to 40 CFR part 2 may be Vegetable, foliage of legume, (7505P), Office of Pesticide Programs, disclosed publicly by EPA without prior except soybean, subgroup Environmental Protection Agency, 1200 notice. Submit the non-CBI copy of your 7A ...... 40 Wheat, bran ...... 0 .06 Pennsylvania Ave. NW., Washington, objection or hearing request, identified Wheat, germ ...... 0 .09 DC 20460–0001; telephone number: by docket ID number EPA–HQ–OPP– (703) 305–9096; email address: 2011–0743, by one of the following (b) Section 18 emergency exemptions. [email protected]. methods: • [Reserved] SUPPLEMENTARY INFORMATION: Federal eRulemaking Portal: http:// (c) Tolerances with regional www.regulations.gov. Follow the online registrations. [Reserved] I. General Information instructions for submitting comments. (d) Indirect or inadvertent residues. A. Does this action apply to me? Do not submit electronically any [Reserved] information you consider to be CBI or You may be potentially affected by [FR Doc. 2012–29250 Filed 12–4–12; 8:45 am] other information whose disclosure is this action if you are an agricultural restricted by statute. BILLING CODE 6560–50–P producer, food manufacturer, or • Mail: OPP Docket, Environmental pesticide manufacturer. The following Protection Agency Docket Center (EPA/ ENVIRONMENTAL PROTECTION list of North American Industrial DC), (28221T), 1200 Pennsylvania Ave. AGENCY Classification System (NAICS) codes is NW., Washington, DC 20460–0001. not intended to be exhaustive, but rather • Hand Delivery: To make special 40 CFR Part 180 provides a guide to help readers arrangements for hand delivery or determine whether this document delivery of boxed information, please [EPA–HQ–OPP–2011–0743; FRL–9364–7] applies to them. Potentially affected follow the instructions at http:// entities may include: Dodine; Pesticide Tolerances www.epa.gov/dockets/contacts.htm. • Crop production (NAICS code 111). Additional instructions on commenting AGENCY: Environmental Protection • Animal production (NAICS code or visiting the docket, along with more Agency (EPA). 112). information about dockets generally, is ACTION: Final rule. • Food manufacturing (NAICS code available at http://www.epa.gov/ 311). dockets. SUMMARY: This regulation establishes • Pesticide manufacturing (NAICS tolerances for residues of dodine, (N- code 32532). II. Summary of Petitioned-for Tolerance dodecyl guanidine acetate) in or on In the Federal Register of August 22, multiple commodities and also removes B. How can I get electronic access to 2012 (77 FR 50661) (FRL–9358–9), EPA multiple, previously established other related information? issued a notice pursuant to FFDCA tolerances which are identified and You may access a frequently updated section 408(d)(3), 21 U.S.C. 346a(d)(3), discussed later in this document. electronic version of EPA’s tolerance announcing the filing of a pesticide Agriphar S.A., c/o Ceres International regulations at 40 CFR part 180 through petition (PP 1F7872) by Agriphar S.A.,
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c/o Ceres International LLC, 1087 including exposure resulting from the performed, and based on the results it Heartsease Drive, West Chester, PA tolerances established by this action. was concluded that dodine should be 19382. The petition requested that 40 EPA’s assessment of exposures and risks classified as Not Likely to be CFR 180.172 be amended by associated with dodine follows. Carcinogenic to Humans based on the establishing tolerances for residues of following: A. Toxicological Profile the fungicide dodine, (N-dodecyl (1) There was no evidence of tumors guanidine acetate), in or on stone fruits EPA has evaluated the available in male mice or in rats of either sex; (group 12) at 5 parts per million (ppm); toxicity data and considered its validity, (2) In female mice, the increase in tree nuts (group 14) at 0.3 ppm; and completeness, and reliability as well as incidence of combined tumors is almond, hulls at 20 ppm. The petitioner the relationship of the results of the marginal (8.3%) compared to historical also requested that the tolerances in 40 studies to human risk. EPA has also controls (8%), and there were no pre- CFR 180.172 be amended by removing considered available information neoplastic lesions that can be associated established tolerances for residues of concerning the variability of the with the tumor response, and therefore dodine as follows: Cherry, sweet at 3 sensitivities of major identifiable no evidence that the high dose was ppm; cherry, tart at 3 ppm; peach at 5 subgroups of consumers, including associated with further progression to ppm; pecan at 0.3 ppm; and walnut at infants and children. carcinoma; 0.3 ppm. These tolerances would be Dodine is moderately toxic via the (3) There was no evidence of redundant if the crop group tolerances acute oral, dermal and inhalation routes genotoxicity, and therefore no for stone fruits (group 12) and tree nuts of exposure. It is a severe eye irritant mutagenicity concern; and (group 14) are established. That notice and causes severe dermal irritation; it is (4) The Structure Activity referenced a summary of the petition not a skin sensitizer. A definitive target Relationship (SAR) assessment does not prepared by Agriphar S.A., c/o Ceres organ has not been identified for indicate probable carcinogenicity. International LLC, the registrant, which dodine. The most common effects Factors bearing on this weight of the is available in the docket, http:// observed in sub-chronic and chronic evidence determination are described in www.regulations.gov. There were no studies were decreases in food ‘‘Dodine: Human Health Risk comments received in response to the consumption, body weight and/or body Assessment for Proposed Use Bananas notice of filing. weight gain. Possible neurological and Peanuts,’’ pages 20–21 in docket ID Based upon review of the data clinical signs (excessive salivation and number EPA–HQ–OPP–2007–0221, at supporting the petition, EPA has raised hunched posture/hypoactivity) were http://www.regulations.gov. In the the requested tolerance level for observed in chronic studies in rats and absence of carcinogenicity concern, risk almond, hull. The reason for this change mice but were not dose-related or assessment using the chronic is explained in Unit IV.C. statistically significant. Excessive population adjusted dose will be salivation in the chronic study in dogs protective for any chronic toxicity. III. Aggregate Risk Assessment and was not consistent with a neurological Specific information on the studies Determination of Safety adverse effect since it was seen prior to received and the nature of the adverse Section 408(b)(2)(A)(i) of FFDCA dosing and was a persistent finding effects caused by dodine as well as the allows EPA to establish a tolerance (the throughout the study. Therefore, there is no-observed-adverse-effect-level legal limit for a pesticide chemical no evidence of neurotoxicity and the (NOAEL) and the lowest-observed- residue in or on a food) only if EPA acute and subchronic neurotoxicity adverse-effect-level (LOAEL) from the determines that the tolerance is ‘‘safe.’’ studies are not required (HASPOC, toxicity studies can be found at http:// Section 408(b)(2)(A)(ii) of FFDCA October 25, 2012). The current database www.regulations.gov in document defines ‘‘safe’’ to mean that ‘‘there is a does not indicate concerns for ‘‘Dodine. Amended Human Health Risk reasonable certainty that no harm will immunotoxicity and the registrant has Assessment to Support Use on Stone result from aggregate exposure to the agreed to perform an immunotoxicity Fruit and Tree Nut Crops,’’ pages 14 and pesticide chemical residue, including study (OCSPP Guideline 870.7800). 42 in docket ID number EPA–HQ–OPP– all anticipated dietary exposures and all Therefore, the Food Quality Protection 2011–0743. other exposures for which there is Act (FQPA) safety factor is reduced to B. Toxicological Points of Departure/ reliable information.’’ This includes 1X. exposure through drinking water and in There is no evidence of increased Levels of Concern residential settings, but does not include susceptibility (quantitative or Once a pesticide’s toxicological occupational exposure. Section qualitative) in pups versus adults based profile is determined, EPA identifies 408(b)(2)(C) of FFDCA requires EPA to on rat and rabbit developmental studies toxicological points of departure (POD) give special consideration to exposure and the rat multi-generation and levels of concern to use in of infants and children to the pesticide reproduction study. In rat and rabbit evaluating the risk posed by human chemical residue in establishing a prenatal developmental studies, there exposure to the pesticide. For hazards tolerance and to ‘‘ensure that there is a was no toxicity identified in the fetuses that have a threshold below which there reasonable certainty that no harm will up to the highest dose tested (HDT). In is no appreciable risk, the toxicological result to infants and children from the 2-generation reproduction study, POD is used as the basis for derivation aggregate exposure to the pesticide decreases in body weight gain and food of reference values for risk assessment. chemical residue * * * .’’ consumption were seen in pups at the PODs are developed based on a careful Consistent with FFDCA section same dose at which maternal toxicity analysis of the doses in each 408(b)(2)(D), and the factors specified in (decreased body weight, body weight toxicological study to determine the FFDCA section 408(b)(2)(D), EPA has gain and food consumption) was dose at which no adverse effects are reviewed the available scientific data observed. observed (the NOAEL) and the lowest and other relevant information in There was equivocal evidence of dose at which adverse effects of concern support of this action. EPA has carcinogenicity in animal are identified (the LOAEL). Uncertainty/ sufficient data to assess the hazards of carcinogenicity studies; however, a safety factors are used in conjunction and to make a determination on weight-of-evidence evaluation of the with the POD to calculate a safe aggregate exposure for dodine, carcinogenic potential of dodine was exposure level—generally referred to as
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a population-adjusted dose (PAD) or a of an occurrence of the adverse effect www.epa.gov/pesticides/factsheets/ reference dose (RfD)—and a safe margin expected in a lifetime. For more riskassess.htm. of exposure (MOE). For non-threshold information on the general principles A summary of the toxicological risks, the Agency assumes that any EPA uses in risk characterization and a endpoints for dodine used for human amount of exposure will lead to some complete description of the risk risk assessment is shown in the degree of risk. Thus, the Agency assessment process, see http:// following Table. estimates risk in terms of the probability
TABLE—SUMMARY OF TOXICOLOGICAL DOSES AND ENDPOINTS FOR DODINE FOR USE IN DIETARY AND NON- OCCUPATIONAL HUMAN HEALTH RISK ASSESSMENTS
Point of departure and RfD, PAD, LOC for risk Exposure/scenario uncertainty/safety factors assessment Study and toxicological effects
Acute dietary (Females 13–50 N/A ...... N/A ...... No appropriate endpoint for females age years of age). 13–49. Acute dietary (General popu- N/A ...... N/A ...... No appropriate endpoint identified. lation including infants and children). Chronic dietary (All populations) NOAEL = 2 mg/kg/day ...... cRfD=0.02 mg/kg/day ...... Chronic toxicity-dog LOAEL = 10 mg/kg/ UFA = 10x ...... day based on body weight loss in fe- UFH = 10x ...... males. FQPA SF = 1x ...... cPAD = 0.02 mg/kg/day. Incidental oral short-term (1 to NOAEL = 26 mg/kg/day ...... Residential MOE = 100 ...... 2-Generation Reproduction-rat Offspring 30 days). UFA = 10x ...... LOAEL = 53 mg/kg/day based on de- UFH = 10x ...... creased body weight. Incidental oral intermediate-term (1 to 6 months). Dermal short-term (1 to 30 NOAEL = 200 mg/kg/day (HDT) Residential MOE = 100 ...... 28-Day Dermal Toxicity-rat LOAEL = not days). identified. Dermal intermediate-term (1 to UFA = 10xUFH = 10x. 6 months). Inhalation short-term(1 to 30 Developmental Study Maternal Residential MOE = 100 ...... Developmental Toxicity Study-rat Mater- days). NOAEL = 10 mg/kg/day. nal LOAEL = 45 mg/kg/day based on IAF = 100% ...... decreased body weight gain and food consumption. Inhalation (1 to 6 months) ...... UFA = 10x ...... UFH = 10x.
Cancer (oral, dermal, inhalation) Not likely to be carcinogenic to humans. FQPA SF = Food Quality Protection Act Safety Factor. HDT= Highest Dose Tested. IAF = inhalation absorption rate. LOAEL = lowest-ob- served-adverse-effect-level. LOC = level of concern. mg/kg/day = milligram/kilogram/day. MOE = margin of exposure. NOAEL = no-observed-ad- verse-effect-level. PAD = population adjusted dose (a = acute, c = chronic). RfD = reference dose. UFA = extrapolation from animal to human (interspecies). UFH = potential variation in sensitivity among members of the human population (intraspecies).
C. Exposure Assessment Individuals (CSFII). As to residue levels • Condition a: The data used are in food, EPA assumed tolerance level reliable and provide a valid basis to 1. Dietary exposure from food and residues for all treated crops. In terms show what percentage of the food feed uses. In evaluating dietary of extent of usage, percent crop treated derived from such crop is likely to exposure to dodine, EPA considered (PCT) information was used for apples, contain the pesticide residue. exposure under the petitioned-for cherries, peaches, pears, peanuts, • Condition b: The exposure estimate tolerances as well as all existing dodine pecans, and strawberries. One hundred does not underestimate exposure for any tolerances in 40 CFR 180.172. EPA significant subpopulation group. assessed dietary exposures from dodine PCT was assumed for the remainder of crops. • Condition c: Data are available on in food as follows: pesticide use and food consumption in iii. Cancer. Based on the data i. Acute exposure. Quantitative acute a particular area, the exposure estimate discussed in Unit III.A., EPA dietary exposure and risk assessments does not understate exposure for the determined that dodine did not pose a are performed for a food-use pesticide, population in such area. if a toxicological study has indicated the carcinogenicity concern and that risk In addition, the Agency must provide possibility of an effect of concern assessment using the chronic for periodic evaluation of any estimates occurring as a result of a 1-day or single population adjusted dose will be used. To provide for the periodic exposure. protective for any chronic toxicity. evaluation of the estimate of PCT as No such effects were identified in the Accordingly, no exposure assessment, required by FFDCA section 408(b)(2)(F), toxicological studies for dodine; separate from the chronic assessment, EPA may require registrants to submit therefore, a quantitative acute dietary was conducted with regard to cancer data on PCT. exposure assessment is unnecessary. risk. The Agency estimated the PCT for ii. Chronic exposure. In conducting iv. PCT information. Section existing uses as follows: the chronic dietary exposure assessment 408(b)(2)(F) of FFDCA states that the The Agency used the following PCT EPA used the food consumption data Agency may use data on the actual information for the currently registered from the USDA 1994–1996 and 1998 percent of food treated for assessing uses of dodine: 10% PCT for pecans, 5% Continuing Survey of Food Intakes by chronic dietary risk only if: PCT for cherries and pears, 2.5% PCT
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for apples and peanuts along with 1% drinking water models used in pesticide cumulative effects of a particular PCT for peaches and strawberries. exposure assessment can be found at pesticide’s residues and ‘‘other In most cases, EPA uses available data http://www.epa.gov/oppefed1/models/ substances that have a common from U.S. Department of Agriculture/ water/index.htm. mechanism of toxicity.’’ National Agricultural Statistics Service Based on the FQPA Index Reservoir EPA has not found dodine to share a (USDA/NASS), proprietary market Screening Tool (FIRST) and Screening common mechanism of toxicity with surveys, and the National Pesticide Use Concentration in Ground Water (SCI– any other substances, and dodine does Database for the chemical/crop GROW) models, the estimated drinking not appear to produce a toxic metabolite combination for the most recent 6–7 water concentrations (EDWCs) of dodine produced by other substances. For the years. EPA uses an average PCT for for chronic exposures for non-cancer purposes of this tolerance action, chronic dietary risk analysis. The assessments are estimated to be 1.79 therefore, EPA has assumed that dodine average PCT figure for each existing use parts per billion (ppb) for surface water does not have a common mechanism of is derived by combining available and <0.05 ppb for ground water. toxicity with other substances. For public and private market survey data Modeled estimates of drinking water information regarding EPA’s efforts to for that use, averaging across all concentrations were directly entered determine which chemicals have a observations, and rounding to the into the dietary exposure model. For common mechanism of toxicity and to nearest 5%, except for those situations chronic dietary risk assessment, the evaluate the cumulative effects of such in which the average PCT is less than 1. water concentration of value 1.79 ppb chemicals, see EPA’s Web site at In those cases, 1% is used as the average was used to assess the contribution to http://www.epa.gov/pesticides/ PCT and 2.5% is used as the maximum drinking water. cumulative. PCT. EPA uses a maximum PCT for 3. From non-dietary exposure. The acute dietary risk analysis. The term ‘‘residential exposure’’ is used in D. Safety Factor for Infants and maximum PCT figure is the highest this document to refer to non- Children observed maximum value reported occupational, non-dietary exposure 1. In general. Section 408(b)(2)(C) of within the recent 6 years of available (e.g., for lawn and garden pest control, FFDCA provides that EPA shall apply public and private market survey data indoor pest control, termiticides, and an additional tenfold (10X) margin of for the existing use and rounded up to flea and tick control on pets). safety for infants and children in the the nearest multiple of 5%. Dodine is not registered for any case of threshold effects to account for The Agency believes that the three specific use patterns that would result prenatal and postnatal toxicity and the conditions discussed in Unit III.C.1.iv. in residential exposure. However, a completeness of the database on toxicity have been met. With respect to closely related chemical, and exposure unless EPA determines Condition a, PCT estimates are derived dodecylguanidine hydrochloride (DGH) based on reliable data that a different from Federal and private market survey is used as an antimicrobial in margin of safety will be safe for infants data, which are reliable and have a valid household, industrial, and commercial and children. This additional margin of basis. The Agency is reasonably certain products having residential and safety is commonly referred to as the that the percentage of the food treated occupational exposure potential. DGH is FQPA Safety Factor (SF). In applying is not likely to be an underestimation. used as a bacteriostat in paints and in this provision, EPA either retains the As to Conditions b and c, regional absorbent material in disposal diapers. default value of 10X, or uses a different consumption information and Dodine and DGH have similar chemical additional safety factor when reliable consumption information for significant compositions and properties and are data available to EPA support the choice sub-populations is taken into account therefore considered bio-equivalents. of a different factor. through EPA’s computer-based model Residential painters may have short 2. Prenatal and postnatal sensitivity. for evaluating the exposure of term dermal and inhalation exposure as There is no evidence (quantitative or significant subpopulations including a result of using DGH treated paint. qualitative) of increased susceptibility several regional groups. Use of this Infants and small children may have and no residual uncertainties with consumption information in EPA’s risk short-, intermediate-, and long-term regard to prenatal and/or postnatal assessment process ensures that EPA’s dermal exposure as a result of wearing toxicity following in utero exposure to exposure estimate does not understate DGH impregnated diapers. The Agency rats or rabbits. In rat and rabbit prenatal exposure for any significant believes that a transfer factor of 30% developmental studies, there was no subpopulation group and allows the does not underestimate exposure in toxicity identified in the fetuses up to Agency to be reasonably certain that no determining the amount of DGH the HDT. In the 2-generation regional population is exposed to transferred to infants from diapers based reproduction study, decreases in body residue levels higher than those on a transfer study using dodine-treated weight gain and food consumption were estimated by the Agency. Other than the paper exposed to extreme conditions. seen in pups at the same dose at which data available through national food Inhalation exposure of infants and maternal toxicity (decreased body consumption surveys, EPA does not children is expected to be negligible. weight, body weight gain and food have available reliable information on Although small children may have consumption) was observed. the regional consumption of food to short-term post application oral 3. Conclusion. EPA has determined which dodine may be applied in a exposure as a result of accidental that reliable data show the safety of particular area. ingestion of paint chips which contain infants and children would be 2. Dietary exposure from drinking DGH, the Agency does not believe that adequately protected if the FQPA SF water. The Agency used screening level this would occur on a regular basis. were reduced to 1X. That decision is water exposure models in the dietary 4. Cumulative effects from substances based on the following findings: exposure analysis and risk assessment with a common mechanism of toxicity. The toxicity database for dodine is for dodine in drinking water. These Section 408(b)(2)(D)(v) of FFDCA mostly complete. The database contains simulation models take into account requires that, when considering whether the following toxicity studies: data on the physical, chemical, and fate/ to establish, modify, or revoke a i. A sub-chronic mouse toxicity study. transport characteristics of dodine. tolerance, the Agency consider ii. Chronic rat, mouse, and dog Further information regarding EPA ‘‘available information’’ concerning the toxicity studies.
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iii. A 28-day dermal and dermal 1. Acute risk. An acute aggregate risk IV. Other Considerations penetration studies (rats. assessment takes into account acute A. Analytical Enforcement Methodology iv. Prenatal developmental studies exposure estimates from dietary (rats and rabbits). consumption of food and drinking Adequate enforcement methodology v. A reproduction study in rats. water. No adverse effect resulting from (colormetric method with spectrometric There are also acute LD50 studies via a single oral exposure was identified detection and various modifications is the oral, dermal and inhalation routes, and no acute dietary endpoint was listed in FDA’s Pesticide Analytical a metabolism study, and a complete selected. Therefore, dodine is not Manual (PAM), Volume II as Methods I, mutagenicity battery. The current expected to pose an acute risk. I(a), I(b), and I(d)) is available to enforce database does not indicate neurotoxicity the tolerance expression. 2. Chronic risk. Using the exposure or immunotoxicity concerns. Thus, EPA assumptions described in this unit for B. International Residue Limits has waived the acute and subchronic neurotoxicity studies. An chronic exposure, EPA has concluded In making its tolerance decisions, EPA immunotoxicity study is required that chronic exposure to dodine from seeks to harmonize U.S. tolerances with pursuant to the recent amendment of food and water will utilize 21% of the international standards whenever EPA’s data regulations to evaluate the cPAD for all infants <1 year old, the possible, consistent with U.S. food potential of a repeated chemical population group receiving the greatest safety standards and agricultural exposure to produce adverse effects (i.e., exposure. Further, EPA has concluded practices. EPA considers the suppression) on the immune system. that the combined long-term food, international maximum residue limits However, because no immunotoxicity water, and dermal exposure for infants (MRLs) established by the Codex was observed in available toxicity wearing diapers containing DGH treated Alimentarius Commission (Codex), as studies, EPA has confidence that this material results in an aggregate MOE required by FFDCA section 408(b)(4). study is unlikely to change the POD in greater than 100. Because EPA’s level of The Codex Alimentarius is a joint assessing risk to infants and children. concern for dodine is for MOEs below United Nations Food and Agriculture a. There is no evidence that dodine 100, this MOE does not raise a risk Organization/World Health results in increased susceptibility in in concern. Organization food standards program, utero rats or rabbits in the prenatal and it is recognized as an international 3. Short- and intermediate-term risk. food safety standards-setting developmental studies or in young rats Short- and intermediate-term aggregate in the 2-generation reproduction study. organization in trade agreements to exposure takes into account short- and which the United States is a party. EPA b. There are no residual uncertainties intermediate-term residential exposure identified in the exposure databases. may establish a tolerance that is plus chronic exposure to food and water The dietary food exposure assessments different from a Codex MRL; however, (considered to be a background were performed based on Agency FFDCA section 408(b)(4) requires that exposure level). recommended tolerance-level residues EPA explain the reasons for departing and health protective modeling Using the exposure assumptions from the Codex level. assumptions. Although PCT estimates described in this unit for short- and The Codex has not established MRLs were used for crops with existing intermediate-term exposures, EPA has for dodine on the tree nut crop group. tolerances, the use of tolerance values concluded the combined short- and The Codex has established MRLs for for residue levels will likely intermediate-term combined food, dodine in or on cherries, sweet and overestimate actual exposures. EPA water, and residential exposures cherries, tart at 3 ppm and on peaches made conservative (protective) aggregated result in aggregate MOEs of and nectarines at 5 ppm. The Codex assumptions in the ground and surface 4,200 for adult males handling paint MRL for cherries is not harmonized water modeling used to assess exposure and 4,500 for adult females handling with the stone fruit crop group tolerance to dodine in drinking water. EPA used paint. The exposures do not exceed the of 5 ppm. similarly conservative assumptions to Agency’s level of concern. EPA has Harmonization with the Codex MRL assess postapplication exposure of concluded that the combined for cherries is not possible because the cherry field trial data shows that children, as well as incidental oral intermediate-term food, water, and residues from the domestic, labeled use exposure of children and incidental oral dermal exposure for infants wearing may exceed the 3 ppm Codex MRL exposure of toddlers. These assessments diapers containing DGH treated material will not underestimate the exposure and making it impractical for limits to be results in aggregate MOEs of 120 when risks posed by dodine. harmonized based on the proposed using a 30% transfer factor. Because domestic use pattern. However, the E. Aggregate Risks and Determination of EPA’s level of concern for dodine is for cherry data when considered as part of Safety MOEs below 100, this MOE does not the data set to support a stone fruit crop EPA determines whether acute and raise a risk concern. group tolerance, indicate that a 5 ppm chronic dietary pesticide exposures are 4. Aggregate cancer risk for U.S. crop group tolerance would be safe by comparing aggregate exposure population. Based on the data discussed appropriate. To harmonize to the best estimates to the acute PAD (aPAD) and in Unit III.A., EPA concluded that extent possible with Codex, the crop chronic PAD (cPAD). For linear cancer dodine is not expected to pose a cancer group tolerance will be set at 5 ppm, risks, EPA calculates the lifetime risk to humans. This at least harmonizes the Codex and probability of acquiring cancer given the U.S. tolerances for peaches and 5. Determination of safety. Based on estimated aggregate exposure. Short-, nectarines. these risk assessments, EPA concludes intermediate-, and chronic-term risks C. Revisions to Petitioned-for Tolerances are evaluated by comparing the that there is a reasonable certainty that estimated aggregate food, water, and no harm will result to the general Based on the analysis of the residue residential exposure to the appropriate population, or to infants and children, trial data using the Organization for PODs to ensure that an adequate MOE from aggregate exposure to dodine Economic Cooperation and exists. residues. Development (OECD) tolerance
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calculation procedures, tolerances for governments, or on the distribution of § 180.172 Dodine; tolerances for residues. almond hulls were increased. power and responsibilities among the (a) General. Tolerances are various levels of government or between V. Conclusion established for residues of the fungicide the Federal Government and Indian dodine, including its metabolites and Therefore, tolerances are established tribes. Thus, the Agency has determined degradates, in or on the commodities for residues of dodine, N- that Executive Order 13132, entitled listed in the table below. Compliance dodecylguanidine acetate, including its ‘‘Federalism’’ (64 FR 43255, August 10, with the tolerance levels specified in the metabolites and degradates, in or on 1999) and Executive Order 13175, table is to be determined by measuring almond, hulls at 30 ppm; fruit, stone, entitled ‘‘Consultation and Coordination only dodine, N-dodecylguanidine crop group 12 at 5.0 ppm; and nuts, tree, with Indian Tribal Governments’’ (65 FR acetate; in or on the following crop group 14 at 0.3 ppm. This final rule 67249, November 9, 2000) do not apply commodities. removes established tolerances for to this final rule. In addition, this final cherry, sweet; cherry, tart; peach; pecan; rule does not impose any enforceable Commodity Parts per and walnut. duty or contain any unfunded mandate million VI. Statutory and Executive Order as described under Title II of the Almond, hull ...... 30.0 Reviews Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1501 et seq.). This final rule establishes tolerances ***** under FFDCA section 408(d) in This action does not involve any Fruit, stone, crop group 12 ... 5.0 Nuts, tree, crop group 14 ..... 0.3 response to a petition submitted to the technical standards that would require Agency consideration of voluntary Agency. The Office of Management and ***** Budget (OMB) has exempted these types consensus standards pursuant to section 12(d) of the National Technology of actions from review under Executive * * * * * Order 12866, entitled ‘‘Regulatory Transfer and Advancement Act of 1995 (NTTAA) (15 U.S.C. 272 note). [FR Doc. 2012–29251 Filed 12–4–12; 8:45 am] Planning and Review’’ (58 FR 51735, BILLING CODE 6560–50–P October 4, 1993). Because this final rule VII. Congressional Review Act has been exempted from review under Executive Order 12866, this final rule is Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), EPA will FEDERAL COMMUNICATIONS not subject to Executive Order 13211, COMMISSION entitled ‘‘Actions Concerning submit a report containing this rule and Regulations That Significantly Affect other required information to the U.S. 47 CFR Part 73 Energy Supply, Distribution, or Use’’ (66 Senate, the U.S. House of FR 28355, May 22, 2001) or Executive Representatives, and the Comptroller [MB Docket No. 09–52; FCC 12–127] Order 13045, entitled ‘‘Protection of General of the United States prior to Policies To Promote Rural Radio Children from Environmental Health publication of the rule in the Federal Service and To Streamline Allotment Risks and Safety Risks’’ (62 FR 19885, Register. This action is not a ‘‘major and Assignment Procedures April 23, 1997). This final rule does not rule’’ as defined by 5 U.S.C. 804(2). contain any information collections List of Subjects in 40 CFR Part 180 AGENCY: Federal Communications subject to OMB approval under the Commission. Paperwork Reduction Act (PRA) (44 Environmental protection, ACTION: Final rule; petitions for U.S.C. 3501 et seq.), nor does it require Administrative practice and procedure, reconsideration and clarification. any special considerations under Agricultural commodities, Pesticides Executive Order 12898, entitled and pests, Reporting and recordkeeping SUMMARY: In this document, the ‘‘Federal Actions to Address requirements. Commission denied four of six Petitions Environmental Justice in Minority Dated: November 21, 2012. for Reconsideration, Petitions for Partial Reconsideration, and Petitions for Populations and Low-Income Lois Rossi, Populations’’ (59 FR 7629, February 16, Clarification of the Second Report and Director, Registration Division, Office of Order (Second R&O) in this proceeding, 1994). Pesticide Programs. Since tolerances and exemptions that granting in part and denying in part two are established on the basis of a petition Therefore, 40 CFR chapter I is of the petitions. The Commission under FFDCA section 408(d), such as amended as follows: clarified some of the methodology to be the tolerance in this final rule, do not used in applying the new rules and require the issuance of a proposed rule, PART 180—[AMENDED] procedures in the Second R&O, in particular the method of counting the requirements of the Regulatory ■ Flexibility Act (RFA) (5 U.S.C. 601 et 1. The authority citation for part 180 reception services in service gain and seq.), do not apply. continues to read as follows: loss areas, to assist applicants and This final rule directly regulates Authority: 21 U.S.C. 321(q), 346a and 371. allotment proponents in accurately growers, food processors, food handlers, applying the new rules and procedures. ■ 2. Amend § 180.172 as follows: and food retailers, not States or tribes, The Commission also further restricted ■ nor does this action alter the i. Revise the introductory text in the categories of applicants and relationships or distribution of power paragraph (a). allotment proponents to whom the new and responsibilities established by ■ ii. Remove the entries for cherry, rules and procedures apply, finding that Congress in the preemption provisions sweet; cherry, tart; peach, pecan and equitable considerations supported such of FFDCA section 408(n)(4). As such, walnut from the table in paragraph (a). restrictions. In addition to restrictions the Agency has determined that this ■ iii. Add alphabetically the entries for set forth in the Second R&O, the new action will not have a substantial direct almond, hull; fruit, stone, crop group rules will not apply to applications and effect on States or tribal governments, 12; and nuts, tree, crop group 14. allotment proposals filed before the new on the relationship between the national The additions and revision read as rules were proposed, or to those government and the States or tribal follows: applications and proposals that have
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already been subject to Commission Second R&O, the Commission adopted it would strongly disfavor any proposed decisions, but that remain pending due procedures to limit dispositive community of license change that to subsequent legal challenges. preferences under 47 U.S.C. 307(b) would result in the net loss of third, DATES: The rules discussed in the (section 307(b)) for new AM fourth, or fifth reception service to more Second Order on Reconsideration construction permits, as well as new FM than 15 percent of the population in the (Order) became effective on May 6, 2011 allotments, in already well-served station’s current protected contour, or (see 76 FR 18942 (Apr. 6, 2011)) and on urbanized areas. loss of a second local transmission July 19, 2011 (see 76 FR 42575 (Jul. 19, 2. The Commission also adopted service to a community with a 2011)). The Commission, in the Order, procedures to forestall the movement of population of 7,500 or greater. With two clarified some of the methods to be used radio service from rural areas to more exceptions, the Commission stated that in applying the new rules, and further urban areas absent a compelling the new procedures would apply to all limited the categories of parties to showing of need. Among these applications or proposals pending as of whom the new rules apply. procedures was an urbanized area the Second R&O’s adoption date. ADDRESSES: Peter Doyle or Thomas service presumption (UASP), under 4. Most of the Petitions for Nessinger, Federal Communications which a proposal for new or relocated Reconsideration or Partial Commission, Media Bureau, Audio radio service that would constitute the Reconsideration (Petitions) merely Division, 445 12th Street SW., Room 2– first local transmission service at a repeated points from the comments filed B450, Washington, DC 20445. specified community is presumed to be in this proceeding that were considered a proposal to serve an entire urbanized and rejected in the Second R&O. On that FOR FURTHER INFORMATION CONTACT: area if the community is located within basis, the Commission denied the Peter Doyle, Chief, Media Bureau, the urbanized area, or if the proposal Petitions filed by Friendship Audio Division, (202) 418–2700 or would place, or could be modified to Broadcasting, LLC; William B. Clay; [email protected]; Thomas Nessinger, place, a daytime principal community M&M Broadcasters, Ltd.; and Attorney-Advisor, Media Bureau, Audio signal over 50 percent or more of the Educational Media Foundation and the Division, (202) 418–2700 or urbanized area. The UASP can be Kent Frandsen Radio Companies. The [email protected]. rebutted by a compelling showing (1) Commission granted in part and denied SUPPLEMENTARY INFORMATION: This is a that the specified community is truly in part the Petitions filed by Entravision summary of the Commission’s Second independent of the urbanized area, (2) Communications Corporation Order on Reconsideration (Order), FCC that the community has a specific need (Entravision) and Radio One, Inc., et al. 12–127, adopted October 11, 2012, and for an outlet for local expression (Radio One Parties). The Commission released October 12, 2012. The full text separate from the urbanized area and (3) did address requests for clarification of of the Order is available for inspection that the proposed station is able to certain issues, specifically, for and copying during regular business provide that outlet. The basis for such clarification of the methodology for hours in the FCC Reference Center, 445 a rebuttal showing is the longstanding calculating reception service in section 12th Street SW., Room CY–A257, test first set forth in Faye and Richard 307(b) analyses under Priority (4), other Portals II, Washington, DC 20554, and Tuck, Memorandum Opinion and public interest matters; for clarification may also be purchased from the Order, 3 FCC Rcd 5374, 5376 (1988) or amendment of some of the factors Commission’s copy contractor, BCPI, (Tuck), as slightly modified in the used to determine whether a community Inc., Portals II, 445 12th Street SW., Second R&O. The UASP applies, albeit is independent of an urbanized area; Room CY–B402, Washington, DC 20554. in somewhat different forms, to and for clarification of the applicability Customers may contact BCPI, Inc. via applications for new AM stations, of the UASP to intra-urbanized area their Web site, http://www.bcpi.com, or proposals for new FM allotments, and station relocations. The Commission call 1–800–378–3160. This document is applications to change a station’s also addressed the requests of available in alternative formats community of license. petitioners M&M Broadcasters, Inc. (computer diskette, large print, audio 3. The Commission also limited the (M&M) and Entravision to exclude record, and Braille). Persons with circumstances under which a mutually certain pending community of license disabilities who need documents in exclusive applicant for a new AM change applications from the new these formats may contact the FCC by station may receive a dispositive section policies. email: [email protected] or phone: 202– 307(b) preference under Priority (4), 5. Although many of the arguments in 418–0530 or TTY: 202–418–0432. other public interest matters, of the the Petitions were considered and Commission’s allotment priorities. In rejected in the Second R&O, the Synopsis of Order the context of proposals for new FM Commission found it to be in the public 1. In the Order, the Commission allotments, raw reception population interest to discuss the merits of these addressed six petitions for totals will receive less weight than other arguments in light of its contrary reconsideration, petitions for partial legitimate service-based considerations, determinations. While some petitioners reconsideration, and petitions for especially service to underserved argued that the new procedures ‘‘ignore clarification of certain procedures populations. The UASP also applies to current marketplace realities,’’ causing adopted in the Second R&O in this applications to change a station’s radio stations to relocate to more proceeding (76 FR 18942, April 6, 2011, community of license. Additionally, populous areas because there is little or FCC 11–28, 26 FCC Rcd 2556, rel. Mar. with regard to such applications, the no money to be made in rural areas, the 3, 2011). These included a number of Commission mandated greater Commission reiterated that new stations measures designed to limit the use of transparency in applicants’ section are assigned or allotted on a demand population as the principal metric when 307(b) showings, including the basis, with the economic decision to considering competing proposals for submission of more detailed showings locate a station in a particular new radio stations, a standard that has demonstrating the populations gaining community resting solely with the largely favored proposals located in or and losing radio service, and the applicant. To the extent that changed near large urbanized areas, rather than numbers of services those populations circumstances render it an economic those located in less well-served rural receive before and after the proposed hardship for a station to remain in its areas and smaller communities. In the move. The Commission also announced community of license, the new
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procedures allow for such a showing. to smaller, non-urbanized communities independence or interdependence, and The Commission again rejected the that might benefit more from new that the burden remains on the suggestion that rural residents should service. applicant to show that the presence of simply purchase any radio service they 7. The Radio One Parties again argued such factors provides meaningful and desire above ‘‘basic’’ broadcast service that the new procedures constitute a relevant support for an ‘‘independent’’ of as few as two reception services, or return to the policies eliminated in The community finding. The Commission that section 307(b) obliges it only to Suburban Community Policy, the also clarified that its analysis of assign minimal free radio service to Berwick Doctrine, and the De Facto showings rebutting the UASP will place certain Americans, based solely on Reallocation Policy, Report and Order, primary emphasis on the first two where they choose to live. 93 F.C.C.2d 436 (1993), an argument prongs of the Tuck test, namely, the 6. The Radio One Parties contended considered and rejected in the Second degree to which the proposed station that the new procedures, particularly R&O. The Commission in that would provide coverage to the the UASP, were arbitrary and proceeding discontinued those policies urbanized area, and the size and capricious, based largely on reiterating based in part on application processes proximity of the proposed community arguments made in their comments, and procedural safeguards that now no of license relative to the central city of which were mostly confined to the longer exist. The Commission in the the urbanized area. context of community of license change Second R&O also noted the 9. The Radio One Parties also asked applications. The Commission rejected dissimilarities between its new that the Commission clarify the procedures and the processes formerly methodology for measuring ‘‘reception the Radio One Parties’ re-argument that used to implement the policies that service’’ for Priority (4) analyses of ‘‘only’’ 19 percent of community of were discontinued in Suburban applications to change a station’s license change applications would Community Policy. To the extent that community of license, as discussed in trigger the UASP, and thus that this similarities exist, it is because both are paragraph 39 of the Second R&O. level of activity is insufficient to grounded in fulfilling the Commission’s Specifically, they ask, first, whether the warrant remedial agency action. The section 307(b) responsibilities. The contours of a non-reserved band FM Commission stated that the number of record in this proceeding and the station, for purposes of gain/loss comments in the record indicating a Commission’s recent experience with analysis of a community of license strong interest of many radio broadcast auctions and community of change, should be calculated from the broadcasters in relocating to more license change proposals filed as minor allotment coordinates at the proposed populated areas reflects the importance modification applications—both new community or from the transmitter of the UASP as a section 307(b) licensing processes that post-date coordinates specified in the actual licensing policy. For the reasons set Suburban Community Policy by many proposal; second, when evaluating gain forth in the Second R&O, the years—convinced the Commission that and loss areas, and in particular when Commission reiterated that allowing the new procedures are necessary. determining the number of reception such migration in all cases does not 8. The Commission declined the services to the gain and loss areas, comport with its statutory duty under Radio One Parties’ request that it revise which signal contour should be used; section 307(b), also noting that because the eight factors, first enumerated in the and third, in assessing reception service, the UASP is a presumption rather than Tuck case, that are used to evaluate the whether ‘‘potential services,’’ such as a hard-and-fast rule, a licensee seeking interdependence of the community of vacant FM allotments or granted but to relocate its facilities due, for example, license specified by the applicant with unbuilt construction permits, should be to changed conditions in its current the larger metropolitan area. It did, counted. The Commission clarified the community of license may rebut the however, agree that some of the factors standards for evaluating reception presumption. Additionally, the should be accorded less weight. For services in the gain and loss areas for Commission rejected the Radio One example, while disagreeing with the applications to change community of Parties’ argument that the UASP Radio One Parties’ claim that the closing license, and thus granted the Radio One constitutes an improper attempt to or consolidation of post office facilities Petition in part. assume an applicant’s service intentions necessarily invalidates the use of the 10. First, when determining gain and based on the fact that the population of remaining ZIP code as an indicator of loss areas for an FM station changing its the proposed community of license may community independence, the community of license, the contours constitute a very small percentage of the Commission agreed that the ubiquity of should be calculated using the overall coverage population. The UASP ZIP codes gives the presence of a authorized transmitter coordinates for was not designed to divine an dedicated ZIP code little probative the current facility, and the transmitter applicant’s service intent, but rather to significance of itself in establishing a coordinates specified for the proposed eliminate the undue, often dispositive community’s independence, and thus new or modified facility. This is a advantage that prior section 307(b) that this factor should be given little change from past practice, under which policies conferred on proposals to serve weight. While generally declining to the staff used allotment coordinates communities located in large urbanized revise the Tuck factors, the Commission rather than the transmitter coordinates areas, especially in the context of noted that it would provide applicants specified in the actual proposal. That selecting among mutually exclusive seeking to rebut the UASP wide latitude practice, however, was an artifact of applications for new AM service. This to present whatever facts they deem former licensing procedures, under advantage was based largely on the fact, appropriate to its evaluation. While which all community of license changes supported by the record, that applicants such showings would be scrutinized, for FM stations first involved a would often designate as the community the Commission will be receptive to reallotment of the station’s channel at of license a community lacking local presentations that may in some cases the new community. Since the transmission service but whose provide better and more reliable Commission changed its procedures in population constituted a small measures of community status than 2006 to permit the filing of community percentage of the total audience to be those set forth in Tuck. The Commission of license change proposals by minor served, to the detriment of mutually further emphasized that the eight Tuck change applications, the staff can now exclusive applicants proposing service factors are merely potential indicators of evaluate the actual proposed transmitter
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site. It is more appropriate to do so than be calculated using actual terrain under both 0.5 mV/m and 2.0 mV/m daytime to use allotment coordinates that may be the standard prediction methodology set service from the proposed facilities. miles from the actual transmitter site forth in 47 CFR 73.313 rather than 13. Third, for purposes of the gain and specified in the proposal. Moreover, this assuming uniform terrain. For NCE loss calculations in Priority (4) analyses, new approach is consistent with reserved band stations, the service as described in paragraph 39 of the Commission practice regarding AM contours will be determined in the same Second R&O, applicants shall count all change of community applications, for manner, using actual currently full-service AM (including daytime-only which contours are calculated from the authorized and proposed facilities AM),1 FM, and NCE FM stations, applicants’ authorized and proposed (including directional patterns) and including granted, but unbuilt, transmitter sites. actual terrain. The service contour shall construction permits for new stations. 11. Second, the Commission clarified be the 60 dBm contour, calculated as set However, for purposes of these that, when determining the number of forth in 47 CFR 73.509(c)(1). calculations applicants should not reception services in gain and loss areas, 12. For an AM station, the signal level count vacant FM allotments. For the the signal level to be evaluated for non- to be evaluated for purposes of gain and reasons cited above, the increased reserved band FM stations (including loss calculations in applications to scrutiny of reception service in gain and noncommercial educational [NCE] change community of license shall be loss areas requires an evaluation of stations in the non-reserved band) shall the predicted or measured daytime 2.0 actual, rather than hypothetical service. be the service contour originating at the mV/m groundwave contour, calculated Thus, the Commission will evaluate the currently authorized and proposed from the current and proposed reception service as of the time of transmitter coordinates. The service transmitter coordinates using authorized application, and will count only those contour shall be calculated based on the facilities. When calculating AM facilities that have advanced to the facility’s authorized and proposed reception services in gain and loss areas point of a granted construction permit. effective radiated power (ERP) and under Priority (4), ‘‘reception service’’ Accordingly, in conducting the height above average terrain (HAAT) should include all AM daytime remaining services analysis and making and shall, as described below, take into reception services. In this regard, the a showing as described in paragraph 39 account actual terrain. This is a Commission noted that the AM primary of the Second R&O, applicants should departure from the method previously service contours are set forth in 47 CFR exclude vacant FM allotments from used to determine the number of 73.182(d), and are the daytime 0.5 mV/ counts of reception services. Applicants reception services in gain and loss areas, m groundwave contour for communities for changes to a station’s community of which was based on maximum class under 2,500 population, and the license following release of the Order facilities for all FM stations except for daytime 2.0 mV/m groundwave contour shall use these clarified procedures full Class C and NCE stations, and did for communities over 2,500 population. when determining the number of not take into account actual terrain. The different primary service contours reception services to gain and loss areas, However, in the Second R&O, the take into account the higher level of and the procedures shall also apply to Commission required applicants environmental noise resulting from pending applications. However, the proposing to change a station’s greater population density. However, Commission found that because the community of license to provide using different contours for Radio One Petition did not constitute detailed reports of populations receiving communities of different sizes will often notice to applicants of the exact nature service and the numbers of services result in complicated calculations of the of any clarifications of procedure on received. This increased scrutiny of the number of services to certain areas lying reconsideration, it shall allow parties current and proposed reception service between the daytime 2.0 mV/m and 0.5 with pending change of community landscape demands a realistic picture of mV/m groundwave contours of an AM applications as of the release date of the the populations receiving various levels station. Because 47 CFR 73.182 Order the option of either amending of service, overruling the considerations implicitly recognizes that all areas, of their application showings to conform of ‘‘uniformity and certainty’’ in service whatever population, receive primary to the clarified procedures announced area calculations previously cited to service within an AM station’s daytime in the Order, or proceeding based on the justify the use of maximum rather than 2.0 mV/m groundwave contour, for actual facilities. See Greenup, Kentucky purposes of determining the number of 1 For purposes of the prohibition against any and Athens, Ohio, Memorandum AM services and populations in gain facility change that would create white or gray area, and loss areas, the daytime 2.0 mV/m however (see Second R&O, 26 FCC Rcd at 2577), Opinion and Order, 6 FCC Rcd 1493, daytime-only AM stations will not count as 1494 (1991). Moreover, population groundwave contour should be used. providing full-time reception service. ‘‘White’’ area counts using the new methodology do Applicants for new commercial AM has been defined as that which receives no full-time not lack certainty. Additionally, many stations providing showings under aural service, while ‘‘gray’’ area is that which section 307(b) should, however, receives only one full-time aural service. Full-time existing stations, for technical, aural (reception) service means both day and night economic, or other reasons, may never continue to count populations to be service. While FM service contours are consistent be able to realize full class facilities. served by using the primary service for all dayparts, AM service contours vary between Thus, the Commission believed it more contours (0.5 mV/m for communities daytime and nighttime operation, with full-time under 2,500 population, 2.0 mV/m for AM reception service areas being those receiving appropriate to base an evaluation of the both daytime 2.0 mV/m groundwave service and section 307(b) merits of community of communities over 2,500) set forth in 47 nighttime interference-free (NIF) service. For most license change applications on the CFR 73.182(d). An applicant for a new stations, the daytime 2.0 mV/m groundwave populations actually receiving service AM station provides a section 307(b) contour completely encompasses the NIF contour, showing only after being directed to do thus the NIF contour constitutes the full-time from stations in an area, rather than on service area for such stations. Where the daytime what may be, in many cases, merely a so by the staff (that is, after its 2.0 mV/m groundwave and NIF contours neither hypothetical level of reception service. application has been determined to be completely encompass nor are completely For purposes of these gain and loss area mutually exclusive with one or more encompassed by the other, due to changes in other AM proposals), and in such cases antenna pattern and/or transmitter site between calculations, the FM service contour daytime and nighttime operation, the full-time shall be that set forth for the class of the staff typically directs the applicant service area is the common area within both station in 47 CFR 73.215(a)(1), and shall to provide the populations receiving contours.
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reception service counts in their of an urbanized area. The Commission proceeding, including ‘hybrid’ already-filed technical showings. found that the new procedures will coordinated application/allotment 14. While, as noted above, vacant FM promote the Commission’s goals under proceedings, in which the Commission allotments will not be included in section 307(b) in a reasonable manner. has modified a radio station license or counts of reception services, the See AT&T Corp. v. FCC, 220 F.3d 607, granted a construction permit.’’ 26 FCC Commission will continue to count 621 (D.C. Cir. 2000) (‘‘As long as the Rcd at 2576. M&M argued that the same vacant FM allotments for purposes of agency’s interpretation is reasonable, we equities articulated to exempt these two section 307(b) analyses under Priority uphold it ‘regardless whether there may categories should apply equally to (3), provision of first local transmission be other reasonable, or even more pending community of license change service. This is because only one reasonable, views.’ ’’ quoting Serono applications, especially those in which applicant or allotment proponent can Lab, Inc. v. Shalala, 158 F.3d 1313, 1321 other stations were required to make claim to provide ‘‘first’’ transmission (D.C. Cir. 1998)). facility modifications. It contended that service at a given community. It would 16. Entravision, in its Petition for the decision to apply the new be inappropriate to accept a claim by a Reconsideration and/or Clarification, procedures to pending community of community of license change applicant raised issues concerning two aspects of license change applications was to provide first local transmission the modified procedures. First, noting arbitrary and capricious because service at the new community, if a that the Commission had not typically ‘‘similarly situated’’ new AM channel had already been allotted there required a Tuck showing for community applications and FM allotment based on a showing that the allotment of license change applications where proceedings were not treated in the would constitute the first local both the current and the proposed same way. Entravision suggested that transmission service. Of course, should communities of license are located in the Commission apply the prior the only channel allocated to a the same urbanized area, Entravision procedures to any case in which there community be re-allotted to another asked that the Commission clarify had been an ‘‘initial decision’’ as of community, a subsequent applicant or whether the UASP will apply, and a March 2, 2011, the day before release of allotment proponent could propose first Tuck showing be required, in such the Second R&O, even if the action was local transmission service there. situations in the future. The not final (i.e., if there is a pending 15. Petitioner William Clay (Clay) Commission clarified that Tuck petition for reconsideration or sought reconsideration, arguing that the showings will not be required where application for review). new procedures will still allow grant of both the current and proposed 18. The Commission questioned most applications claiming to provide communities are located in the same whether applicants proposing first local transmission service while urbanized area, or the current facilities community of license modification were primarily serving communities and cover, and the proposed facilities would ‘‘similarly situated’’ to the two classes of populations other than the proposed or could be modified to cover, more applicants, permittees, and licensees community of license, because the than 50 percent of the same urbanized that were exempted from the new majority of the proposed communities area with a daytime principal policy. AM Auction 84 filing window are not located in or near urbanized community signal. However, in such applicants were required to file their areas and are thus not subject to the community of license change cases, the applications during a filing window, in UASP, and further arguing that the UASP presumption would apply to the January 2004, that antedated the Notice procedures set forth in the Second R&O new community, i.e., would of Proposed Rule Making in this still fail to guarantee service to, and an presumptively prohibit treating the proceeding (FCC 09–30, 74 FR 22498 outlet for self-expression of, the nominal service at the new community as a first (May 13, 2009), 24 FCC Rcd 5239 community of license rather than the local transmission service under Priority (2009)) (Rural NPRM) by over five years. greatest populations to be served by a (3). Thus, in the absence of a showing Those applicants therefore had no proposal. Clay contended, as he did in to rebut the presumption that either the reason to expect that their applications comments, that any new procedure move-out or move-in community is would be evaluated under a new section should grant any local service sufficiently independent to warrant a 307(b) standard. The Commission preference to the community or first local transmission service priority, recognized, however, that the same collection of communities most likely to the applicant must make its showing equities apply to those few pending benefit from a proposed new service, no under Priority (4), other public interest community of license change matter where situated. The Commission matters, by demonstrating from which applicants, and petitioners seeking to rejected Clay’s proposal as overbroad, of the two communities the station amend the FM Table of Allotments, that finding that its approach struck an would provide service to a greater area filed their applications or rulemaking appropriate balance between and population within the urbanized petitions before release of the Rural encouraging the goals of localism, area. NPRM. Thus, on reconsideration the allowing an applicant to propose to 17. Entravision and M&M, as well as Commission determined that the new provide a chosen community with an Educational Media Foundation and the procedures should not apply to (1) outlet for expression, and the economic Kent Frandsen Radio Companies (filing applications for minor modification of a reality that a broadcaster will and must a joint petition), also sought changes in station to specify a new community of also provide for the needs and interests the categories of cases subject to the license filed before April 20, 2009, the of its entire service area, of which the new procedures. In the Second R&O, the release date of the Rural NPRM; or (2) designated community of license may Commission stated that the new FM allotment proceedings where the constitute a very small percentage. The procedures would apply to all pending petition for rulemaking had been filed, record and the Commission’s experience applications and allotment rulemaking and the rulemaking proceeding thus has shown this problem to be most proceedings, with two exceptions. The initiated, prior to the release date of the acute in the case of applications for new first was AM Auction 84 applications, Rural NPRM. and relocated radio service in and near which were filed in 2004 and the 19. Entravision, in its Petition, stated urbanized areas, hence the limitation of majority of which have been processed that the Commission did not ‘‘precisely the UASP to situations in which a under the prior procedures. The second answer the question’’ as to those cases station is located in or will cover most was ‘‘any non-final FM allotment to which the new section 307(b)
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procedures would apply. Both principled reason to apply different Federal Communications Commission. Entravision and M&M suggested that the procedures to such otherwise similarly Marlene H. Dortch, Commission draw a ‘‘bright line’’ as of situated applications, especially where Secretary. the Second R&O’s release date, to clarify any applicant facing reconsideration or [FR Doc. 2012–29423 Filed 12–4–12; 8:45 am] the cases to which the new rules apply. review would have to go to the BILLING CODE 6712–01–P Entravision stated that the prior section additional expense of revising its 307(b) procedures should apply in any (previously successful) section 307(b) instance in which the Commission had showing, above and beyond the expense DEPARTMENT OF COMMERCE rendered a decision as of March 2, 2011, of rebutting a reconsideration petition. even if there was still a petition for On reconsideration, the Commission National Oceanic and Atmospheric reconsideration or application for thus revised its previous determination Administration review pending, as an equitable solution as to the application of the new to keep parties from having to expend procedures. In addition to those 50 CFR Part 648 further time and resources revising their categories of applications and section 307(b) showings after having rulemaking proceedings listed in [Docket No. 120109034–2171–01] already obtained a favorable result from paragraph 21 of the Order, and in the RIN 0648–XC369 the Commission under pre-Second R&O Second R&O (26 FCC Rcd at 2575–76), procedures. M&M requested that the the Commission held that the revised Fisheries of the Northeastern United Commission only apply the new section 307(b) procedures shall not States; Northeast Multispecies procedures to community of license apply to any pending community of Fishery; White Hake Trimester Total change applications filed after release of license change application or FM Allowable Catch Area Closure for the the Second R&O. allotment proceeding in which a Common Pool Fishery 20. The Commission disagreed that it decision on the application, or was unclear, in the Second R&O, as to allotment Report and Order, was AGENCY: National Marine Fisheries when the new procedures would apply, released prior to March 3, 2011, the Service (NMFS), National Oceanic and and further disagreed with M&M that all release date of the Second R&O. The Atmospheric Administration (NOAA), pending community of license change Commission therefore granted the Commerce. applications were ‘‘similarly situated’’ Entravision Petition to the extent set ACTION: Temporary rule; closure. to the categories of cases the forth in the Order, and denied the M&M Commission exempted from the new Petition. SUMMARY: This temporary rule closes the procedures. The majority of pending White Hake Trimester Total Allowable community of license change Report to Congress Catch (TAC) Area to all common pool applications were filed after release of 22. Because no new rules are being groundfish vessels fishing with trawl the Rural NPRM, and thus were on adopted by the Commission in the gear, sink gillnet gear, or longline/hook notice that the procedures could change Order, but merely clarifications of gear for the remainder of Trimester 2, while their applications were pending. methodology and applicability of rules through December 31, 2012. This action While the Commission further carved previously adopted, the Commission is necessary to prevent the common out a limited exception to the new will not send a copy of the Order to pool fishery from exceeding its procedures in FM allotment and hybrid Congress under the Congressional Trimester 2 TAC or its annual catch proceedings where licenses were Review Act. See 5 U.S.C. 801(a)(1)(A). limit for white hake. This rule is modified or construction permits expected to slow the catch rate of white granted, to the extent that similar Ordering Clauses hake in the common pool fishery for the equities may exist in the case of certain remainder of Trimester 2. pending community of license change 23. Accordingly, it is ordered, pursuant to the authority contained in DATES: Effective December 5, 2012, applications, it stated it would entertain through 2400 hours, December 31, 2012. requests for waiver of the revised sections 1, 2, 4(i), 303, 307, and 309(j) FOR FURTHER INFORMATION CONTACT: procedures on a case-by-case basis. The of the Communications Act of 1934, 47 Brett Alger, Fisheries Management Commission rejected M&M’s attempt to U.S.C. 151, 152, 154(i), 303, 307, and Specialist, 978–675–2153, Fax 978–281– analogize those pending community of 309(j), that this Second Order on license change applications without Reconsideration is adopted. 9135. such equities, however, and thus M&M’s 24. It is further ordered that the SUPPLEMENTARY INFORMATION: request to apply the prior procedures to Petition for Reconsideration & Regulations governing the NE all such applications pending as of Comments Regarding the Following multispecies fishery are found at 50 CFR release of the Second R&O. Matter, filed by Anthony V. Bono, part 648, subpart F. Beginning in fishing 21. The Commission was more Friendship Broadcasting, LLC; the year (FY) 2012 (May 1, 2012—April 30, persuaded by Entravision’s equitable Petition for Partial Reconsideration, 2013), the common pool’s sub-annual argument to reconsider its application of filed by William B. Clay; the Petition for catch limit (ACL) for each stock is the new policies. It envisioned Partial Reconsideration, filed by M&M apportioned into trimester TACs situations in which, for example, two Broadcasters, Ltd.; and the Petition for (Trimester 1 May 1—August 31; applications for change of community of Reconsideration, filed by Educational Trimester 2 September 1—December 31; license were granted on the same day, Media Foundation and the Kent and Trimester 3 January 1—April 30). but one would become final under the Frandsen Radio Companies, are denied. The regulations at § 648.82(n) require pre-Second R&O procedures while the It is further ordered that the Petition for the Regional Administrator to close the other would be subject to the new Reconsideration and/or Clarification, Trimester TAC Area for a stock when procedures merely because of a factor filed by Entravision Communications available information supports a beyond the applicant’s control, i.e., the Corporation; and the Petition for Partial determination that 90 percent of the filing of a petition for reconsideration or Reconsideration, filed by Radio One, Trimester TAC is projected to be caught. application for review of the application Inc., et al., are granted in part and The Trimester TAC Area for a stock will grant. The Commission found no denied in part. close to all common pool vessels fishing
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with gear capable of catching that stock undermining the conservation Fishery Management Council under for the remainder of the trimester. Any objectives of the Fishery Management authority of the Magnuson-Stevens overages of a trimester TAC will be Plan. Any overage of the Trimester 2 Fishery Conservation and Management deducted from Trimester 3, and any TAC must be deducted from the Act. Regulations governing fishing by overages of the common pool’s sub-ACL Trimester 3 TAC, and any overage of the U.S. vessels in accordance with the FMP at the end of the FY will be deducted total sub-ACL in FY 2012 must be appear at subpart H of 50 CFR part 600 from the common pool’s sub-ACL the deducted from the FY 2013 sub-ACL. and 50 CFR part 679. following FY. Any uncaught portion of This would have adverse economic The 2012 Pacific cod total allowable the Trimester 1 and Trimester 2 TAC consequences on common pool vessels. catch (TAC) specified for catcher vessels will be carried over into the next The AA further finds, pursuant to 5 greater than or equal to 60 feet length trimester. Any uncaught portion of the U.S.C. 553(d)(3), good cause to waive overall (LOA) using pot gear in the BSAI common pool’s sub-ACL may not be the 30-day delayed effectiveness period is 19,509 metric tons (mt) as established carried over into the following FY. for the reasons stated above. by the final 2012 and 2013 harvest The FY 2012 common pool sub-ACL Authority: 16 U.S.C. 1801 et seq. specifications for groundfish in the for white hake is 26 mt (57,320 lb). The BSAI (77 FR 10669, February 23, 2012). Trimester 2 TAC is 8.1 mt (17,853 lb). Dated: November 29, 2012. The Regional Administrator has Because only a few vessels are Lindsay Fullenkamp, determined that catcher vessels greater responsible for the white hake catch, it Acting Deputy Director, Office of Sustainable than or equal to 60 feet LOA using pot was difficult to project when 90 percent Fisheries, National Marine Fisheries Service. gear will not be able to harvest 6,300 mt of the Trimester TAC would be reached. [FR Doc. 2012–29401 Filed 11–30–12; 4:15 pm] of the 2012 Pacific cod TAC allocated to Therefore, NMFS has monitored the BILLING CODE 3510–22–P those vessels under white hake catch very closely to § 679.20(a)(7)(ii)(A)(5). In accordance determine when 90 percent was with § 679.20(a)(7)(iii) and taking into exceeded. Based on the best available DEPARTMENT OF COMMERCE account the capabilities of the sectors to data, which includes vessel trip reports harvest reallocated amounts of Pacific National Oceanic and Atmospheric (VTRs), dealer reported landings, and cod, the Regional Administrator has also Administration vessel monitoring system (VMS) determined that this unharvested information, NMFS has projected that amount is unlikely to be entirely 50 CFR Part 679 90 percent of the Trimester 2 TAC for harvested through the reallocation white hake was harvested on November [Docket No. 111213751–2102–02] hierarchy set forth in 26, 2012. Therefore, effective December RIN 0648–XC376 § 679.20(a)(7)(iii)(A). Therefore, 5, 2012, the White Hake Trimester TAC following the reallocation hierarchies Area is closed for the remainder of set forth in both § 679.20(a)(7)(iii)(A) Trimester 2, through December 31, Fisheries of the Exclusive Economic Zone Off Alaska; Reallocation of and § 679.20(a)(7)(iii)(C), NMFS 2012, to all common pool vessels fishing reallocates 500 mt to catcher vessels less with trawl gear, sink gillnet gear, and Pacific Cod in the Bering Sea and Aleutian Islands Management Area than 60 ft. LOA using hook-and-line or longline/hook gear. The White Hake pot gear, 800 mt to pot catcher/ Trimester TAC Area will reopen to AGENCY: National Marine Fisheries processors, and 5,000 mt to hook-and- common pool vessels fishing with trawl, Service (NMFS), National Oceanic and line catcher/processors.1 sink gillnet, and longline/hook gear at Atmospheric Administration (NOAA), The harvest specifications for Pacific the beginning of Trimester 3, at 0001 Commerce. cod included in the final 2012 harvest hours, January 1, 2013. ACTION: Temporary rule; reallocation. specifications for groundfish in the Classification BSAI (77 FR 10669, February 23, 2012) SUMMARY: NMFS is reallocating the and inseason adjustment (77 FR 53152, This action is required by 50 CFR part projected unused amounts of Pacific cod 648, and is exempt from review under August 31, 2012) are revised as follows: from catcher vessels greater than or 118,106 mt for hook-and-line catcher/ Executive Order 12866. equal to 60 feet length overall (LOA) The Assistant Administrator for processors, 4,284 mt for pot catcher/ using pot gear to hook-and-line catcher/ processors, 8,880 mt for catcher vessels Fisheries, NOAA (AA), finds good cause processors, pot catcher/processors, and pursuant to 5 U.S.C. 553(b)(B) to waive less than 60 ft. LOA using hook-and-line catcher vessels less than 60 feet LOA or pot gear, and 13,209 mt for catcher prior notice and the opportunity for using hook-and-line or pot gear in the public comment because it would be vessels greater than or equal to 60 ft. Bering Sea and Aleutian Islands LOA using pot gear. impracticable and contrary to the public management area. This action is interest. This action closes the White necessary to allow the 2012 total Classification Hake Trimester TAC Area for common allowable catch of Pacific cod to be This action responds to the best pool vessels fishing with trawl gear, harvested. sink gillnet gear, or longline/hook gear available information recently obtained through December 31, 2012. The DATES: Effective November 30, 2012, from the fishery. The Assistant regulations at § 648.82 require this through 2400 hrs, Alaska local time Administrator for Fisheries, NOAA action to ensure that the common pool (A.l.t.), December 31, 2012. (AA), finds good cause to waive the fishery does not exceed its catch limits FOR FURTHER INFORMATION CONTACT: requirement to provide prior notice and for white hake in FY 2012. The catch Obren Davis, 907–586–7228. 1 SUPPLEMENTARY INFORMATION: § 679.20(a)(7)(iii)(A) requires that the projected data indicating that 90 percent of the NMFS unharvested amount from catcher vessels greater Trimester 2 TAC for white hake has manages the groundfish fishery in the than or equal to 60 feet length overall (LOA) using been caught only recently became Bering Sea and Aleutian Islands (BSAI) pot gear that is unlikely to be harvested through the available. If implementation of this according to the Fishery Management reallocation hierarchy set forth in § 679.20(a)(7)(iii)(A) be reallocated to the pot closure is delayed to solicit prior public Plan for Groundfish of the Bering Sea catcher/processor sector in accordance with the comment, the white hake Trimester 2 and Aleutian Islands Management Area reallocation hierarchy set forth in TAC could be exceeded, thereby (FMP) prepared by the North Pacific 679.20(a)(7)(iii)(C).
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opportunity for public comment notification is necessary to allow for the prior notice and opportunity for public pursuant to the authority set forth at 5 orderly conduct and efficient operation comment. U.S.C. 553(b)(B) as such requirement is of this fishery, to allow the industry to This action is required by § 679.20 impracticable and contrary to the public plan for the fishing season, and to avoid and is exempt from review under interest. This requirement is potential disruption to the fishing fleet Executive Order 12866. impracticable and contrary to the public as well as processors. NMFS was unable interest as it would prevent NMFS from to publish a notice providing time for Authority: 16 U.S.C. 1801 et seq. responding to the most recent fisheries public comment because the most Dated: November 30, 2012. data in a timely fashion and would recent, relevant data only became Lindsay Fullenkamp, delay the reallocation of Pacific cod available as of November 29, 2012. specified for the Pacific cod sectors The AA also finds good cause to Acting Deputy Director, Office of Sustainable affected by this action. Since the fishery waive the 30-day delay in the effective Fisheries, National Marine Fisheries Service. is currently open, it is important to date of this action under 5 U.S.C. [FR Doc. 2012–29394 Filed 11–30–12; 4:15 pm] immediately inform the industry as to 553(d)(3). This finding is based upon BILLING CODE 3510–22–P the revised allocations. Immediate the reasons provided above for waiver of
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Proposed Rules Federal Register Vol. 77, No. 234
Wednesday, December 5, 2012
This section of the FEDERAL REGISTER Docket Clerk during regular business United States in any district in which contains notices to the public of the proposed hours, or can be viewed at: http:// the handler is an inhabitant, or has his issuance of rules and regulations. The www.regulations.gov. All comments or her principal place of business, has purpose of these notices is to give interested submitted in response to this rule will jurisdiction to review USDA’s ruling on persons an opportunity to participate in the be included in the record and will be the petition, provided an action is filed rule making prior to the adoption of the final rules. made available to the public. Please be not later than 20 days after the date of advised that the identity of the the entry of the ruling. individuals or entities submitting the This proposal invites comments on DEPARTMENT OF AGRICULTURE comments will be made public on the reapportionment of the membership of Internet at the address provided above. the Committee established under the Agricultural Marketing Service FOR FURTHER INFORMATION CONTACT: Oregon-Washington pear marketing Teresa Hutchinson or Gary Olson, order. This rule would reapportion the 7 CFR Part 927 Northwest Marketing Field Office, processor membership such that the [Doc. No. AMS–FV–12–0032; FV12–927–3 Marketing Order and Agreement three processor members and alternate PR] Division, Fruit and Vegetable Program, members would be selected from the AMS, USDA; Telephone: (503) 326– production area-at-large rather than Pears Grown in Oregon and 2724, Fax: (503) 326–7440, or Email: from a specific district. With nine Washington; Committee Membership [email protected] or members present, the Committee Reapportionment for Processed Pears [email protected]. unanimously recommended this change Small businesses may request at a meeting held on May 30, 2012, with AGENCY: Agricultural Marketing Service, information on complying with this a request that the change be made USDA. regulation by contacting Laurel May, effective on July 1, 2013. ACTION: Proposed rule. Marketing Order and Agreement Section 927.20(b) establishes the Division, Fruit and Vegetable Program, Processed Pear Committee consisting of SUMMARY: This rule invites comments AMS, USDA, 1400 Independence ten members. Three members are on reapportionment of the membership Avenue SW., STOP 0237, Washington, growers, three members are handlers, of the Processed Pear Committee DC 20250–0237; Telephone: (202) 720– three members are processors, and one (Committee) established under the 2491, Fax: (202) 720–8938, or Email: member represents the public. For each Oregon-Washington pear marketing [email protected]. member, there are two alternate order. The marketing order regulates the members, designated as the ‘‘first handling of processed pears grown in SUPPLEMENTARY INFORMATION: This alternate’’ and the ‘‘second alternate,’’ Oregon and Washington, and is proposal is issued under Marketing respectively. Committee membership is administered locally by the Committee. Order No. 927, as amended (7 CFR part apportioned among two districts. This rule would reapportion the 927), regulating the handling of pears Section 927.11(b) defines the districts as processor membership such that the grown in Oregon and Washington, follows: District 1—The State of three processor members and alternate hereinafter referred to as the ‘‘order.’’ Washington and District 2—The State of members would be selected from the The order is effective under the Oregon. District 1 is represented by two production area-at-large rather than Agricultural Marketing Agreement Act grower members, two handler members from a specific district. In an industry of 1937, as amended (7 U.S.C. 601–674), and two processor members. District 2 with few processors, this change would hereinafter referred to as the ‘‘Act.’’ is represented by one grower member, provide the flexibility needed to help The Department of Agriculture one handler member, and one processor ensure that all processor member (USDA) is issuing this rule in member. positions are filled, resulting in effective conformance with Executive Order The order provides in § 927.20(c) that representation of the processed pear 12866. USDA, upon recommendation of the industry. This proposal has been reviewed under Executive Order 12988, Civil Committee, may reapportion members DATES: Comments must be received by Justice Reform. This rule is not intended among districts, may change the number February 4, 2013. to have retroactive effect. of members and alternate members, and ADDRESSES: Interested persons are The Act provides that administrative may change the composition by invited to submit written comments proceedings must be exhausted before changing the ratio of members, concerning this proposal. Comments parties may file suit in court. Under including their alternate members. must be sent to the Docket Clerk, section 608c(15)(A) of the Act, any This rule would add a new § 927.150 Marketing Order and Agreement handler subject to an order may file to the order’s administrative rules and Division, Fruit and Vegetable Program, with USDA a petition stating that the regulations reapportioning the processor AMS, USDA, 1400 Independence order, any provision of the order, or any membership such that the three Avenue SW., STOP 0237, Washington, obligation imposed in connection with processor members and alternate DC 20250–0237; Fax: (202) 720–8938; the order is not in accordance with law members would be selected from the Internet: http://www.regulations.gov. All and request a modification of the order production area-at-large rather than comments should reference the or to be exempted therefrom. A handler from a specific district. The Committee document number and the date and is afforded the opportunity for a hearing recommended this change because the page number of this issue of the Federal on the petition. After the hearing, USDA District 2 processor member Register and will be made available for would rule on the petition. The Act representative on the Committee is no public inspection in the Office of the provides that the district court of the longer processing pears. As a result, the
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District 2 processor member and based on Committee records, the increased opportunities for citizen alternate member positions are currently Committee has estimated that all of the access to Government information and vacant. This change would result in Oregon-Washington pear handlers services, and for other purposes. more effective representation of the currently ship less than $7,000,000 USDA has not identified any relevant processed pear industry by allowing the worth of processed pears each on an Federal rules that duplicate, overlap or Committee to fill these vacant positions annual basis. From this information, it conflict with this proposed rule. with processors from District 1. Since is concluded that the majority of In addition, the Committee’s meeting 2006, pear acreage in Oregon and producers and handlers of Oregon and was widely publicized throughout the Washington has decreased by 10 Washington processed pears may be Oregon-Washington pear industry and percent. classified as small entities. all interested persons were invited to Reapportioning the processor There are three pear processing plants attend and participate in Committee membership would allow all processor in the production area, all currently deliberations on all issues. Like all member and alternate member positions located in Washington. All three pear Committee meetings, the May 30, 2012, to be filled. The Committee processors would be considered large meeting was a public meeting and all recommended maintaining the three entities under the SBA’s definition of entities, both large and small, were able processor member positions, but small businesses. to express views on this issue. Finally, specifying that such members and This rule would add a new § 927.150 interested persons are invited to submit alternate members may be located in to the order’s administrative rules and information on the regulatory and either district. The proposed regulatory regulations reapportioning the processor informational impacts of this action on language includes flexibility that would membership such that the three small businesses. provide opportunity for representation processor members would be selected A small business guide on complying from District 2 should a processor once from the production area-at-large. This with fruit, vegetable, and specialty crop again process pears in that district. rule would be effective July 1, 2013. marketing agreements and orders may Authority for reapportioning the Initial Regulatory Flexibility Analysis be viewed at: www.ams.usda.gov/ Committee is provided in § 927.20(c) of MarketingOrderSmallBusinessGuide. Pursuant to requirements set forth in the order. Any questions about the compliance the Regulatory Flexibility Act (RFA) (5 The Committee believes that these guide should be sent to Laurel May at U.S.C. 601–612), the Agricultural proposed changes would not negatively the previously mentioned address in the Marketing Service (AMS) has impact producers, handlers, or FOR FURTHER INFORMATION CONTACT considered the economic impact of this processors in terms of cost. The benefits section. action on small entities. Accordingly, for this rule are not expected to be A 60-day comment period is provided AMS has prepared this initial regulatory disproportionately greater or less for to allow interested persons to respond flexibility analysis. small producers, handlers, or processors to this proposal. All written comments The purpose of the RFA is to fit than for larger entities. timely received will be considered regulatory actions to the scale of The Committee discussed alternatives before a final determination is made on business subject to such actions in order to this rule, including leaving the this matter. that small businesses will not be unduly District 2 processor member and or disproportionately burdened. alternate member positions vacant. List of Subjects in 7 CFR Part 927 Marketing orders issued pursuant to the However, the Committee believes that Marketing agreements, Pears, Act, and rules issued thereunder, are three members should continue to Reporting and recordkeeping unique in that they are brought about represent processors on the Committee, requirements. through group action of essentially except the representative should be For the reasons set forth in the small entities acting on their own chosen from the production area-at-large preamble, 7 CFR part 927 is proposed to behalf. Thus, both statutes have small rather than from a specific district. be amended as follows: entity orientation and compatibility. In accordance with the Paperwork There are approximately 1,500 Reduction Act of 1995, (44 U.S.C. PART 927—PEARS GROWN IN producers of processed pears in the chapter 35), the order’s information OREGON AND WASHINGTON regulated production area and collection requirements have been approximately 46 handlers of processed previously approved by the Office of 1. The authority citation for 7 CFR pears subject to regulation under the Management and Budget (OMB) and part 927 continues to read as follows: order. Small agricultural producers are assigned OMB No. 0581–0189, Generic Authority: 7 U.S.C. 601–674. defined by the Small Business Fruit Crops. No changes in those 2. A new undesignated center Administration (SBA) (13 CFR 121.201) requirements as a result of this action heading, ‘‘Administrative Bodies,’’ is as those having annual receipts of less are necessary. Should any changes added before a new § 927.150 which is than $750,000, and small agricultural become necessary, they would be proposed to read as follows: service firms are defined as those whose submitted to OMB for approval. annual receipts are less than $7,000,000. Additional reporting or recordkeeping § 927.150 Reapportionment of the According to the Noncitrus Fruits and requirements would not be imposed on Processed Pear Committee. Nuts 2011 Preliminary Summary issued either small or large processed pear Pursuant to § 927.20(c), on and after in March 2012 by the National handlers. As with all Federal marketing July 1, 2013, the 10-member Processed Agricultural Statistics Service, the total order programs, reports and forms are Pear Committee is reapportioned and farm-gate value of summer/fall periodically reviewed to reduce shall consist of three grower members, processed pears grown in Oregon and information requirements and three handler members, three processor Washington for 2011 was $35,315,000. duplication by industry and public members, and one member representing Based on the number of processed pear sector agencies. the public. For each member, there are producers in Oregon and Washington, AMS is committed to complying with two alternate members, designated as the average gross revenue for each the E-Government Act, to promote the the ‘‘first alternate’ and the ‘‘second producer can be estimated at use of the Internet and other alternate,’’ respectively. District 1, the approximately $23,543. Furthermore, information technologies to provide State of Washington, shall be
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represented by two grower members and include ‘‘RIN 2590–AA57’’ in the Soundness Act of 1992 (Safety and two handler members. District 2, the subject line of the message. Soundness Act) provided the Secretary State of Oregon, shall be represented by • Hand Delivered/Courier: The hand of the U.S. Department of Housing and one grower member and one handler delivery address is: Alfred M. Pollard, Urban Development (HUD) with specific member. Processor members may be General Counsel, Attention: Comments/ authority to establish, monitor and from District 1, District 2, or from both. RIN 2590–AA57, Federal Housing enforce housing goals for mortgages Dated: November 29, 2012. Finance Agency, Eighth Floor, 400 purchased by Fannie Mae and Freddie Mac (collectively, the Enterprises). In David R. Shipman, Seventh Street SW., Washington, DC 20024. The package should be logged in addition, section 309(m) and (n) of the Administrator, Agricultural Marketing Federal National Mortgage Association Service. at the Seventh Street entrance Guard Desk, First Floor, on business days Charter Act and section 307(e) and (f) of [FR Doc. 2012–29425 Filed 12–4–12; 8:45 am] between 9 a.m. and 5 p.m. the Federal Home Loan Mortgage BILLING CODE 3410–02–P • U.S. Mail, United Parcel Service, Corporation Act (collectively, Charter Federal Express, or Other Mail Service: Acts) required that each Enterprise The mailing address for comments is: submit information on its housing FEDERAL HOUSING FINANCE Alfred M. Pollard, General Counsel, activities to the Secretary of HUD, the AGENCY Attention: Comments/RIN 2590–AA57, Committee on Financial Services of the Federal Housing Finance Agency, House of Representatives, and the 12 CFR Part 1209 Eighth Floor, 400 Seventh Street SW., Committee on Banking, Housing and Washington, DC 20024. Urban Affairs of the Senate.1 See 12 RIN 2590–AA57 FOR FURTHER INFORMATION CONTACT: Lyn U.S.C. 1723a(m) and (n); 12 U.S.C. Rules of Practice and Procedure: Abrams, Assistant General Counsel, 1456(e) and (f). The Safety and Soundness Act, prior Enterprise and Federal Home Loan (202) 649–3059; or Sharon Like, to the HERA amendments, authorized Bank Housing Goals Related Managing Associate General Counsel, HUD to initiate cease and desist Enforcement Amendment (202) 649–3057, Office of General proceedings and impose civil money Counsel. These are not toll-free penalties against an Enterprise for AGENCY: Federal Housing Finance numbers. The mailing address for each failure to submit or comply with a Agency. contact is: Office of General Counsel, housing plan or failure to submit ACTION: Proposed rule. Federal Housing Finance Agency, information on its housing activities. Eighth Floor, 400 Seventh Street SW., SUMMARY: The Federal Housing Finance HUD issued regulations implementing Washington, DC 20024. The telephone its enforcement authority against the Agency (FHFA) is proposing to amend number for the Telecommunications its Rules of Practice and Procedure Enterprises for these violations. See 24 Device for the Hearing Impaired is (800) CFR part 81, Subpart G. (RPP) to specify that the rules of 877–8339. practice and procedure for hearings on HERA amended the Safety and the record in Subpart C therein shall SUPPLEMENTARY INFORMATION: Soundness Act in 2008 to create FHFA apply to any cease and desist or civil I. Comments as an independent agency of the federal money penalty proceedings brought government and, among other things, FHFA invites comments on all aspects against the Federal National Mortgage transferred the responsibility to of the proposed rule, and will revise the Association (Fannie Mae), the Federal establish, monitor and enforce the language of the proposed rule as Home Loan Mortgage Corporation housing goals for the Enterprises from appropriate after taking all comments (Freddie Mac), or the Federal Home HUD to FHFA, and required that each into consideration. Copies of all Loan Banks (Banks) for failure to submit Enterprise submit information on its comments will be posted without or follow a housing plan or failure of an housing activities to the Director of change on the FHFA Web site at http:// Enterprise to submit information on its FHFA instead of to the Secretary of www.fhfa.gov, and will include any housing activities, except where such HUD. See Public Law 110–289, 122 Stat. personal information you provide, such rules are inconsistent with related 2654 (2008), codified at 12 U.S.C. 4501 as your name, address, email address statutory provisions, in which case the et seq. The Safety and Soundness Act, and telephone number. In addition, statutory provisions shall apply. as amended, requires the Director of copies of all comments received will be FHFA to establish new annual housing DATES: Written comments must be available for examination by the public goals for mortgages purchased by the received on or before January 22, 2013. on business days between the hours of Enterprises, effective for 2010 and ADDRESSES: You may submit your 10 a.m. and 3 p.m., at the Federal beyond. FHFA reviews mortgage comments, identified by Regulatory Housing Finance Agency, Eighth Floor, purchase data provided by each Information Number (RIN) 2590–AA57, 400 Seventh Street SW., Washington, Enterprise in its Annual Housing by any of the following methods: DC 20024. To make an appointment to • Activities Report and other mortgage Email: Comments to Alfred M. inspect comments, please call the Office reports, as well as other available data, Pollard, General Counsel, may be sent of General Counsel at (202) 649–3804. and determines whether the Enterprise by email to [email protected]. II. Background has met the housing goals. Please include ‘‘RIN 2590–AA57’’ in the Enterprise compliance with the subject line of the message. A. Statutory and Regulatory Background housing goals is enforced under section • Federal eRulemaking Portal: http:// 1336 of the Safety and Soundness Act, www.regulations.gov. Follow the 1. Enterprise Enforcement for Housing Plan and Failure To Submit Housing instructions for submitting comments. If 1 Activities Information The Charter Acts require that the Enterprises you submit your comment to the submit information on their housing activities to Federal eRulemaking Portal, please also Prior to the enactment of the Housing the Committee on Banking, Finance and Urban Affairs of the House of Representatives. The send it by email to FHFA at and Economic Recovery Act of 2008 Enterprises submit this information to that [email protected] to ensure (HERA), the Federal Housing Committee’s successor, the Committee on Financial timely receipt by the Agency. Please Enterprises Financial Safety and Services of the House of Representatives.
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which provides that if an Enterprise Enterprise housing goals regulation, judicial review of a final order pursuant fails to meet a housing goal determined does not specifically address to a proceeding under sections 1341 and by the Director to be feasible, the enforcement actions for failure to 1345. See 12 U.S.C. 4583. Section 1344 Director may, in his or her discretion, submit or follow a housing plan. See 12 authorizes the Director to bring a civil require the Enterprise to submit a CFR Part 1281. action in federal court to enforce a housing plan describing the specific notice or order under sections 1341 and actions the Enterprise will take to 3. Applicable Enforcement Provisions 1345. achieve the goal. See 12 U.S.C. 4566. Sections 1341 to 1348 of the Safety Section 1336 further provides that if and Soundness Act set forth the grounds d. Public Disclosure and Notice of an Enterprise fails to submit an and procedures for the enforcement Service acceptable housing plan or fails to actions that are the subject of this Section 1346 governs disclosure of the comply with the plan, the Director may proposed rule. Following is a summary Director’s enforcement actions under initiate cease and desist proceedings or of these provisions. sections 1342 and 1343, public hearings, impose civil money penalties against and retention of documents. See 12 the Enterprise in accordance with a. Cease and Desist Proceedings U.S.C. 4586. Section 1347 gives the sections 1341 and 1345, respectively, of Section 1341 of the Safety and Director authority to determine, by the Safety and Soundness Act, exercise Soundness Act sets forth the grounds for regulation or otherwise, the manner of other appropriate enforcement initiating cease and desist proceedings notice of service. See 12 U.S.C. 4587. and the procedures FHFA must follow authority, or seek other appropriate e. Subpoena Authority actions. See 12 U.S.C. 4566(c)(1) and when filing a notice of charges against (c)(7), 4581, 4585. In addition, sections an Enterprise and issuing an order in Section 1348 sets forth the Director’s 1341 and 1345 provide that the Director such proceedings. See 12 U.S.C. 4581. subpoena authority for administrative may initiate cease and desist The grounds for issuing a notice of proceedings under sections 1341 to proceedings or impose civil money charges are: 1348. See 12 U.S.C. 4588. penalties, respectively, if an Enterprise (1) Failure to submit housing activity 4. General Enforcement Under FHFA’s fails to submit information on its information required under section RPP housing activities. Id. FHFA’s 309(m) or (n) of Fannie Mae’s Charter regulations do not currently address Act or section 307(e) or (f) of Freddie Sections 1371 through 1379D of the enforcement proceedings for these Mac’s Charter Act; Safety and Soundness Act authorize the violations. Accordingly, as further (2) Failure to submit an acceptable Director to initiate civil administrative discussed below, FHFA is proposing to housing plan with respect to the enforcement actions against the amend its RPP to implement the hearing housing goals; or Enterprises, the Banks, and their entity- procedures for enforcement actions (3) Failure to comply with a housing affiliated parties to enforce, as needed, under sections 1341 to 1348 of the plan.2 applicable law, rules, orders and Safety and Soundness Act. See 12 agreements pertaining to the safe and b. Civil Money Penalties U.S.C. 4581–4588. sound operation of the Enterprises and Section 1345 sets forth the grounds Banks. See 12 U.S.C. 4631—4641. 2. Bank Housing Plan Enforcement for imposing civil money penalties FHFA’s RPP implements these Section 10C(a) of the Federal Home under this section, which are identical provisions by setting forth the authority, Loan Bank Act (Bank Act), as amended to the grounds for initiating cease and grounds and procedures for cease and by HERA (12 U.S.C. 1430c(a)), requires desist proceedings under section 1341. desist proceedings, temporary cease and the Director of FHFA to establish See 12 U.S.C. 4585. This section also desist orders, civil money penalty housing goals with respect to the sets forth the procedures governing proceedings, and removal and purchase of mortgages, if any, by the imposition of civil money penalties, the prohibition proceedings. Subpart C of Banks. Section 10C(a) further states that factors the Director shall consider in the RPP sets forth the specific rules of the goals shall be consistent with the determining the amount of a penalty, practice and procedure for hearings on goals established for the Enterprises the maximum amount of penalty the the record and hearings in accordance under sections 1331 through 1334 of the Director may impose, and authorizes the with the APA in connection with these Safety and Soundness Act, taking into Director to bring an action in federal enforcement proceedings. consideration the unique mission and court to collect a penalty. However, the RPP does not ownership structure of the Banks. implement provisions governing Section 10C(d) provides that the c. Hearings, Judicial Review and enforcement proceedings for failure to monitoring and enforcement Enforcement submit or comply with a housing plan requirements of section 1336 of the Section 1342 sets forth the hearing or failure to submit information on Safety and Soundness Act shall apply to requirements for hearings under housing activities. The hearing the Banks in the same manner and to sections 1341 and 1345. See 12 U.S.C. procedures set forth in the Safety and the same extent as they apply to the 4582. Section 1342 specifies that Soundness Act for adjudicating these Enterprises. Thus, in accordance with hearings shall be held on the record and actions are almost indistinguishable section 1336, if a Bank fails to submit in accordance with the Administrative from the statutory procedures for or follow an acceptable housing plan, Procedures Act (APA). This section also adjudicating enforcement actions under the Director may initiate cease and governs the issuance of the order from sections 1371 to 1379D. Accordingly, desist proceedings or impose civil the Director after the hearing. Section the formal hearing procedures set forth money penalties against the Bank. 1343 sets forth the procedures for in Subpart C of the RPP are well suited FHFA’s Bank housing goals to govern enforcement proceedings regulation, which implements the 2 Sections 1341 and 1345 also include Enterprise under sections 1341 to 1348. FHFA statutory housing goals requirements, failure to submit a report under section 1327 as stated this in the SUPPLEMENTARY grounds for enforcement actions. However, section INFORMATION includes housing plan provisions 1327 does not exist in the Safety and Soundness published with the RPP similar to those in FHFA’s Enterprise Act, as amended by HERA, its subject having been and noted that promoting use of the housing goals regulation, but like the subsumed in section 1314. Subpart C procedures for housing-goals-
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related enforcement proceedings both amendments to each of the affected because the regulation is applicable supports an economies of scale sections of the RPP. only to the Enterprises and the Banks, approach to regulation, and provides IV. Consideration of Differences which are not small entities for certainty with respect to the process. Between the Banks and the Enterprises purposes of the Regulatory Flexibility See 76 FR 53596, 53601–53602 (Aug. Act. 26, 2011). Section 1313(f) of the Safety and Soundness Act, as amended by HERA, List of Subjects in 12 CFR Part 1209 B. Conservatorship requires the Director, when Administrative practice and On September 6, 2008, the Director of promulgating regulations relating to the procedure, Federal home loan banks, FHFA appointed FHFA as conservator Banks, to consider the differences of the Enterprises to maintain the between the Banks and the Enterprises Mortgages, Reporting and recordkeeping Enterprises in a safe and sound financial with respect to the Banks’: cooperative requirements. condition and to help assure ownership structure; mission of Authority and Issuance performance of their public mission. providing liquidity to members; The Enterprises remain under affordable housing and community For the reasons stated in the conservatorship at this time. development mission; capital structure; SUPPLEMENTARY INFORMATION, FHFA joint and several liability; and any other proposes to amend part 1209, III. Analysis of Proposed Rule differences the Director considers Subchapter A, Chapter XII of title 12 of As successor to HUD in establishing, appropriate. See 12 U.S.C. 4513(f). In the Code of Federal Regulations as monitoring and enforcing the housing preparing this proposed rule, the follows: goals, FHFA is responsible for initiating Director considered the differences and adjudicating enforcement actions between the Banks and the Enterprises PART 1209—RULES OF PRACTICE for failure to submit or comply with a as they relate to the above factors, and AND PROCEDURE housing plan. FHFA is also responsible determined that the Banks should not be for ensuring that an Enterprise submits treated differently from the Enterprises 1. The authority citation for part 1209 information on its housing activities to for purposes of the proposed rule, is revised to read as follows: Congress and the Director, and FHFA particularly as section 10C(d) of the Bank Act provides that the monitoring Authority: 5 U.S.C. 554, 556, 557, and 701 has the authority to enforce this et seq.; 12 U.S.C. 1430c(d); 12 U.S.C. 4501, 3 and enforcement requirements of requirement. 4502, 4503, 4511, 4513, 4513b, 4517, 4526, None of the Banks was subject to section 1336 of the Safety and Soundness Act shall apply to the Banks 4566(c)(1) and (c)(7), 4581–4588, 4631–4641; housing goals in 2011. Under FHFA’s and 28 U.S.C. 2461 note. Bank housing goals regulation, to be in the same manner and to the same subject to housing goals, the total extent as they apply to the Enterprises. 2. Amend § 1209.1 by: unpaid principal balance of loans Nonetheless, FHFA requests comments on whether these factors should result a. In paragraph (c)(2), remove the purchased through the Acquired word ‘‘and’’; Member Assets programs held by a Bank in a revision of the proposed must exceed $2.5 billion in a given year. amendment as it relates to the Banks. b. In paragraph (c)(3), remove ‘‘.’’ at the end of the paragraph and add in its See 12 CFR Part 1281. Mortgage V. Paperwork Reduction Act place ‘‘; and’’; and purchase volumes did not individually The proposed rule does not contain exceed $2.5 billion at any of the Banks any information collection requirement c. Add new paragraph (c)(4) to read as in 2011. that requires the approval of the Office follows: To provide clarity on the rules of of Management and Budget under the § 1209.1 Scope. practice and procedure that would Paperwork Reduction Act (44 U.S.C. apply should FHFA initiate enforcement 3501 et seq.). * * * * * actions under sections 1341 to 1348 of (c) * * * the Safety and Soundness Act, the VI. Regulatory Flexibility Act (4) Enforcement proceedings under proposed rule would amend § 1209.1(c) The Regulatory Flexibility Act (5 sections 1341 through 1348 of the Safety of the RPP to specify that the rules of U.S.C. 601 et seq.) requires that a and Soundness Act, as amended (12 practice and procedure for hearings on regulation that has a significant U.S.C. 4581 through 4588), and section the record in Subpart C therein shall economic impact on a substantial apply to enforcement proceedings under number of small entities, small 10C of the Federal Home Loan Bank sections 1341 to 1348, except where businesses, or small organizations must Act, as amended (12 U.S.C. 1430c), such rules are inconsistent with sections include an initial regulatory flexibility except where the Rules of Practice and 1341 to 1348 or section 10C of the Bank analysis describing the regulation’s Procedure in Subpart C are inconsistent Act, in which case those statutory impact on small entities. Such an with such statutory provisions, in which provisions shall apply. The amendment analysis need not be undertaken if the case the statutory provisions shall would codify FHFA’s intent as agency has certified that the regulation apply. expressed in the SUPPLEMENTARY will not have a significant economic Dated: November 29, 2012. INFORMATION published with the RPP. impact on a substantial number of small Edward J. DeMarco, FHFA is proposing to amend § 1209.1(c) entities. 5 U.S.C. 605(b). FHFA has as a simpler and more efficient considered the impact of the proposed Acting Director, Federal Housing Finance Agency. approach than making conforming rule under the Regulatory Flexibility Act. [FR Doc. 2012–29419 Filed 12–4–12; 8:45 am] 3 The Banks are subject to similar reporting The General Counsel of FHFA BILLING CODE 8070–01–P requirements under 12 CFR Part 1281. Because the certifies that the proposed rule, if reporting requirements for the Banks are already subject to enforcement under sections 1371 through adopted as a final rule, is not likely to 1379D of the Safety and Soundness Act, they are have a significant economic impact on not addressed in this rulemaking. a substantial number of small entities
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DEPARTMENT OF TRANSPORTATION P.O. Box 7706, Wichita, KS 67277; Discussion telephone: (316) 517–5800; fax: (316) In January 2012, we issued AD 2012– Federal Aviation Administration 517–7271; email: 02–02 (77 FR 6003, February 7, 2012), [email protected]; and in October 2012, we issued AD 14 CFR Part 39 Internet: http:// 2012–22–01 (77 FR 70114, November www.cessnasupport.com. You may [Docket No. FAA–2012–1273; Directorate 23, 2012) for certain Cessna Aircraft review copies of the referenced service Identifier 2012–CE–045–AD] Company (Cessna) Models 172R and information at the FAA, Small Airplane 172S airplanes. These ADs required RIN 2120–AA64 Directorate, 901 Locust, Kansas City, inspection of the fuel return line MO 64106. For information on the Airworthiness Directives; Cessna assembly for chafing; replacement of the availability of this material at the FAA, Aircraft Company Airplanes fuel return line assembly if chafing is call (816) 329–4148. found; inspection of the clearance AGENCY: Federal Aviation Examining the AD Docket between the fuel return line assembly Administration (FAA), DOT. and both the right steering tube You may examine the AD docket on ACTION: Notice of proposed rulemaking assembly and the airplane structure; and the Internet at http:// (NPRM). adjustment as necessary. The ADs www.regulations.gov; or in person at the resulted from reports of chafed fuel SUMMARY: We propose to adopt a new Docket Management Facility between 9 return line assemblies, which were airworthiness directive (AD) for certain a.m. and 5 p.m., Monday through caused by the fuel return line assembly Cessna Aircraft Company Models 172R Friday, except Federal holidays. The AD rubbing against the right steering tube and 172S airplanes. This proposed AD docket contains this proposed AD, the assembly during full rudder pedal was prompted by reports of chafing of regulatory evaluation, any comments actuation. We issued these ADs to detect a new configuration of the fuel return received, and other information. The and correct chafing of the fuel return line assembly, which was caused by the street address for the Docket Office line assembly, which could result in fuel return line assembly rubbing (phone: 800–647–5527) is in the fuel leaking under the floor and fuel against the right steering tube assembly ADDRESSES section. Comments will be vapors entering the cabin. This during rudder pedal actuation. This available in the AD docket shortly after condition could lead to fire under the proposed AD would require you to receipt. install the forward and aft fuel return floor or in the cabin area. FOR FURTHER INFORMATION CONTACT: Jeff line support clamps and brackets; We were recently notified that the Janusz, Aerospace Engineer, Wichita inspect for a minimum clearance unsafe condition also applies to Aircraft Certification Office, FAA, 1801 between the fuel return line assembly airplanes with different serial number S. Airport Road, Room 100, Wichita, and the steering tube assembly and effectivity. Kansas 67209; phone: (316) 946–4148; clearance between the fuel return line fax: (316) 946–4107; email: Relevant Service Information assembly and the airplane structure; [email protected]. and, if any damage is found, replace the We reviewed Cessna Aircraft fuel return line assembly. We are SUPPLEMENTARY INFORMATION: Company Service Bulletin SEB–28–01, proposing this AD to correct the unsafe dated September 21, 2012. The service Comments Invited condition on these products. information describes procedures for DATES: We must receive comments on We invite you to send any written fuel return line inspection and this proposed AD by January 22, 2013. relevant data, views, or arguments about modification. ADDRESSES: You may send comments, this proposal. Send your comments to FAA’s Determination using the procedures found in 14 CFR an address listed under the ADDRESSES 11.43 and 11.45, by any of the following section. Include ‘‘Docket No. FAA– We are proposing this AD because we methods: 2012–1273; Directorate Identifier 2012– evaluated all the relevant information • Federal eRulemaking Portal: Go to CE–045–AD’’ at the beginning of your and determined the unsafe condition http://www.regulations.gov. Follow the comments. We specifically invite described previously is likely to exist or instructions for submitting comments. comments on the overall regulatory, develop in other products of the same • Fax: 202–493–2251. economic, environmental, and energy type design. • Mail: U.S. Department of aspects of this proposed AD. We will Proposed AD Requirements Transportation, Docket Operations, M– consider all comments received by the 30, West Building Ground Floor, Room closing date and may amend this This proposed AD would require W12–140, 1200 New Jersey Avenue SE., proposed AD because of those accomplishing the actions specified in Washington, DC 20590. comments. the service information described • Hand Delivery: Deliver to Mail We will post all comments we previously. address above between 9 a.m. and 5 receive, without change, to http:// Costs of Compliance p.m., Monday through Friday, except www.regulations.gov, including any Federal holidays. personal information you provide. We We estimate that this proposed AD For service information identified in will also post a report summarizing each affects 80 airplanes of U.S. registry. this proposed AD, contact Cessna substantive verbal contact we receive We estimate the following costs to Aircraft Company, Customer service, about this proposed AD. comply with this proposed AD:
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ESTIMATED COSTS
Cost per Cost on U.S. Action Labor cost Parts cost product operators
Installation of brackets and clamps and inspection of the fuel 2 work-hours × $85 per hour $78 $248 $19,840 return line assembly for chafing and clearance. = $170.
We estimate the following costs to do be required based on the results of the determining the number of aircraft that any necessary replacement that would proposed inspection. We have no way of might need this replacement:
ON-CONDITION COSTS
Cost per Action Labor cost Parts cost product
Replacement of the fuel return line assembly and adjustment of the 2 work-hours × $85 per hour = $53 $223 clearance between the fuel return line assembly and the steering tube $170. assembly and the airplane structure.
According to the manufacturer, some (1) Is not a ‘‘significant regulatory (c) Applicability of the costs of this proposed AD may be action’’ under Executive Order 12866, This AD applies to the following Cessna covered under warranty, thereby (2) Is not a ‘‘significant rule’’ under Aircraft Company (Cessna) airplanes, reducing the cost impact on affected the DOT Regulatory Policies and certificated in any category: individuals. We do not control warranty (1) Model 172R, serial numbers (S/N) Procedures (44 FR 11034, February 26, 17281573 through 17281616; and coverage for affected individuals. As a 1979), result, we have included all costs in our (2) Model 172S, S/N 172S11074 through 172S11193. cost estimate. (3) Will not affect intrastate aviation in Alaska, and (d) Subject Authority for This Rulemaking (4) Will not have a significant Joint Aircraft System Component (JASC)/ Title 49 of the United States Code economic impact, positive or negative, Air Transport Association (ATA) of America specifies the FAA’s authority to issue on a substantial number of small entities Code 2820, Aircraft Fuel Distribution System. rules on aviation safety. Subtitle I, under the criteria of the Regulatory (e) Unsafe Condition section 106, describes the authority of Flexibility Act. This AD was prompted by reports of the FAA Administrator. Subtitle VII: List of Subjects in 14 CFR Part 39 chafing of a new configuration of the fuel Aviation Programs, describes in more return line assembly, which was caused by detail the scope of the Agency’s Air transportation, Aircraft, Aviation the fuel return line assembly rubbing against authority. safety, Incorporation by reference, the right steering tube assembly during We are issuing this rulemaking under Safety. rudder pedal actuation. We are issuing this the authority described in Subtitle VII, AD to correct the unsafe condition on these products. Part A, Subpart III, Section 44701: The Proposed Amendment (f) Compliance ‘‘General requirements.’’ Under that Accordingly, under the authority section, Congress charges the FAA with delegated to me by the Administrator, Comply with this AD within the promoting safe flight of civil aircraft in the FAA proposes to amend 14 CFR part compliance times specified, unless already done. air commerce by prescribing regulations 39 as follows: for practices, methods, and procedures (g) Inspect the Fuel Return Line Assembly the Administrator finds necessary for PART 39—AIRWORTHINESS At whichever of the following compliance safety in air commerce. This regulation DIRECTIVES times that occurs later, inspect the fuel return is within the scope of that authority line assembly (Cessna part number (P/N) because it addresses an unsafe condition 1. The authority citation for part 39 0516031–1) for damage following Cessna that is likely to exist or develop on continues to read as follows: Aircraft Company Service Bulletin SEB–28– products identified in this rulemaking 01, dated September 21, 2012. Authority: 49 U.S.C. 106(g), 40113, 44701. action. (1) At the next annual inspection after the effective date of this AD; § 39.13 [Amended] Regulatory Findings (2) Within the next 100 hours time-in- 2. The FAA amends § 39.13 by adding service (TIS) after the effective date of this We determined that this proposed AD AD; or would not have federalism implications the following new airworthiness directive (AD): (3) Within the next 12 calendar months under Executive Order 13132. This after the effective date of this AD. proposed AD would not have a Cessna Aircraft Company: Docket No. FAA– substantial direct effect on the States, on 2012–1273; Directorate Identifier 2012– (h) Replace the Fuel Return Line Assembly the relationship between the national CE–045–AD. If you find evidence of damage of the fuel return line assembly (Cessna P/N 0516031– Government and the States, or on the (a) Comments Due Date distribution of power and 1) as a result of the inspection required by We must receive comments by January 22, paragraph (g) of this AD, before further flight, responsibilities among the various 2013. replace the fuel return line assembly (Cessna levels of government. P/N 0516031–1) following Cessna Aircraft For the reasons discussed above, I (b) Affected ADs Company Service Bulletin SEB–28–01, dated certify this proposed regulation: None. September 21, 2012.
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(i) Install the Fuel Return Line Assembly Customer service, P.O. Box 7706, Wichita, KS • Hand Delivery: U.S. Department of If you find no evidence of damage of the 67277; telephone: (316) 517–5800; fax: (316) Transportation, Docket Operations, M– fuel return line assembly (Cessna P/N 517–7271; 30, West Building Ground Floor, Room 0516031–1) as a result of the inspection [email protected]; Internet: W12–140, 1200 New Jersey Avenue SE., required by paragraph (g) of this AD, before http://www.cessnasupport.com. You may review copies of the referenced service Washington, DC 20590, between 9 a.m. further flight, reinstall the fuel return line and 5 p.m., Monday through Friday, assembly (Cessna P/N 0516031–1) following information at the FAA, Small Airplane Directorate, 901 Locust, Kansas City, MO except Federal holidays. Cessna Aircraft Company Service Bulletin For service information identified in SEB–28–01, dated September 21, 2012. 64106. For information on the availability of this material at the FAA, call (816) 329–4148. this proposed AD, contact Reims (j) Install Forward and Aft Fuel Return Line Aviation Industries, Ae´rodrome de Support Clamps and Brackets Issued in Kansas City, Missouri, on November 29, 2012. Reims Prunay, 51360 Prunay, France; After installing the fuel return line Earl Lawrence, telephone + 33 3 26 48 46 65; fax + 33 assembly as required by replacement in 3 26 49 18 57; email: paragraph (h) of this AD or installation in Manager, Small Airplane Directorate, Aircraft Certification Service. [email protected]; paragraph (i) of this AD, before further flight, Internet: www.geciaviation.com/en/ [FR Doc. 2012–29402 Filed 12–4–12; 8:45 am] install the forward and aft fuel return line f406.html. You may review copies of the support clamps and brackets following BILLING CODE 4910–13–P Cessna Aircraft Company Service Bulletin referenced service information at the SEB–28–01, dated September 21, 2012. FAA, Small Airplane Directorate, 901 DEPARTMENT OF TRANSPORTATION Locust, Kansas City, Missouri 64106. (k) Inspect for a Minimum Clearance For information on the availability of Between Certain Parts Federal Aviation Administration this material at the FAA, call (816) 329– After the installation required by paragraph 4148. (j) of this AD, before further flight, inspect for a minimum clearance between the following 14 CFR Part 39 Examining the AD Docket parts throughout the range of copilot pedal [Docket No. FAA–2012–1274; Directorate You may examine the AD docket on travel. The requirements of this AD take Identifier 2012–CE–042–AD] precedence over the actions required in the Internet at http:// Cessna Aircraft Company Service Bulletin RIN 2120–AA64 www.regulations.gov; or in person at the SEB–28–01, dated September 21, 2012: Docket Management Facility between 9 (1) A minimum clearance of 0.5 inch Airworthiness Directives; Reims a.m. and 5 p.m., Monday through between the fuel return line assembly Aviation S.A. Airplanes Friday, except Federal holidays. The AD (Cessna P/N 0516031–1) and the steering docket contains this proposed AD, the tube assembly (Cessna P/N MC0543022–2C); AGENCY: Federal Aviation regulatory evaluation, any comments and Administration (FAA), Department of received, and other information. The (2) Visible positive clearance between the Transportation (DOT). street address for the Docket Office fuel return line assembly (Cessna P/N 0516031–1) and the airplane structure. ACTION: Notice of proposed rulemaking (telephone (800) 647–5527) is in the (NPRM). ADDRESSES section. Comments will be (l) Adjust Clearance for Fuel Return Line available in the AD docket shortly after Assembly SUMMARY: We propose to adopt a new receipt. If you find any clearance less than the airworthiness directive (AD) for Reims FOR FURTHER INFORMATION CONTACT: minimum clearance required by paragraph Aviation S.A. Model F406 airplanes. Albert Mercado, Aerospace Engineer, (k) of this AD, adjust to the minimum This proposed AD results from FAA, Small Airplane Directorate, 901 clearance required by paragraph (k) of this mandatory continuing airworthiness AD. Locust, Room 301, Kansas City, information (MCAI) originated by an Missouri 64106; telephone: (816) 329– (m) Alternative Methods of Compliance aviation authority of another country to 4119; fax: (816) 329–4090; email: (AMOCs) identify and correct an unsafe condition [email protected]. (1) The Manager, Wichita Aircraft on an aviation product. The MCAI Certification Office (ACO), FAA, has the describes the unsafe condition as SUPPLEMENTARY INFORMATION: authority to approve AMOCs for this AD, if improper material used in nose landing Comments Invited requested using the procedures found in 14 gear (NLG) attachment brackets which CFR 39.19. In accordance with 14 CFR 39.19, could lead to failure of the NLG bracket We invite you to send any written send your request to your principal inspector with consequent damage to the airplane relevant data, views, or arguments about or local Flight Standards District Office, as while landing. We are issuing this this proposed AD. Send your comments appropriate. If sending information directly proposed AD to require actions to to an address listed under the to the manager of the ACO, send it to the ADDRESSES section. Include ‘‘Docket No. attention of the person identified in the address the unsafe condition on these products. FAA–2012–1274; Directorate Identifier Related Information section of this AD. 2012–CE–042–AD’’ at the beginning of (2) Before using any approved AMOC, DATES: We must receive comments on your comments. We specifically invite notify your appropriate principal inspector, this proposed AD by January 22, 2013. or lacking a principal inspector, the manager comments on the overall regulatory, of the local flight standards district office/ ADDRESSES: You may send comments by economic, environmental, and energy certificate holding district office. any of the following methods: aspects of this proposed AD. We will • Federal eRulemaking Portal: Go to consider all comments received by the (n) Related Information http://www.regulations.gov. Follow the closing date and may amend this (1) For more information about this AD, instructions for submitting comments. proposed AD because of those contact Jeff Janusz, Aerospace Engineer, • Fax: (202) 493–2251. comments. Wichita ACO, FAA, 1801 S. Airport Road, • Room 100, Wichita, Kansas 67209; phone: Mail: U.S. Department of We will post all comments we (316) 946–4148; fax: (316) 946–4107; email: Transportation, Docket Operations, M– receive, without change, to http:// [email protected]. 30, West Building Ground Floor, Room regulations.gov, including any personal (2) For service information identified in W12–140, 1200 New Jersey Avenue SE., information you provide. We will also this AD, contact Cessna Aircraft Company, Washington, DC 20590. post a report summarizing each
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substantive verbal contact we receive this proposed AD. The average labor List of Subjects in 14 CFR Part 39 about this proposed AD. rate is $85 per work-hour. Air transportation, Aircraft, Aviation Discussion Based on these figures, we estimate safety, Incorporation by reference, the cost of the proposed AD on U.S. The European Aviation Safety Agency Safety. operators to be $42.50, or $297.50 per (EASA), which is the Technical Agent The Proposed Amendment for the Member States of the European product. Community, has issued EASA AD No.: In addition, we estimate that any Accordingly, under the authority 2012–0202, dated October 1, 2012 necessary follow-on actions would take delegated to me by the Administrator, (referred to after this as ‘‘the MCAI’’), to about 3 work-hours and require parts the FAA proposes to amend 14 CFR part correct an unsafe condition for the costing $500, for a cost of $755 per 39 as follows: specified products. The MCAI states: product. We have no way of determining the number of products PART 39—AIRWORTHINESS During the manufacturing process, RAI DIRECTIVES found that some of the nose landing gear that may need these actions. (NLG) attachment brackets, Part Number (P/ Authority for This Rulemaking 1. The authority citation for part 39 N) 6013119–1, were made of aluminum alloy, continues to read as follows: instead of steel. The results of the Title 49 of the United States Code investigations showed that some of these specifies the FAA’s authority to issue Authority: 49 U.S.C. 106(g), 40113, 44701. aluminum alloy brackets are likely to be installed on aeroplanes currently in service. rules on aviation safety. Subtitle I, § 39.13 [Amended] section 106, describes the authority of This condition, if not detected and 2. The FAA amends § 39.13 by adding corrected, could lead to failure of the NLG the FAA Administrator. ‘‘Subtitle VII: attachment bracket and jamming of the NLG Aviation Programs,’’ describes in more the following new AD: extension/retraction mechanism, possibly detail the scope of the Agency’s Reims Aviation S.A.: Docket No. FAA–2012– resulting in a runway excursion and authority. 1274; Directorate Identifier 2012–CE– consequent damage to the aeroplane and 042–AD. injury to the occupants. We are issuing this rulemaking under For the reasons described above, this AD the authority described in ‘‘Subtitle VII, (a) Comments Due Date requires inspection of the NLG attachment Part A, Subpart III, Section 44701: We must receive comments by January 22, bracket P/N 6013119–1 and, depending on General requirements.’’ Under that 2013. findings, replacement with a serviceable section, Congress charges the FAA with (b) Affected ADs bracket made of steel. promoting safe flight of civil aircraft in None. In addition, as some aluminum alloy P/N air commerce by prescribing regulations 6013119–1 NLG attachment brackets may (c) Applicability have been supplied as spares, this AD also for practices, methods, and procedures requires determination that the part is made the Administrator finds necessary for This AD applies to Reims Aviation S.A. of steel, prior to installation. safety in air commerce. This regulation F406 airplanes, all serial numbers, is within the scope of that authority certificated in any category. You may obtain further information by because it addresses an unsafe condition examining the MCAI in the AD docket. (d) Subject that is likely to exist or develop on Relevant Service Information Air Transport Association of America products identified in this rulemaking (ATA) Code 32: Landing Gear. Reims Aviation S.A. has issued action. (e) Reason Service Bulletin No. F406–74, dated Regulatory Findings September 26, 2012. The actions This AD was prompted by reports of described in this service information are We determined that this proposed AD improper material used in nose landing gear (NLG) attachment brackets which could lead intended to correct the unsafe condition would not have federalism implications to failure of the NLG bracket with consequent identified in the MCAI. under Executive Order 13132. This damage to the airplane while landing. We are proposed AD would not have a FAA’s Determination and Requirements issuing this proposed AD to ensure the substantial direct effect on the States, on of the Proposed AD proper NLG attachment bracket is installed. the relationship between the national (f) Actions and Compliance This product has been approved by Government and the States, or on the the aviation authority of another distribution of power and Unless already done, do the following country, and is approved for operation responsibilities among the various actions following the instructions in Reims Aviation S.A. Service Bulletin No. F406–74, in the United States. Pursuant to our levels of government. bilateral agreement with this State of dated September 26, 2012: For the reasons discussed above, I (1) Within the next 25 hours time-in- Design Authority, they have notified us certify this proposed regulation: service (TIS) after the effective date of this of the unsafe condition described in the AD or within the next 30 days after the MCAI and service information (1) Is not a ‘‘significant regulatory effective date of this AD, whichever occurs referenced above. We are proposing this action’’ under Executive Order 12866, first, inspect the nose landing gear (NLG) AD because we evaluated all (2) Is not a ‘‘significant rule’’ under attachment brackets, part number (P/N) information and determined the unsafe the DOT Regulatory Policies and 6013119–1, to verify if they are made of steel condition exists and is likely to exist or Procedures (44 FR 11034, February 26, and not aluminum alloy. develop on other products of the same 1979), (2) If during the inspection required in type design. paragraph (f)(1) of this AD, you find that a (3) Will not affect intrastate aviation NLG attachment bracket made of aluminum Costs of Compliance in Alaska, and alloy is installed, before further flight, replace with an airworthy steel NLG We estimate that this proposed AD (4) Will not have a significant attachment bracket, P/N 6013119–1. will affect 7 products of U.S. registry. economic impact, positive or negative, (3) As of the effective date of this AD, do We also estimate that it would take on a substantial number of small entities not install any NLG attachment bracket P/N about .5 work-hour per product to under the criteria of the Regulatory 6013119–1 that has not been confirmed to be comply with the basic requirements of Flexibility Act. made of steel.
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(g) Other FAA AD Provisions Issued in Kansas City, Missouri, on Minority Business Development Agency. The following provisions also apply to this November 29, 2012. David Hinson, AD: Earl Lawrence, National Director. (1) Alternative Methods of Compliance Manager, Small Airplane Directorate, Aircraft [FR Doc. 2012–29431 Filed 12–4–12; 8:45 am] Certification Service. (AMOCs): The Manager, Standards Office, BILLING CODE 3510–21–P FAA, has the authority to approve AMOCs [FR Doc. 2012–29395 Filed 12–4–12; 8:45 am] for this AD, if requested using the procedures BILLING CODE 4910–13–P found in 14 CFR 39.19. Send information to DEPARTMENT OF HEALTH AND ATTN: Albert Mercado, Aerospace Engineer, HUMAN SERVICES FAA, Small Airplane Directorate, 901 Locust, DEPARTMENT OF COMMERCE Room 301, Kansas City, Missouri 64106; Food and Drug Administration telephone: (816) 329–4119; fax: (816) 329– Minority Business Development 4090; email: [email protected]. Before Agency 21 CFR Parts 500, 520, 522, 524, 529, using any approved AMOC on any airplane 556, and 558 to which the AMOC applies, notify your 15 CFR Part 1400 appropriate principal inspector (PI) in the [Docket No. FDA–2012–N–1067] FAA Flight Standards District Office (FSDO), [Docket No. 121130667–2667–01] RIN 0910–AG17 or lacking a PI, your local FSDO. Petition for Inclusion of the Arab- (2) Airworthy Product: For any requirement American Community in the Groups New Animal Drugs; Updating in this AD to obtain corrective actions from Eligible for MBDA Services Tolerances for Residues of New a manufacturer or other source, use these Animal Drugs in Food actions if they are FAA-approved. Corrective AGENCY: Minority Business actions are considered FAA-approved if they Development Agency, Commerce. AGENCY: Food and Drug Administration, are approved by the State of Design Authority ACTION: Notice of proposed rulemaking HHS. (or their delegated agent). You are required and request for comments; amendment. ACTION: Proposed rule. to assure the product is airworthy before it is returned to service. SUMMARY: The Minority Business SUMMARY: The Food and Drug (3) Reporting Requirements: For any Development Agency (MBDA) publishes Administration (FDA) is proposing to reporting requirement in this AD, a federal this notice to extend the date on which revise the animal drug regulations agency may not conduct or sponsor, and a it plans to make its decision on a regarding tolerances for residues of person is not required to respond to, nor petition from the American-Arab Anti- approved and conditionally approved shall a person be subject to a penalty for Discrimination Committee requesting new animal drugs in food by failure to comply with a collection of formal designation as a group eligible standardizing, simplifying, and information subject to the requirements of for MBDA’s services from November 30, clarifying the determination standards the Paperwork Reduction Act unless that 2012 to March 1, 2013. and codification style. In addition, we collection of information displays a current FOR FURTHER INFORMATION CONTACT: For are proposing to add definitions for key valid OMB Control Number. The OMB terms. The purpose of the revision is to Control Number for this information further information about this Notice, collection is 2120–0056. Public reporting for contact Josephine Arnold, Minority enhance understanding of tolerance this collection of information is estimated to Business Development Agency, 1401 determination and improve the be approximately 5 minutes per response, Constitution Avenue NW., Room 5053, readability of the regulations. including the time for reviewing instructions, Washington, DC 20230, (202) 482–5461. DATES: Submit either electronic or completing and reviewing the collection of SUPPLEMENTARY INFORMATION: On May written comments by March 5, 2013. information. All responses to this collection 30, 2012, the Minority Business See section VI of this document for the of information are mandatory. Comments Development Agency (MBDA) proposed effective date of a final rule concerning the accuracy of this burden and published a notice of proposed based on this proposed rule. suggestions for reducing the burden should rulemaking and request for comments ADDRESSES: You may submit comments, be directed to the FAA at: 800 Independence regarding a petition received on January identified by Docket No. FDA–2012–N– Ave. SW., Washington, DC 20591, Attn: 11, 2012 from the American-Arab Anti- 1067 and RIN number 0910–AG17, by Information Collection Clearance Officer, Discrimination Committee (ADC) any of the following methods: AES–200. requesting formal designation of Arab- Electronic Submissions (h) Related Information Americans as a minority group that is socially or economically disadvantaged Submit electronic comments in the Refer to MCAI European Aviation Safety pursuant to 15 CFR part 1400. MBDA following way: Agency (EASA) AD No. 2012–0202, dated has published several notices in the • October 1, 2012; and Reims Aviation S.A. Federal eRulemaking Portal: http:// Federal Register to extend the date for www.regulations.gov/. Follow the Service Bulletin No. F406–74, dated making a decision on the merits of the September 26, 2012, for related information. instructions for submitting comments. petition. On September 4, 2012, MBDA For service information related to this AD, published an amendment to extend the Written Submissions contact Reims Aviation Industries, Ae´rodrome de Reims Prunay, 51360 Prunay, deadline for the decision until Submit written submissions in the France; telephone + 33 3 26 48 46 65; fax + November 30, 2012. The Agency has following ways: determined that an additional ninety • Fax: 301–827–6870. 33 3 26 49 18 57; email: • [email protected]; Internet: (90) day period for consideration of the Mail/Hand Delivery/Courier (for www.geciaviation.com/en/f406.html. You policy implications associated with the paper or CD–ROM submissions): may review copies of the referenced service petition is necessary. Therefore, the Division of Dockets Management (HFA– information at the FAA, Small Airplane Agency has determined that the time in 305), Food and Drug Administration, Directorate, 901 Locust, Kansas City, which it will make its decision on the 5630 Fishers Lane, rm. 1061, Rockville, Missouri 64106. For information on the petition will be on or before March 1, MD 20852. availability of this material at the FAA, call 2013. This extension will not prejudice Instructions: All submissions received (816) 329–4148. the petitioner. must include the Agency name, Docket
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No. FDA–2012–N–1067, and Regulatory of these studies, FDA determined the but not all, drugs. In addition, the Information Number (RIN) 0910–AG17 ‘‘no-observed-effect-level’’ (NOEL). The regulations list some tolerances as being for this rulemaking. All comments acceptable daily intake (ADI) for total for ‘‘negligible’’ residue, and others as received may be posted without change residue of a drug was calculated by ‘‘no residue,’’ ‘‘zero,’’ or ‘‘not required,’’ to http://www.regulations.gov, including dividing the NOEL by the appropriate but they do not explain what these any personal information provided. For safety factor to adjust for the differences important terms mean. The proposed additional information on submitting between test animals and humans. To rule addresses these inconsistencies by comments, see the ‘‘Comments’’ heading calculate the safe concentrations, FDA simplifying and standardizing the of the SUPPLEMENTARY INFORMATION considered food consumption values determination standards and section of this document. and human body weight. Consumption codification style and by adding Docket: For access to the docket to was estimated as a total dietary definitions for key terms. read background documents or exposure of 1,500 grams of food per day. II. Description of Proposed Rule comments received, go to http:// Historically, FDA used an average www.regulations.gov and insert the human weight of 50 or 60 kilograms. FDA proposes to revise part 556 by docket number, found in brackets in the Because these toxicology studies did not standardizing and simplifying the heading of this document, into the assess lifetime effects (which could only codification style and adding definitions ‘‘Search’’ box and follow the prompts be observed in long-term feeding for key terms. First, proposed § 556.1 and/or go to the Division of Dockets studies), FDA applied a 2,000-fold provides a revised scope for part 556. Management, 5630 Fishers Lane, rm. safety factor to the NOELs. FDA Second, proposed § 556.3 provides 1061, Rockville, MD 20852. generally set the tolerance for definitions of key terms FDA uses in the FOR FURTHER INFORMATION CONTACT: ‘‘negligible’’ residues of these drugs at regulations. Third, proposed § 556.5 Dong Yan, Center for Veterinary 0.1 part per million (ppm) in muscle explains the general considerations for Medicine (HFV–151), Food and Drug and 10 parts per billion in milk, even if using the tolerance information for Administration, 7500 Standish Pl., the computed tolerance exceeded the veterinary drug residues. Finally, FDA Rockville, MD 20855, 240–276–8117, calculated values. proposes a uniform format for listing In later years, FDA assigned what it email: [email protected]. tolerances in subpart B, by, among other called ‘‘finite tolerances.’’ Finite things, removing obsolete or confusing SUPPLEMENTARY INFORMATION: tolerances were calculated using terms and cross-referencing tolerances I. Background procedures similar to those described to the approved conditions of use for previously, except, unlike tolerances set that new animal drug. Sections 512(b)(1)(H), 512(i), and for ‘‘negligible’’ residues, finite 571(a)(2)(A) of the Federal Food, Drug, tolerances were set at the calculated A. Subpart A—General Provisions and Cosmetic Act (the FD&C Act) (21 level. Finite tolerances had to be 1. Scope (Proposed § 556.1) U.S.C. 360b(b)(1)(H), 360b(i), and supported, at a minimum, by lifetime 360ccc(a)(2)(A)) provide the authority feeding studies in two rodent species, a FDA proposes to delete existing for the Secretary of Health and Human 6-month or longer study in a non-rodent § 556.1 (‘‘General considerations; Services (the Secretary) to establish and mammalian species, and a three- tolerances for residues of new animal publish regulations setting tolerances generation reproduction study. Because drugs in food’’) and replace it with a for residues of approved and finite tolerances were based on more description of the scope. FDA proposes conditionally approved new animal extensive studies, FDA generally to discuss general considerations for drugs. The Secretary delegated this applied a lower (100-fold) safety factor setting tolerances in new § 556.5. authority to the Commissioner of Food in calculating the ADI. Proposed § 556.1 reiterates the and Drugs. FDA’s regulations setting The earliest established tolerances requirement in sections 512(b)(1)(H) and forth the tolerances for residues of new generally referred to the parent drug. 571(a)(2)(A) of the FD&C Act that animal drugs in food are codified in part Consequently, residue chemistry applicants seeking approval or 556 of Title 21 of the Code of Federal studies, including residue depletion conditional approval of new animal Regulations (21 CFR part 556) (40 FR studies that served as the basis for drugs must submit a proposed tolerance 13802 at 13942, March 27, 1975). The assigning withdrawal periods for tissues as part of new animal drug applications part 556 regulations describe general and for milk (milk discard time), and when necessary to assure that the considerations regarding tolerances for the analytical methods used to measure proposed use of the new animal drug residues of new animal drugs in food in residue levels focused on the parent will be safe. The proposed section states subpart A and specific tolerances for drug. that FDA assigns tolerances for animal residues of new animal drugs in subpart From the mid-1970s to the present, drugs used in food-producing animals B. Subpart B has been amended FDA’s human food safety evaluation of as part of the application approval frequently as new animal drugs have animal drug residues has evolved with process and then codifies them in been approved for use in food- advancements in science. As a result, subpart B of part 556. Proposed § 556.1 producing animals. Food from treated the procedures described in the existing also clarifies that compounds that have animals with new animal drug residues § 556.1 for setting drug tolerances no been found to be carcinogenic are that exceed established tolerances is longer accurately reflect current regulated under subpart E of part 500 adulterated under section regulatory science. In addition, current (21 CFR part 500). 402(a)(2)(C)(ii) of the FD&C Act (21 part 556 employs a patchwork of U.S.C. 342(a)(2)(C)(ii)). various styles for listing tolerances that 2. Definitions (Proposed § 556.3) FDA’s human food safety evaluation have evolved over the past 40 years. As FDA proposes to define in § 556.3 of residues of new animal drugs has a result, the listings in part 556 are not certain key terms used in animal drug evolved over the past 50 years. Before uniform in format, and, in some residue chemistry and some terms the mid-1970s, FDA based tolerances instances, do not provide all relevant frequently used in part 556. In the primarily on a small number of toxicity information in a consistent manner. For proposed rule, the definitions appear in studies, typically 90-day feeding studies example, the regulations provide the alphabetical order. In this preamble, the in laboratory animals. From the results ADI and safe concentrations for some, definitions are discussed in an order
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that facilitates the explanation of the aggregate of all experimental procedures target tissue must be non-detectable or interrelated concepts the terms for measuring and confirming the below the limit of detection of the represent. presence of the marker residue in the approved regulatory method (67 FR a. Terms related to determining target tissue of the target animal. The 78172, December 23, 2002). Consistent tolerances. FDA’s human food safety ‘‘target tissue’’ means the edible tissue with this interpretation, FDA is evaluation focuses on residues of new selected to monitor for residues in the proposing to define ‘‘no residue’’ to animal drugs in the edible tissues of the target animals. When the marker residue mean that the marker residue is below treated animal. FDA proposes to define or other residue indicated for the limit of detection using the ‘‘edible tissues’’ as muscle, liver, monitoring is at or below the tolerance approved regulatory method. FDA is kidney, fat, skin with fat in natural in the target tissue, the total drug proposing to add this definition to proportions, whole eggs, whole milk, residues in all the edible tissues § 500.82 under subpart E entitled and honey. FDA proposes to define (excluding milk and eggs unless ‘‘Regulation of Carcinogenic ‘‘residue,’’ as it is defined in 21 CFR otherwise specified) should be at or Compounds Used in Food-Producing 530.3, to mean any compound present below the safe concentration. Animals.’’ in edible tissues that results from the b. Terms used to characterize Third, FDA previously approved use of a drug, and includes the drug, its tolerances. In the past, FDA has used some animal drugs with a waiver of the metabolites, and any other substance several terms to characterize tolerances requirement for a tolerance (i.e., a formed in or on food because of the in part 556, including ‘‘zero,’’ ‘‘no tolerance was ‘‘not required’’ or ‘‘not drug’s use. Under the proposed rule, the residue,’’ ‘‘not required,’’ and ‘‘not needed’’) because they met two ‘‘total residue’’ includes every residue of needed’’ but has not included clear conditions in place at the time they a given drug. FDA proposes to define definitions in part 556 for these were evaluated by FDA. The first total residue as the aggregate of all important terms. Because the condition was an assurance that compounds that result from the use of differences in these terms has not residues would deplete to or below safe an animal drug, including the drug, its always been evident, FDA is proposing levels by zero-day withdrawal (i.e., no metabolites, and any other substances to amend part 556 by eliminating withdrawal period was needed), or that formed in or on food because of such redundant terminology and adding an adequate withdrawal period was drug use. definitions for the terms that the Agency inherent in the proposed conditions of Under the proposal, the definition of intends to continue using to help ensure drug use. The second condition was a a NOEL means the highest dose level of that going forward the terms will be rapid depletion of residues, so there was a drug tested that produces no uniformly applied by the Agency and no concern about residues resulting observable effects. ADI means the understood by the public. from misuse or overdosing. Sometimes amount of total residue that can safely First, over the years, many people the codified tolerance listings described be consumed per day over a human’s have mistakenly believed the term these situations as ones where a lifetime. The ADI is calculated by ‘‘zero’’ with respect to tolerances to tolerance was ‘‘not needed’’; other times dividing the NOEL (from the most mean there could be no residue appropriate toxicological study) by a remaining in an edible tissue. However, the phrase ‘‘not required’’ was used to safety factor. The safety factor reflects, FDA acknowledges that some residue convey the same meaning. To ensure among other things, the extrapolation of will remain in the animal, even if below consistency, FDA proposes to revise long-term effects from shorter-term a detectable level, and that a complete part 556 to delete descriptions of exposures, extrapolation of animal data lack of drug residue is not achievable. tolerances as ‘‘not needed’’ and replace to humans, and variability in sensitivity In approving certain animal drugs, FDA such designations with the term ‘‘not among human populations. Sometimes, assigned a ‘‘zero’’ tolerance, with ‘‘zero’’ required.’’ the concept of an ‘‘acceptable single- meaning that no residues could be Fourth, in the past, when a drug was dose intake’’ or ‘‘ASDI’’ is used to detected using the approved analytical approved with a zero withdrawal calculate tolerances. FDA is proposing method to detect residues of that drug. period, FDA would not set a tolerance to define ‘‘ASDI’’ as the amount of total Often, the analytical method chosen to for the particular drug. Historically, residue that may safely be consumed in determine ‘‘zero’’ represented the limit FDA generally recommended that a a single meal. The ASDI may be used to of technology at the time. FDA no longer sponsor of a drug seeking a zero derive the tolerance for residues of a assigns ‘‘zero’’ tolerances for new withdrawal period conduct a total drug at an injection site where the drug approvals, but instead assigns a residue depletion study in which target is administered according to the label. tolerance for a drug based on a animals were dosed with 1.5 to 2 times Under the proposed rule, a toxicological and residue chemistry the recommended maximum dose of ‘‘tolerance’’ means the maximum evaluation (see proposed § 556.5). drug to simulate overdosing. If a zero concentration of a marker residue or However, FDA is not proposing to withdrawal period was approved, FDA other residue indicated for monitoring remove the previously assigned ‘‘zero’’ would not set a tolerance for the drug. that can legally remain in a specific tolerances from the regulations at this Currently, FDA continues to edible tissue of a treated animal. A time. recommend these total residue ‘‘marker residue’’ means the residue Second, FDA uses the term ‘‘no depletion studies when sponsors selected for assay by the regulatory residue’’ to apply specifically to propose zero withdrawal periods, but, method. In general, the marker residue compounds of carcinogenic concern. when possible, FDA sets a tolerance for is a subset of the total residue; for Under section 512(d)(1)(I) of the FD&C these drugs. Infrequently, circumstances example, the marker residue could be Act, ‘‘no residue’’ of any drug that preclude FDA from setting a tolerance. the parent drug, a metabolite, or a induces cancer when ingested by man For example, some drugs may be poorly combination of residues. The or animal is allowed in any edible tissue absorbed and/or metabolized rapidly to concentration of the marker residue in of a food-producing animal, when tested such an extent as to make selection of the target tissue is in a known using methods of examination an analyte impractical or impossible. In relationship to the concentration of the prescribed or approved by FDA. FDA these uncommon cases, FDA proposes total residue in the target tissue. The historically has interpreted the term ‘‘no to use the term ‘‘not required’’ when ‘‘regulatory method’’ means the residue’’ to mean that any residue in the describing the tolerance.
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FDA is proposing to define ‘‘not target species at concentrations around target tissue, the tilmicosin required’’ with respect to tolerances as the tolerance as provided in concentration in muscle alone does not indicating that at the time of approval, § 514.1(b)(7) of this chapter. The predict residue safety for the other the drug met one of the following tolerance is directly tied to the approved edible tissues. conditions: (1) No withdrawal period regulatory method because FDA C. Other Proposed Changes to Part 556 (i.e., zero withdrawal) was necessary for determines the tolerance using data residues of the drug to deplete to or collected with that method. This proposal includes other changes below the concentrations considered to to the current part 556 regulations. First, B. Subpart B—Specific Tolerances for be safe or an adequate withdrawal FDA proposes to delete salt designations Residues of Approved and period was inherent in the proposed from the tolerance listings in subpart B. Conditionally Approved New Animal drug use, and there was no concern For example, maduramicin ammonium, Drugs about residues resulting from misuse or morantel tartrate, and overdosing; or (2) the drug qualified for FDA proposes a uniform format for sulfabromomethazine sodium will be a zero withdrawal period because it was the individual drug tolerance listings in listed as maduramicin, morantel, and poorly absorbed or metabolized rapidly subpart B. FDA would list the ADI and sulfabromomethazine, respectively. to such an extent as to make selection ASDI if they are available. If the ADI FDA proposes this change for several of an analyte impractical or impossible. and ASDI are both unavailable, FDA reasons. The residues derived from salt would reserve paragraph (a) for future formulations and hydrated forms of a 3. General Considerations (Proposed use. FDA would list tolerances in given drug are the same. In addition, the § 556.5) paragraph (b) for each edible tissue for approved regulatory methods ordinarily Proposed § 556.5(a) states that each species, as appropriate. When a measure the free drug, a metabolite, or tolerances published in subpart B of tolerance listing states ‘‘edible tissues,’’ some combination of residues, not the part 556 pertain only to the species and it would mean all edible tissues of that salts. FDA also believes such a production classes of the animal for species unless otherwise specified. FDA simplification of tolerance listings will which the drug use has been approved intends the revised paragraph (c) to help improve their readability. However, or conditionally approved. The readers locate approved or conditionally when FDA lists the ADI for a proposed rule provides the approved approved uses of each drug and to compound, the specific compound that use and conditionally approved use identify the form of the drug (e.g., free was administered in the pivotal conditions, including species and acid or base, salt, hydrate). toxicological feeding study will be production classes, in each tolerance FDA proposes to revise subpart B by indicated, as toxicological outcome listing under ‘‘(c) Related conditions of deleting tolerances for certain drugs (or could be affected by salt formulation. use.’’ Tolerances are not provided for species of animals) whose approvals Second, FDA proposes to cross- extralabel (e.g., use in species or have been withdrawn, but the reference drug tolerances in part 556 to production classes in which the drug is corresponding tolerances were not the approved or conditionally approved not approved for use.) Extralabel use removed from the part 556 listing; and conditions of use listed in 21 CFR parts resulting in any residue above an adding tolerances for approved drugs 516, 520, 522, 524, 526, 529, and 558. established safe level or tolerance is not previously listed in this subpart. These listings specify the drug, salt, unlawful and renders the drug product Specifically, FDA proposes to delete the dosage form, and indications for use adulterated under section 501(a)(5) of tolerances for clopidol for all species (amount, animal species/production the FD&C Act (21 U.S.C. 351(a)(5)), in other than chickens and turkeys class, and limitations) of approved or that it is unsafe within the meaning of (§ 556.160) and nystatin for swine conditionally approved animal drug section 512 of the FD&C Act. (§ 556.470). FDA proposes to add products. In conjunction with adding Proposed § 556.5(b) states that all tolerance listings for: Azaperone, these cross-references, FDA proposes to tolerances refer to the concentrations of bambermycins, coumaphos, remove references to production classes a marker residue, or other residue efrotomycin, fenprostalene (swine), from tolerance listings in subpart B. In indicated for monitoring, permitted in fenthion, flurogestone, and poloxalene. a few past instances, FDA codified uncooked tissues. Note that some listings provide more tolerances specifying the production Proposed § 556.5(c) states that a than one tolerance. For example, class (e.g., beef or dairy cattle) of food- finding that the concentration of a tilmicosin in cattle (§ 556.735(b)(1)) producing species. This was done in an marker residue is at or below the includes the following information: A effort to be consistent with the listed tolerance in the target tissue from a marker residue (tilmicosin), a target approved conditions of use, but for only tested animal indicates that all edible tissue (liver), a tolerance of 1.2 ppm for a few animal drugs listed in part 556. tissues (excluding milk and eggs unless tilmicosin in liver of cattle, and a FDA also proposes to delete safe otherwise specified) from that animal tolerance of 0.1 ppm for tilmicosin in concentrations from the tolerance are safe. In the proposed listing format, muscle of cattle. listings in part 556. Although tolerances if a listed tolerance is linked to a target This means that if the concentration have been codified using the total tissue, the phrase ‘‘target tissue’’ will of tilmicosin in the liver of a treated residue, target tissue, and marker appear in parentheses immediately after animal is at or below 1.2 ppm, all the residue concepts for about 25 years, the the identified tissue. If a listed tolerance edible tissues (excluding milk and eggs particular types of information codified is not expressly linked to a target tissue, unless otherwise specified) from the have varied. For some drugs, FDA listed then the tolerance is meant to apply animal are considered to be safe if only tolerances. For other drugs, FDA only to the named edible tissue, and ingested daily by humans over a listed safe concentrations as well as inferences cannot be made about the lifetime. If the concentration of tolerances, leading some readers to safety of the other edible tissues from tilmicosin is assayed for only the misinterpret the safe concentrations as the target animal. muscle tissue and the concentration is tolerances. Because a tolerance can be a Proposed § 556.5(d) states that FDA at or below 0.1 ppm, the muscle tissue small fraction of the safe concentration, requires that a drug sponsor develop a from the animal is considered to be safe such a misunderstanding could lead to regulatory method to measure drug if ingested daily by humans over a referencing an incorrect residue safety residues in edible tissues of approved lifetime. Because muscle is not the standard for a specific drug. FDA
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tentatively concludes that removing safe Executive Orders 12866 and 13563 clearance by the Office of Management concentrations from the codified listings direct Agencies to assess all costs and and Budget under the Paperwork will reduce the potential for this benefits of available regulatory Reduction Act of 1995 (44 U.S.C. 3501– confusion. The Agency invites comment alternatives and, when regulation is 3520) is not required. on this removal. necessary, to select regulatory VII. Proposed Effective Date Further, FDA proposes to remove the approaches that maximize net benefits word ‘‘negligible’’ from tolerance (including potential economic, FDA is proposing that any final rule citations, because the word is outdated. environmental, public health and safety, that may issue based on this proposal be A tolerance is the maximum and other advantages; distributive effective 60 days after the date of its concentration of a new animal drug impacts; and equity). The Agency publication in the Federal Register. residue that can legally remain in an believes that this proposed rule is not a VIII. Comments edible tissue of a treated animal and significant regulatory action as defined raise no concern for human food safety. by the Executive Order 12866. Interested persons may submit either In other words, by definition, a The Regulatory Flexibility Act written comments regarding this tolerance essentially represents the requires Agencies to analyze regulatory document to the Division of Dockets negligible level of residue. Therefore, options that would minimize any Management (see ADDRESSES) or FDA no longer uses the word significant impact of a rule on small electronic comments to http:// ‘‘negligible’’ to characterize residues. entities. Because this proposed rule www.regulations.gov. It is only Finally, FDA is proposing to delete would not impose compliance costs on necessary to send one set of comments. the word ‘‘uncooked’’ from the the current or future sponsors of any Identify comments with the docket individual listings in subpart B. Because approved and conditionally approved number found in brackets in the the general considerations and the new animal drugs, the Agency proposes heading of this document. Received proposed definition of tolerance to certify that the final rule will not comments may be seen in the Division clarifies that all tolerances refer to the have a significant economic impact on of Dockets Management between 9 a.m. concentrations of the marker residue, or a substantial number of small entities. and 4 p.m., Monday through Friday, and other residues indicated for monitoring, Section 202(a) of the Unfunded will be posted to the docket at http:// permitted in uncooked edible tissues, Mandates Reform Act of 1995 requires www.regulations.gov. including the word ‘‘uncooked’’ in that Agencies prepare a written individual listings is no longer statement, which includes an List of Subjects necessary. assessment of anticipated costs and 21 CFR Part 500 FDA seeks comment on the proposed benefits, before proposing ‘‘any rule that changes to part 556. In particular, the includes any Federal mandate that may Animal drugs, Animal feeds, Cancer, Agency is interested to know if the result in the expenditure by State, local, Labeling, Packaging and containers, reorganization and standardization of and tribal governments, in the aggregate, Polychlorinated biphenyls (PCBs). content enhances the clarity and utility or by the private sector, of $100,000,000 21 CFR Parts 520, 522, 524, and 529 of part 556 and if the definitions of or more (adjusted annually for inflation) Animal drugs. terms are clear and understandable. in any one year.’’ The current threshold FDA does not, however, seek comment after adjustment for inflation is $139 21 CFR Part 556 on the numerical drug residue tolerance million, using the most current (2011) Animal drugs, Foods. values listed in subpart B as these Implicit Price Deflator for the Gross values were determined by FDA in Domestic Product. FDA does not expect 21 CFR Part 558 conjunction with the approval or this proposed rule to result in any 1- Animal drugs, Animal feeds. conditional approval of each new year expenditure that would meet or animal drug application and, as such, exceed this amount. Therefore, under the Federal Food, are not the subject of public comment. Drug, and Cosmetic Act and under V. Federalism An exception would be the notation of authority delegated to the Commissioner a technical error where the numerical FDA has analyzed this proposed rule of Food and Drugs, it is proposed that value cited in the published document in accordance with the principles set 21 CFR chapter I, subchapter E, be does not conform to an approved forth in Executive Order 13132. FDA amended as follows: has determined that the proposed rule, application or application for PART 500—GENERAL conditional approval. if finalized, would not contain policies that would have substantial direct 1. The authority citation for 21 CFR III. Environmental Impact effects on the States, on the relationship part 500 continues to read as follows: The Agency has determined under 21 between the National Government and Authority: 21 U.S.C. 321, 331, 342, 343, CFR 25.30(i) that this action is of a type the States, or on the distribution of 348, 351, 352, 353, 360b, 371, 379e. that does not individually or power and responsibilities among the cumulatively have a significant effect on various levels of government. 2. Amend § 500.82, in paragraph (b), the human environment. Therefore, Accordingly, the Agency tentatively by alphabetically adding a definition for neither an environmental assessment concludes that the proposed rule does ‘‘no residue’’ to read as follows: nor an environmental impact statement not contain policies that have § 500.82 Definitions. is required. federalism implications as defined in the Executive order and, consequently, * * * * * IV. Analysis of Impacts a federalism summary impact statement (b) * * * FDA has examined the impacts of the is not required. No residue means the marker residue proposed rule under Executive Order is below the limit of detection using the 12866, Executive Order 13563, the VI. Paperwork Reduction Act of 1995 approved regulatory method. The ‘‘no Regulatory Flexibility Act (5 U.S.C. FDA tentatively concludes that this residue’’ designation applies only to 601–612), and the Unfunded Mandates proposed rule contains no new compounds of carcinogenic concern. Reform Act of 1995 (Pub. L. 104–4). collections of information. Therefore, * * * * *
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PART 520—ORAL DOSAGE FORM Authority: 21 U.S.C. 360b. 556.330 Hygromycin B. NEW ANIMAL DRUGS 12. In § 529.1003, add paragraph (d) to 556.344 Ivermectin. 556.346 Laidlomycin. 3. The authority citation for 21 CFR read as follows: 556.347 Lasalocid. part 520 continues to read as follows: § 529.1003 Flurogestone acetate- 556.350 Levamisole. impregnated vaginal sponge. 556.360 Lincomycin. Authority: 21 U.S.C. 360b. 556.375 Maduramicin. 4. In § 520.1840, revise paragraph (c) * * * * * 556.380 Melengestrol. to read as follows: (d) Related tolerances. See § 556.290 556.410 Metoserpate. of this chapter. 556.420 Monensin. § 520.1840 Poloxalene. 556.425 Morantel. PART 556—TOLERANCES FOR * * * * * 556.426 Moxidectin. (c) Related tolerances. See § 556.517 RESIDUES OF NEW ANIMAL DRUGS 556.428 Narasin. IN FOOD 556.430 Neomycin. of this chapter. 556.440 Nequinate. * * * * * 13. The authority citation for 21 CFR 556.445 Nicarbazin. 5. In § 520.2640, revise paragraph (c) part 556 is revised to read as follows: 556.460 Novobiocin. 556.470 Nystatin. to read as follows: Authority: 21 U.S.C. 342, 360b, 360ccc, 556.480 Oleandomycin. 371. § 520.2640 Tylosin. 556.490 Ormetoprim. 14. Revise part 556 to read as follows: * * * * * 556.495 Oxfendazole. (c) Related tolerances. See § 556.746 Subpart A—General Provisions 556.500 Oxytetracycline. of this chapter. 556.510 Penicillin. Sec. 556.513 Piperazine. * * * * * 556.1 Scope. 556.515 Pirlimycin. 556.3 Definitions. 556.517 Poloxalene. PART 522—IMPLANTATION OR 556.5 General considerations. 556.540 Progesterone. INJECTABLE DOSAGE FORM NEW Subpart B—Specific Tolerances for 556.560 Pyrantel. ANIMAL DRUGS Residues of Approved and Conditionally 556.570 Ractopamine. Approved New Animal Drugs 556.580 Robenidine. 6. The authority citation for 21 CFR 556.592 Salinomycin. Sec. part 522 continues to read as follows: 556.597 Semduramicin. 556.34 Albendazole. 556.600 Spectinomycin. Authority: 21 U.S.C. 360b. 556.36 Altrenogest. 556.610 Streptomycin. 556.38 Amoxicillin. 556.620 Sulfabromomethazine. 7. In § 522.770, revise paragraph (c) to 556.40 Ampicillin. 556.625 Sulfachloropyrazine. read as follows: 556.50 Amprolium. 556.630 Sulfachlorpyridazine. 556.52 Apramycin. 556.640 Sulfadimethoxine. § 522.770 Doramectin. 556.60 Arsenic. 556.650 Sulfaethoxypyridazine. 556.68 Azaperone. * * * * * 556.660 Sulfamerazine. 556.70 Bacitracin. (c) Related tolerances. See § 556.222 556.670 Sulfamethazine. 556.75 Bambermycins. of this chapter. 556.685 Sulfaquinoxaline. 556.100 Carbadox. 556.690 Sulfathiazole. * * * * * 556.110 Carbomycin. 556.700 Sulfomyxin. 8. In § 522.2640, revise paragraph (d) 556.113 Ceftiofur. 556.710 Testosterone. to read as follows: 556.115 Cephapirin. 556.720 Tetracycline. 556.120 Chlorhexidine. § 522.2640 Tylosin. 556.730 Thiabendazole. 556.150 Chlortetracycline. 556.733 Tildipirosin. * * * * * 556.160 Clopidol. 556.735 Tilmicosin. (d) Related tolerances. See § 556.746 556.163 Clorsulon. 556.738 Tiamulin. of this chapter. 556.165 Cloxacillin. 556.739 Trenbolone. * * * * * 556.167 Colistimethate. 556.168 Coumaphos. 556.741 Tripelennamine. 556.169 Danofloxacin. 556.745 Tulathromycin. PART 524—OPHTHALMIC AND 556.746 Tylosin. TOPICAL DOSAGE FORM NEW 556.170 Decoquinate. 556.180 Dichlorvos. 556.748 Tylvalosin. ANIMAL DRUGS 556.185 Diclazuril. 556.750 Virginiamycin. 556.200 Dihydrostreptomycin. 556.760 Zeranol. 9. The authority citation for 21 CFR 556.765 Zilpaterol. part 524 continues to read as follows: 556.222 Doramectin. 556.224 Efrotomycin. 556.770 Zoalene. Authority: 21 U.S.C. 360b. 556.226 Enrofloxacin. Subpart A—General Provisions 10. In § 524.920, revise paragraph 556.227 Eprinomectin. 556.230 Erythromycin. (c)(4) to read as follows: § 556.1 Scope. 556.240 Estradiol and related esters. § 524.920 Fenthion. 556.260 Ethopabate. (a) The Federal Food, Drug, and 556.273 Famphur. Cosmetic Act requires an applicant * * * * * 556.275 Fenbendazole. seeking approval or conditional (c) * * * 556.277 Fenprostalene. approval of a new animal drug to submit (4) Related tolerances. See § 556.280 556.280 Fenthion. a proposed tolerance as part of its new of this chapter. 556.283 Florfenicol. animal drug application when such a * * * * * 556.286 Flunixin. tolerance is needed to assure that the 556.290 Flurogestone. PART 529—CERTAIN OTHER DOSAGE 556.292 Gamithromycin. proposed use of the new animal drug FORM NEW ANIMAL DRUGS 556.300 Gentamicin. will be safe (see sections 512(b)(1)(H) 556.304 Gonadotropin. and 571(a)(2)(A) of the Federal Food, 11. The authority citation for 21 CFR 556.308 Halofuginone. Drug, and Cosmetic Act). FDA assigns part 529 continues to read as follows: 556.310 Haloxon. tolerances for animal drugs used in
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food-producing animals as part of the so as to make selection of an analyte conditions of use for each tolerance application approval process. impractical or impossible. listing of subpart B of this part. Tolerances for approved and ppb means parts per billion (b) All tolerances refer to the conditionally approved new animal (equivalent to nanograms per gram (ng/ concentrations of a marker residue, or drugs are codified in subpart B of this g) or mg/kg). other residue indicated for monitoring, part. ppm means parts per million permitted in uncooked tissues. (b) Compounds that have been found (equivalent to micrograms per gram (mg/ (c) After a tolerance is listed, the to be carcinogenic are regulated under g) or mg/kg). finding that the concentration of the subpart E of part 500 of this chapter. ppt means parts per trillion marker residue in the target tissue from a tested animal is at or below the § 556.3 Definitions. (equivalent to picograms per gram (pg/ g) or nanograms per kilogram (ng/kg)). tolerance indicates that all edible tissues As used in this part: Regulatory method means the (excluding milk and eggs unless Acceptable daily intake (ADI) means aggregate of all experimental procedures otherwise indicated) from that tested the amount of total residue that can for measuring and confirming the animal are safe for human consumption. safely be consumed per day over a presence of the marker residue in the If a listed tolerance is not expressly human’s lifetime without adverse health target tissue of the target animal. linked to a target tissue, then the effect. The ADI is calculated by dividing Residue means any compound tolerance is specific only for the named the no-observed-effect-level (NOEL) edible tissue and inferences cannot be (from the most appropriate toxicological present in edible tissues that results from the use of a drug, and includes the made about the safety of the other edible study) by a safety factor. The safety tissues from the tested animal. factor reflects, among other things, the drug, its metabolites, and any other substance formed in or on food because (d) FDA requires that a drug sponsor extrapolation of long-term effects from develop a regulatory method to measure shorter-term exposures, extrapolation of of the drug’s use. Target tissue means the edible tissue drug residues in edible tissues of animal data to humans, and variability approved target species at in sensitivity among human selected to monitor for residues in the target animals. concentrations around the tolerance as populations. provided in § 514.1(b)(7) of this chapter. Acceptable single-dose intake (ASDI) Tolerance means the maximum concentration of a marker residue, or Because FDA determines the tolerance means the amount of total residue that for the marker residue using data may safely be consumed in a single other residue indicated for monitoring, that can legally remain in a specific collected with the approved regulatory meal. The ASDI may be used to derive method, the tolerance is directly tied to the tolerance for residue of the drug at edible tissue of a treated animal. (A finding, using the approved regulatory that method. Approved regulatory the injection site where the drug is methods are available from the Division administered according to the label. method, that the concentration of the marker residue or other residue of Dockets Management (HFA–305), Edible tissues means muscle, liver, Food and Drug Administration, 5630 kidney, fat, skin with fat in natural indicated for monitoring is present in the target tissue at a concentration at or Fishers Lane, rm. 1061, Rockville, MD proportions, whole eggs, whole milk, 20852. and honey. below the tolerance, indicates that all Marker residue means the residue edible tissues (excluding milk and eggs Subpart B—Specific Tolerances for selected for assay by the regulatory unless otherwise specified) from the Residues of Approved and method whose concentration in the tested animal are safe. All tolerances Conditionally Approved New Animal target tissue is in a known relationship refer to the concentrations of a marker Drugs to the concentration of the total residue residue, or other residue indicated for in the target tissue. A finding that the monitoring, permitted in uncooked § 556.34 Albendazole. concentration of marker residue is at or tissues.) (a) Acceptable daily intake (ADI). The below the tolerance in the target tissue Total residue means the aggregate of ADI for total residue of albendazole is from a tested animal indicates that all all compounds that results from the use 5 mg/kg of body weight per day. edible tissues (excluding milk and eggs of an animal drug, including the drug, (b) Tolerances. The tolerances for unless otherwise specified) from that its metabolites, and any other albendazole 2-aminosulfone (marker animal are safe. substances formed in or on food because residue) are: mg/kg means milligrams per kilogram. of such drug use. (1) Cattle—(i) Liver (target tissue): 0.2 No-Observed-Effect Level (NOEL) mg/kg means microgram per kilogram. ppm. means the highest dose level of a drug Zero, in reference to tolerances in this (ii) Muscle: 0.05 ppm. tested that produces no observable part, means no detectable residues are (2) Sheep—(i) Liver (target tissue): effects. allowed when using a method of 0.25 ppm. Not required, in reference to detection prescribed or approved by (ii) Muscle: 0.05 ppm. tolerances in this part, means that at the FDA. Any residue detectable using the (3) Goat—(i) Liver (target tissue): 0.25 time of approval, the drug met one of prescribed or approved method renders ppm. the following conditions: the tissue unsafe. (ii) [Reserved] (1) No withdrawal period (i.e. zero (c) Related conditions of use. See § 556.5 General considerations. withdrawal) was necessary for residues § 520.45 of this chapter. of the drug to deplete to or below the (a) The tolerances listed in subpart B concentrations considered to be safe or of this part pertain only to the species § 556.36 Altrenogest. an adequate withdrawal period was and production classes of the animal for (a) Acceptable daily intake (ADI). The inherent in the proposed drug use, and which the drug use has been approved ADI for total residue of altrenogest is there was no concern about residues or conditionally approved. Approved 0.04 mg/kg of body weight per day. resulting from misuse or overdosing; or use and conditionally approved use (b) Tolerances. The tolerance for (2) The drug qualified for a zero conditions, including the species and altrenogest (the marker residue) is: withdrawal period because it was production classes of the animals, are (1) Swine—(i) Liver (target tissue): 4 poorly absorbed or metabolized rapidly cited under paragraph (c) Related ppb.
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(ii) Muscle: 1 ppb. § 556.68 Azaperone. of ceftiofur that may safely be consumed (2) [Reserved] (a) Acceptable daily intake (ADI). The in a single meal. (c) Related conditions of use. See ADI for total residues of azaperone is (b) Tolerances. The tolerances for § 520.48 of this chapter. 0.63 mg/kg of body weight per day. desfuroylceftiofur (marker residue) are: (b) Tolerances. The tolerances for (1) Cattle—(i) Kidney (target tissue): § 556.38 Amoxicillin. azaperone are: 0.4 ppm. (a) [Reserved] (1) Swine—(i) Edible tissues: Not (ii) Liver: 2 ppm. (b) Tolerances. The tolerances for required. (iii) Muscle: 1 ppm. amoxicillin are: (2) [Reserved] (iv) Milk: 0.1 ppm. (1) Cattle—Edible tissues: 0.01 ppm. (c) Related conditions of use. See (2) Chickens and turkeys—Edible (2) [Reserved] § 522.150 of this chapter. tissues (excluding eggs): Not required. (c) Related conditions of use. See (3) Goats—(i) Kidney (target tissue): 8 §§ 520.88, 522.88, and 526.88 of this § 556.70 Bacitracin. ppm. chapter. (a) Acceptable daily intake (ADI). The (ii) Liver: 2 ppm. § 556.40 Ampicillin. ADI for total residue of bacitracin is 0.05 (iii) Muscle: 1 ppm. mg/kg of body weight per day. (a) [Reserved] (iv) Milk: 0.1 ppm. (b) Tolerances. The tolerances for (b) Tolerances. The tolerances for (4) Sheep—Edible tissues (excluding bacitracin are: ampicillin are: milk): Not required. (1) Cattle—Edible tissues: 0.5 ppm. (1) Cattle—Edible tissues: 0.01 ppm. (5) Swine—(i) Kidney (target tissue): (2) Chickens, turkeys, pheasants, (2) Swine—Edible tissues: 0.01 ppm. 0.25 ppm. (c) Related conditions of use. See quail—Edible tissues: 0.5 ppm. (ii) Liver: 3 ppm. §§ 520.90e, 520.90f, and 522.90 of this (3) Swine—Edible tissues: 0.5 ppm. (iii) Muscle: 2 ppm. (c) Related conditions of use. See chapter. (c) Related conditions of use. See §§ 520.154, 558.76, and 558.78 of this §§ 522.313 and 526.313 of this chapter. § 556.50 Amprolium. chapter. § 556.115 Cephapirin. (a) [Reserved] § 556.75 Bambermycins. (b) Tolerances. The tolerances for (a) [Reserved] amprolium are: (a) [Reserved] (b) Tolerances. The tolerances for (1) Cattle—(i) Liver, kidney, and (b) Tolerances. The tolerances for cephapirin are: muscle: 0.5 ppm. bambermycins are: (1) Cattle—(i) Edible tissues (ii) Fat: 2.0 ppm. (1) Cattle—Edible tissues (excluding (excluding milk): 0.1 ppm. (2) Chickens and turkeys—(i) Liver milk): Not required. (ii) Milk: 0.02 ppm. and kidney: 1 ppm. (2) Chickens and turkeys—Edible (2) [Reserved] (ii) Muscle: 0.5 ppm. tissues (excluding eggs): Not required. (c) Related conditions of use. See (iii) Eggs: (3) Swine—Edible tissues: Not §§ 526.363 and 526.365 of this chapter. (A) Egg yolks: 8 ppm. required. (B) Whole eggs: 4 ppm. (c) Related conditions of use. See § 556.120 Chlorhexidine. (3) Pheasants—(i) Liver: 1 ppm. § 558.95 of this chapter. (a) [Reserved] (ii) Muscle: 0.5 ppm. § 556.100 Carbadox. (b) Tolerances. The tolerances for (c) Related conditions of use. See chlorhexidine are: (a) [Reserved] §§ 520.100, 558.55, and 558.58 of this (1) Cattle—Edible tissues (excluding (b) Tolerance. The tolerance for chapter. milk): Zero. quinoxaline-2-carboxylic acid (marker (2) [Reserved] § 556.52 Apramycin. residue) is: (c) Related conditions of use. See (1) Swine—Liver (target tissue): 30 (a) Acceptable daily intake (ADI). The § 529.400 of this chapter. ADI for total residue of apramycin is 25 ppb. mg/kg of body weight per day. (2) [Reserved] § 556.150 Chlortetracycline. (b) Tolerance. The tolerance for (c) Related conditions of use. See (a) Acceptable daily intake (ADI). The apramycin (marker residue) is: § 558.115 of this chapter. ADI for total residue of tetracyclines (1) Swine—Kidney (target tissue): 0.1 § 556.110 Carbomycin. including chlortetracycline, ppm. oxytetracycline, and tetracycline is 25 (2) [Reserved] (a) [Reserved] (b) Tolerances. The tolerances for mg/kg of body weight per day. (c) Related conditions of use. See (b) Tolerances. The tolerances for the §§ 520.110 and 558.59 of this chapter. carbomycin are: (1) Chickens—Edible tissues sum of tetracycline residues are: § 556.60 Arsenic. (excluding eggs): Zero. (1) Cattle—(i) Liver: 6 ppm. (a) [Reserved] (2) [Reserved] (ii) Kidney and fat: 12 ppm. (b) Tolerances. The tolerances for (c) Related conditions of use. See (iii) Muscle: 2 ppm. total residue of combined arsenic § 520.1660a of this chapter. (2) Chickens, turkeys, and ducks—(i) (calculated as As) are: Liver: 6 ppm. (1) Chickens and turkeys—(i) Muscle § 556.113 Ceftiofur. (ii) Kidney and fat: 12 ppm. and eggs: 0.5 ppm. (a) Acceptable daily intake and (iii) Muscle: 2 ppm. (ii) Other edible tissues: 2 ppm. acceptable single-dose intake—(1) (iv) Eggs: 0.4 ppm for (2) Swine—(i) Liver and kidney: 2 Acceptable daily intake (ADI). The ADI chlortetracycline only. ppm. for total residue of ceftiofur is 30 mg/kg (3) Sheep—(i) Liver: 6 ppm. (ii) Muscle and fat: 0.5 ppm. of body weight per day. (ii) Kidney and fat: 12 ppm. (c) Related conditions of use. See (2) Acceptable single-dose intake (iii) Muscle: 2 ppm. §§ 520.2087, 520.2088, 520.2089, (ASDI). The ASDI total residue for (4) Swine—(i) Liver: 6 ppm. 558.62, 558.120, 558.369, and 558.530 ceftiofur is 0.830 mg/kg of body weight. (ii) Kidney and fat: 12 ppm. of this chapter. The ASDI is the amount of total residue (iii) Muscle: 2 ppm.
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(c) Related conditions of use. See (ii) Muscle: 0.2 ppm. (c) Related conditions of use. See §§ 520.445, 558.128, 558.145, and (2) [Reserved] §§ 522.770 and 524.770 of this chapter. 558.155 of this chapter. (c) Related conditions of use. See § 522.522 of this chapter. § 556.224 Efrotomycin. § 556.160 Clopidol. (a) Acceptable daily intake (ADI). The (a) [Reserved] § 556.170 Decoquinate. ADI for total residue of efrotomycin is (b) Tolerances. The tolerances for (a) Acceptable daily intake (ADI). The 10 mg/kg of body weight per day. clopidol are: ADI for total residue of decoquinate is (b) Tolerances. The tolerances for (1) Chickens and turkeys—(i) Liver 75 mg/kg of body weight per day. efrotomycin are: and kidney: 15 ppm. (b) Tolerances. The tolerances for (1) Swine—Edible tissues: Not (ii) Muscle: 5 ppm. decoquinate are: required. (2) [Reserved] (1) Cattle—(i) Muscle: 1 ppm. (2) [Reserved] (c) Related conditions of use. See (ii) Other edible tissues (excluding (c) Related conditions of use. See § 558.175 of this chapter. milk): 2 ppm. § 558.235 of this chapter. (2) Chickens—(i) Muscle: 1 ppm. § 556.163 Clorsulon. (ii) Other edible tissues (excluding § 556.226 Enrofloxacin. (a) Acceptable daily intake (ADI). The eggs): 2 ppm. (a) Acceptable daily intake (ADI). The ADI for total residue of clorsulon is 8 (3) Goats—(i) Muscle: 1 ppm. ADI for total residue of enrofloxacin is mg/kg of body weight per day. (ii) Other edible tissues (excluding 3 mg/kg of body weight per day. (b) Tolerances. The tolerances for milk): 2 ppm. (b) Tolerances. The tolerances for clorsulon (marker residue) are: (c) Related conditions of use. See enrofloxacin are: (1) Cattle—(i) Kidney (target tissue): § 558.195 of this chapter. (1) Cattle—Liver (target tissue): 0.1 1.0 ppm. ppm desethylene ciprofloxacin (marker § 556.180 Dichlorvos. (ii) Muscle: 0.1 ppm. residue). (2) [Reserved] (a) [Reserved] (2) Swine—Liver (target tissue): 0.5 (c) Related conditions of use. See (b) Tolerances. The tolerances for ppm enrofloxacin (marker residue). §§ 520.462 and 522.1193 of this chapter. dichlorvos are: (c) Related conditions of use. See (1) Swine—Edible tissues: 0.1 ppm. § 522.812 of this chapter. § 556.165 Cloxacillin. (2) [Reserved] (a) [Reserved] (c) Related conditions of use. See § 556.227 Eprinomectin. (b) Tolerances. The tolerances for § 558.205 of this chapter. (a) Acceptable daily intake (ADI). The cloxacillin are: § 556.185 Diclazuril. ADI for total residue of eprinomectin is (1) Cattle—Edible tissues: 0.01 ppm. 10 mg/kg of body weight per day. (a) Acceptable daily intake (ADI). The (2) [Reserved] (b) Tolerances. The tolerances for (c) Related conditions of use. See ADI for total residue of diclazuril is 25 eprinomectin B (marker residue) are: § 526.464 of this chapter. mg/kg of body weight per day. 1a (1) Cattle—(i) Liver (target tissue): 1.5 (b) Tolerances. The tolerances for ppm. § 556.167 Colistimethate. diclazuril are: (ii) Muscle: 100 ppb. (a) [Reserved] (1) Chickens and turkeys—(i) Liver: 3 (iii) Milk: 12 ppb. (b) Tolerances. The tolerances for ppm. (2) [Reserved] colistimethate are: (ii) Muscle: 0.5 ppm. (c) Related conditions of use. See (1) Chickens—Edible tissues (iii) Skin/fat: 1 ppm. (excluding eggs): Not required. (2) [Reserved] §§ 522.814 and 524.814 of this chapter. (2) [Reserved] (c) Related conditions of use. See § 556.230 Erythromycin. (c) Related conditions of use. See § 558.198 of this chapter. § 522.468 of this chapter. (a) [Reserved] § 556.200 Dihydrostreptomycin. (b) Tolerances. The tolerances for § 556.168 Coumaphos. (a) [Reserved] erythromycin are: (a) [Reserved] (b) Tolerances. The tolerances for (1) Cattle—(i) Edible tissues (b) Tolerances. The tolerances for dihydrostreptomycin are: (excluding milk): 0.1 ppm. coumaphos (measured as coumaphos (1) Cattle—(i) Kidney: 2.0 ppm. (ii) Milk: Zero. and its oxygen analog, O,O-diethyl O–3- (ii) Other edible tissues (excluding (2) Chickens and turkeys—(i) Edible chloro-4-methyl-2-oxo-2 H–1- milk): 0.5 ppm. tissues (excluding eggs): 0.125 ppm. benzopyran-7-yl phosphate) are: (iii) Milk: 0.125 ppm. (ii) Eggs: 0.025 ppm. (1) Cattle—(i) Edible tissues (2) Swine—(i) Kidney: 2.0 ppm. (3) Swine—Edible tissues: 0.1 ppm. (excluding milk): 1 ppm. (ii) Other edible tissues: 0.5 ppm. (c) Related conditions of use. See (ii) Milk fat: 0.5 ppm. (c) Related conditions of use. See §§ 520.823, 522.820, 526.820, and (2) Chickens—(i) Edible tissues §§ 520.2158b, 520.2158c, 522.650, and 558.248 of this chapter. (excluding eggs): 1 ppm. 526.1696b of this chapter. § 556.240 Estradiol and related esters. (ii) Eggs: 0.1 ppm. (c) Related conditions of use. See § 556.222 Doramectin. (a) [Reserved] § 558.185 of this chapter. (a) Acceptable daily intake (ADI). The (b) Tolerances. Residues of estradiol ADI for total residue of doramectin is are not permitted in excess of the § 556.169 Danofloxacin. 0.75 mg/kg of body weight per day. following increments above the (a) Acceptable daily intake (ADI). The (b) Tolerances. The tolerances for concentrations of estradiol naturally ADI for total residue of danofloxacin is doramectin (marker residue) are: present in untreated animals: 2.4 mg/kg of body weight per day. (1) Cattle—(i) Liver (target tissue): 100 (1) Cattle—(i) Muscle: 120 ppt. (b) Tolerances. The tolerances for ppb. (ii) Fat: 480 ppt. danofloxacin (marker residue) are: (ii) Muscle: 30 ppb. (iii) Kidney: 360 ppt. (1) Cattle—(i) Liver (target tissue): 0.2 (2) Swine—Liver (target tissue): 160 (iv) Liver: 240 ppt. ppm. ppb. (2) [Reserved]
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(c) Related conditions of use. See (1) Cattle—Edible tissues (excluding (b) Tolerances. The tolerances for §§ 522.840, 522.842, 522.850, 522.1940, milk): 0.1 ppm. gentamicin are: 522.2477, and 522.2478 of this chapter. (2) [Reserved] (1) Chickens and turkeys—Edible (c) Related conditions of use. See tissues (excluding eggs): 0.1 ppm. § 556.260 Ethopabate. § 524.920 of this chapter. (2) Swine—(i) Liver: 0.3 ppm. (a) [Reserved] (ii) Kidney (target tissue): 0.4 ppm (b) Tolerances. The tolerances for § 556.283 Florfenicol. gentamicin (marker residue). ethopabate, measured as (a) Acceptable daily intake (ADI). The (iii) Fat: 0.4 ppm. metaphenetidine, are: ADI for total residue of florfenicol is 10 (iv) Muscle: 0.1 ppm. (1) Chickens—(i) Liver: 1.5 ppm. mg/kg of body weight per day. (c) Related conditions of use. See (ii) Kidney: 1.5 ppm. (b) Tolerances. The tolerances for §§ 522.1044, 524.1044e, and 529.1044b (iii) Muscle: 0.5 ppm. florfenicol amine (marker residue) are: of this chapter. (2) [Reserved] (1) Cattle—(i) Liver (target tissue): 3.7 (c) Related conditions of use. See ppm. § 556.304 Gonadotropin. § 558.58 of this chapter. (ii) Muscle: 0.3 ppm. (a) Acceptable daily intake (ADI). The (2) Swine—(i) Liver (target tissue): 2.5 ADI for residues of total gonadotropins § 556.273 Famphur. ppm. (human chorionic gonadotropin and (a) [Reserved] (ii) Muscle: 0.2 ppm. pregnant mare serum gonadotropin) is (b) Tolerances. The tolerances for (3) Catfish—Muscle (target tissue): 1 42.25 International Units per kilogram famphur including its oxygen analog ppm. of body weight per day. are: (4) Freshwater-reared warmwater (b) Tolerances. The tolerances for (1) Cattle—Edible tissues (excluding finfish (other than catfish) and gonadotropin are: milk): 0.1 ppm. salmonids—Muscle/skin (target tissue): (1) Cattle—Edible tissues (excluding (2) [Reserved] 1 ppm. milk): Not required. (c) Related conditions of use. See (c) Related conditions of use. See (2) Fish—Edible tissues: Not required. §§ 520.955, 522.955, 522.956, and §§ 520.1242g, 524.900, and 558.254 of (3) Swine—Edible tissues: Not 558.261 of this chapter. this chapter. required. § 556.286 Flunixin. (c) Related conditions of use. See § 556.275 Fenbendazole. §§ 522.1077, 522.1078, 522.1079, and (a) Acceptable daily intake (ADI). The (a) Acceptable daily intake (ADI). The ADI for total residue of flunixin is 0.72 522.1081 of this chapter. ADI for total residue of fenbendazole is mg/kg of body weight per day. § 556.308 Halofuginone. 40 mg/kg of body weight per day. (b) Tolerances. The tolerances for (b) Tolerances. The tolerances for (a) Acceptable daily intake (ADI). The flunixin are: ADI for total residue of halofuginone fenbendazole are: (1) Cattle—(i) Liver (target tissue): 125 hydrobromide is 0.7 mg/kg of body (1) Cattle—(i) Liver (target tissue): 0.8 ppb flunixin free acid (marker residue). ppm fenbendazole (marker residue). (ii) Muscle: 25 ppb flunixin free acid. weight per day. (ii) Muscle: 0.4 ppm fenbendazole. (iii) Milk: 2 ppb 5-hydroxy flunixin (b) Tolerances. The tolerances for (iii) Milk: 0.6 ppm fenbendazole (marker residue). halofuginone (marker residue) are: sulfoxide. (2) Swine—(i) Liver (target tissue): 30 (1) Chickens—Liver (target tissue): (2) Goats—(i) Liver (target tissue): 0.8 ppb flunixin free acid (marker residue). 0.16 ppm. ppm fenbendazole (marker residue). (ii) Muscle: 25 ppb flunixin free acid. (2) Turkeys—Liver (target tissue): 0.13 (ii) Muscle: 0.4 ppm fenbendazole. (c) Related conditions of use. See ppm. (3) Swine—(i) Liver (target tissue): 6 §§ 522.956 and 522.970 of this chapter. (c) Related conditions of use. See ppm fenbendazole (marker residue). § 558.265 of this chapter. § 556.290 Flurogestone. (ii) Muscle: 2 ppm fenbendazole. § 556.310 Haloxon. (4) Turkeys—(i) Liver (target tissue): 6 (a) [Reserved] (b) Tolerances. The tolerances for (a) [Reserved] ppm fenbendazole sulfone (marker (b) Tolerances. The tolerances for residue). flurogestone are: (1) Sheep—Edible tissues (excluding haloxon are: (ii) Muscle: 2 ppm fenbendazole (1) Cattle—Edible tissues (excluding sulfone. milk): Not required. (2) [Reserved] milk): 0.1 ppm. (c) Related conditions of use. See (c) Related conditions of use. See (2) [Reserved] §§ 520.905 and 558.258 of this chapter. § 529.1003 of this chapter. (c) Related conditions of use. See § 556.277 Fenprostalene. § 520.1120 of this chapter. § 556.292 Gamithromycin. (a) Acceptable daily intake (ADI). The (a) Acceptable daily intake (ADI). The § 556.330 Hygromycin B. ADI for total residue of fenprostalene is ADI for total residue of gamithromycin (a) [Reserved] 0.08 mg/kg of body weight per day. is 10 mg/kg of body weight per day. (b) Tolerances. The tolerances for (b) Tolerances. The tolerances for (b) Tolerances. The tolerances for hygromycin B are: fenprostalene are: gamithromycin (marker residue) are: (1) Chickens—Edible tissues: Zero. (1) Cattle—Edible tissues (excluding (1) Cattle—(i) Liver (target tissue): 500 (2) Swine—Edible tissues: Zero. milk): Not required. ppb. (c) Related conditions of use. See (2) Swine—Edible tissues: Not (ii) Muscle: 150 ppb. § 558.274 of this chapter. required. (2) [Reserved] (c) Related conditions of use. See (c) Related conditions of use. See § 556.344 Ivermectin. § 522.914 of this chapter. § 522.1014 of this chapter. (a) Acceptable daily intake (ADI). The ADI for total residue of ivermectin is 1 § 556.280 Fenthion. § 556.300 Gentamicin. mg/kg of body weight per day. (a) [Reserved] (a) Acceptable daily intake (ADI). The (b) Tolerances. The tolerances for (b) Tolerance. The tolerances for ADI for total residue of gentamicin is 60 22,23-dihydroavermectin B1a (marker fenthion are: mg/kg of body weight per day. residue) are:
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(1) American bison—Liver (target (1) Chickens—Edible tissues § 556.426 Moxidectin. tissue): 15 ppb. (excluding eggs): Not required. (a) Acceptable daily intake (ADI). The (2) Cattle—(i) Liver (target tissue): 100 (2) Swine—(i) Liver: 0.6 ppm. ADI for total residue of moxidectin is 4 ppb. (ii) Muscle: 0.1 ppm. mg/kg of body weight per day. (ii) Muscle: 10 ppb. (c) Related conditions of use. See (b) Tolerances. The tolerances for (3) Reindeer—Liver (target tissue): 15 §§ 520.1263b, 520.1263c, 522.1260, and moxidectin (marker residue) are: ppb. 558.325 of this chapter. (1) Cattle—(i) Fat (target tissue): 900 (4) Sheep— Liver (target tissue): 30 § 556.375 Maduramicin. ppb. ppb. (ii) Liver: 200 ppb. (5) Swine—(i) Liver (target tissue): 20 (a) [Reserved] (iii) Muscle: 50 ppb. ppb. (b) Tolerance. The tolerance for (iv) Milk: 40 ppb. (ii) Muscle: 20 ppb. maduramicin (marker residue) is: (2) Sheep—(i) Fat (target tissue): 900 (c) Related conditions of use. See (1) Chickens—Fat (target tissue): 0.38 ppb. §§ 520.1192, 520.1195, 520.1197, ppm. (ii) Liver: 200 ppb. 522.1192, 522.1193, 524.1193, and (2) [Reserved] (iii) Muscle: 50 ppb. 558.300 of this chapter. (c) Related conditions of use. See (c) Related conditions of use. See § 558.340 of this chapter. §§ 520.1454, 522.1450, and 524.1450 of § 556.346 Laidlomycin. § 556.380 Melengestrol. this chapter. (a) Acceptable daily intake (ADI). The (a) [Reserved] ADI for total residue of laidlomycin is § 556.428 Narasin. (b) Tolerance. The tolerance for 7.5 mg/kg of body weight per day. (a) Acceptable daily intake (ADI). The melengestrol is: (b) Tolerance. The tolerance for ADI for total residue of narasin is 5 mg/ (1) Cattle—Fat: 25 ppb. kg of body weight per day. laidlomycin (marker residue) is: (2) [Reserved] (1) Cattle—Liver (target tissue): 0.2 (c) Related conditions of use. See (b) Tolerance. The tolerance for ppm. § 558.342 of this chapter. narasin (marker residue) is: (2) [Reserved] (1) Chickens—Abdominal fat (target (c) Related conditions of use. See § 556.410 Metoserpate. tissue): 480 ppb. § 558.305 of this chapter. (a) [Reserved] (2) [Reserved] (c) Related conditions of use. See § 556.347 Lasalocid. (b) Tolerances. The tolerances for metoserpate are: § 558.363 of this chapter. (a) Acceptable daily intake (ADI). The (1) Chickens—Edible tissues § 556.430 Neomycin. ADI for total residue of lasalocid is 10 (excluding eggs): 0.02 ppm. mg/kg of body weight per day. (2) [Reserved] (a) Acceptable daily intake (ADI). The (b) Tolerances. The tolerances for (c) Related conditions of use. See ADI for total residue of neomycin is 6 lasalocid (marker residue) are: § 520.1422 of this chapter. mg/kg of body weight per day. (1) Cattle—Liver (target tissue): 0.7 (b) Tolerances. The tolerances for ppm. § 556.420 Monensin. neomycin are: (2) Chickens—(i) Skin with adhering (a) Acceptable daily intake (ADI). The (1) Cattle—(i) Kidney (target tissue): fat (target tissue): 1.2 ppm. ADI for total residue of monensin is 12.5 7.2 ppm. (ii) Liver: 0.4 ppm. mg/kg of body weight per day. (ii) Liver: 3.6 ppm. (3) Rabbits—Liver (target tissue): 0.7 (b) Tolerances. The tolerances for (iii) Muscle: 1.2 ppm. ppm. monensin are: (iv) Fat: 7.2 ppm. (4) Sheep—Liver (target tissue): 1.0 (1) Cattle—(i) Liver: 0.10 ppm. (v) Milk: 0.15 ppm. ppm. (ii) Muscle, kidney, and fat: 0.05 ppm. (2) Sheep and Goats—(i) Kidney (5) Turkeys—(i) Liver (target tissue): (iii) Milk: Not required. (target tissue): 7.2 ppm. 0.4 ppm. (2) Chickens and turkeys—Edible (ii) Liver: 3.6 ppm. (ii) Skin with adhering fat: 0.4 ppm. tissues (excluding eggs): Not required. (iii) Muscle: 1.2 ppm. (c) Related conditions of use. See (3) Goats—Edible tissues (excluding (iv) Fat: 7.2 ppm. § 558.311 of this chapter. milk): 0.05 ppm. (v) Milk: 0.15 ppm. (4) Quail—Edible tissues (excluding (3) Swine—(i) Kidney (target tissue): § 556.350 Levamisole. eggs): Not required. 7.2 ppm. (a) [Reserved] (c) Related conditions of use. See (ii) Liver: 3.6 ppm. (b) Tolerances. The tolerances for § 558.355 of this chapter. (iii) Muscle: 1.2 ppm. levamisole are: (iv) Fat: 7.2 ppm. (1) Cattle—Edible tissues (excluding § 556.425 Morantel. (4) Turkeys—(i) Skin with adhering milk): 0.1 ppm. (a) Acceptable daily intake (ADI). The fat: 7.2 ppm. (2) Sheep—Edible tissues (excluding ADI for total residue of morantel tartrate (ii) Liver: 3.6 ppm. milk): 0.1 ppm. is 10 mg/kg of body weight per day. (iii) Muscle: 1.2 ppm. (3) Swine—Edible tissues: 0.1 ppm. (b) Tolerances. The tolerances for N- (c) Related conditions of use. See (c) Related conditions of use. See methyl-1,3-propanediamine (marker §§ 520.1484, 524.1600b, and 558.364 of §§ 520.1242, 522.1244, and 524.1240 of residue) are: this chapter. this chapter. (1) Cattle—(i) Liver (target tissue): 0.7 ppm. § 556.440 Nequinate. § 556.360 Lincomycin. (ii) Milk: Not required. (a) [Reserved] (a) Acceptable daily intake (ADI). The (2) Goats—(i) Liver (target tissue): 0.7 (b) Tolerances. The tolerances for ADI for total residue of lincomycin is 25 ppm. nequinate are: mg/kg of body weight per day. (ii) Milk: Not required. (1) Chickens—Edible tissues (b) Tolerances. The tolerances for (c) Related conditions of use. See (excluding eggs): 0.1 ppm. lincomycin are: §§ 520.1450 and 558.360 of this chapter. (2) [Reserved]
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(c) Related conditions of use. See § 556.500 Oxytetracycline. § 556.517 Poloxalene. § 558.365 of this chapter. (a) Acceptable daily intake (ADI). The (a) [Reserved] ADI for total tetracycline residues (b) Tolerances. The tolerances for § 556.445 Nicarbazin. (chlortetracycline, oxytetracycline, and poloxalene are: (a) [Reserved] tetracycline) is 25 mg/kg of body weight (1) Cattle—Edible tissues (excluding (b) Tolerances. The tolerances for per day. milk): Not required. nicarbazin are: (b) Tolerances. The tolerances for the (2) [Reserved] (1) Chickens—(i) Muscle: 4 ppm. (ii) Liver: 4 ppm. sum of tetracycline residues are: (c) Related conditions of use. See (2) [Reserved] (1) Cattle—(i) Muscle: 2 ppm. §§ 520.1840, 558.464, and 558.465 of (c) Related conditions of use. See (ii) Liver: 6 ppm. this chapter. § 558.366 of this chapter. (iii) Fat and kidney: 12 ppm. (iv) Milk: 0.3 ppm. § 556.540 Progesterone. § 556.460 Novobiocin. (2) Chickens and turkeys—(i) Muscle: (a) [Reserved] (a) [Reserved] 2 ppm. (b) Tolerances. Residues of (b) Tolerances. The tolerances for (ii) Liver: 6 ppm. progesterone are not permitted in excess novobiocin are: (iii) Fat and kidney: 12 ppm. of the following increments above the (1) Cattle—(i) Edible tissues (3) Finfish—Muscle (with adhering concentrations of progesterone naturally (excluding milk): 1 ppm. skin when edible): 2 ppm. present in untreated animals: (ii) Milk: 0.1 ppm. (4) Lobster—Muscle: 2 ppm. (1) Cattle and sheep—(i) Muscle: 5 (2) Chickens, turkeys, ducks—Edible (5) Swine and Sheep—(i) Muscle: 2 ppb. tissues (excluding eggs): 1 ppm. ppm. (ii) Liver: 15 ppb. (c) Related conditions of use. See (ii) Liver: 6 ppm. (iii) Kidney: 30 ppb. §§ 526.1590, 526.1696d, and 558.415 of (iii) Fat and kidney: 12 ppm. (iv) Fat: 30 ppb. this chapter. (c) Related conditions of use. See (2) [Reserved] § 556.470 Nystatin. §§ 520.1660, 522.1660, 522.1662, (c) Related conditions of use. See §§ 522.1940 and 529.1940 of this (a) [Reserved] 524.1662b, 529.1660, and 558.450 of chapter. (b) Tolerances. The tolerances for this chapter. nystatin are: § 556.510 Penicillin. § 556.560 Pyrantel. (1) Cattle—Edible tissues (excluding (a) [Reserved] (a) [Reserved] milk): Zero. (b) Tolerances. The tolerances for (2) Chickens and turkeys—Edible (b) Tolerances. The tolerances for pyrantel are: tissues: Zero. penicillin are: (c) Related conditions of use. See (1) Cattle—(i) Edible tissues (1) Swine—(i) Liver and kidney: 10 §§ 524.1600b and 558.430 of this (excluding milk): 0.05 ppm. ppm. chapter. (ii) Milk: Zero. (ii) Muscle: 1 ppm. (2) Chickens—Edible tissues: Zero. (2) [Reserved] § 556.480 Oleandomycin. (3) Pheasants and quail—Edible (c) Related conditions of use. See (a) [Reserved] tissues: Zero. §§ 520.2045 and 558.485 of this chapter. (b) Tolerances. The tolerances for (4) Sheep and Swine—Edible tissues: § 556.570 Ractopamine. oleandomycin are: Zero. (1) Chickens and turkeys—Edible (5) Turkeys—Edible tissues (excluding (a) Acceptable daily intake (ADI). The tissues (excluding eggs): 0.15 ppm. eggs): 0.01 ppm. ADI for total residue of ractopamine (2) Swine—Edible tissues: 0.15 ppm. (c) Related conditions of use. See hydrochloride is 1.25 mg/kg of body (c) Related conditions of use. See §§ 520.1696, 522.1696, 526.1696, and weight per day. § 558.435 of this chapter. 558.460 of this chapter. (b) Tolerances. The tolerances for ractopamine (marker residue) are: § 556.490 Ormetoprim. § 556.513 Piperazine. (1) Cattle—(i) Liver (target tissue): (a) [Reserved] (a) [Reserved] 0.09 ppm. (b) Tolerances. The tolerances for (b) Tolerances. The tolerances for (ii) Muscle: 0.03 ppm. ormetoprim are: piperazine are: (2) Swine—(i) Liver (target tissue): (1) Chickens, turkeys, ducks, and (1) Chickens and turkeys—Edible 0.15 ppm. chukar partridges—Edible tissues tissues (excluding eggs): 0.1 ppm. (ii) Muscle: 0.05 ppm. (excluding eggs): 0.1 ppm. (2) Swine—Edible tissues: 0.1 ppm. (3) Turkeys—(i) Liver (target tissue): (2) Salmonids and catfish—Edible (c) Related conditions of use. See 0.45 ppm. tissues: 0.1 ppm. (c) Related conditions of use. See § 520.1807 of this chapter. (ii) Muscle: 0.1 ppm. § 558.575 of this chapter. (c) Related conditions of use. See § 556.515 Pirlimycin. § 558.500 of this chapter. § 556.495 Oxfendazole. (a) Acceptable daily intake (ADI). The § 556.580 Robenidine. (a) Acceptable daily intake (ADI). The ADI for total residue of pirlimycin is ADI for total residue of oxfendazole is 0.01 mg/kg of body weight per day. (a) [Reserved] 7 mg/kg of body weight per day. (b) Tolerances. The tolerances for (b) Tolerances. The tolerances for (b) Tolerance. The tolerance for pirlimycin (marker residue) are: robenidine are: fenbendazole (marker residue) is: (1) Cattle—(i) Liver (target tissue): 0.5 (1) Chickens—(i) Skin and fat: 0.2 (1) Cattle—Liver (target tissue): 0.8 ppm. ppm. ppm. (ii) Muscle: 0.3 ppm. (ii) Other edible tissues (excluding (2) [Reserved] (iii) Milk: 0.4 ppm. eggs): 0.1 ppm. (c) Related conditions of use. See (2) [Reserved] (2) [Reserved] §§ 520.1629 and 520.1630 of this (c) Related conditions of use. See (c) Related conditions of use. See chapter. § 526.1810 of this chapter. § 558.515 of this chapter.
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§ 556.592 Salinomycin. (1) Chickens—Edible tissues (1) Cattle—Edible tissues (excluding (a) Acceptable daily intake (ADI). The (excluding eggs): Zero. milk): 0.1 ppm. ADI for total residue of salinomycin is (2) [Reserved] (2) Chickens and turkeys—Edible 5 mg/kg of body weight per day. (c) Related conditions of use. See tissues (excluding eggs): 0.1 ppm. (b) Tolerances. The tolerances for § 520.2184 of this chapter. (c) Related conditions of use. See salinomycin are: §§ 520.2325 and 558.586 of this chapter. (1) Chickens—Edible tissues § 556.630 Sulfachlorpyridazine. (excluding eggs): Not required. (a) [Reserved] § 556.690 Sulfathiazole. (2) Quail—Edible tissues (excluding (b) Tolerances. The tolerances for (a) [Reserved] eggs): Not required. sulfachlorpyridazine are: (b) Tolerances. The tolerances for (c) Related conditions of use. See (1) Cattle and Swine—Edible tissues sulfathiazole are: § 558.550 of this chapter. (excluding milk): 0.1 ppm. (1) Swine—Edible tissues: 0.1 ppm. (2) [Reserved] (2) [Reserved] § 556.597 Semduramicin. (c) Related conditions of use. See (c) Related conditions of use. See (a) Acceptable daily intake (ADI). The §§ 520.2200 and 522.2200 of this § 558.155 of this chapter. ADI for total residue of semduramicin is chapter. 3 mg/kg of body weight per day. § 556.700 Sulfomyxin. (b) Tolerances. The tolerances for § 556.640 Sulfadimethoxine. (a) [Reserved] semduramicin are: (a) [Reserved] (b) Tolerances. The tolerances for (1) Chickens—(i) Liver: 400 ppb. (b) Tolerances. The tolerances for sulfomyxin are: (ii) Muscle: 130 ppb. sulfadimethoxine are: (1) Chickens and turkeys—Edible (2) [Reserved] (1) Catfish and salmonids—Edible tissues (excluding eggs): Zero. (c) Related conditions of use. See tissues: 0.1 ppm. (2) [Reserved] § 558.555 of this chapter. (2) Cattle—(i) Edible tissues (c) Related conditions of use. See (excluding milk): 0.1 ppm. § 522.2340 of this chapter. § 556.600 Spectinomycin. (ii) Milk: 0.01 ppm. (a) Acceptable daily intake (ADI). The (3) Chickens, turkeys, ducks and § 556.710 Testosterone. ADI for total residue of spectinomycin chukar partridges—Edible tissues (a) [Reserved] is 25 mg/kg of body weight per day. (excluding eggs): 0.1 ppm. (b) Tolerances. Residues of (b) Tolerances. The tolerances for (c) Related conditions of use. See testosterone are not permitted in excess spectinomycin are: §§ 520.2220, 522.2220, and 558.575 of of the following increments above the (1) Cattle—(i) Kidney (target tissue): 4 this chapter. concentrations of testosterone naturally ppm spectinomycin (marker residue). present in untreated animals: § 556.650 Sulfaethoxypyridazine. (ii) Muscle: 0.25 ppm. (1) Cattle—(i) Fat: 2.6 ppb. (2) Chickens and turkeys—Edible (a) [Reserved] (ii) Kidney: 1.9 ppb. tissues (excluding eggs): 0.1 ppm. (b) Tolerances. The tolerances for (iii) Liver: 1.3 ppb. (3) Swine—Edible tissues: Not sulfaethoxypyridazine are: (iv) Muscle: 0.64 ppb. required. (1) Cattle—(i) Edible tissues (2) [Reserved] (c) Related conditions of use. See (excluding milk): 0.1 ppm. (c) Related conditions of use. See §§ 520.1265, 520.2123b, 520.2123c, (ii) Milk: Zero. § 522.842 of this chapter. 522.2120, and 522.2121 of this chapter. (2) Swine—Edible tissues: Zero. (c) Related conditions of use. See § 556.720 Tetracycline. § 556.610 Streptomycin. §§ 520.2240 and 522.2240 of this (a) Acceptable daily intake (ADI). The (a) [Reserved] chapter. ADI for total tetracycline residues (b) Tolerances. The tolerances for § 556.660 Sulfamerazine. (chlortetracycline, oxytetracycline, and streptomycin are: tetracycline) is 25 mg/kg of body weight (1) Cattle and Swine—(i) Kidney: 2.0 (a) [Reserved] (b) Tolerances. The tolerances for per day. ppm. (b) Tolerances. The tolerances for the (ii) Other edible tissues (excluding sulfamerazine are: sum of tetracycline residues are: milk): 0.5 ppm. (1) Trout—Edible tissues: Zero. (1) Cattle and Sheep—(i) Kidney and (2) Chickens—(i) Kidney: 2.0 ppm. (2) [Reserved] (ii) Other edible tissues (excluding (c) Related conditions of use. See fat: 12 ppm. eggs): 0.5 ppm. § 558.582 of this chapter. (ii) Liver: 6 ppm. (c) Related conditions of use. See (iii) Muscle: 2 ppm. § 556.670 Sulfamethazine. § 520.2158 of this chapter. (2) Chickens and turkeys—(i) Kidney (a) [Reserved] and fat: 12 ppm. § 556.620 Sulfabromomethazine. (b) Tolerances. The tolerances for (ii) Liver: 6 ppm. (a) [Reserved] sulfamethazine are: (iii) Muscle: 2 ppm. (b) Tolerances. The tolerances for (1) Cattle—Edible tissues (excluding (3) Swine—(i) Kidney and fat: 12 ppm. sulfabromomethazine are: milk): 0.1 ppm. (ii) Liver: 6 ppm. (1) Cattle—(i) Edible tissues (2) Chickens and turkeys—Edible (iii) Muscle: 2 ppm. (excluding milk): 0.1 ppm. tissues (excluding eggs): 0.1 ppm. (c) Related conditions of use. See (ii) Milk: 0.01 ppm. (3) Swine—Edible tissues: 0.1 ppm. §§ 520.2345c and 520.2345d of this (2) [Reserved] (c) Related conditions of use. See chapter. (c) Related conditions of use. See §§ 520.2260, 520.2261, 522.2260, § 556.730 Thiabendazole. § 520.2170 of this chapter. 558.145, and 558.630 of this chapter. (a) [Reserved] § 556.625 Sulfachloropyrazine. § 556.685 Sulfaquinoxaline. (b) Tolerances. The tolerances for (a) [Reserved] (a) [Reserved] thiabendazole are: (b) Tolerances. The tolerances for (b) Tolerances. The tolerances for (1) Cattle—(i) Edible tissues sulfachloropyrazine are: sulfaquinoxaline are: (excluding milk): 0.1 ppm.
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(ii) Milk: 0.05 ppm. (b) Tolerances. The tolerances for (b) Tolerances. The tolerances for (2) Swine—Edible tissues: 0.1 ppm. tripelennamine are: zeranol are: (3) Sheep and Goats—(i) Edible (1) Cattle—(i) Edible tissues (1) Cattle—Edible tissues (excluding tissues (excluding milk): 0.1 ppm. (excluding milk): 200 ppb. milk): Not required. (ii) Milk: 0.05 ppm. (ii) Milk: 20 ppb. (2) Sheep—Edible tissues (excluding (4) Pheasants—Edible tissues (2) [Reserved] milk): 20 ppb. (excluding eggs): 0.1 ppm. (c) Related conditions of use. See (c) Related conditions of use. See (c) Related conditions of use. See § 522.2615 of this chapter. § 522.2680 of this chapter. §§ 520.2380a, 520.2380b, 520.2380c, § 556.745 Tulathromycin. and 558.615 of this chapter. § 556.765 Zilpaterol. (a) Acceptable daily intake (ADI). The (a) Acceptable daily intake (ADI). The § 556.733 Tildipirosin. ADI for total residue of tulathromycin is ADI for total residue of zilpaterol is (a) Acceptable daily intake (ADI). The 15 mg/kg of body weight per day. 0.083 mg/kg of body weight per day. ADI for total residue of tildipirosin is 10 (b) Tolerances. The tolerances for CP– (b) Tolerances. The tolerances for mg/kg of body weight per day. 60,300 (marker residue) are: zilpaterol freebase (marker residue) are: (b) Tolerances. The tolerances for (1) Cattle—Liver (target tissue): 5.5 (1) Cattle—Liver (target tissue): 12 tildipirosin (the marker residue) are: ppm. ppb. (1) Cattle—(i) Liver (the target tissue): (2) Swine—Kidney (target tissue): 15 (2) [Reserved] 10 ppm. ppm. (c) Related conditions of use. See (c) Related conditions of use. See (ii) [Reserved] § 558.665 of this chapter. (2) [Reserved] § 522.2630 of this chapter. § 556.770 Zoalene. (c) Related conditions of use. See § 556.746 Tylosin. § 522.2460 of this chapter. (a) [Reserved] (a) [Reserved] (b) Tolerances. The tolerances for § 556.735 Tilmicosin. (b) Tolerances. The tolerances for tylosin are: zoalene and its metabolite 3-amino-5- (a) Acceptable daily intake (ADI). The nitro-o-toluamide are: ADI for total residue of tilmicosin is 25 (1) Cattle—(i) Liver, kidney, fat, and muscle: 0.2 ppm. (1) Chickens—(i) Liver and kidney: 6 mg/kg of body weight per day. ppm. (b) Tolerances. The tolerances for (ii) Milk: 0.05 ppm. (2) Chickens and turkeys—(i) Liver, (ii) Muscle: 3 ppm. tilmicosin (marker residue) are: (iii) Fat: 2 ppm. (1) Cattle—(i) Liver (target tissue): 1.2 kidney, fat, and muscle: 0.2 ppm. (ii) Eggs: 0.2 ppm. (2) Turkeys—Liver and muscle: 3 ppm. (3) Swine—Liver, kidney, fat, and ppm. (ii) Muscle: 0.1 ppm. muscle: 0.2 ppm. (c) Related conditions of use. See (2) Sheep—(i) Liver (target tissue): 1.2 (c) Related conditions of use. See § 558.680 of this chapter. ppm. §§ 520.2640, 522.2640, 558.625, and (ii) Muscle: 0.1 ppm. 558.630 of this chapter. PART 558—NEW ANIMAL DRUGS FOR (3) Swine—(i) Liver (target tissue): 7.5 USE IN ANIMAL FEEDS ppm. § 556.748 Tylvalosin. (ii) Muscle: 0.1 ppm. (a) Acceptable daily intake (ADI). The 15. The authority citation for 21 CFR (c) Related conditions of use. See ADI for total residues of tylvalosin is part 558 continues to read as follows: §§ 522.2471 and 558.618 of this chapter. 47.7 mg/kg of body weight per day. Authority: 21 U.S.C. 360b, 371. § 556.738 Tiamulin. (b) Tolerances. A tolerance for 16. In § 558.95, add paragraph (c) to tylvalosin in edible tissues of swine is (a) Acceptable daily intake (ADI). The read as follows: not required. ADI for total residue of tiamulin is 25 (c) Related conditions of use. See § 558.95 Bambermycins. mg/kg of body weight per day. § 520.2645 of this chapter. (b) Tolerance. The tolerance for 8- * * * * * alpha-hydroxymutilin (marker residue) § 556.750 Virginiamycin. (c) Related tolerances. See § 556.75 of this chapter. is: (a) Acceptable daily intake (ADI). The (1) Swine—Liver (target tissue): 0.6 ADI for total residue of virginiamycin is * * * * * ppm. 250 mg/kg of body weight per day. 17. In § 558.185, revise paragraph (c) (2) [Reserved] (b) Tolerances. The tolerances for to read as follows: (c) Related conditions of use. See virginiamycin are: § 558.185 Coumaphos. §§ 520.2455 and 558.600 of this chapter. (1) Cattle—Edible tissues (excluding milk): Not required. * * * * * § 556.739 Trenbolone. (2) Chickens—Edible tissues (c) Related tolerances. See § 556.168 (a) Acceptable daily intake (ADI). The (excluding eggs): Not required. of this chapter. ADI for total residue of trenbolone is 0.4 (3) Swine—(i) Kidney, skin, and fat: * * * * * mg/kg of body weight per day. 0.4 ppm. 18. In § 558.235, add paragraph (c) to (b) Tolerances. The tolerances for (ii) Liver: 0.3 ppm. read as follows: trenbolone are: (iii) Muscle: 0.1 ppm. (1) Cattle—Edible tissues (excluding (4) Turkeys—Edible tissues (excluding § 558.235 Efrotomycin. milk): Not required. eggs): Not required. * * * * * (2) [Reserved] (c) Related conditions of use. See (c) Related tolerances. See § 556.224 (c) Related conditions of use. See § 558.635 of this chapter. of this chapter. §§ 522.2476, 522.2477, and 522.2478 of 19. In § 558.464, add paragraph (c) to this chapter. § 556.760 Zeranol. read as follows: (a) Acceptable daily intake (ADI). The § 556.741 Tripelennamine. ADI for total residue of zeranol is 1.25 § 558.464 Poloxalene. (a) [Reserved] mg/kg of body weight per day. * * * * *
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(c) Related tolerances. See § 556.517 Additional Medicare Tax. This The accuracy of the estimated burden of this chapter. document also provides notice of a associated with the proposed collection 20. In § 558.465, add paragraph (c) to public hearing on these proposed rules. of information; and read as follows: Estimates of capital or start-up costs DATES: Written or electronic comments and costs of operation, maintenance, § 558.465 Poloxalene free-choice liquid must be received by March 5, 2013. and purchase of services to provide Type C feed. Requests to speak (with outlines of information. * * * * * topics to be discussed) at the public The collection of information in these (c) Related tolerances. See § 556.517 hearing scheduled for April 4, 2013, proposed regulations is in of this chapter. must be received by March 5, 2013. §§ 31.6011(a)–1, 31.6011(a)–2, 31.6205– 21. In § 558.625, revise paragraph (e) ADDRESSES: Send submissions to: 1, 31.6402(a)–2, 31.6413(a)–1, and to read as follows: CC:PA:LPD:PR (REG–130074–11), Room 31.6413(a)–2. This information is § 558.625 Tylosin. 5205, Internal Revenue Service, P.O. required by the IRS to verify compliance Box 7604, Ben Franklin Station, with return requirements under section * * * * * Washington, DC 20044. Submissions 6011, employment tax adjustments (e) Related tolerances. See § 556.746 may be hand-delivered Monday through under sections 6205 and 6413, and of this chapter. Friday between the hours of 8 a.m. and claims for refund of overpayments * * * * * 4 p.m. to CC:PA:LPD:PR (REG–130074– under section 6402. This information 22. In § 558.630, revise paragraph (d) 11), Courier’s Desk, Internal Revenue will be used to determine whether the to read as follows: Service, 1111 Constitution Avenue NW., amount of tax has been reported and § 558.630 Tylosin and sulfamethazine. Washington, DC, or sent electronically, calculated correctly. The likely respondents are employers and * * * * * via the Federal eRulemaking Portal at www.regulations.gov (IRS REG–130074– individuals. (d) Related tolerances. See §§ 556.670 Estimated total annual reporting and/ and 556.746 of this chapter. 11). The public hearing will be held in the Auditorium, Internal Revenue or recordkeeping burden: 1,900,000 * * * * * Building, 1111 Constitution Avenue hours. Dated: November 26, 2012. NW., Washington, DC. Estimated average annual burden per Leslie Kux, respondent: 1 hour. FOR FURTHER INFORMATION CONTACT: Estimated number of respondents: Assistant Commissioner for Policy. Concerning the proposed regulations, 1,900,000. [FR Doc. 2012–29322 Filed 12–4–12; 8:45 am] Andrew K. Holubeck or Ligeia M. Donis An agency may not conduct or BILLING CODE 4160–01–P at (202) 622–6040; concerning sponsor, and a person is not required to submission of comments, the hearing, respond to, a collection of information and/or to be placed on the building unless it displays a valid control DEPARTMENT OF THE TREASURY access list to attend the hearing, please number assigned by the Office of contact Oluwafunmilayo (Funmi) Taylor Management and Budget. Internal Revenue Service at Oluwafunmilayo.P.Taylor@ Books or records relating to a irscounsel.treas.gov or (202) 622–7180 collection of information must be 26 CFR Parts 1 and 31 (not toll-free numbers). retained as long as their contents may [REG–130074–11] SUPPLEMENTARY INFORMATION: become material in the administration of any internal revenue law. Generally, RIN 1545–BK54 Paperwork Reduction Act tax returns and tax return information Rules Relating to Additional Medicare are confidential, as required by 26 The collection of information U.S.C. 6103. Tax contained in these proposed regulations Background AGENCY: Internal Revenue Service (IRS), was previously reviewed and approved Treasury. by the Office of Management and These proposed regulations are issued Budget in accordance with the ACTION: in connection with the Additional Notice of proposed rulemaking Paperwork Reduction Act of 1995 (44 and notice of public hearing. Hospital Insurance Tax on income U.S.C. 3507(d)) under control number above threshold amounts (‘‘Additional SUMMARY: This document contains 1545–2097. Comments on the collection Medicare Tax’’), as added by section proposed regulations relating to of information should be sent to the 9015 of the Patient Protection and Additional Hospital Insurance Tax on Office of Management and Budget, Attn: Affordable Care Act (PPACA), Public income above threshold amounts Desk Officer for the Department of the Law 111–148 (124 Stat. 119 (2010)), and (‘‘Additional Medicare Tax’’), as added Treasury, Office of Information and as amended by section 10906 of the by the Affordable Care Act. Specifically, Regulatory Affairs, Washington, DC PPACA and section 1402(b) of the these proposed regulations provide 20503, with copies to the Internal Health Care and Education guidance for employers and individuals Revenue Service, Attn: IRS Reports Reconciliation Act of 2010, Public Law relating to the implementation of Clearance Officer, 111–152 (124 Stat. 1029 (2010)) Additional Medicare Tax. This SE:W:CAR:MP:T:T:SP, Washington, DC (collectively, the ‘‘Affordable Care document also contains proposed 20224. Comments on the collection of Act’’). The proposed regulations include regulations relating to the requirement information should be received by amendments to § 1.1401–1 of the to file a return reporting Additional February 4, 2013. Comments are Income Tax Regulations, and Medicare Tax, the employer process for specifically requested concerning: §§ 31.3101–2, 31.3102–1, 31.3102–4, making adjustments of underpayments Whether the proposed collection of 31.3202–1, 31.6011(a)–1, 31.6011(a)–2, and overpayments of Additional information is necessary for the proper 31.6205–1, 31.6402(a)–2, 31.6413(a)–1, Medicare Tax, and the employer and performance of the functions of the IRS, and 31.6413(a)–2 of the Employment employee processes for filing a claim for including whether the information will Tax Regulations. The proposed refund for an overpayment of have practical utility; regulations provide guidance for
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employers and individuals relating to under sections 3101(a) and (b) and no different than calculating wages for the implementation of Additional 3111(a) and (b). FICA generally. Thus, for example, if an Medicare Tax, including the Under section 3202, the employer is employee has amounts deferred under a requirement to withhold Additional required to collect the employee nonqualified deferred compensation Medicare Tax on certain wages and portions of RRTA tax by deducting the plan and the nonqualified deferred compensation, the requirement to file a amount of the taxes from compensation compensation (NQDC) is taken into return reporting Additional Medicare as and when paid, and is liable for account as wages for FICA tax purposes Tax, the employer process for adjusting payment of the taxes required to be under the special timing rule described underpayments and overpayments of collected. Until collected, the employee in § 31.3121(v)(2)–1(a)(2), the NQDC Additional Medicare Tax, and the also is liable for the employee portion would likewise be taken into account employer and employee processes for of the tax. See § 31.3202–1(e). under the special timing rule for filing a claim for refund of Additional The Affordable Care Act added purposes of determining an employer’s Medicare Tax. section 3101(b)(2). Section 3101(b)(2) obligation to withhold Additional For purposes of these proposed increases the employee portion of Medicare Tax. regulations, the term employment taxes Medicare tax for wages received in any Similarly, when an employee is means the Federal Insurance taxable year beginning after December concurrently employed by related Contributions Act (FICA) tax imposed 31, 2012, by an additional 0.9 percent of corporations and one of the corporations on employers and employees, the FICA wages which are in excess of disburses wages for services performed Railroad Retirement Tax Act (RRTA) tax certain threshold amounts. Additional for each of the employers and the imposed on employers and employees, Medicare Tax differs from Medicare tax arrangement otherwise satisfies the and federal income tax withholding in that Additional Medicare Tax is not common paymaster provisions of imposed until wages exceed a threshold (ITW). section 3121(s), liability for FICA tax amount, and the threshold amount for with respect to the wages disbursed by Federal Insurance Contributions Act application of the tax is based on the the common paymaster is computed as and Railroad Retirement Tax Act Taxes filing status of the individual. Under if there was a single employer. In this section 3101(b)(2), the threshold amount Tax under the FICA is composed of case, the obligation to withhold is $250,000 in the case of a joint return, Old-Age, Survivors, and Disability Additional Medicare Tax on wages in $125,000 in the case of a married Insurance (OASDI) tax, also referred to excess of $200,000 disbursed by the taxpayer filing a separate return, and common paymaster would also be as social security tax, and Hospital $200,000 in any other case. Additional determined as if there was a single Insurance (HI) tax, also referred to as Medicare Tax also differs from Medicare employer. Medicare tax. The Medicare portion of Tax in that there is no employer portion Section 3102(f)(2) specifies that to the FICA tax is imposed separately on the to correspond to the amount owed by extent Additional Medicare Tax is not employer, under section 3111(b), and the employee. withheld by the employer, the employee the employee, under section 3101(b), in Additional Medicare Tax applies to must pay the tax. This is consistent with an amount equal to a percentage of RRTA compensation paid to railroad the general FICA rule in § 31.3102–1(d), wages. Under section 3102, the employees and employee which provides that the employee is employer is required to collect the representatives. See reference to section liable for the employee portion of FICA employee portion of FICA tax by 3101(b) in sections 3201(a) and 3211(a). tax until collected by the employer. deducting the amount of the tax from Accordingly, Tier 1 RRTA tax imposed Section 3102(f)(3) provides that if an wages, as and when paid, and is liable under sections 3201(a) and 3211(a) will employer fails to withhold Additional for payment of the tax required to be be increased for compensation received Medicare Tax, and the tax is collected. Until collected, the employee in any taxable year beginning after subsequently paid by the employee, the also is liable for the employee portion December 31, 2012, by an additional 0.9 IRS will not collect the tax from the of the tax. See § 31.3102–1(d). percent of RRTA compensation which is employer. Section 3102(f)(3) specifies, Under the RRTA, railroad in excess of certain threshold amounts however, that the employer would employment is subject to a separate and as enumerated in section 3101(b)(2). remain subject to any applicable distinct system of taxes from those The threshold amount for Additional penalties or additions to tax for failure imposed under the FICA. The RRTA Medicare Tax applies separately to the to withhold Additional Medicare Tax as serves as the functional equivalent of FICA and the RRTA. Accordingly, an required. Section 3102(f)(3), reflecting FICA for railroad employers, employees, individual will not combine FICA wages that Additional Medicare Tax is and employee representatives (a group and RRTA compensation in determining imposed only on employees and is unique to the railroad industry). Tax whether Additional Medicare Tax ultimately based on the employee’s under the RRTA is divided into tiers applies under FICA or under RRTA. filing status, is similar to section and each tier finances different benefits. The Affordable Care Act added 3402(d), which abates the employer’s Tier 1 RRTA tax provides equivalent section 3102(f). Section 3102(f)(1) liability for ITW when the employee has social security and Medicare benefits. provides that an employer’s obligation paid the income tax. Section 3201(a) imposes Tier 1 RRTA under section 3102(a) to withhold tax on employees and section 3211(a) Additional Medicare Tax applies only to Self-Employment Contributions Act imposes Tier 1 RRTA tax on employee the extent that the wages the employee Taxes representatives, in an amount equal to receives from the employer are in excess Section 1401 imposes social security the applicable percentage of of $200,000 in a calendar year. Section and Medicare taxes on the self- compensation. For employees, the 3102(f)(1) further provides that in employment income of every individual applicable percentage under section satisfying its obligation to withhold at the same combined employer and 3201(a) is the sum of the rates of tax Additional Medicare Tax, the employer employee rates applicable under the under section 3101(a) and (b). For may disregard the amount of wages FICA. employee representatives, the received by the employee’s spouse. The Affordable Care Act added applicable percentage under section Calculating wages for purposes of section 1401(b)(2). Section 1401(b)(2)(A) 3211(a) is the sum of the rates of tax withholding Additional Medicare Tax is increases the Medicare tax on self-
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employment income for any taxable Interest-Free Adjustments of against any tax liability of the person year beginning after December 31, 2012, Employment Taxes who made the overpayment and shall, by an additional 0.9 percent of self- The current regulations under section subject to certain offsets, refund any employment income which is in excess 6205 set forth the procedures for making balance to such person. A claim for of certain threshold amounts. As with interest-free adjustments for refund under section 6402(a) must be Additional Medicare Tax under the underpayments of employment taxes. filed within the period of limitations on FICA, the threshold amounts for an Generally, under the regulations, if an credit or refund. Section 6414 permits individual to be subject to Additional employer ascertains an underpayment refunds of ITW only to the extent the amount of the ITW overpayment was Medicare Tax under the Self- of FICA or RRTA tax, the employer can not actually deducted and withheld Employment Contributions Act (SECA) make an underpayment adjustment, are determined by the individual’s filing from an employee. within the period of limitations for The current regulations under section status. The threshold amounts assessment, by reporting the additional enumerated under section 1401(b)(2)(A), 6402(a) set out the procedures for filing amount due on an adjusted return for a claim for refund of overpaid FICA and are $250,000 in the case of a joint the return period in which the wages or return, $125,000 in the case of a married RRTA taxes. The regulations permit an compensation was paid. For employer to file a claim for refund of an taxpayer filing a separate return, and underpayments of ITW, subject to $200,000 in any other case. overpayment of FICA or RRTA tax, but limited exceptions for correcting worker generally require the employer to certify Section 1401(b)(2)(B) provides for misclassification errors or for coordination with Additional Medicare as part of the claim process that the administrative errors (that is, errors employer has repaid or reimbursed the Tax under the FICA and specifies that involving the inaccurate reporting of the the threshold amounts under section employee’s share of the overpayment of amount actually withheld) and for audit FICA or RRTA tax to the employee or 1401(b)(2)(A) are reduced (but not adjustments, an adjustment may be below zero) by the amount of wages has secured the written consent of the made only for errors ascertained during employee to allowance of the refund or taken into account in determining the calendar year in which the wages Additional Medicare Tax under the credit. were paid. Generally, under the current section FICA. Section 1401(b)(2)(B) does not The current regulations under section 6402 regulations, an employee may file provide for similar coordination with 6413(a) set forth the procedures for a claim for refund of overpaid FICA or Additional Medicare Tax under the making interest-free adjustments for RRTA tax as long as the employee has RRTA. Therefore, the amount of RRTA overpayments of employment taxes. not been repaid or reimbursed by the compensation taken into account in Under the regulations, if an employer employer and does not give the determining Additional Medicare Tax ascertains within the applicable period employer consent to file a claim on his under the RRTA will not reduce the of limitations on credit or refund that an or her behalf, and the employee has not threshold amounts under section overpayment error was made, the taken the overcollection into account in 1401(b)(2)(A) for determining employer is generally required to repay claiming a credit against, or refund of, Additional Medicare Tax under the or reimburse its employees the amount his or her income tax, in the case of a SECA. of overcollected employee FICA tax or claim under section 6413(c) for overpaid Estimated Taxes employee RRTA tax prior to the employee social security tax. expiration of the applicable period of The current regulations under section Section 6654 imposes an addition to limitations on credit or refund. The 6414 set out the procedures for filing a tax in the case of an individual’s regulations further provide that once an claim for refund of overpaid ITW and underpayment of estimated tax. employer repays or reimburses an provide that an employer may not file Generally, the addition to tax imposed employee, the employer may report both a claim for refund of an overpayment of under section 6654 will not apply to the employee and employer portions of ITW to the extent the amount was individuals who have sufficient ITW on FICA or RRTA tax as an overpayment on deducted or withheld from an wages or who make estimated tax an adjusted return within the period of employee. payments throughout the year. limitations on credit or refund. The Explanation of Provisions Employees may request additional ITW employer must generally certify on the on wages on Form W–4, ‘‘Withholding adjusted return that it has repaid or The proposed regulations provide Allowance Certificate,’’ to reduce the reimbursed its employees. rules for the withholding, computation, need to make estimated tax payments to Similar rules apply for making reporting, and payment of Additional cover the individual’s tax liability. interest-free adjustments for Medicare Tax on wages, self- Under section 6654(m), which was overpayments of ITW, except that an employment income, and RRTA added by the Affordable Care Act, interest-free adjustment may only be compensation. The proposed Additional Medicare Tax is treated as a made if the employer ascertains the regulations also provide rules for when tax subject to estimated tax payment error and repays or reimburses its and how employers may make an requirements. In the case of employees, employees within the same calendar interest-free adjustment to correct an Additional Medicare Tax is collected year that the wages were paid, unless overpayment or an underpayment of through withholding on FICA wages or the employer is correcting an Additional Medicare Tax and how RRTA compensation in excess of administrative error. employers and employees may claim $200,000 in a calendar year. In addition, refunds for overpayments of Additional employees may request additional ITW Claims for Refund of Employment Taxes Medicare Tax. These procedural rules on wages on Form W–4 and use this In lieu of making an interest-free for interest-free adjustments and claims additional ITW to apply against taxes adjustment under section 6413(a) for an for refund track the existing rules that shown on their return, including any overpayment, employers may file a apply to ITW rather than the rules that Additional Medicare Tax liability. To claim for refund pursuant to section apply to FICA tax. The regulations take the extent not withheld, Additional 6402. Under section 6402(a), the IRS this approach because Additional Medicare Tax must be included when may credit the amount of an Medicare Tax, like ITW, does not making estimated tax payments. overpayment, including any interest, include an employer portion, and the
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ultimate liability is reconciled on the regulations also provide that the IRS employer. This is consistent with the individual employee’s income tax will not collect from an employer the general rule in §§ 31.3102–1(d) and return. amount of Additional Medicare Tax it 31.3202–1(e) for FICA and RRTA failed to withhold from wages paid to an Rates and Computation of Employee purposes, respectively, that provides employee if the employee subsequently FICA Tax that the employee is liable for the tax pays the Additional Medicare Tax. until collected by the employer. Under The proposed regulations under However, the proposed regulations also the proposed regulations under section section 3101(b) update the rates of tax specify that the employer would remain 6011, an individual must report for the social security and Medicare tax subject to any applicable penalties or Additional Medicare Tax on Form 1040. on employees, and add a paragraph additions to tax for failure to withhold An individual will claim credit for any describing the rate of Additional Additional Medicare Tax as required. withheld Additional Medicare Tax on Medicare Tax. The proposed regulations Although Additional Medicare Tax Form 1040 and pay any such tax due also provide an updated example applies to RRTA compensation, the that was not previously paid through illustrating that the social security and Affordable Care Act did not add withholding or estimated tax. For Medicare rates applicable to the provisions similar to section 3102(f) to example, if an employee and his or her calendar year in which wages are the RRTA, nor does the RRTA cross- spouse each had wages of $200,000 or received apply to compute the tax reference section 3102(f). However, in less, such that their employers did not liability. light of the general similarities between withhold Additional Medicare Tax from Employer’s Obligation To Withhold the FICA and the RRTA and the the employee’s or the spouse’s wages, Additional Medicare Tax principles discussed above, and in order but the combined wages of the to provide guidance to railroad employee and the employee’s spouse The proposed regulations under employers regarding their liability to exceed the threshold for a joint return sections 3102 and 3202(a) describe the withhold Additional Medicare Tax, the under section 3101(b)(2) (that is, exceed extent to which an employer is required proposed regulations under section $250,000), the proposed regulations to withhold Additional Medicare Tax. 3202(a) incorporate the same rules as The proposed regulations under section provided in section 3102(f). Therefore, indicate that the employee and the 3102(f) provide that an employer must the proposed regulations under section employee’s spouse are liable to pay withhold Additional Medicare Tax from 3202(a) provide that railroad employers Additional Medicare Tax. The proposed an employee’s wages only to the extent must withhold Additional Medicare Tax regulations under sections 3102(f) and that the employee receives wages from from an employee’s compensation only 3202(a) include examples illustrating the employer in excess of $200,000 in a to the extent the employee receives this principle for FICA wages and RRTA calendar year. In determining whether compensation from the employer in compensation, respectively. wages exceed $200,000, an employer excess of $200,000 in a calendar year. Self-Employed Individual’s Obligation does not take into account the Similar to the FICA rule, an employee To Pay Additional Medicare Tax employee’s filing status or other wages may not request that the employer or compensation which may impact the deduct and withhold Additional The proposed regulations under employee’s liability for the tax. An Medicare Tax on compensation of section 1401(b) describe the extent to employee may not request that the $200,000 or less. Instead, an employee which an individual who has self- employer deduct and withhold who anticipates liability for Additional employment income is liable for Additional Medicare Tax on wages of Medicare Tax may request that the Additional Medicare Tax. Specifically, $200,000 or less. However, an employee employer deduct and withhold an the proposed regulations describe how who anticipates liability for Additional additional amount of ITW under the applicable threshold amounts under Medicare Tax may request that the § 31.3402(i)–2 on Form W–4 to apply section 1401(b)(2)(A) are reduced (but employer deduct and withhold an against taxes shown on Form 1040, not below zero) by the amount of FICA additional amount of ITW under including any Additional Medicare Tax wages taken into account in determining § 31.3402(i)–2 on Form W–4. This liability. The regulations under section Additional Medicare Tax liability. Thus, additional ITW can apply against taxes 3202 further provide that: (1) To the the proposed regulations under section shown on Form 1040, ‘‘U.S. Individual extent Additional Medicare Tax is not 1401(b)(2) illustrate the application of Tax Return,’’ including any Additional withheld by the employer, the employee the reduced threshold amounts for Medicare Tax liability. An employee is liable for the tax; (2) the IRS will not purposes of determining liability for might request that the employer deduct collect Additional Medicare Tax from Additional Medicare Tax attributable to and withhold an additional amount of an employer who fails to withhold the individual’s self-employment ITW on wages that are not in excess of Additional Medicare Tax on income. $200,000 if, for example, the employee compensation paid by the employer, if is married and files a joint return, and the tax is subsequently paid by the The Affordable Care Act did not anticipates liability for Additional employee; and (3) the employer will provide for a reduction in the self- Medicare Tax because the combined remain subject to any applicable employment income threshold amounts wages of the employee and the penalties or additions to tax for failure by the amount of any RRTA employee’s spouse will exceed to withhold Additional Medicare Tax as compensation taken into account in $250,000. The proposed regulations required. determining liability for Additional under sections 3102(f) and 3202(a) Medicare Tax. Accordingly, an include examples illustrating the extent Employee’s Obligation To Report and individual who receives both RRTA of the employer’s obligation to withhold Pay Additional Medicare Tax compensation and self-employment Additional Medicare Tax. The proposed regulations under income would not reduce the self- Further, the proposed regulations sections 3102(f) and 3202(a) provide employment income threshold amounts under section 3102(f) provide that to the that an employee is liable for Additional under section 1401(b)(2)(A) by the extent Additional Medicare Tax is not Medicare Tax on wages or amount of RRTA compensation taken withheld by the employer, the employee compensation to the extent that the tax into account in determining Additional is liable for the tax. The proposed is not withheld by the employee’s Medicare Tax liability.
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Interest-Free Adjustments of Additional Refund and Request for Abatement.’’ forth the basis for the correction or the Medicare Tax Employees may only claim a refund of claim in detail, designating the return The proposed regulations under Additional Medicare Tax if they have period in which the error was sections 6205 provide that adjustments not received repayment or ascertained and the return period being of underpayments of Additional reimbursement from their employer in corrected, and setting forth such other Medicare Tax may be made only if the the context of an interest-free information as may be required by the error is ascertained in the same year the adjustment. instructions to the form. In addition, for adjustments of overpayments of wages or compensation was paid, Proposed Effective/Applicability Dates Additional Medicare Tax, employers unless: (1) The underpayment is These regulations are proposed to be must also obtain and retain the written attributable to an administrative error, effective the date the final regulations receipt of the employee showing the (2) section 3509 applies to determine are published in the Federal Register. date and amount of the repayment to the the amount of the underpayment, due to The regulations under the Internal employee or retain evidence of the employer’s failure to treat the Revenue Code (Code) sections 1401, reimbursement. This collection of individual as an employee, or (3) the 3101, 3102, and 3202 are proposed to information is not new to the proposed adjustment is the result of an IRS apply to quarters beginning after the regulations. The proposed regulations examination. date the final regulations are published merely apply the existing procedural Similarly, the proposed regulations in the Federal Register. The regulations requirements, with appropriate under section 6413 provide that an under Code section 6011 are proposed modifications, to corrections of adjustment of overpaid Additional to apply to taxable years beginning after Additional Medicare Tax. The filing of Medicare Tax may only be made if the the date the final regulations are a claim for refund and the making of an employer ascertains the error in the year published in the Federal Register. The interest-free adjustment pursuant to the the wages or compensation was paid regulations under Code sections 6205, proposed regulations are voluntary on and repays or reimburses the employee 6402, and 6413 are proposed to apply to the part of taxpayers. the amount of the overcollection prior to adjustments made and claims for refund Based on these facts, the IRS hereby the end of the calendar year. As in the filed after the date the final regulations certifies that the collection of case of all overpayment adjustments, the are published in the Federal Register. information contained in these requirement to repay or reimburse does The Treasury Department and IRS proposed regulations will not have a not apply to the extent that, after intend to finalize these proposed significant economic impact on a reasonable efforts, the employer cannot regulations in 2013. Taxpayers may rely substantial number of small entities. locate the employee. However, if an on these proposed regulations for tax Accordingly, a regulatory flexibility employer has not repaid or reimbursed periods beginning before the date that analysis is not required. the amount of the overcollection to the the final regulations are published in Pursuant to section 7805(f) of the employee, an adjustment cannot be the Federal Register. Code, this notice of proposed made. rulemaking has been submitted to the Special Analyses Claims for Refund of Additional Chief Counsel for Advocacy of the Small It has been determined that this notice Medicare Tax Business Administration for comment of proposed rulemaking is not a on its impact on small business. The proposed regulations under significant regulatory action as defined section 6402 provide a process by which in Executive Order 12866. Therefore, a Comments and Public Hearing employers and employees claim refunds regulatory assessment is not required. It Before these proposed regulations are of overpaid Additional Medicare Tax. has also been determined that section adopted as final regulations, Under the proposed regulations, 553(b) of the Administrative Procedure consideration will be given to any employers may claim refunds of Act (5 U.S.C. chapter 5) does not apply written comments (a signed original and overpaid Additional Medicare Tax only to these regulations. eight (8) copies) or electronic comments if the employer did not deduct or The proposed regulations under that are submitted timely to the IRS. The withhold the overpaid Additional section 6011 affect all taxpayers that file Treasury Department and the IRS Medicare Tax from the employee’s individual tax returns and are subject to specifically request comments on the wages or compensation. Additional Medicare Tax. The proposed clarity of the proposed rules and how For employees, the proposed regulations under sections 6205, 6402, they can be made easier to understand. regulations eliminate the requirements and 6413 affect all taxpayers that file All comments will be available for that the employee first seek a refund employment tax returns, as well as public inspection and copying. All from the employer and provide a taxpayers that file claims for refund of comments that are submitted by the statement in support of the employee’s employment taxes. Therefore, the IRS public will be available for public claim. Further, the proposed regulations has determined that these proposed inspection and copying at http:// direct the employee to claim the refund regulations will have an impact on a www.regulations.gov. or upon request. A or credit of overpaid Additional substantial number of small entities. public hearing has been scheduled for Medicare Tax by taking the The IRS has determined, however, April 4, 2013, beginning at 10 a.m., in overpayment into account in claiming a that the impact on entities affected by the Auditorium, Internal Revenue credit against, or refund of, tax on an the proposed regulations will not be Building, 1111 Constitution Avenue individual tax return (for example, Form significant. The proposed regulations NW., Washington, DC. Due to building 1040) for the year in which the require taxpayers who file employment security procedures, visitors must enter overpayment was made, or for a taxable tax returns and who make interest-free at the Constitution Avenue entrance. In year for which a tax return has been adjustments to their employment taxes addition, all visitors must present photo filed, by filing Form 1040X, ‘‘Amended for either underpayments or identification to enter the building. U.S. Individual Income Tax Return.’’ overpayments of Additional Medicare Because of access restrictions, visitors This process is in lieu of filing a claim Tax or who file claims for refund for an will not be admitted beyond the for refund for overpaid Additional overpayment of Additional Medicare immediate entrance area more than 30 Medicare Tax on Form 843, ‘‘Claim for Tax to provide an explanation setting minutes before the hearing starts.
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For information about having your Taxable year Percent on $20,000 ($220,000 in self-employment name placed on the building access list income minus the threshold of $200,000). to attend the hearing, see the FOR Beginning after December 31, Example 3. C, a single filer, has $145,000 FURTHER INFORMATION CONTACT section of 1983 and before January 1, in self-employment income and $130,000 in this preamble. 1988 ...... 11.40 wages. C’s wages are not in excess of $200,000 so C’s employer did not withhold The rules of 26 CFR 601.601(a)(3) Beginning after December 31, Additional Medicare Tax. However, the apply to the hearing. Persons who wish 1987 and before January 1, 1990 ...... 12.12 $130,000 of wages reduces the self- to present oral comments at the hearing Beginning after December 31, employment income threshold to $70,000 must submit comments and an outline 1989 ...... 12.40 ($200,000 threshold minus the $130,000 of of the topics to be discussed and the wages). C is liable to pay Additional time to be devoted to each topic by (2)(i) For Hospital Insurance: Medicare Tax on $75,000 of self-employment February 28, 2013. income ($145,000 in self-employment A period of 10 minutes will be Taxable year Percent income minus the reduced threshold of allotted to each person for making $70,000). comments. An agenda showing the Beginning after December 31, Example 4. E, who is married and files a scheduling of the speakers will be 1983 and before January 1, joint return, has $140,000 in self-employment 1985 ...... 2.60 income. F, E’s spouse, has $130,000 in wages. prepared after the deadline for receiving F’s wages are not in excess of $200,000 so F’s outlines has passed. Copies of the Beginning after December 31, 1984 and before January 1, employer did not withhold Additional agenda will be available free of charge 1986 ...... 2.70 Medicare Tax. However, the $130,000 of F’s at the hearing. Beginning after December 31, wages reduces E’s self-employment income 1985 ...... 2.90 threshold to $120,000 ($250,000 threshold Drafting Information minus the $130,000 of wages). E and F are The principal authors of these (ii) For Additional Medicare Tax: liable to pay Additional Medicare Tax on proposed regulations are Sydney L. $20,000 of E’s self-employment income ($140,000 in self-employment income minus Gernstein and Ligeia M. Donis of the Taxable year Percent Office of the Division Counsel/Associate the reduced threshold of $120,000). Chief Counsel (Tax Exempt and Beginning after December 31, Example 5. D, who is married and files 2012 ...... 0.9 married filing separately, has $150,000 in Government Entities). However, other self-employment income and $200,000 in personnel from the IRS and the Treasury wages. D’s wages are not in excess of Department participated in their * * * * * $200,000 so D’s employer did not withhold development. (d) Special rules regarding Additional Additional Medicare Tax. However, the Medicare Tax. (1) General rule. An $200,000 of wages reduces the self- List of Subjects individual is liable for Additional employment income threshold to $0 26 CFR Part 1 Medicare Tax to the extent that his or ($125,000 threshold minus the $200,000 of her self-employment income exceeds wages). D is liable to pay Additional Income Taxes, Reporting and the following threshold amounts. Medicare Tax on $75,000 of wages ($200,000 recordkeeping requirements. in wages minus the $125,000 threshold for a Filling status Threshold married filing separately return) and on 26 CFR Part 31 $150,000 of self-employment income Employment taxes, Income taxes, Married individual filing a joint ($150,000 in self-employment income minus Penalties, Pensions, Railroad retirement, return ...... $250,000 the reduced threshold of $0). Reporting and recordkeeping Married individual filing a sepa- requirements, Social Security, rate return ...... 125,000 (e) Effective/applicability date. Unemployment compensation. Any other case ...... 200,000 Paragraphs (b) and (d) of this section apply to quarters beginning after the Proposed Amendments to the Note: These threshold amounts are speci- date of publication of the Treasury fied under section 1401(b)(2)(A). Regulations decision adopting these rules as final Accordingly, 26 CFR parts 1 and 31 (2) Coordination with Federal regulations in the Federal Register. are proposed to be amended as follows: Insurance Contributions Act. (i) General rule. Under section 1401(b)(2)(B), the PART 31—EMPLOYMENT TAXES AND PART 1—INCOME TAXES applicable threshold specified under COLLECTION OF INCOME TAX AT THE section 1401(b)(2)(A) is reduced (but not SOURCE Paragraph 1. The authority citation below zero) by the amount of wages (as for part 1 continues to read in part as defined in section 3121(a)) taken into Par. 3. The authority citation for part follows: account in determining Additional 31 continues to read in part as follows: Authority: 26 U.S.C. 7805 * * * Medicare Tax under section 3101(b)(2) Authority: 26 U.S.C. 7805 * * * Par. 2. Section 1.1401–1 is amended with respect to the taxpayer. This rule Par. 4. Revise § 31.3101–2 to read as by revising paragraph (b) and adding does not apply to Railroad Retirement follows: new paragraphs (d) and (e) to read as Tax Act (RRTA) compensation (as follows: defined in section 3231(e)). § 31.3101–2 Rates and computation of (ii) Examples. The rules provided in employee tax. § 1.1401–1 Tax on self-employment paragraph (d)(2)(i) of this section are income. illustrated by the following examples: (a) Old-Age, Survivors, and Disability Insurance. The rates of employee tax for * * * * * Example 1. A, a single filer, has $130,000 (b) The rates of tax on self- in self-employment income and $0 in wages. Old-Age, Survivors, and Disability employment income are as follows A is not liable to pay Additional Medicare Insurance (OASDI) with respect to (these regulations do not reflect off-Code Tax. wages received in calendar years after revisions to the below rates): Example 2. B, a single filer, has $220,000 1983 are as follows (these regulations do (1) For Old-age, Survivors, and in self-employment income and $0 in wages. not reflect off-Code revisions to the Disability Insurance: B is liable to pay Additional Medicare Tax below rates):
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Calendar year Percent § 31.3102–1 Collection of, and liability for, amount of Additional Medicare Tax, or employee tax; in general. if it fails to deduct any part of 1984, 1985, 1986, or 1987 ..... 5.7 (a) * * * For special rules relating to Additional Medicare Tax, it is 1988 or 1989 ...... 6.06 Additional Medicare Tax imposed nevertheless liable for the correct 1990 and subsequent years ... 6.2 under section 3101(b)(2), see § 31.3102– amount of tax that it was required to 4. withhold, until the employee pays the (b)(1) Hospital Insurance. The rates of tax. If an employee subsequently pays employee tax for Hospital Insurance (HI) * * * * * the tax that the employer failed to with respect to wages received in (f) Effective/applicability date. deduct, the tax will not be collected calendar years after 1973 are as follows: Paragraph (a) of this section applies to quarters beginning after the date of from the employer. The employer, Calendar year Percent publication of the Treasury decision however, will remain subject to any adopting these rules as final regulations applicable penalties or additions to tax 1974, 1975, 1976, or 1977 ...... 0.90 in the Federal Register. resulting from the failure to withhold as 1978 ...... 1.00 Par. 6. Section 31.3102–4 is added to required. 1979 or 1980 ...... 1.05 read as follows: (d) Effective/applicability date. This 1981, 1982, 1983, or 1984 ...... 1.30 section applies to quarters beginning 1985 ...... 1.35 § 31.3102–4 Special rules regarding after the date of publication of the 1986 and subsequent years ..... 1.45 Additional Medicare Tax. Treasury decision adopting these rules (a) Collection of tax from employee. (2) Additional Medicare Tax. (i) The as final regulations in the Federal An employer is required to collect from rate of Additional Medicare Tax with Register. each of its employees the tax imposed respect to wages received in taxable Par. 7. Section 31.3202–1 is amended by section 3101(b)(2) (Additional years beginning after December 31, by adding new paragraphs (g) and (h) to Medicare Tax) with respect to wages for 2012, is as follows: read as follows: employment performed for the § 31.3202–1 Collection of, and liability for, Taxable year Percent employer by the employee only to the extent the employer pays wages to the employee tax. Beginning after December 31, employee in excess of $200,000 in a * * * * * 2012 ...... 0.9 calendar year. This rule applies (g) Special rules regarding Additional regardless of the employee’s filing status Medicare Tax. (1) An employer is (ii) Individuals are liable for or other income. Thus, the employer required to collect from each of its Additional Medicare Tax with respect to disregards any amount of wages or employees the portion of the tax wages received in taxable years Railroad Retirement Tax Act (RRTA) imposed by section 3201(a) (as beginning after December 31, 2012, compensation paid to the employee’s calculated under section 3101(b)(2)) which are in excess of: spouse. The employer also disregards (Additional Medicare Tax) with respect any RRTA compensation paid by the to compensation for employment Filling status Threshold employer to the employee or any wages performed for the employer by the or RRTA compensation paid to the employee only to the extent the Married individual filing a joint employer pays compensation to the return ...... $250,000 employee by another employer. employee in excess of $200,000 in a Married individual filing a sepa- Example. H, who is married and files a rate return ...... 125,000 joint return, receives $100,000 in wages from calendar year. This rule applies Any other case ...... 200,000 his employer for the calendar year. I, H’s regardless of the employee’s filing status spouse, receives $300,000 in wages from her or other income. Thus, the employer (c) Computation of employee tax. The employer for the same calendar year. H’s disregards any amount of compensation employee tax is computed by applying wages are not in excess of $200,000, so H’s or Federal Insurance Contributions Act to the wages received by the employee employer does not withhold Additional (FICA) wages paid to the employee’s the rates in effect at the time such wages Medicare Tax. I’s employer is required to spouse. The employer also disregards are received. collect Additional Medicare Tax only with any FICA wages paid by the employer respect to wages it pays which are in excess to the employee or any compensation or Example. In 1989, A performed services for of the $200,000 threshold (that is, $100,000) X which constituted employment (see for the calendar year. FICA wages paid to the employee by § 31.3121(b)–2). In 1990 A receives from X another employer. (b) Collection of amounts not $1,000 as remuneration for such services. Example. A, who is married and files a The tax is payable at the 6.2 percent OASDI withheld. To the extent the employer joint return, receives $100,000 in rate and the 1.45 percent HI rate in effect for does not collect Additional Medicare compensation from her employer for the the calendar year 1990 (the year in which the Tax imposed on the employee by calendar year. B, A’s spouse, receives wages are received) and not at the 6.06 section 3101(b)(2), the employee is $300,000 in compensation from his employer percent OASDI rate and the 1.45 percent HI liable to pay the tax. for the same calendar year. A’s compensation rate which were in effect for the calendar is not in excess of $200,000, so A’s employer Example. J, who is married and files a joint year 1989 (the year in which the services does not withhold Additional Medicare Tax. were performed). return, receives $190,000 in wages from his B’s employer is required to collect Additional employer for the calendar year. K, J’s spouse, Medicare Tax only with respect to (d) Effective/applicability date. receives $150,000 in wages from her compensation it pays to B that is in excess Paragraphs (a), (b), and (c) of this employer for the same calendar year. Neither of the $200,000 threshold (that is, $100,000) section apply to quarters beginning after J’s nor K’s wages are in excess of $200,000, for the calendar year. the date of publication of the Treasury so neither J’s nor K’s employers are required decision adopting these rules as final to withhold Additional Medicare Tax. J and (2) To the extent the employer does regulations in the Federal Register. K are liable to pay Additional Medicare Tax not collect Additional Medicare Tax Par. 5. Section 31.3102–1 is amended on $90,000 ($340,000 minus the $250,000 imposed on the employee by section by adding a new sentence at the end of threshold for a joint return). 3201(a) (as calculated under section paragraph (a) and a new paragraph (f) to (c) Employer’s liability for tax. If the 3101(b)(2)), the employee is liable to read as follows: employer deducts less than the correct pay the tax.
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Example. C, who is married and files a Par. 9. Section 31.6011(a)–2 is except as provided in paragraph (b)(4) of joint return, receives $190,000 in amended by adding new paragraphs (d) this section for Additional Medicare compensation from her employer for the and (e) to read as follows: Tax. * * * calendar year. D, C’s spouse, receives (ii) * * * However, if the employer $150,000 in compensation from his employer § 31.6011(a)–2 Returns under Railroad also reported less than the correct for the same calendar year. Neither C’s nor Retirement Tax Act. amount of Additional Medicare Tax, the D’s compensation is in excess of $200,000, so * * * * * neither C’s nor D’s employers are required to employer shall correct the withhold Additional Medicare Tax. C and D (d) Returns by employees and underwithheld and underpaid are liable to pay Additional Medicare Tax on employee representatives in respect of Additional Medicare Tax in accordance $90,000 ($340,000 minus the $250,000 Additional Medicare Tax. An employee with paragraph (b)(4) of this section. threshold for a joint return). or employee representative who is paid *** compensation, as defined in section (iii) * * * However, if the employer (3) If the employer deducts less than 3231(e), subject to the tax under also reported less than the correct the correct amount of Additional sections 3201(a) (as calculated under amount of Additional Medicare Tax, the Medicare Tax, or if it fails to deduct any section 3101(b)(2)) or section 3211(a) (as employer shall correct the part of Additional Medicare Tax, it is calculated under section 3101(b)(2)) underwithheld and underpaid nevertheless liable for the correct (Additional Medicare Tax), must make a Additional Medicare Tax in accordance amount of tax that it was required to return for the taxable year in respect of with paragraph (b)(4) of this section. withhold, until the employee pays the such tax. The return shall be made on *** tax. If an employee subsequently pays Form 1040. The form to be used by (3) * * * However, an adjustment of the tax that the employer failed to residents of the U.S. Virgin Islands, Additional Medicare Tax required to be deduct, the tax will not be collected Guam, American Samoa, or the withheld under section 3101(b)(2) or from the employer. The employer, Northern Mariana Islands is Form 1040– section 3201(a) may only be reported however, will remain subject to any SS, ‘‘U.S. Self-Employment Tax Return pursuant to this section if the error is applicable penalties or additions to tax (Including Additional Child Tax Credit ascertained within the same calendar resulting from the failure to withhold as for Bona Fide Residents of Puerto year that the wages were paid to the required. Rico).’’ The form to be used by residents employee, or if section 3509 applies to (h) Effective/applicability date. of Puerto Rico is either Form 1040–SS determine the amount of the Paragraph (g) of this section applies to or Form 1040–PR, ‘‘Planilla para la underpayment, or if the adjustment is quarters beginning after the date of Declaracio´n de la Contribucio´n Federal reported on a Form 2504 or Form 2504– publication of the Treasury decision sobre el Trabajo por Cuenta Propia WC. See paragraph (b)(4) of this section. adopting these rules as final regulations (Incluyendo el Cre´dito Tributario *** in the Federal Register. Adicional por Hijos para Residentes (4) Additional Medicare Tax. If an Par. 8. Section 31.6011(a)–1 is Bona Fide de Puerto Rico).’’ employer files a return on which FICA amended by adding new paragraphs (h) (e) Effective/applicability date. tax or RRTA tax is required to be and (i) to read as follows: Paragraph (d) of this section applies to reported, and reports on the return less taxable years beginning after the date of than the correct amount of Additional § 31.6011(a)–1 Returns under Federal Medicare Tax required to be withheld Insurance Contributions Act. publication of the Treasury decision with respect to a payment of wages or * * * * * adopting these rules as final regulations in the Federal Register. compensation, and if the employer (h) Returns by employees in respect of Par. 10. Section 31.6205–1 is ascertains the error after filing the Additional Medicare Tax. An employee amended by: return, the employer shall correct the who is paid wages, as defined in 1. Revising the first sentence in error through an interest-free adjustment sections 3121(a), subject to the tax paragraph (b)(2)(i). as provided in this section. An under section 3101(b)(2) (Additional 2. Adding a new second sentence to adjustment of Additional Medicare Tax Medicare Tax), must make a return for paragraphs (b)(2)(ii) and (b)(2)(iii). may only be reported pursuant to this the taxable year in respect of such tax. 3. Adding two new sentences after the paragraph (b)(4) if the error is The return shall be made on Form 1040. sixth sentence in paragraph (b)(3). ascertained within the same calendar The form to be used by residents of the 4. Adding a new paragraph (b)(4). year that the wages or compensation U.S. Virgin Islands, Guam, American 5. Revising paragraph (d)(1). were paid to the employee, unless the Samoa, or the Northern Mariana Islands 6. Adding a new paragraph (e). underpayment is attributable to an is Form 1040–SS, ‘‘U.S. Self- The revisions and additions read as administrative error (that is, an error Employment Tax Return (Including follows: involving the inaccurate reporting of the Additional Child Tax Credit for Bona amount actually withheld), section 3509 Fide Residents of Puerto Rico).’’ The § 31.6205–1 Adjustments of applies to determine the amount of the form to be used by residents of Puerto underpayments. underpayment, or the adjustment is Rico is either Form 1040–SS or Form * * * * * reported on a Form 2504 or Form 2504– 1040–PR, ‘‘Planilla para la Declaracio´n (b) * * * WC. The employer shall adjust the de la Contribucio´n Federal sobre el (2) * * * (i) If an employer files a underpayment of Additional Medicare Trabajo por Cuenta Propia (Incluyendo return on which FICA tax or RRTA tax Tax by reporting the additional amount el Cre´dito Tributario Adicional por is required to be reported, and reports due on an adjusted return for the return Hijos para Residentes Bona Fide de on the return less than the correct period in which the wages or Puerto Rico).’’ amount of employee or employer FICA compensation were paid, accompanied (i) Effective/applicability date. or RRTA tax with respect to a payment by a detailed explanation of the amount Paragraph (h) of this section applies to of wages or compensation, and if the being reported on the adjusted return taxable years beginning after the date of employer ascertains the error after filing and any other information as may be publication of the Treasury decision the return, the employer shall correct required by this section and by the adopting these rules as final regulations the error through an interest-free instructions relating to the adjusted in the Federal Register. adjustment as provided in this section, return. The reporting of the
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underpayment on an adjusted return the employer. If an employer makes an overpayment of Additional Medicare constitutes an adjustment within the erroneous collection of employee tax Tax imposed under section 3101(b)(2) or meaning of this section only if the from two or more of its employees, a section 3201(a) (as calculated under adjusted return is filed within the separate settlement must be made with section 3101(b)(2)), which the employer period of limitations for assessment for respect to each employee. An deducted or withheld from an the return period being corrected, and overcollection of employee tax from one employee. by the due date for filing the return for employee may not be used to offset an (iv) For adjustments without interest the return period in which the error is undercollection of such tax from of overpayments of FICA or RRTA taxes, ascertained. For purposes of the another employee. For provisions including Additional Medicare Tax, see preceding sentence, the due date for relating to the employer’s liability for § 31.6413(a)–2. filing the adjusted return is determined the tax, whether or not it collects the tax (v) For corrections of FICA and RRTA by reference to the return being from the employee, see §§ 31.3102–1(d), tax paid under the wrong chapter, see corrected, without regard to the 31.3102–4(c), and 31.3202–1. This § 31.6205–1(b)(2)(ii) and (b)(2)(iii) and employer’s current filing requirements. paragraph (d)(1) does not apply if § 31.3503–1. For example, an employer with a section 3509 applies to determine the * * * * * current annual filing requirement who employer’s liability. (b) Claim by employee—(1) In general. is correcting an error on a previously * * * * * Except as provided in (b)(3) of this filed quarterly return must file the (e) Effective/applicability date. section, if more than the correct amount adjusted return by the due date for filing Paragraphs (b) and (d) of this section of employee tax under section 3101 or a quarterly return for the quarter in apply to adjustments made after the date section 3201 is collected by an employer which the error is ascertained. The of publication of the Treasury decision from an employee and paid to the IRS, amount of the underpayment adjusted adopting these rules as final regulations the employee may file a claim for refund in accordance with this section must be in the Federal Register. of the overpayment if— paid to the IRS by the time the adjusted Par. 11. Section 31.6402(a)–2 is (i) The employee does not receive return is filed. If an adjustment is amended by: repayment or reimbursement in any reported pursuant to this section, but 1. Revising paragraph (a)(1)(i) and the manner from the employer and does not the amount of the adjustment is not paid first sentence in paragraph (a)(1)(ii). authorize the employer to file a claim when due, interest accrues from that 2. Re-designating paragraphs and receive refund or credit, date (see section 6601). (a)(1)(iii), (a)(1)(iv), (a)(1)(v), and (ii) The overcollection cannot be * * * * * (a)(1)(vi), as new paragraphs (a)(1)(iv), corrected under § 31.3503–1, and (d) * * * (1) Federal Insurance (a)(1)(v), (a)(1)(vi), and (a)(1)(vii), (iii) In the case of overpaid employee Contributions Tax Act and Railroad respectively. social security tax due to having Retirement Tax Act. If an employer 3. Adding a new paragraph (a)(1)(iii). received wages or compensation from collects less than the correct amount of 4. Revising newly-designated multiple employers, the employee has employee FICA or RRTA tax from an paragraphs (a)(1)(iv) and (a)(1)(v). not taken the overcollection into employee with respect to a payment of 5. Revising paragraph (b). account in claiming a credit against, or wages or compensation, the employer 6. Adding a new paragraph (c). refund of, his or her income tax, or if so, must collect the amount of the § 31.6402(a)–2 Credit or refund of tax such claim has been rejected. See undercollection by deducting the under Federal Insurance Contributions Act § 31.6413(c)–1. amount from remuneration of the or Railroad Retirement Tax Act. (2) Statements supporting employee’s employee, if any, paid after the (a) * * * (1) * * * claim. (i) Except as provided in (b)(3) of employer ascertains the error. If an (i) Except as provided in paragraph this section, each employee who makes employer collects less than the correct (a)(1)(iii) of this section, any person may a claim under paragraph (b)(1) of this amount of Additional Medicare Tax file a claim for credit or refund for an section shall submit with such claim a required to be withheld under section overpayment (except to the extent that statement setting forth (a) the extent, if 3101(b)(2) or section 3201(a), the the overpayment must be credited any, to which the employer has repaid employer must collect the amount of the pursuant to § 31.3503–1) if the person or reimbursed the employee in any undercollection on or before the last day paid to the Internal Revenue Service manner for the overcollection, and (b) of the calendar year by deducting the (IRS) more than the correct amount of the amount, if any, of credit or refund amount from remuneration of the employee Federal Insurance of such overpayment claimed by the employee, if any, paid after the Contributions Act (FICA) tax under employer or authorized by the employee employer ascertains the error. Such section 3101 or employer FICA tax to be claimed by the employer. The deductions may be made even though under section 3111, employee Railroad employee shall obtain such statement, if the remuneration, for any reason, does Retirement Tax Act (RRTA) tax under possible, from the employer, who not constitute wages or compensation. section 3201, employee representative should include in such statement the The correct amount of employee tax RRTA tax under section 3211, or fact that it is made in support of a claim must be reported and paid, as provided employer RRTA tax under section 3221, against the United States to be filed by in paragraph (b) of this section, whether or interest, addition to the tax, the employee for refund of employee tax or not the undercollection is corrected additional amount, or penalty with paid by such employer to the IRS. If the by a deduction made as prescribed in respect to any such tax. employer’s statement is not submitted this paragraph (d)(1), and even if the (ii) Except as provided in paragraph with the claim, the employee shall make deduction is made after the return on (a)(1)(iii) of this section, the claim for the statement to the best of his or her which the employee tax must be credit or refund must be made in the knowledge and belief, and shall include reported is due. If such a deduction is manner and subject to the conditions therein an explanation of his or her not made, the obligation of the stated in this section. * * * inability to obtain the statement from employee to the employer with respect (iii) Additional Medicare Tax. No the employer. to the undercollection is a matter for refund or credit to the employer will be (ii) Except as provided in paragraph settlement between the employee and allowed for the amount of any (b)(3) of this section, each individual
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who makes a claim under paragraph (a)(2)(iii), (a)(2)(iv), (a)(2)(v), (a)(2)(vi), reimbursed to the employee in the (b)(1) of this section also shall submit (a)(2)(vii), and (a)(2)(viii), respectively. calendar year in which the with such claim a statement setting 3. Adding a new paragraph (a)(2)(ii). overcollection is made. * * * forth whether the individual has taken 4. Adding a new sentence after the * * * * * the amount of the overcollection into first sentence in newly-designated paragraph (a)(2)(iv). (viii) For corrections of FICA and account in claiming a credit against, or RRTA tax paid under the wrong chapter, refund of, his or her income tax, and the 5. Adding a new sentence after the second sentence in newly-designated see § 31.6205–1(b)(2)(ii) and (b)(2)(iii) amount, if any, so claimed (see and § 31.3503–1. § 31.6413(c)–1). paragraph (a)(2)(v). (3) Additional Medicare Tax. (i) If 6. Revising newly-designated * * * * * more than the correct amount of paragraph (a)(2)(viii). (c) Effective/applicability date. Additional Medicare Tax under section 7. Adding a new paragraph (c). Paragraph (a) of this section applies to 3101(b)(2) or section 3201(a) (as The revisions and additions read as adjustments made after the date of calculated under section 3101(b)(2)), is follows: publication of the Treasury decision collected by an employer from an § 31.6413(a)–1 Repayment or adopting these rules as final regulations employee and paid to the IRS, the reimbursement by employer of tax in the Federal Register. employee may file a claim for refund of erroneously collected from employee. Par. 13. Section 31.6413(a)–2 is the overpayment and receive a refund or (a) * * * amended by: credit if the overcollection cannot be (2) * * * (i) Except as provided in 1. Adding a new sentence after the corrected under § 31.3503–1 and if the paragraph (a)(2)(ii) of this section, if an first sentence in paragraph (a)(1). employee has not received repayment or employer files a return for a return 2. Adding a new sentence after the reimbursement from the employer in the period on which FICA tax or RRTA tax second sentence in paragraph (b)(2)(i). context of an interest-free adjustment. is reported, collects from an employee The claim for refund shall be made on and pays to the IRS more than the 3. Adding a new paragraph (e). Form 1040, ‘‘U.S. Individual Income correct amount of the employee FICA or The revisions and additions read as Tax Return,’’ by taking the RRTA tax, and if the employer follows: overcollection into account in claiming ascertains the error after filing the return a credit against, or refund of, tax. The and within the applicable period of § 31.6413(a)–2 Adjustments of overpayments. form to be used by residents of the U.S. limitations on credit or refund, the Virgin Islands, Guam, American Samoa, employer shall repay or reimburse the (a) * * * or the Northern Mariana Islands is Form employee in the amount of the (1) * * * However, this section only 1040–SS, ‘‘U.S. Self-Employment Tax overcollection prior to the expiration of applies to overcollected or overpaid Return (Including Additional Child Tax such limitations period. * * * Additional Medicare Tax under section Credit for Bona Fide Residents of Puerto (ii) If an employer files a return for a 3101(b)(2) or section 3201(a) if the Rico).’’ The form to be used by residents return period on which Additional employer has repaid or reimbursed the of Puerto Rico is either Form 1040–SS Medicare Tax under section 3101(b)(2) amount of the overcollection of such tax or Form 1040–PR, ‘‘Planilla para la or section 3201(a) is reported, collects to the employee in the year in which the Declaracio´n de la Contribucio´n Federal from an employee and pays to the IRS overcollection was made. * * * sobre el Trabajo por Cuenta Propia more than the correct amount of * * * * * (Incluyendo el Cre´dito Tributario Additional Medicare Tax required to be Adicional por Hijos para Residentes withheld from wages or compensation, (b) * * * Bona Fide de Puerto Rico).’’ The and if the employer ascertains the error (2) * * * (i) * * * However, for employee may not authorize the after filing the return but before the end purposes of Additional Medicare Tax employer to claim the credit or refund of the calendar year in which the wages under section 3101(b)(2) or section for the employee. See § 31.6402(a)– were paid, the employer shall repay or 3201(a), if the amount of the 2(a)(1)(iii). reimburse the employee in the amount overcollection is not repaid or (ii) In the case of an overpayment of of the overcollection prior to the end of reimbursed to the employee under Additional Medicare Tax under section the calendar year. However, this § 31.6413(a)–1(a)(2)(ii), there is no 3101(b)(2) or section 3201(a) for a paragraph does not apply to the extent overpayment to be adjusted under this taxable year of an individual for which that, after reasonable efforts, the section and the employer may only a Form 1040 (or other applicable return employer cannot locate the employee. adjust an overpayment of such tax in the Form 1040 series) has been filed, * * * * * attributable to an administrative error, a claim for refund shall be made by the (iv) * * * However, for purposes of that is, an error involving the inaccurate individual on Form 1040X, ‘‘Amended overcollected Additional Medicare Tax reporting of the amount withheld, U.S. Individual Income Tax Return.’’ under section 3101(b)(2) or section pursuant to this section. * * * (c) Effective/applicability date. This 3201(a), the employer shall reimburse * * * * * section applies to claims for refund filed the employee by applying the amount of (e) Effective/applicability date. after the date of publication of the the overcollection against the employee Paragraphs (a) and (b) of this section Treasury decision adopting these rules FICA or RRTA tax which attaches to apply to adjustments made after the date as final regulations in the Federal wages or compensation paid by the of publication of the Treasury decision Register. employer to the employee in the adopting these rules as final regulations Par. 12. Section 31.6413(a)–1 is calendar year in which the in the Federal Register. amended by: overcollection is made. * * * 1. Revising the first sentence in (v) * * * This paragraph (a)(2)(v) Steven T. Miller, paragraph (a)(2)(i). does not apply for purposes of Deputy Commissioner for Services and 2. Re-designating paragraphs (a)(2)(ii), overcollected Additional Medicare Tax Enforcement. (a)(2)(iii), (a)(2)(iv), (a)(2)(v), (a)(2)(vi), under section 3101(b)(2) or section [FR Doc. 2012–29237 Filed 11–30–12; 2:00 pm] and (a)(2)(vii), as new paragraphs 3201(a) which must be repaid or BILLING CODE P
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DEPARTMENT OF THE TREASURY Secretary for Financial Markets, at We issued a Notice and Request for [email protected]. Information 4 on March 19, 2012, to Fiscal Service SUPPLEMENTARY INFORMATION: The solicit market input on a possible Secretary of the Treasury is authorized floating rate security, particularly 31 CFR Part 356 under chapter 31 of title 31, United concerning the demand for the product, [Docket No. BPD–2012–0002] States Code, to issue United States how the security should be structured, obligations and to offer them for sale its liquidity, the most appropriate index, Sale and Issue of Marketable Book- under such terms and conditions as the and any operational issues that should Entry Treasury Bills, Notes, and Bonds Secretary may prescribe. The Uniform be considered relating to the issuance of this type of debt. Based on the responses Offering Circular, in conjunction with AGENCY: Office of the Assistant to that notice, Treasury announced in its the announcement for each auction, Secretary for Financial Markets; Fiscal August 2012 Quarterly Refunding provides the terms and conditions for Service, Treasury. Statement that it plans to develop a the sale and issuance of marketable ACTION: Advance Notice of Proposed floating rate securities program to Treasury bills, notes, and bonds in an Rulemaking. complement the existing suite of auction to the public.1 securities it issues and to support our Treasury intends to issue a new type SUMMARY: The Department of the broader debt management objectives. of marketable security with a floating Treasury (‘‘Treasury’’) intends to issue a The first floating rate securities auction rate interest payment. We are currently new type of marketable security with a is estimated to be at least one year away. considering two Index Rates 2 for this floating rate interest payment. We are This timeframe reflects our best estimate purpose, a Treasury bill rate and a issuing this Advance Notice of Proposed for implementing required auction Treasury general collateral repurchase Rulemaking to solicit comments on the regulations and computer systems design details, terms and conditions, agreement rate. Through this notice, we modifications. and other features of this new type of are soliciting comments on the design Index Rate: No consensus exists security. We also invite other comments details of the planned floating rate among market participants on the ideal relevant to the issuance of this new security and which index (those index for Treasury’s floating rate security. mentioned above or another index) securities program. Many believe, should result in Treasury attaining the DATES: Submit comments on or before however, that the Index Rate should lowest borrowing cost over time for January 22, 2013. reference a liquid, traded rate with government financing needs. At the end ADDRESSES: Comments may be transparent pricing. of this notice is a hypothetical term We are requesting comments on submitted electronically through the sheet (Appendix A) and a link to which Index Rate should result in Federal eRulemaking Portal at http:// proposed formulas (Appendix B) Treasury attaining the lowest cost of www.regulations.gov, in accordance applicable to the structure being financing over time. Specifically, we are with the instructions. Comments will be considered. considering (1) the 13-week Treasury available at http://www.regulations.gov This Advance Notice of Proposed bill auction High Rate (stop out rate) as submitted, unless modified for Rulemaking is not an offering of converted into a simple ACT/360 technical reasons. Accordingly, your securities and any of the currently interest rate 5 (the ‘‘Treasury Bill Yield’’) comments will not be edited to remove contemplated features of floating rate and (2) a Treasury general collateral any identifying or contact information. securities described in this notice may overnight repurchase agreement rate You may download this notice from change. The terms and conditions of (the ‘‘Treasury GC Rate’’). We also http://www.regulations.gov or the particular securities that Treasury may request comments on whether another Bureau of the Public Debt’s Web site at offer will be provided in the Uniform index would better serve the desired http://www.treasurydirect.gov. Offering Circular and the applicable purpose. Questions about submitting comments offering announcement. If Treasury’s floating rate securities should be directed to Lori Santamorena Treasury intends to issue floating rate program were to be indexed to the at (202) 504–3632. You may also send securities to assist us in our mission of Treasury Bill Yield, it would reference paper comments to Bureau of the Public borrowing at the lowest cost over time, the converted auction stop out rate of Debt, Government Securities as well as to manage the maturity profile 13-week Treasury bills, currently Regulations Staff, 799 9th Street NW., of our marketable debt outstanding, auctioned weekly. Under the current Washington, DC 20239–0001. expand the investor base, and provide a auction schedule, the Index Rate would Comments received will be available for financing tool that gives debt managers change weekly, on Thursday, which is public inspection and copying at the additional flexibility. We plan to the settlement day for 13-week Treasury Treasury Department Library, Main integrate floating rate securities into our bills (non-Business Days excepted). Treasury Building, 1500 Pennsylvania ongoing efforts to extend the maturity Treasury requests comments on whether Avenue NW., Washington, DC 20220. profile of our marketable debt. We the conversion of the High Rate should To visit the library, call (202) 622–0990 decided to establish a floating rate be done on an ACT/360, ACT/365 or for an appointment. In general, securities program after carefully comments received, including considering the long-term supply and addition, Treasury has discussed the topic with the attachments and other supporting demand dynamics for floating rate Treasury Borrowing Advisory Committee, which is materials, are part of the public record securities and with significant a federal advisory committee sponsored by the and are available to the public. Do not 3 Securities Industry and Financial Markets consultation with market participants. Association, and with the primary dealers. The submit any information in your primary dealers serve as trading counterparties of comments or supporting materials that 1 The Uniform Offering Circular is codified at 31 the Federal Reserve Bank of New York in its you consider confidential or CFR part 356. implementation of monetary policy. Primary inappropriate for public disclosure. 2 All capitalized, italicized words are defined in dealers are also required to participate in all the Appendices. Treasury marketable securities auctions. FOR FURTHER INFORMATION CONTACT: 3 In its February and May 2012 Quarterly 4 77 FR 16116 (March 19, 2012). Colin Kim, Director, Office of Debt Refunding Statements, Treasury requested input on 5 An example of this conversion is provided in Management, Office of the Assistant the potential issuance of floating rate securities. In Appendix B.
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some other basis. Treasury would also whether this would present problems Interest Accrual: Interest will accrue appreciate comments on whether the for market participants. on floating rate securities at the Interest Treasury Bill Yield should reference a Frequency of Interest Payments: Rate, with a daily Reset Frequency, Treasury bill maturity other than the 13- Treasury would make Interest payments during the Accrual Period. The interest week bill. on its floating rate securities quarterly. rate for a non-Business Day will be The other Index Rate we are This payment cycle is a departure from based on the most recent interest rate considering for our floating rate our semi-annual payment cycle. Most observed for the prior Business Day. securities program is a Treasury General existing floating rate securities pay a Auction Technique: We would offer Collateral (GC) Rate. Currently, quarterly interest payment and, given floating rate securities through a single- approximately $650 billion 6 of Treasury the non-compounding interest price auction. Competitive bids would securities are used as collateral in tri- calculation currently being considered, be accepted in the form of a negative or party overnight loans each day. Money a quarterly paying security seems to be positive Spread, expressed in one-tenth is lent to borrowers, collateralized by the preferred structure. We welcome of one basis point,10 to be added to the Treasury securities, at the overnight comments on a quarterly versus semi- Index Rate. The securities would settle Treasury GC Rate. This rate represents annual, or other, payment structure. at par, provided that the auction clears transactions in a highly liquid market. Lock Out Periods: The current above the Minimum Spread. If the While a Treasury GC Rate representing convention in the floating rate securities auction clears below the Minimum all tri-party repurchase agreement (repo) market is for interest payments to be set Spread of zero, then the Spread on the transactions currently is not published, five business days in advance of the floating rate security becomes zero and the Depository Trust & Clearing Payment Dates. This standard practice the auction clearing spread is used as Corporation (DTCC) publishes the dates back to the late 1980s. Investors the Discount Margin for determining the Treasury General Collateral Finance requested the five business-day notice settlement price.11 (GCF) rate,7 which represents a subset of for operational purposes. Given Treasury bill competitive bids are tri-party Treasury GC repo transactions. technological advancements, we believe expressed as a discount rate, in Please comment on the relative merits of one Business Day notice of interest increments of one-half of a basis point. using a broader tri-party Treasury GC payments should suffice. Please However, these securities have rate as compared to a narrower subset, comment on the appropriate length of maturities of one year or shorter. such as DTCC’s Treasury GCF index, as the lock out period. Accepting bids in increments of one- the Index Rate. Please note that we are Interest Rate: The Interest Rate on the tenth of a basis point would be more not considering the use of an index that floating rate securities would be the reflective of our fixed rate notes, bonds, represents tri-party repo transactions in Index Rate plus the Spread. and TIPS programs, which are similar to any collateral other than Treasury Minimum Interest Rate: The floating the expected maturities of floating rate securities. rate securities would have a Minimum securities. We are interested in input Reset Frequency: With either Index Interest Rate of zero. A negative Interest from potential auction participants, as Rate, we would structure the floating Rate could lead to an interest payment well as others, on this subject. rate security with daily resets. If we by the investor to Treasury, which could All other auction rules for floating were to select a rate indexed to the 13- have operational and tax consequences. rate securities would be consistent with week Treasury bill, the rate would reset This Minimum Interest Rate feature current rules. Please comment on any daily but, given the current auction could increase the value of these problems that could arise from using the schedule, the rate would actually securities in certain interest rate same rules. change no more than once a week, environments. We could capture this Auction Frequency and Settlement: generally on Thursday. We would want value at auction by allowing floating We contemplate issuing floating rate to allow the Index Rate to reset daily to rate securities to be issued at a securities on a regular quarterly cycle, maintain flexibility in our future premium.89 with potentially two re-openings in auction schedule. We would like commenters to address subsequent months following the If we were to select a Treasury GC the potential need for a Minimum original quarterly auction. We would Rate as the Index Rate, the daily Reset Interest Rate of zero percent (or some appreciate comments on whether the Frequency would have a Determination other level). Treasury would also floating rate securities should settle Date of one Business Day prior. Given appreciate comments on whether there mid-month (like the three-year and ten- that most Treasury securities trade in is an alternative to the Minimum year Treasury notes and the 30-year the secondary market for settlement the Interest Rate structure that would be Treasury bond) or end-of-month (similar next Business Day, referencing the preferable. to the two-year, five-year, and seven- previous Business Day would allow the Minimum Spread: Treasury would set year Treasury notes). We believe that accrued interest to be known at the time a Minimum Spread of zero on the auctioning and settling floating rate of the trade versus only on the floating rate securities to ensure that securities in the same week as similar settlement date. they are issued at a premium in certain maturity fixed rate securities, such as Regardless of choice of index, any interest rate environments. We would the two-year note, may provide greater forward trades settling beyond one like comments on whether some other transparency for market participants business day could have unknown level is the appropriate Minimum seeking comparative pricing between accrued interest. Please comment on Spread. floating rate and fixed rate securities. On the other hand, a mid-month 6 This amount is derived from publicly available 8 An example of this premium calculation can be settlement might be preferable to cash tri-party repo statistics from the Federal Reserve found in Appendix B. management investors as well as Bank of New York. It is the approximated sum of 9 Treasury announced at the August 2012 corporations with mid-month tax volumes of U.S. Treasury securities collateral Quarterly Refunding that it is in the process of (including Strips) and Treasury GCF (adjusted for building the operational capabilities to allow for double-counting). negative rate bidding in Treasury bill auctions, 10 A basis point is equal to one hundredth of a 7 For more information on the DTCC Treasury should we make the determination to allow such percentage point. GCF rate please go to http://www.dtcc.com/ bidding in the future. No such determination has 11 An example of this premium calculation can be products/fi/gcfindex/. yet been made. found in Appendix B.
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liabilities. Please comment on the Also, we are requesting comments on make floating rate securities eligible as relative merits of these settlement whether the larger amount outstanding collateral for depository institutions that conventions or whether an alternative per issue that would result from having hold Treasury funds. Valuation for convention would be preferable. several reopenings is important for collateral purposes would depend on Section 356.24(c) of the Uniform market liquidity, or whether it would be the precise structure of the security. Offering Circular states that, no later more important to issue a new floating Stripping: Stripping 13 a floating rate than the day after the auction, Treasury rate security each month. security is different from stripping a will provide notice of the amount to be Maturities: We intend to start our nominal fixed rate security because the charged (in principal and accrued floating rate securities program with a future interest payments are unknown. interest) on the issue date. If the auction two-year maturity. We anticipate strong We do not currently plan to make date is more than one day before the demand from money market investors floating rate securities Strips Eligible. issue date, the amount of accrued with weighted average portfolio However, we welcome comments on interest for reopenings may not be constraints. A two-year maturity might whether a floating rate interest strip known. That could be problematic if the also offer an appealing investment would appeal to investors and how it initial Index Rate is not known by the alternative for cash portfolios. We would be priced. day after the auction. We are anticipate eventually issuing longer Taxation: Interest payments on considering changing this rule to state maturity securities and seek comment floating rate securities would be that we will provide this notification no on the most appropriate maturity for included in the owner’s taxable income later than the day before the issue date. both the initial and future phases of the when received or as accrued, in Please comment on any operational program. accordance with the owner’s method of issues this rule change might cause. Offering Amounts: We are requesting accounting for tax purposes. In general, Reopenings: As stated above, we may comments on the appropriate size of the the tax treatment of floating rate reopen floating rate securities, subject to initial floating rate security auctions and securities would be determined under the same Original Issue Discount tax potential reopenings, and on whether it the tax rules applicable to variable rate rules that apply to existing Treasury would be preferable for the initial debt instruments.14 Relevant tax issues, securities. A reopening would also be auction size to be larger than reopening if any, would be addressed before the accomplished by an auction. Because offering amounts. first auction of these securities. the Spread will have already been Book-Entry Form and Systems: The We invite comments on any other established, we anticipate bids in a floating rate securities would be offered issues relevant to the sale and issuance reopening would be in terms of only in book-entry form. They would be of floating rate securities. After we 12 Discount Margin, as defined in issued and maintained in the consider the responses to this Advance Appendix B, carried out to one-tenth of commercial book-entry system operated Notice of Proposed Rulemaking, we a basis point. Existing floating rate by the Federal Reserve System, acting as intend to issue a final rule amending the securities trade on a Discount Margin fiscal agent for Treasury. We also would Uniform Offering Circular. Because the basis in the secondary market. Because make floating rate securities available to rule would relate to public contracts reopenings would not settle on a be purchased through and held in ® and procedures for United States quarterly interest Payment Date, TreasuryDirect , a system designed securities, the notice, public comment, successful bidders in reopening primarily to enable investors to hold and delayed effective date provisions of auctions would be required to pay their book-entry securities directly with the Administrative Procedure Act are accrued interest. Please comment on Treasury. inapplicable under 5 U.S.C. 553(a)(2). any objection to using a Discount Eligible amounts for holding and BILLING CODE 4810–39–P Margin for auction reopenings or any transferring would be in minimums and multiples of $100 of original par value issues with the proposed pricing 13 Stripping means separating a security’s interest formulas found in Appendix B. for floating rate securities. and principal components so they can be traded Eligible Collateral for Banks Holding separately. 12 See Appendix B. Treasury Cash Deposits: We intend to 14 See 26 CFR 1.1275–5.
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Appendix A-HYPOTHETICAL TERM SHEET
I. ISSUER U. S. Department of the Treasury
II. ISSUANCE Floating Rate Securities
III. ISSUE DATE 15 The last day of the month succeeding the Auction Date, subject to following Business Day convention.
IV. DATED DATE The unadjusted Issue Date
V. MATURITY 2-year
VI. ORIGINAL ISSUE PRICE Par (100 percent of face value)
VII. INTEREST:
A. ACCRUAL PERIOD From and including the Dated Date or last unadjusted Interest Payment Date to, but excluding, the next unadjusted Interest Payment Date.
B. COMPOUNDING No
C. FREQUENCY OF INTEREST PAYMENTS Quarterly
D. PAYMENT DATES Principal will be paid on the maturity date as specified in the auction announcement. Interest will be paid on a quarterly basis. If any principal or interest payment date is a Saturday, Sunday, or other day on which the Federal Reserve Bank of New York is not open for business, we will make the payment (without additional interest) on the next Business Day.
15 Please note that the Issue Date is synonymous with the settlement date.
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E. INTEREST RATE Index Rate plus the Spread, floored at 0.000 percent.
1. INDEX RATE a. INDEX RATE (Option 1) Treasury Bill Yield, defined as the ACT/360 simple yield of the most recent auction that matches the Index Maturity with an issue date preceding the beginning of the Accrual Period or most recent reset.
i. INDEX MATURITY 13-weeks
ii. INDEX RATE DETERMINA nON DATES The preceding auction for the U.S. Treasury Bill with the Index Maturity.
b. INDEX RATE (Option 2) Treasury GC Rate, defined as a Treasury general collateral overnight repurchase agreement rate.
i.INDEXMATURITY Daily
ii. INDEX RATE DETERMINA nON DATES For a Business Day, the prior Business Day. For a non-Business Day, two Business Days pnor.
2. SPREAD Determined on the security's initial Auction Date; expressed in terms of one tenth of one basis point (subject to a Minimum Spread).
a. MINIMUM SPREAD Zero
3. MINIMUM INTEREST RATE 0.000%
F. RESET FREQUENCY Daily
G. DAY COUNT ACT/360
H. LOCK OUT PERIOD None
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VIII. BUSINESS DAY Any day other than a Saturday, Sunday or a day on which the Federal Reserve Bank of New York is closed.
IX. STRIPS ELIGIBLE No
X. CALCULATION AGENT U. S. Department of the Treasury
XI. AUCTION TECHNIQUE A single price auction format in which a competitive bid must show a positive or negative Spread, expressed in one-tenth of one basis point, to be added to the Index Rate. Note that if the auction clearing spread is less than the Minimum Spread, then the spread on the floating rate security is set to the Minimum Spread and the auction clearing spread becomes the Discount Margin used to calculate the price.
Treasury will first accept in full all noncompetitive bids up to $5 million per bid received by the closing time specified in the offering announcement. Then competitive bids will be accepted, starting with the lowest spread to the highest spread needed to fill the public offering. The usual Treasury proration rules will apply if the amount of bids at the highest accepted spread exceeds the amount of the public offering remaining.
Reopenings will be auctioned in the same manner, but with bidding on the basis of Discount Margin rather than Spread.
XII. MINIMUM AND MULTIPLES TO BID, HOLD AND TRANSFER The minimum to bid, hold, and transfer is $100 original principal value. Larger amounts must be in multiples of $1 00.
XlII. MAXIMUM NONCOMPETITIVE AWARD $5 million
BILLING CODE 4810–39–C A link to formulas: http:// to convey any decision with respect to Appendix B—PRICING FORMULAS www.treasurydirect.gov/instit/statreg/ rounding and/or truncation. auctreg/ANPRFRNformula.pdf. AND EXAMPLES Matthew S. Rutherford, A link to examples: http:// The Discount Margin is the spread that www.treasurydirect.gov/instit/statreg/ Assistant Secretary for Financial Markets. would return a price of par if the existing auctreg/DMCalc.xlsm. [FR Doc. 2012–29307 Filed 12–4–12; 8:45 am] floating rate security were being auctioned as Please note: These examples are for BILLING CODE 4810–39–P a new issue. It is used to calculate the price illustrative purposes only and are not meant (see formula in link below) of the floating rate security with an established Spread.
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ENVIRONMENTAL PROTECTION Development Section, Air Planning in hard copy at the Regulatory AGENCY Branch, Air, Pesticides and Toxics Development Section, Air Planning Management Division, U.S. Branch, Air, Pesticides and Toxics 40 CFR Part 52 Environmental Protection Agency, Management Division, U.S. [EPA–R04–OAR–2012–0814; FRL– 9757–9] Region 4, 61 Forsyth Street, SW., Environmental Protection Agency, Atlanta, Georgia 30303–8960. Such Region 4, 61 Forsyth Street, SW., Approval and Promulgation of deliveries are only accepted during the Atlanta, Georgia 30303–8960. EPA Implementation Plans; Region 4 Regional Office’s normal hours of requests that if at all possible, you States; Section 110(a)(2)(D)(i)(II) operation. The Regional Office’s official contact the person listed in the FOR Infrastructure Requirement for the hours of business are Monday through FURTHER INFORMATION CONTACT section to 1997 and 2006 Fine Particulate Matter Friday, 8:30 to 4:30, excluding federal schedule your inspection. The Regional National Ambient Air Quality holidays. Office’s official hours of business are Standards Instructions: Direct your comments to Monday through Friday, 8:30 to 4:30, Docket ID No. EPA–R04–OAR–2012– excluding federal holidays. AGENCY: Environmental Protection 0814. EPA’s policy is that all comments FOR FURTHER INFORMATION CONTACT: Agency (EPA). received will be included in the public Sean Lakeman, Regulatory Development ACTION: Proposed rule. docket without change and may be Section, Air Planning Branch, Air, made available online at Pesticides and Toxics Management SUMMARY: EPA is proposing to approve www.regulations.gov, including any Division, U.S. Environmental Protection submissions from Alabama, Georgia, personal information provided, unless Agency, Region 4, 61 Forsyth Street, Mississippi and South Carolina for the comment includes information SW., Atlanta, Georgia 30303–8960. The inclusion into each states’ State claimed to be Confidential Business telephone number is (404) 562–9043. Implementation Plans (SIP). This Information (CBI) or other information Mr. Lakeman can be reached via proposal pertains to the Clean Air Act whose disclosure is restricted by statute. electronic mail at lakeman.sean@epa. (CAA) requirements regarding Do not submit through gov. prevention of significant deterioration www.regulations.gov or email, (PSD) for the 1997 annual and 2006 24- information that you consider to be CBI Table of Contents hour fine particulate matter (PM2.5) or otherwise protected. The I. Background National Ambient Air Quality Standards www.regulations.gov Web site is an II. What are States required to address under (NAAQS) infrastructure SIPs. The CAA ‘‘anonymous access’’ system, which Sections 110(a)(2)(D)? requires that each state adopt and means EPA will not know your identity III. What is EPA’s analysis of how Region 4 submit a SIP for the implementation, or contact information unless you States addressed element (D)(i)(II) related maintenance, and enforcement of each provide it in the body of your comment. to PSD? NAAQS promulgated by EPA, which is If you send an email comment directly IV. Proposed Action commonly referred to as an to EPA without going through V. Statutory and Executive Order Reviews ‘‘infrastructure’’ SIP. EPA is proposing www.regulations.gov, your email I. Background to approve the submissions for address will be automatically captured Alabama, Georgia, Mississippi, and and included as part of the comment On July 18, 1997 (62 FR 38652), EPA South Carolina that relate to adequate that is placed in the public docket and established an annual PM2.5 NAAQS at made available on the Internet. If you 15.0 micrograms per cubic meter (mg/ provisions prohibiting emissions that 3 interfere with any other state’s required submit an electronic comment, EPA m ) based on a 3-year average of annual measures to prevent significant recommends that you include your mean PM2.5 concentrations. At that time, name and other contact information in EPA also established a 24-hour NAAQS deterioration of its air quality. All other 3 applicable infrastructure requirements the body of your comment and with any of 65 mg/m . See 40 CFR 50.7. On for the 1997 annual and 2006 24-hour disk or CD–ROM you submit. If EPA October 17, 2006 (71 FR 61144), EPA cannot read your comment due to retained the 1997 annual PM2.5 NAAQS PM2.5 NAAQS associated with these 3 States are being addressed in separate technical difficulties and cannot contact at 15.0 mg/m based on a 3-year average rulemakings. you for clarification, EPA may not be of annual mean PM2.5 concentrations, able to consider your comment. and promulgated a new 24-hour DATES: Written comments must be Electronic files should avoid the use of NAAQS of 35 mg/m3 based on a 3-year received on or before January 4, 2013. special characters, any form of average of the 98th percentile of 24-hour ADDRESSES: Submit your comments, encryption, and be free of any defects or concentrations. By statute, SIPs meeting identified by Docket ID No. EPA–R04– viruses. For additional information the requirements of sections 110(a)(1) OAR–2012–0814, by one of the about EPA’s public docket visit the EPA and (2) are to be submitted by states following methods: Docket Center homepage at http:// within three years after promulgation of 1. www.regulations.gov: Follow the www.epa.gov/epahome/dockets.htm. a new or revised NAAQS. Sections on-line instructions for submitting Docket: All documents in the 110(a)(1) and (2) require states to comments. electronic docket are listed in the address basic SIP requirements, 2. Email: R4–[email protected]. www.regulations.gov index. Although including emissions inventories, 3. Fax: (404) 562–9019. listed in the index, some information is monitoring, and modeling to assure 4. Mail: ‘‘EPA–R04–OAR–2012– not publicly available, i.e., CBI or other attainment and maintenance of the 0814,’’ Regulatory Development Section, information whose disclosure is NAAQS. States were required to submit Air Planning Branch, Air, Pesticides and restricted by statute. Certain other such SIPs to EPA no later than July 2000 Toxics Management Division, U.S. material, such as copyrighted material, for the 1997 annual PM2.5 NAAQS, and Environmental Protection Agency, is not placed on the Internet and will be no later than October 2009 for the 2006 Region 4, 61 Forsyth Street, SW., publicly available only in hard copy 24-hour PM2.5 NAAQS. Atlanta, Georgia 30303–8960. form. Publicly available docket States were required to submit such 5. Hand Delivery or Courier: Lynorae materials are available either SIPs to EPA no later than July 2000 for Benjamin, Chief, Regulatory electronically in www.regulations.gov or the 1997 annual PM2.5 NAAQS, and no
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later than Octoer 2009 for the 2006 24- take action on the SIP submittal related Georgia, Mississippi and South hour PM2.5 NAAQS. to the ‘‘infrastructure’’ requirements for Carolina’s SIP submissions related to On March 4, 2004, Earthjustice the 2006 24-hour PM2.5 NAAQS. On sections 110(a)(2)(D)(i)(I) and submitted a notice of intent to sue October 20, 2011, EPA entered into a 110(a)(2)(D)(ii) for the 1997 annual and related to EPA’s failure to issue findings consent decree with WildEarth 2006 24-hour PM2.5 NAAQS. Today’s of failure to submit related to the Guardians and Sierra Club which proposed rulemaking relates only to ‘‘infrastructure’’ requirements for the required EPA, among other things, to requirements related to prong 3 of 1997 annual PM2.5 NAAQS. On March complete a Federal Register notice of section 110(a)(2)(D)(i), which as 10, 2005, EPA entered into a consent the Agency’s final action either previously described, requires that the decree with Earthjustice which required approving, disapproving, or approving SIP contain adequate provisions EPA, among other things, to complete a in part and disapproving in part the prohibiting emissions that interfere with Federal Register notice announcing Alabama, Georgia, Mississippi and any other state’s required measures to EPA’s determinations pursuant to South Carolina 2006 24-hour PM2.5 prevent significant deterioration of its section 110(k)(1)(B) as to whether each NAAQS Infrastructure SIP submittals air quality. More information on this state had made complete submissions to addressing the applicable requirements requirement and EPA’s rationale for meet the requirements of section of sections 110(a)(2)(A)–(H), (J)–(M), today’s proposal that each state is 110(a)(2) for the 1997 PM2.5 NAAQS by except for section 110(a)(2)(C) meeting this requirement for purposes October 5, 2008. In accordance with the nonattainment area requirements and of the 1997 annual and 2006 24-hour consent decree, EPA made completeness section 110(a)(2)(D)(i) visibility PM2.5 NAAQS is provided below. findings for each state based upon what requirements. The rulemaking proposed III. What is EPA’s analysis of how the Agency received from each state for through today’s action is consistent with Region 4 States addressed element the 1997 PM2.5 NAAQS as of October 3, the terms of this consent decree. 2008. Today’s action is proposing to (D)(i)(II) related to PSD? On October 22, 2008, EPA published approve Alabama, Georgia, Mississippi EPA’s September 25, 2009, a final rulemaking entitled and South Carolina’s infrastructure memorandum entitled ‘‘Guidance on ‘‘Completeness Findings for Section submissions for the 1997 annual and SIP Elements Required Under Section 110(a) State Implementation Plans 2006 24-hour PM2.5 NAAQS addressing 110(a)(1) and (2) for the 2006 24-Hour Pertaining to the Fine Particulate Matter CAA section 110(a)(2)(D)(i)(II) related to Fine Particle (PM2.5) National Ambient (PM2.5) NAAQS’’ making a finding that adequate provisions prohibiting Air Quality Standards’’ provided each state had submitted or failed to emissions that interfere with any other guidance on addressing the submit a complete SIP that provided the state’s required measures to prevent infrastructure requirements required basic program elements of section significant deterioration of its air quality under sections 110(a)(1) and 110(a)(2) of 110(a)(2) necessary to implement the (referred to as ‘‘prong 3’’). EPA has the CAA with respect to the 2006 24- 1997 PM2.5 NAAQS. See 73 FR 62902. taken previous action on Alabama, hour PM2.5 NAAQS. The 2009 Guidance For those states that did receive Georgia, Mississippi and South describes that a state’s PSD permitting findings, the findings of failure to Carolina’s infrastructure submissions for program is the primary measure that submit for all or a portion of a state’s the 1997 and 2006 PM2.5 NAAQS for such state must include in its SIP to implementation plan established a 24- sections 110(a)(2)(A)-(F), (H), (J)-(M), prevent significant deterioration of air month deadline for EPA to promulgate including other portions of section quality in accordance with prong 3 of a Federal Implementation Plan (FIP) to 110(a)(2)(D)(i) in separate actions from section 110(a)(2)(D)(i). EPA believes that address the outstanding SIP elements today’s rulemaking. Alabama, Georgia, Mississippi and unless, prior to that time, the affected South Carolina’s infrastructure states submitted, and EPA approved, the II. What are States required to address submissions are consistent with the required SIPs. under Sections 110(a)(2)(D)? 2009 Guidance, when considered in The findings that all or portions of a Section 110(a)(2)(D) has two conjunction with each State’s PSD state’s submission are complete components, 110(a)(2)(D)(i) and program. established a 12-month deadline for 110(a)(2)(D)(ii). Specifically, section At present, there are four regulations EPA to take action upon the complete 110(a)(2)(D)(i) has four components that that are required to be adopted into the SIP elements in accordance with section require SIPs to include provisions SIP to meet PSD-related infrastructure 110(k). Alabama, Georgia, Mississippi prohibiting any source or other type of requirements. See Sections 110(a)(2)(C), and South Carolina’s infrastructure emissions activity in one state from: 1) 110(a)(2)(D)(i)(II), and 110(a)(2)(J) of the submissions were received by EPA on contributing significantly to CAA. These regulations are: (1) ‘‘Final July 25, 2008, July 23, 2008, December nonattainment of the NAAQS in any Rule To Implement the 8-Hour Ozone 7, 2007, and March 14, 2008, other State, and 2) interfering with National Ambient Air Quality respectively, for the 1997 annual PM2.5 maintenance of the NAAQS by any Standard—Phase 2; Final Rule’’ NAAQS and on September 23, 2009, other State (collectively referred to as (November 29, 2005, 70 FR 71612) October 21, 2009, October 6, 2009, and 110(a)(2)(D)(i)(I)); or interfering with (hereafter referred to as the ‘‘Phase II September 18, 2009, respectively, for measures required to 3) prevent Rule’’); (2) ‘‘Implementation of the New the 2006 24-hour PM2.5 NAAQS. significant deterioration of air quality in Source Review Program for Particulate Alabama, Georgia, Mississippi and any other State, or 4) protect visibility Matter Less Than 2.5 Micrometers; Final South Carolina were among other states in any other State (collectively referred Rule’’ (May 16, 2008, 73 FR 28321) that did not receive findings of failure to as 110(a)(2)(D)(i)(II)). Section (hereafter referred to as the ‘‘NSR PM2.5 to submit because they had provided a 110(a)(2)(D)(ii) requires SIPs to include Rule’’); (3) ‘‘Prevention of Significant complete submission to EPA to address provisions insuring compliance with Deterioration and Title V Greenhouse the infrastructure elements for the 1997 sections 115 and 126 of the Act, relating Gas Tailoring Rule; Final Rule’’ (June 3, PM2.5 NAAQS by October 3, 2008. to interstate and international pollution 2010, 75 FR 31514) (hereafter referred to On July 6, 2011, WildEarth Guardians abatement. as the ‘‘GHG Tailoring Rule’’); and, (4) and Sierra Club filed an amended In previous actions, EPA has already ‘‘Final Rule on the Prevention of complaint related to EPA’s failure to taken action to address Alabama, Significant Deterioration (PSD) for
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Particulate Matter Less Than 2.5 Second, the NSR PM2.5 Rule revised sources become subject to the PSD Micrometers (PM2.5)—Increments, the NSR program to establish the program of the CAA. See 75 FR 31514. Significant Impact Levels (SILs) and framework for implementing Lastly, the PM2.5 PSD Increment-SILs- Significant monitoring Concentration preconstruction permit review for the SMC Rule (only as it relates to PM2.5 (SMC); Final Rule’’ (October 20, 2010, PM2.5 NAAQS in both attainment areas increments) provided additional 75 FR 64864) (hereafter referred to as and nonattainment areas. These PSD regulatory requirements under the PSD ‘‘PM2.5 PSD Increment-SILs-SMC Rule requirements included: (1) A provision program regarding the implementation (only as it relates to PM2.5 Increments)’’). that NSR permits address directly of the PM2.5 NAAQS for NSR by Specific details on these PSD emitted PM2.5 and precursor pollutants; specifically establishing PM2.5 requirements can be found in the (2) a requirement establishing increments pursuant to section 166(a) of respective final rules cited above, significant emission rates for direct the CAA to prevent significant however, a brief summary of each rule PM2.5 and precursor pollutants deterioration of air quality in areas is provided below. (including sulfur dioxide (SO2) and meeting the NAAQS. NOx); 3) exceptions to the The PSD requirements promulgated in First, as part of the framework to grandfathering policy for permits being the aforementioned regulations establish implement the 1997 8-hour ozone reviewed under the PM10 surrogate the framework for a comprehensive SIP NAAQS, EPA promulgated an program; and, (4) a revision that states PSD program which EPA has implementation rule in two phases.1 account for gases that condense to form determined are necessary to comply The Phase 2 Rule is relevant to today’s particles (condensables) in PM2.5 and with prong 3 of section 110(a)(2)(D)(i). action. Among other changes, the rule PM10 emission limits in PSD permits. The following table shows when EPA revised the PSD regulations to recognize Third, in the GHG Tailoring Rule, approved the incorporation of the nitrogen oxide (NOx) as an ozone EPA tailored the applicability criteria aforementioned regulations in each of precursor. that determine which GHG emission the States’ implementation plan:
PM2.5 PSD increment-SILs-SMC State Phase II rule GHG tailoring rule NSR PM2.5 rule rule (as it relates to PM2.5 increments)
Alabama ...... 5/1/2008 12/29/2010 9/26/2012 9/26/2012. 73 FR 23957 75 FR 81863 77 FR 59100 77 FR 59100. Georgia ...... 11/22/2010 9/8/2011 9/8/2011 See Below. 75 FR 71018 76 FR 55572 76 FR 55572 Mississippi ...... 12/20/2010 12/29/2010 9/26/2012 9/26/2012. 75 FR 79300 75 FR 81858 77 FR 59095 77 FR 59095. South Carolina ...... 6/23/2011 Refer to Footnote 2 6/23/2011 See Below. 76 FR 36875 76 FR 36875
1. Alabama: As noted in the table first taking final action to approve 4. South Carolina: In this action, EPA above, Alabama has addressed, and EPA Georgia’s July 26, 2012, SIP revision is proposing to approve South has approved, the underlying PSD regarding PM2.5 PSD Increment-SILs- Carolina’s infrastructure submissions for regulations to support the State’s SMC Rule (only as it relates to PM2.5 the 1997 annual and 2006 24-hour PM2.5 program. In this action, EPA is Increments) revision into the State’s NAAQS with regard to prong 3 of proposing to approve Alabama’s implementation plan. EPA will consider section 110(a)(2)(D)(i). Today’s infrastructure submissions for the 1997 action on Georgia’s July 26, 2012, proposed approval of South Carolina’s annual and 2006 24-hour PM2.5 NAAQS submission in a rulemaking separate implementation plan respecting prong 3 with regard to the PSD requirements for from today’s action. of section 110(a)(2)(D)(i)(II) is prong 3 of 110(a)(2)(D)(i). contingent upon EPA first taking final 2. Georgia: In this action, EPA is 3. Mississippi: As noted in the table action to approve South Carolina’s May above, Mississippi has addressed, and proposing to approve Georgia’s 1, 2012, SIP revision regarding the PM2.5 infrastructure submissions for the 1997 EPA has approved, the underlying PSD PSD Increment-SILs-SMC Rule (only as annual and 2006 24-hour PM2.5 NAAQS regulations to support the State’s it relates to PM2.5 Increments) revision with regard to the prong 3 requirement program. In this action, EPA is into the State’s implementation plan. of section 110(a)(2)(D)(i). Today’s proposing to approve Mississippi’s EPA will consider action on South proposed approval of Georgia’s infrastructure submissions for the 1997 Carolina’s May 1, 2012, submission in a implementation plan respecting the annual and 2006 24-hour PM2.5 NAAQS rulemaking separate from today’s action. prong 3 infrastructure element of with regard to the PSD requirements for Pending final approval of the above- 110(a)(2)(D)(i) is contingent upon EPA prong 3 of section 110(a)(2)(D)(i). described contingent SIP revisions,
1 EPA promulgated the Phase I Rule on April 30, Ensure Authority To Implement Title V Permitting States. South Carolina was included in this 2004 entitled ‘‘Final Rule To Implement the 8-Hour Programs Under the Greenhouse Gas Tailoring rulemaking. On March 4, 2011, South Carolina Ozone National Ambient Air Quality Standard— Rule’’ (75 FR 82254) to narrow EPA’s previous submitted a letter withdrawing from EPA’s Phase 1.’’ See 69 FR 23951. approval of State title V operating permit programs consideration the portion of South Carolina’s SIP 2 On June 11, 2010, the South Carolina Governor that apply (or may apply) to GHG-emitting sources; for which EPA withdrew its previous approval in signed an Executive Order to confirm that the State this rule hereafter is referred to as the ‘‘Narrowing the Narrowing Rule. These provisions are no longer had authority to implement appropriate emission Rule.’’ EPA narrowed its previous approval of thresholds for determining which new stationary certain State permitting thresholds, for GHG intended for inclusion in the SIP, and are no longer sources and modification projects become subject to emissions so that only sources that equal or exceed before EPA for its approval or disapproval. A copy PSD permitting requirements for their GHG the GHG thresholds, as established in the final of South Carolina’s letter can be accessed at emissions at the state level. On December 30, 2010, Tailoring Rule, would be covered as major sources www.regulations.gov using Docket ID No. EPA– EPA published a final rulemaking, ‘‘Action To by the Federally-approved programs in the affected R04–OAR–2010–0721.
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Alabama, Georgia, Mississippi and • Does not contain any unfunded Authority: 42 U.S.C. 7401 et seq. South Carolina have demonstrated that mandate or significantly or uniquely Dated: November 21, 2012. major sources in each state are subject affect small governments, as described A. Stanley Meiburg, to PSD permitting programs to comply in the Unfunded Mandates Reform Act Acting Regional Administrator, Region 4. with prong 3 of section 110(a)(2)(D)(i) of of 1995 (Pub. L. 104–4); • [FR Doc. 2012–29367 Filed 12–4–12; 8:45 am] the CAA for the PM2.5 NAAQS. Does not have Federalism Therefore, EPA has made the implications as specified in Executive BILLING CODE 6560–50–P preliminary determination that, pending Order 13132 (64 FR 43255, August 10, these contingent revisions, Alabama, 1999); ENVIRONMENTAL PROTECTION • Is not an economically significant Georgia, Mississippi and South AGENCY Carolina’s SIP and practices will be regulatory action based on health or adequate for insuring compliance with safety risks subject to Executive Order 40 CFR Part 52 the applicable PSD requirements 13045 (62 FR 19885, April 23, 1997); relating to interstate transport pollution • Is not a significant regulatory action [EPA–R04–OAR–2012–0814; FRL–9757–8] for the 1997 and 2006 PM2.5 NAAQS. subject to Executive Order 13211 (66 FR 28355, May 22, 2001); Approval and Promulgation of IV. Proposed Action • Is not subject to requirements of Implementation Plans; Florida; As described above, EPA is proposing Section 12(d) of the National 110(a)(2)(D)(i)(II) Infrastructure to approve SIP revisions for Alabama, Technology Transfer and Advancement Requirement for the 1997 and 2006 Georgia, Mississippi and South Carolina Act of 1995 (15 U.S.C. 272 note) because Fine Particulate Matter National to incorporate provisions into the States’ application of those requirements would Ambient Air Quality Standards implementation plans to address prong be inconsistent with the CAA; and AGENCY: Environmental Protection • 3 of section 110(a)(2)(D)(i) of the CAA Does not provide EPA with the Agency (EPA). discretionary authority to address, as for both the 1997 and 2006 PM2.5 ACTION: Proposed rule. NAAQS. Specifically, EPA is proposing appropriate, disproportionate human to approve the States’ prong 3 of section health or environmental effects, using SUMMARY: EPA is proposing to approve 110(a)(2)(D)(i) submissions because they practicable and legally permissible in part, and disapprove in part, the State are consistent with section 110 of the methods, under Executive Order 12898 Implementation Plan (SIP) submissions, CAA. As noted above, the proposed (59 FR 7629, February 16, 1994). submitted by the State of Florida, approval of Georgia’s and South EPA has preliminarily determined through the Florida Department of Carolina’s implementation plan that this proposed rule does not have Environmental Protection (DEP) on respecting prong 3 of section tribal implications as specified by April 18, 2008, and September 23, 2009. 110(a)(2)(D)(i) is contingent upon EPA Executive Order 13175 (65 FR 67249, This proposal addresses the Clean Air first taking final action to approve the November 9, 2000), because there are no Act (CAA) requirements pertaining to States’ July 26, 2012, and May 1, 2012, ‘‘substantial direct effects’’ on an Indian prevention of significant deterioration SIP revisions, respectively, for the PM2.5 Tribe as a result of this action. EPA (PSD) for the 1997 annual and 2006 24- PSD Increment-SILs-SMC Rule (only as notes that the Catawba Indian Nation hour fine particulate matter (PM2.5) it relates to PM2.5 Increments). Reservation is located within the South National Ambient Air Quality Standards Carolina. Pursuant to the Catawba (NAAQS) infrastructure SIPs. The CAA V. Statutory and Executive Order Indian Claims Settlement Act, S.C. Code requires that each state adopt and Reviews Ann. 27–16–120, ‘‘all state and local submit a SIP for the implementation, Under the CAA, the Administrator is environmental laws and regulations maintenance, and enforcement of each required to approve a SIP submission apply to the Catawba Indian Nation and NAAQS promulgated by EPA, which is that complies with the provisions of the Reservation and are fully enforceable by commonly referred to as an Act and applicable federal regulations. all relevant state and local agencies and ‘‘infrastructure’’ SIP. EPA is proposing See 42 U.S.C. 7410(k); 40 CFR 52.02(a). authorities.’’ Thus, while the South to approve in part, and disapprove in Thus, in reviewing SIP submissions, Carolina SIP applies to the Catawba part the submission for Florida, that EPA’s role is to approve state choices, Reservation, because today’s action is relates to adequate provisions provided that they meet the criteria of not proposing a substantive revision to prohibiting emissions that interfere with the CAA. Accordingly, this proposed the South Carolina SIP, and is instead any other state’s required measures to action merely approves state law as proposing that the existing SIP will prevent significant deterioration of its meeting federal requirements and does satisfy the prong 3 requirements of air quality. All other applicable not impose additional requirements section 110(a)(2)(D)(i)(II), EPA has infrastructure requirements for the 1997 beyond those imposed by state law. For preliminarily determined that today’s annual and 2006 24-hour PM2.5 NAAQS that reason, this proposed action: action will have no ‘‘substantial direct associated with Florida are being • Is not a ‘‘significant regulatory effects’’ on the Catawba Indian Nation. addressed in separate rulemakings. action’’ subject to review by the Office EPA has also preliminarily determined DATES: Written comments must be of Management and Budget under that these revisions will not impose any received on or before January 4, 2013. Executive Order 12866 (58 FR 51735, substantial direct costs on tribal ADDRESSES: Submit your comments, October 4, 1993); governments or preempt tribal law. identified by Docket ID No. EPA–R04– • Does not impose an information List of Subjects in 40 CFR Part 52 OAR–2012–0814, by one of the collection burden under the provisions following methods: of the Paperwork Reduction Act (44 Environmental protection, Air 1. www.regulations.gov: Follow the U.S.C. 3501 et seq.); pollution control, Incorporation by on-line instructions for submitting • Is certified as not having a reference, Intergovernmental relations, comments. significant economic impact on a Nitrogen dioxide, Particulate matter, 2. Email: R4–[email protected]. substantial number of small entities Reporting and recordkeeping 3. Fax: (404) 562–9019. under the Regulatory Flexibility Act (5 requirements, Volatile organic 4. Mail: ‘‘EPA–R04–OAR–2012– U.S.C. 601 et seq.); compounds. 0814,’’ Regulatory Development Section,
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Air Planning Branch, Air, Pesticides and restricted by statute. Certain other such SIPs to EPA no later than July 2000 Toxics Management Division, U.S. material, such as copyrighted material, for the 1997 annual PM2.5 NAAQS, and Environmental Protection Agency, is not placed on the Internet and will be no later than October 2009 for the 2006 Region 4, 61 Forsyth Street SW., publicly available only in hard copy 24-hour PM2.5 NAAQS. Atlanta, Georgia 30303–8960. form. Publicly available docket On March 4, 2004, Earthjustice 5. Hand Delivery or Courier: Lynorae materials are available either submitted a notice of intent to sue Benjamin, Chief, Regulatory electronically in www.regulations.gov or related to EPA’s failure to issue findings Development Section, Air Planning in hard copy at the Regulatory of failure to submit related to the Branch, Air, Pesticides and Toxics Development Section, Air Planning ‘‘infrastructure’’ requirements for the Management Division, U.S. Branch, Air, Pesticides and Toxics 1997 annual PM2.5 NAAQS. On March Environmental Protection Agency, Management Division, U.S. 10, 2005, EPA entered into a consent Region 4, 61 Forsyth Street SW., Environmental Protection Agency, decree with Earthjustice which required Atlanta, Georgia 30303–8960. Such Region 4, 61 Forsyth Street SW., EPA, among other things, to complete a deliveries are only accepted during the Atlanta, Georgia 30303–8960. EPA Federal Register notice announcing Regional Office’s normal hours of requests that if at all possible, you EPA’s determinations pursuant to operation. The Regional Office’s official contact the person listed in the FOR section 110(k)(1)(B) as to whether each hours of business are Monday through FURTHER INFORMATION CONTACT section to state had made complete submissions to Friday, 8:30 to 4:30, excluding federal schedule your inspection. The Regional meet the requirements of section holidays. Office’s official hours of business are 110(a)(2) for the 1997 PM2.5 NAAQS by Instructions: Direct your comments to Monday through Friday, 8:30 to 4:30, October 5, 2008. In accordance with the Docket ID No. EPA–R04–OAR–2012– excluding federal holidays. consent decree, EPA made completeness 0814. EPA’s policy is that all comments findings for each state based upon what FOR FURTHER INFORMATION CONTACT: received will be included in the public Sean Lakeman, Regulatory Development the Agency received from each state for docket without change and may be Section, Air Planning Branch, Air, the 1997 PM2.5 NAAQS as of October 3, made available online at 2008. Pesticides and Toxics Management www.regulations.gov, including any On October 22, 2008, EPA published Division, U.S. Environmental Protection personal information provided, unless a final rulemaking entitled the comment includes information Agency, Region 4, 61 Forsyth Street ‘‘Completeness Findings for Section claimed to be Confidential Business SW., Atlanta, Georgia 30303–8960. The 110(a) State Implementation Plans Information (CBI) or other information telephone number is (404) 562–9043. Pertaining to the Fine Particulate Matter Mr. Lakeman can be reached via whose disclosure is restricted by statute. (PM2.5) NAAQS’’ making a finding that Do not submit through electronic mail at each state had submitted or failed to www.regulations.gov or email, [email protected]. submit a complete SIP that provided the information that you consider to be CBI Table of Contents basic program elements of section or otherwise protected. The 110(a)(2) necessary to implement the www.regulations.gov Web site is an I. Background 1997 PM NAAQS. See 73 FR 62902. II. What are states required to address under 2.5 ‘‘anonymous access’’ system, which sections 110(a)(2)(D)? For those states that did receive means EPA will not know your identity III. What is EPA’s analysis of how Florida findings, the findings of failure to or contact information unless you addressed element (D)(i)(II) related to submit for all or a portion of a state’s provide it in the body of your comment. PSD? implementation plan established a 24- If you send an email comment directly IV. Proposed Action month deadline for EPA to promulgate to EPA without going through V. Statutory and Executive Order Reviews a Federal Implementation Plan (FIP) to www.regulations.gov, your email I. Background address the outstanding SIP elements address will be automatically captured unless, prior to that time, the affected and included as part of the comment On July 18, 1997 (62 FR 38652), EPA states submitted, and EPA approved, the that is placed in the public docket and established an annual PM2.5 NAAQS at required SIPs. made available on the Internet. If you 15.0 micrograms per cubic meter (mg/ The findings that all or portions of a submit an electronic comment, EPA m3) based on a 3-year average of annual state’s submission are complete recommends that you include your mean PM2.5 concentrations. At that time, established a 12-month deadline for name and other contact information in EPA also established a 24-hour NAAQS EPA to take action upon the complete the body of your comment and with any of 65 mg/m3. See 40 CFR 50.7. On SIP elements in accordance with section disk or CD–ROM you submit. If EPA October 17, 2006 (71 FR 61144), EPA 110(k). Florida’s infrastructure cannot read your comment due to retained the 1997 annual PM2.5 NAAQS submission was received by EPA on technical difficulties and cannot contact at 15.0 mg/m3 based on a 3-year average April 18, 2008, for the 1997 annual you for clarification, EPA may not be of annual mean PM2.5 concentrations, PM2.5 NAAQS and on September 23, able to consider your comment. and promulgated a new 24-hour 2009, for the 2006 24-hour PM2.5 Electronic files should avoid the use of NAAQS of 35 mg/m3 based on a 3-year NAAQS. Florida was among other states special characters, any form of average of the 98th percentile of 24-hour that did not receive findings of failure encryption, and be free of any defects or concentrations. By statute, SIPs meeting to submit because they had provided a viruses. For additional information the requirements of sections 110(a)(1) complete submission to EPA to address about EPA’s public docket visit the EPA and (2) are to be submitted by states the infrastructure elements for the 1997 Docket Center homepage at http:// within three years after promulgation of PM2.5 NAAQS by October 3, 2008. www.epa.gov/epahome/dockets.htm. a new or revised NAAQS. Sections On July 6, 2011, WildEarth Guardians Docket: All documents in the 110(a)(1) and (2) require states to and Sierra Club filed an amended electronic docket are listed in the address basic SIP requirements, complaint related to EPA’s failure to www.regulations.gov index. Although including emissions inventories, take action on the SIP submittal related listed in the index, some information is monitoring, and modeling to assure to the ‘‘infrastructure’’ requirements for not publicly available, i.e., CBI or other attainment and maintenance of the the 2006 24-hour PM2.5 NAAQS. On information whose disclosure is NAAQS. States were required to submit October 20, 2011, EPA entered into a
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consent decree with WildEarth of 110(a)(2)(D)(i). More information on final rules, however, a brief summary of Guardians and Sierra Club which this requirement and EPA’s rationale for each rule is provided below. required EPA, among other things, to today’s proposal approving in part, and First, as part of the framework to complete a Federal Register notice of disapproving in part, this requirement implement the 1997 8-hour ozone the Agency’s final action either for purposes of the 1997 annual and NAAQS, EPA promulgated an 1 approving, disapproving, or approving 2006 24-hour PM2.5 NAAQS is provided implementation rule in two phases. in part and disapproving in part the below. The Phase II Rule is relevant to today’s Florida 2006 24-hour PM NAAQS 2.5 III. What is EPA’s analysis of how action. This rule, among other changes, Infrastructure SIP submittals addressing Florida addressed element (D)(i)(II) revised the PSD regulations to recognize the applicable requirements of sections related to PSD? nitrogen oxide (NOX) as an ozone 110(a)(2)(A)–(H), (J)–(M), except for precursor. section 110(a)(2)(C) nonattainment area EPA’s September 25, 2009, Second, the NSR PM2.5 Rule revised requirements and section 110(a)(2)(D)(i) memorandum entitled ‘‘Guidance on the NSR program to establish the visibility requirements. The rulemaking SIP Elements Required Under Section framework for implementing proposed through today’s action is 110(a)(1) and (2) for the 2006 24-Hour preconstruction permit review for the consistent with the terms of this consent Fine Particle (PM2.5) National Ambient PM2.5 NAAQS in both attainment areas decree. Air Quality Standards’’ provided and nonattainment areas. The PSD Today’s action is proposing to guidance on addressing the requirements included: (1) A provision approve in part, and disapprove in part, infrastructure requirements required that NSR permits address directly under sections 110(a)(1) and 110(a)(2) of Florida’s infrastructure submission for emitted PM2.5 and precursor pollutants; the 1997 annual and 2006 24-hour PM2.5 the CAA with respect to the 2006 24- (2) a requirement establishing NAAQS addressing CAA section hour PM2.5 NAAQS. The 2009 Guidance significant emission rates for direct describes that a state’s PSD permitting 110(a)(2)(D(i) as it relates to adequate PM2.5 and precursor pollutants program is the primary measure that provisions prohibiting emissions that (including sulfur dioxide (SO2) and such state must include in its SIP to interfere with any other state’s required NOX); (3) exceptions to the measures to prevent significant prevent significant deterioration of air grandfathering policy for permits being quality in accordance with prong 3 of deterioration of its air quality (referred reviewed under the PM10 surrogate to as ‘‘prong 3’’). EPA has taken section 110(a)(2)(D)(i). As described program; and, (4) a revision that states previous action on Florida’s below, EPA has preliminarily account for gases that condense to form infrastructure submission for the 1997 determined that portions of Florida’s particles (condensables) in PM2.5 and and 2006 PM2.5 NAAQS for sections infrastructure submissions are PM10 emission limits in PSD permits. 110(a)(2)(A)–(F), (H), (J)–(M), including consistent with the 2009 Guidance, Third, in the GHG Tailoring Rule, other requirements of section when considered in conjunction with EPA tailored the applicability criteria 110(a)(2)(D)(i) in separate actions from the State’s PSD program, and that a that determine which GHG emission today’s rulemaking. portion of the submissions is not. sources become subject to the PSD At present, there are four regulations program of the CAA. See 75 FR 31514. II. What are states required to address that are required to be adopted into the Lastly, the PM PSD Increment-SILs- under sections 110(a)(2)(D)? SIP to meet PSD-related infrastructure 2.5 SMC Rule (only as it relates to PM Section 110(a)(2)(D) has two requirements. See Sections 110(a)(2)(C), 2.5 increments) provided additional components, 110(a)(2)(D)(i) and prong 3 of 110(a)(2)(D)(i), and regulatory requirements under the PSD 110(a)(2)(D)(ii). Specifically, section 110(a)(2)(J) of the CAA. These 110(a)(2)(D)(i) has four components that regulations are: (1) ‘‘Final Rule To program regarding the implementation require SIPs to include provisions Implement the 8-Hour Ozone National of the PM2.5 NAAQS for NSR by
prohibiting any source or other type of Ambient Air Quality Standard—Phase specifically establishing PM2.5 emissions activity in one state from: (1) 2; Final Rule’’ (November 29, 2005, 70 increments pursuant to section 166(a) of Contributing significantly to FR 71612) (hereafter referred to as the the CAA to prevent significant nonattainment maintenance of the ‘‘Phase II Rule’’); (2) ‘‘Implementation of deterioration of air quality in areas NAAQS in another state, and (2) the New Source Review Program for meeting the NAAQS. interfering with maintenance of the Particulate Matter Less Than 2.5 The PSD requirements promulgated in NAAQS in another state (collectively Micrometers; Final Rule’’ (May 16, the aforementioned regulations establish referred to as 110(a)(2)(D)(i)(I)); or 2008, 73 FR 28321) (hereafter referred to the framework for a comprehensive SIP PSD program which EPA has interfering with measures required to (3) as the ‘‘NSR PM2.5 Rule’’); (3) prevent significant deterioration of air ‘‘Prevention of Significant Deterioration determined are necessary to comply quality in another state (prong 3), or (4) and Title V Greenhouse Gas Tailoring with prong 3 of 110(a)(2)(D)(i). The protect visibility in another state Rule; Final Rule’’ (June 3, 2010, 75 FR following provides a listing of relevant (collectively referred to as 31514) (hereafter referred to as the EPA approvals for Florida SIP revisions 110(a)(2)(D)(i)(II)). Section ‘‘GHG Tailoring Rule’’); and, (4) ‘‘Final to address PSD requirements. 110(a)(2)(D)(ii) requires SIPs to include Rule on the Prevention of Significant 1. EPA’s approval of Florida’s PSD/ provisions insuring compliance with Deterioration (PSD) for Particulate NSR regulations which address the sections 115 and 126 of the Act, relating Matter Less Than 2.5 Micrometers Ozone Implementation NSR Update requirements was published in the to interstate and international pollution (PM2.5)—Increments, Significant Impact abatement. Levels (SILs) and Significant monitoring Federal Register on June 15, 2012 (77 In previous actions, EPA has already Concentration (SMC); Final Rule’’ FR 35862). taken action to address 110(a)(2)(D)(i)(I) (October 20, 2010, 75 FR 64864) 2. EPA’s approval of Florida’s NSR PM2.5 Rule was published in the Federal and 110(a)(2)(D)(ii) for Florida’s (hereafter referred to as ‘‘PM2.5 PSD infrastructure submissions for the 1997 Increment-SILs-SMC Rule (only as it 1 EPA promulgated the Phase I Rule on April 30, annual and 2006 24-hour PM2.5 NAAQS. relates to PM2.5 Increments)’’). Specific 2004 entitled ‘‘Final Rule To Implement the 8-Hour Today’s proposed rulemaking relates details on the PSD requirements of these Ozone National Ambient Air Quality Standard— only to requirements related to prong 3 regulations can be found the respective Phase 1.’’ See 69 FR 23951.
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Register on September 19, 2012 (77 FR became subject to PSD on January 2, • Is not a ‘‘significant regulatory 58027). 2011. action’’ subject to review by the Office 3. EPA’s approval of Florida’s PSD/ The Florida SIP currently does not of Management and Budget under provide adequate legal authority to PM2.5 approving PM2.5 increments was Executive Order 12866 (58 FR 51735, published in the Federal Register on address the GHG PSD permitting October 4, 1993); September 19, 2012 (77 FR 58027). requirements at or above the levels of • Does not impose an information emissions set forth in the GHG Tailoring These three approval actions collection burden under the provisions Rule, or at other appropriate levels. As of the Paperwork Reduction Act (44 demonstrate that Florida’s SIP-approved a result, EPA has preliminarily PSD program meets three of the four U.S.C. 3501 et seq.); determined that the Florida SIP does not • required regulatory elements necessary Is certified as not having a satisfy a portions of section significant economic impact on a to satisfy prong 3 of section 110(a)(2)(D)(i) prong 3 for the 1997 and 110(a)(2)(D)(i). substantial number of small entities 2006 PM2.5 infrastructure requirements. under the Regulatory Flexibility Act (5 With respect to the fourth necessary Therefore, EPA is proposing disapproval U.S.C. 601 et seq.); regulatory element—the GHG Tailoring of FDEP’s submission for prong 3 of • Rule—Florida did not submit a SIP section 110(a)(2)(D)(i) as it relates relate Does not contain any unfunded revision to adopt the appropriate to GHG PSD permitting requirements. mandate or significantly or uniquely emission thresholds for determining EPA’s proposed disapproval of this affect small governments, as described which new stationary sources and element does not result in any further in the Unfunded Mandates Reform Act modification projects become subject to obligation on the part of Florida, of 1995 (Pub. L. 104–4); • PSD permitting requirements for their because EPA has already promulgated a Does not have Federalism GHG emissions as promulgated in the FIP for the Florida PSD program to implications as specified in Executive GHG Tailoring Rule. Therefore, address permitting GHG at or above the Order 13132 (64 FR 43255, August 10, Florida’s federally-approved SIP GHG Tailoring Rule thresholds (76 FR 1999); contained errors that resulted in its 25178). Thus, today’s proposed action to • Is not an economically significant failure to address, or provide adequate approve in part, and disapprove in part, regulatory action based on health or legal authority for, the implementation FDEP’s submission for prong 3 of safety risks subject to Executive Order of a GHG PSD program in Florida. In the section 110(a)(2)(D)(i), once final, will 13045 (62 FR 19885, April 23, 1997); GHG SIP Call,2 EPA determined that the not require any further action by either • Is not a significant regulatory action State of Florida’s SIP was substantially FDEP or EPA. subject to Executive Order 13211 (66 FR inadequate to achieve CAA IV. Proposed Action 28355, May 22, 2001); requirements because its existing PSD • Is not subject to requirements of As described above, EPA is proposing program does not apply to GHG- Section 12(d) of the National to approve in part, and disapprove in emitting sources. This rule finalized a Technology Transfer and Advancement part, the SIP revision for Florida to SIP call for 15 state and local permitting Act of 1995 (15 U.S.C. 272 note) because incorporate provisions into the State’s authorities including Florida. EPA application of those requirements would implementation plan to address prong 3 explained that if a state, identified in be inconsistent with the CAA; and the SIP call, failed to submit the of section 110(a)(2)(D)(i) of the CAA for • both the 1997 annual and 2006 24-hour Does not provide EPA with the required corrective SIP revision by the discretionary authority to address, as applicable deadline, EPA would PM2.5 NAAQS. Specifically, EPA is proposing to approve the State’s prong appropriate, disproportionate human promulgate a FIP under CAA section health or environmental effects, using 110(c)(1)(A) for that state to govern PSD 3 of section 110(a)(2)(D)(i) submissions as they relate to the ‘‘Phase II Rule,’’ the practicable and legally permissible permitting for GHG. On December 30, methods, under Executive Order 12898 ‘‘NSR PM2.5 Rule,’’ and the ‘‘PM2.5 PSD 2010, EPA promulgated a FIP 3 because (59 FR 7629, February 16, 1994). Florida failed to submit, by its Increment-SILs-SMC Rule (only as it relates to PM2.5 increments)’’ because In addition, this rule does not have December 22, 2010, deadline, the tribal implications as specified by corrective SIP revision to apply its PSD they are consistent with section 110 of the CAA. EPA also is proposing to Executive Order 13175 (65 FR 67249, program to sources of GHG consistent November 9, 2000), because the SIP is with the thresholds described in the disapprove Florida’s submissions for the portion of the section 110(a)(2)(D)(i) not approved to apply in Indian GHG Tailoring rule. The FIP ensured country, and EPA notes that it will not that a permitting authority (i.e., EPA) prong 3 requirements related to the regulation of GHG emissions. impose substantial direct costs on tribal would be available to issue governments or preempt tribal law. preconstruction PSD permits to GHG- V. Statutory and Executive Order emitting sources in the State of Florida. Reviews List of Subjects in 40 CFR Part 52 EPA took these actions through interim Under the CAA, the Administrator is Environmental protection, Air final rulemaking, effective upon required to approve a SIP submission pollution control, Incorporation by publication, to ensure the availability of that complies with the provisions of the reference, Intergovernmental relations, a permitting authority—EPA—in Florida Act and applicable federal regulations. Nitrogen dioxide, Particulate matter, for GHG-emitting sources when they See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Reporting and recordkeeping Thus, in reviewing SIP submissions, requirements, Volatile organic 2 Action to Ensure Authority to Issue Permits EPA’s role is to approve state choices, compounds. Under the Prevention of Significant Deterioration Program to Sources of Greenhouse Gas Emissions: provided that they meet the criteria of Authority: 42 U.S.C. 7401 et seq. Finding of Substantial Inadequacy and SIP Call, the CAA. Accordingly, this proposed Final Rule, 75 FR 77698 (December 13, 2010). action merely approves state law as Dated: November 21, 2012. 3 Action to Ensure Authority to Issue Permits meeting federal requirements and does A. Stanley Meiburg, under the Prevention of Significant Deterioration Acting Regional Administrator, Region 4. Program to Sources of Greenhouse Gas Emissions: not impose additional requirements Federal Implementation Plan—Final Rule, 75 FR beyond those imposed by state law. For [FR Doc. 2012–29400 Filed 12–4–12; 8:45 am] 82246 (December 30, 2010). that reason, this proposed action: BILLING CODE 6560–50–P
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ENVIRONMENTAL PROTECTION Region 4, 61 Forsyth Street SW., publicly available only in hard copy AGENCY Atlanta, Georgia 30303–8960. form. Publicly available docket 5. Hand Delivery or Courier: Lynorae materials are available either 40 CFR Part 52 Benjamin, Chief, Regulatory electronically in www.regulations.gov or [EPA–R04–OAR–2012–0814; FRL– 9757–7] Development Section, Air Planning in hard copy at the Regulatory Branch, Air, Pesticides and Toxics Development Section, Air Planning Approval and Promulgation of Management Division, U.S. Branch, Air, Pesticides and Toxics Implementation Plans; Region 4 Environmental Protection Agency, Management Division, U.S. States; Section 110(a)(2)(D)(i)(II) Region 4, 61 Forsyth Street SW., Environmental Protection Agency, Infrastructure Requirement for the Atlanta, Georgia 30303–8960. Such Region 4, 61 Forsyth Street SW., 1997 and 2006 Fine Particulate Matter deliveries are only accepted during the Atlanta, Georgia 30303–8960. EPA National Ambient Air Quality Regional Office’s normal hours of requests that if at all possible, you Standards operation. The Regional Office’s official contact the person listed in the FOR hours of business are Monday through FURTHER INFORMATION CONTACT section to AGENCY: Environmental Protection Friday, 8:30 to 4:30, excluding federal schedule your inspection. The Regional Agency (EPA). holidays. Office’s official hours of business are ACTION: Proposed rule. Instructions: Direct your comments to Monday through Friday, 8:30 to 4:30, Docket ID No. EPA–R04–OAR–2012– excluding federal holidays. SUMMARY: EPA is proposing to 0814. EPA’s policy is that all comments conditionally approve submissions from received will be included in the public FOR FURTHER INFORMATION CONTACT: Kentucky, North Carolina and docket without change and may be Sean Lakeman, Regulatory Development Tennessee for inclusion into each states’ made available online at Section, Air Planning Branch, Air, State Implementation Plan (SIP). This www.regulations.gov, including any Pesticides and Toxics Management proposal addresses the Clean Air Act personal information provided, unless Division, U.S. Environmental Protection (CAA) requirements pertaining to the comment includes information Agency, Region 4, 61 Forsyth Street prevention of significant deterioration claimed to be Confidential Business SW., Atlanta, Georgia 30303–8960. The (PSD) for the 1997 annual and 2006 24- Information (CBI) or other information telephone number is (404) 562–9043. hour fine particulate matter (PM2.5) whose disclosure is restricted by statute. Mr. Lakeman can be reached via National Ambient Air Quality Standards Do not submit through electronic mail at (NAAQS) infrastructure SIPs. The CAA www.regulations.gov or email, [email protected]. information that you consider to be CBI requires that each state adopt and Table of Contents submit a SIP for the implementation, or otherwise protected. The maintenance, and enforcement of each www.regulations.gov Web site is an I. Background NAAQS promulgated by EPA, which is ‘‘anonymous access’’ system, which II. What are states required to address under commonly referred to as an means EPA will not know your identity sections 110(a)(2)(D)? ‘‘infrastructure’’ SIP. EPA is proposing or contact information unless you III. What is EPA’s analysis of how region 4 to conditionally approve the provide it in the body of your comment. states addressed element (D)(i)(II) related to PSD? submissions for Kentucky, North If you send an email comment directly to EPA without going through IV. Proposed Action Carolina and Tennessee that relate to V. Statutory and Executive Order Reviews adequate provisions prohibiting www.regulations.gov, your email emissions that interfere with any other address will be automatically captured I. Background state’s required measures to prevent and included as part of the comment significant deterioration of its air that is placed in the public docket and On July 18, 1997 (62 FR 38652), EPA quality. The subject of this notice is made available on the Internet. If you established an annual PM2.5 NAAQS at limited to infrastructure provisions submit an electronic comment, EPA 15.0 micrograms per cubic meter m 3 prohibiting emissions that interfere with recommends that you include your ( g/m ) based on a 3-year average of any other state’s required measures to name and other contact information in annual mean PM2.5 concentrations. At prevent significant deterioration of its the body of your comment and with any that time, EPA also established a 24- m 3 air quality. All other applicable disk or CD–ROM you submit. If EPA hour NAAQS of 65 g/m . See 40 CFR infrastructure elements for these states cannot read your comment due to 50.7. On October 17, 2006 (71 FR are being addressed in separate technical difficulties and cannot contact 61144), EPA retained the 1997 annual m 3 rulemakings. you for clarification, EPA may not be PM2.5 NAAQS at 15.0 g/m based on a able to consider your comment. 3-year average of annual mean PM2.5 DATES: Written comments must be Electronic files should avoid the use of concentrations, and promulgated a new received on or before January 4, 2013. special characters, any form of 24-hour NAAQS of 35 mg/m3 based on ADDRESSES: Submit your comments, encryption, and be free of any defects or a 3-year average of the 98th percentile identified by Docket ID No. EPA–R04– viruses. For additional information of 24-hour concentrations. By statute, OAR–2012–0814, by one of the about EPA’s public docket visit the EPA SIPs meeting the requirements of following methods: Docket Center homepage at http:// sections 110(a)(1) and (2) are to be 1. www.regulations.gov: Follow the www.epa.gov/epahome/dockets.htm. submitted by states within three years on-line instructions for submitting Docket: All documents in the after promulgation of a new or revised comments. electronic docket are listed in the NAAQS. Sections 110(a)(1) and (2) 2. Email: [email protected]. www.regulations.gov index. Although require states to address basic SIP 3. Fax: (404) 562–9019. listed in the index, some information is requirements, including emissions 4. Mail: ‘‘EPA–R04–OAR–2012– not publicly available, i.e., CBI or other inventories, monitoring, and modeling 0814,’’ Regulatory Development Section, information whose disclosure is to assure attainment and maintenance of Air Planning Branch, Air, Pesticides and restricted by statute. Certain other the NAAQS. States were required to Toxics Management Division, U.S. material, such as copyrighted material, submit such SIPs to EPA no later than Environmental Protection Agency, is not placed on the Internet and will be July 2000 for the 1997 annual PM2.5
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NAAQS, and no later than October 2009 for the 1997 PM2.5 NAAQS by October to interstate and international pollution for the 2006 24-hour PM2.5 NAAQS. 3, 2008. abatement. On March 4, 2004, Earthjustice On July 6, 2011, WildEarth Guardians In previous actions, EPA has already submitted a notice of intent to sue and Sierra Club filed an amended taken action to address Kentucky, North related to EPA’s failure to issue findings complaint related to EPA’s failure to Carolina and Tennessee’s SIP of failure to submit related to the take action on the SIP submittal related submissions related to sections ‘‘infrastructure’’ requirements for the to the ‘‘infrastructure’’ requirements for 110(a)(2)(D)(i)(I) and 110(a)(2)(D)(ii) for 1997 annual PM2.5 NAAQS. On March the 2006 24-hour PM2.5 NAAQS. On the 1997 annual and 2006 24-hour PM2.5 10, 2005, EPA entered into a consent October 20, 2011, EPA entered into a NAAQS. Today’s proposed rulemaking decree with Earthjustice which required consent decree with WildEarth relates only to requirements related to EPA, among other things, to complete a Guardians and Sierra Club which prong 3 of section 110(a)(2)(D)(i), which Federal Register notice announcing required EPA, among other things, to as previously described, requires that EPA’s determinations pursuant to complete a Federal Register notice of the SIP contain adequate provisions section 110(k)(1)(B) as to whether each the Agency’s final action either prohibiting emissions that interfere with state had made complete submissions to approving, disapproving, or approving any other state’s required measures to meet the requirements of section in part and disapproving in part the prevent significant deterioration of its 2 110(a)(2) for the 1997 PM2.5 NAAQS by Kentucky, North Carolina and air quality. More information on this October 5, 2008. In accordance with the Tennessee’s 2006 24-hour PM2.5 requirement and EPA’s rationale for consent decree, EPA made completeness NAAQS Infrastructure SIP submittals today’s proposed conditional approvals findings for each state based upon what addressing the applicable requirements for this requirement for purposes of the the Agency received from each state for of sections 110(a)(2)(A)–(H), (J)–(M), 1997 annual and 2006 24-hour PM2.5 the 1997 PM2.5 NAAQS as of October 3, except for section 110(a)(2)(C) NAAQS is provided below. 2008. nonattainment area requirements and III. What is EPA’s analysis of how On October 22, 2008, EPA published section 110(a)(2)(D)(i) visibility region 4 states addressed element a final rulemaking entitled requirements. The rulemaking proposed (D)(i)(II) related to PSD? ‘‘Completeness Findings for Section through today’s action is consistent with 110(a) State Implementation Plans the terms of this consent decree. EPA’s September 25, 2009, Pertaining to the Fine Particulate Matter Today’s action is proposing to memorandum entitled ‘‘Guidance on (PM2.5) NAAQS’’ making a finding that conditionally approve Kentucky, North SIP Elements Required Under Section each state had submitted or failed to Carolina and Tennessee’s infrastructure 110(a)(1) and (2) for the 2006 24-Hour submit a complete SIP that provided the submissions for the 1997 annual and Fine Particle (PM2.5) National Ambient basic program elements of section 2006 24-hour PM2.5 NAAQS addressing Air Quality Standards’’ provided 110(a)(2) necessary to implement the CAA section 110(a)(2)(D)(i)(II), related guidance on addressing the 1997 PM2.5 NAAQS. See 73 FR 62902. to adequate provisions prohibiting infrastructure requirements required For those states that did receive emissions that interfere with any other under sections 110(a)(1) and 110(a)(2) of findings, the findings of failure to state’s required measures to prevent the CAA with respect to the 2006 24- submit for all or a portion of a state’s significant deterioration of its air quality hour PM2.5 NAAQS. The 2009 Guidance implementation plan established a 24- (referred to as ‘‘prong 3’’). EPA is taking describes that a state’s PSD permitting month deadline for EPA to promulgate action on Kentucky, North Carolina and program is the primary measure that a Federal Implementation Plan (FIP) to Tennessee’s infrastructure submissions such state must include in its SIP to address the outstanding SIP elements for the 1997 and 2006 PM2.5 NAAQS for prevent significant deterioration of air unless, prior to that time, the affected sections 110(a)(2)(A)–(F), (H), (J)–(M), quality in accordance with prong of states submitted, and EPA approved, the including other portions of section section 110(a)(2)(D)(i). EPA has required SIPs. 110(a)(2)(D)(i) in separate actions from preliminarily determined that Kentucky, The findings that all or portions of a today’s rulemaking. North Carolina and Tennessee’s prong 3 state’s submission are complete infrastructure submissions, with the established a 12-month deadline for II. What are states required to address under sections 110(a)(2)(D)? exceptions noted below are consistent EPA to take action upon the complete with the 2009 Guidance, when SIP elements in accordance with section Section 110(a)(2)(D) has two considered in conjunction with each 110(k). Kentucky, North Carolina and components, 110(a)(2)(D)(i) and State’s PSD program. Tennessee’s infrastructure submissions 110(a)(2)(D)(ii). Section 110(a)(2)(D)(i) At present, there are four regulations were received by EPA on August 26, has four components that require SIPs to that are required to be adopted into the 2008, April 1, 2008, and December 14, include provisions prohibiting any SIP to meet PSD-related infrastructure 2007, respectively, for the 1997 annual source or other type of emissions requirements. See Sections 110(a)(2)(C), 1 PM2.5 NAAQS and on July 17, 2012, activity in one state from: (1) prong 3 of 110(a)(2)(D)(i), and September 21, 2009, and October 19, Contributing significantly to 110(a)(2)(J) of the CAA. These 2009, respectively, for the 2006 24-hour nonattainment maintenance of the regulations are: (1) ‘‘Final Rule To PM2.5 NAAQS. Kentucky, North NAAQS in another state, and (2) Implement the 8-Hour Ozone National Carolina and Tennessee were among interfering with maintenance of the Ambient Air Quality Standard—Phase other states that did not receive findings NAAQS in another state (collectively 2; Final Rule’’ (November 29, 2005, 70 of failure to submit because they had codified as 110(a)(2)(D)(i)(I)); and from FR 71612) (hereafter referred to as the provided a complete submission to EPA interfering with measures required to (3) ‘‘Phase II Rule’’); (2) ‘‘Implementation of to address the infrastructure elements prevent significant deterioration of air the New Source Review Program for quality in another state, or (4) protect Particulate Matter Less Than 2.5 1 On July 17, 2012, Kentucky withdrew its visibility in another state (collectively Micrometers; Final Rule’’ (May 16, September 8, 2009, 110(a)(1)–(2) infrastructure codified as 110(a)(2)(D)(i)(II)). Section 2008, 73 FR 28321) (hereafter referred to submission addressing the 8-hour ozone, PM2.5 and Lead NAAQS. Kentucky replaced its September 8, 110(a)(2)(D)(ii) requires SIPs to include 2009, 110(a)(1)–(2) infrastructure submission with a provisions insuring compliance with 2 EPA’s action today does not address the other submission provided on July 17, 2012. sections 115 and 126 of the Act, relating requirements of section 110(a)(2)(D)(i).
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as the ‘‘NSR PM2.5 Rule’’); (3) action. Among other changes, this rule that determine which GHG emission ‘‘Prevention of Significant Deterioration revised the PSD regulations to recognize sources become subject to the PSD and Title V Greenhouse Gas Tailoring nitrogen oxide (NOX) as an ozone program of the CAA. See 75 FR 31514. Rule; Final Rule’’ (June 3, 2010, 75 FR precursor. Lastly, the PM PSD Increment-SILs- Second, the NSR PM Rule revised 2.5 31514) (hereafter referred to as the 2.5 the NSR program to establish the SMC Rule (only as it relates to PM2.5 ‘‘GHG Tailoring Rule’’); and, (4) ‘‘Final increments) provided additional Rule on the Prevention of Significant framework for implementing preconstruction permit review for the regulatory requirements under the PSD Deterioration (PSD) for Particulate program regarding the implementation PM2.5 NAAQS in both attainment areas Matter Less Than 2.5 Micrometers of the PM NAAQS for NSR by (PM )—Increments, Significant Impact and nonattainment areas. These PSD 2.5 2.5 specifically establishing PM Levels (SILs) and Significant monitoring requirements included: (1) A provision 2.5 increments pursuant to section 166(a) of Concentration (SMC); Final Rule’’ that NSR permits address directly the CAA to prevent significant (October 20, 2010, 75 FR 64864) emitted PM2.5 and precursor pollutants; (2) a requirement establishing deterioration of air quality in areas (hereafter referred to as the‘‘PM2.5 PSD Increment-SILs-SMC Rule (only as it significant emission rates for direct meeting the NAAQS. relates to PM Increments)’’). Specific PM2.5 and precursor pollutants The PSD requirements promulgated in 2.5 (including sulfur dioxide (SO ) and details on these PSD requirements can 2 the aforementioned regulations establish NO ); (3) exceptions to the be found in the respective final rules X the framework for a comprehensive SIP grandfathering policy for permits being cited above, however, a brief summary PSD program which EPA has reviewed under the PM surrogate of each rule is provided below. 10 program; and, (4) a revision that states determined are necessary to comply First, as part of the framework to account for gases that condense to form with prong 3 of section 110(a)(2)(D)(i). The following table shows when EPA implement the 1997 8-hour ozone particles (condensables) in PM2.5 and approved the incorporation of the NAAQS, EPA promulgated an PM10 emission limits in PSD permits. implementation rule in two phases.3 Third, in the GHG Tailoring Rule, aforementioned regulations in each of The Phase 2 Rule is relevant to today’s EPA tailored the applicability criteria the States’ implementation plans:
PM2.5 PSD Increment- SILs-SMC Rule (only as it State Phase II Rule GHG Tailoring Rule NSR PM2.5 Rule relates to PM2.5 increments)
Kentucky ...... 9/15/20120, 75 FR 55988 12/29/2010, 75 FR 81868 See Below ...... See Below. North Carolina ...... 8/10/2011, 76 FR 36875 10/18/2011, 76 FR 64240 See Below ...... See Below. Tennessee ...... 2/7/2012, 77 FR 6016 2/28/2012, 77 FR 11744 7/30/2012, 77 FR 44481 See Below
Kentucky: On July 3, 2012, the become a disapproval on that date and Rule submission on October 16, 2012 Commonwealth submitted a EPA will issue a finding of disapproval. (77 FR 63234). EPA is relying upon this commitment letter to EPA requesting EPA is not required to propose the earlier commitment to address the NSR conditional approval of outstanding finding of disapproval. If the PM2.5 Rule and the PM2.5 PSD requirements related to the NSR PM2.5 conditional approval is converted to a Increment-SILs-SMC Rule (only as it Rule and PM2.5 PSD Increment-SILs- disapproval, the final disapproval relates to PM2.5 increments) as the basis SMC Rule. In this letter, Kentucky triggers the Federal Implementation for conditionally approving North provided a schedule as to how the Plan requirement under section 110(c). Carolina’s infrastructure SIP as it relates Commonwealth will address However, if the State meets its to prong 3 of section 110(a)(2)(D)(i). If outstanding requirements related to the commitment within the applicable North Carolina fails to submit these NSR PM2.5 Rule and PM2.5 PSD timeframe, the conditionally approved revisions by October 16, 2013, today’s Increment-SILs-SMC Rule. EPA submission will remain a part of the SIP conditional approval will automatically determined that this letter of until EPA takes final action approving become a disapproval on that date and commitment met the requirements of or disapproving the new submittal. EPA will issue a finding of disapproval. section 110(k)(4) of the CAA, and North Carolina: On July 10, 2012, EPA is not required to propose the accordingly, EPA conditionally North Carolina submitted a commitment finding of disapproval. If the approved the Commonwealth’s NSR letter to EPA requesting conditional conditional approval is converted to a PM2.5 Rule and PM2.5 PSD Increment- approval of outstanding requirements disapproval, the final disapproval SILs-SMC Rule submission on October related to the NSR PM2.5 Rule and the triggers the Federal Implementation 3, 2012. See 77 FR 60307. EPA is relying PM2.5 PSD Increment-SILs-SMC Rule. In Plan requirement under section 110(c). upon this earlier commitment to address this letter, North Carolina provided a However, if the State meets its the NSR PM2.5 Rule and the PM2.5 PSD schedule for the State to address commitment within the applicable Increment-SILs-SMC Rule (only as it outstanding requirements related to the timeframe, the conditionally approved relates to PM2.5 increments) as the basis NSR PM2.5 Rule and the PM2.5 PSD submission will remain a part of the SIP for conditionally approving Kentucky’s Increment-SILs-SMC Rule. EPA until EPA takes final action approving infrastructure SIP as it relates to prong determined that this letter of or disapproving the new submittal. 3 of section 110(a)(2)(D)(i). If the commitment met the requirements of Tennessee: On October 4, 2012, Commonwealth fails to submit these section 110(k)(4) of the CAA, and Tennessee submitted a commitment revisions by October 3, 2013, today’s accordingly, EPA conditionally letter to EPA requesting conditional conditional approval will automatically approved North Carolina’s NSR PM2.5 approval of specific enforceable
3 EPA promulgated the Phase I Rule on April 30, Ozone National Ambient Air Quality Standard— 2004 entitled ‘‘Final Rule To Implement the 8-Hour Phase 1.’’ See 69 FR 23951.
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measures related to prong 3 of section significant deterioration of its air quality impose substantial direct costs on tribal 110(a)(2)(D)(i); specifically, the PM2.5 because they are consistent with section governments or preempt tribal law. PSD Increment-SILs-SMC Rule (only as 110 of the CAA. List of Subjects in 40 CFR Part 52 it relates to PM increments). In this 2.5 V. Statutory and Executive Order letter, Tennessee described how the Environmental protection, Air Reviews State has already scheduled a public pollution control, Incorporation by hearing/comment period and anticipates Under the CAA, the Administrator is reference, Intergovernmental relations, providing a final version as soon as required to approve a SIP submission Nitrogen dioxide, Particulate matter, possible after the public hearing to be that complies with the provisions of the Reporting and recordkeeping scheduled on or before December 4, Act and applicable federal regulations. requirements, Volatile organic 2012. Consistent with section 110(k)(4) See 42 U.S.C. 7410(k); 40 CFR 52.02(a). compounds. of the Act, EPA is relying upon this Thus, in reviewing SIP submissions, Authority: 42 U.S.C. 7401 et seq. EPA’s role is to approve state choices, commitment by Tennessee to address Dated: November 21, 2012. the PM PSD Increment-SILs-SMC Rule provided that they meet the criteria of 2.5 A. Stanley Meiburg, (only as it relates to PM2.5 increments) the CAA. Accordingly, this proposed as the basis for conditionally approving action merely approves state law as Acting Regional Administrator, Region 4. Tennessee’s infrastructure SIP as it meeting federal requirements and does [FR Doc. 2012–29370 Filed 12–4–12; 8:45 am] relates to prong 3 of section not impose additional requirements BILLING CODE 6560–50–P 110(a)(2)(D)(i). If Tennessee fails to beyond those imposed by state law. For submit these revisions within one year that reason, this proposed action: from the date of conditional approval, • Is not a ‘‘significant regulatory ENVIRONMENTAL PROTECTION today’s proposed conditional approval action’’ subject to review by the Office AGENCY will automatically become a disapproval of Management and Budget under 40 CFR Parts 60 and 63 on that date and EPA will issue a Executive Order 12866 (58 FR 51735, finding of disapproval. EPA is not October 4, 1993); [EPA–HQ–OAR–2009–0234; EPA–HQ–OAR– required to propose the finding of • Does not impose an information 2011–0044; FRL–9733–2] disapproval. If the conditional approval collection burden under the provisions RIN 2060–AR62 is converted to a disapproval, the final of the Paperwork Reduction Act (44 disapproval triggers the Federal U.S.C. 3501 et seq.); Reconsideration of Certain New Implementation Plan requirement under • Is certified as not having a Source and Startup/Shutdown Issues: section 110(c). However, if the State significant economic impact on a National Emission Standards for meets its commitment within the substantial number of small entities Hazardous Air Pollutants From Coal- applicable timeframe, the conditionally under the Regulatory Flexibility Act (5 and Oil-Fired Electric Utility Steam approved submission will remain a part U.S.C. 601 et seq.); Generating Units and Standards of of the SIP until EPA takes final action • Does not contain any unfunded Performance for Fossil-Fuel-Fired approving or disapproving the new mandate or significantly or uniquely Electric Utility, Industrial-Commercial- submittal. affect small governments, as described Institutional, and Small Industrial- Kentucky, North Carolina and in the Unfunded Mandates Reform Act Commercial-Institutional Steam Tennessee have, or will have pending of 1995 (Pub. L. 104–4); Generating Units the commitments described above, • Does not have Federalism demonstrated that major sources in each implications as specified in Executive Correction state are subject to PSD permitting Order 13132 (64 FR 43255, August 10, Proposed rule document 2012–28729, program to comply with the prong 3 of 1999); appearing on pages 71323–71344 in the section 110(a)(2)(D)(i) of the CAA for the • Is not an economically significant issue of Friday, November 30, 2012, PM2.5 NAAQS. Therefore EPA has made regulatory action based on health or should have appeared in the Proposed the preliminary determination to safety risks subject to Executive Order Rules section of the issue. conditionally approve that Kentucky, 13045 (62 FR 19885, April 23, 1997); [FR Doc. C1–2012–28729 Filed 12–4–12; 8:45 am] • Is not a significant regulatory action North Carolina and Tennessee’s SIP and BILLING CODE 1505–01–D practices are adequate for insuring subject to Executive Order 13211 (66 FR compliance with the applicable PSD 28355, May 22, 2001); requirements relating to interstate • Is not subject to requirements of FEDERAL COMMUNICATIONS transport pollution for the 1997 and Section 12(d) of the National COMMISSION 2006 PM2.5 NAAQS. Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because 47 CFR Part 20 IV. Proposed Action application of those requirements would As described above, EPA is proposing be inconsistent with the CAA; and [WT Docket No. 10–254; DA 12–1898] to conditionally approve the Kentucky, • Does not provide EPA with the North Carolina and Tennessee discretionary authority to address, as Comment Deadline Extended for infrastructure SIP submissions as appropriate, disproportionate human Public Notice Seeking Updated addressing prong 3 of section health or environmental effects, using Information and Comment on Review 110(a)(2)(D)(i) of the CAA for both the practicable and legally permissible of Hearing Aid Compatibility Regulations 1997 and 2006 PM2.5 NAAQS. methods, under Executive Order 12898 Specifically, EPA is proposing to (59 FR 7629, February 16, 1994). AGENCY: Federal Communications conditionally approve the portion of the In addition, this rule does not have Commission. States’ infrastructure SIP section tribal implications as specified by ACTION: Proposed rule; extension of 110(a)(2)(D)(i) submissions as they Executive Order 13175 (65 FR 67249, comment period. relate to provisions prohibiting November 9, 2000), because the SIP is emissions that interfere with any other not approved to apply in Indian SUMMARY: In this document, the state’s required measures to prevent country, and EPA notes that it will not Wireless Telecommunications Bureau
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(Bureau) extends the time within which request information in accessible (although we continue to experience to file comments on the Public Notice formats (computer diskettes, large print, delays in receiving U.S. Postal Service seeking updated information and audio recording, and Braille), send an mail). All filings must be addressed to comment on review of hearing aid email to [email protected] or call the the Commission’s Secretary, Office of compatibility regulations. FCC’s Consumer and Governmental the Secretary, Federal Communications DATES: Comments are due on or before Affairs Bureau at 202–418–0530 (voice) Commission. • January 7, 2013. or 202–418–0432 (TTY). All hand-delivered or messenger- delivered paper filings for the ADDRESSES: You may submit comments, Summary identified by WT Docket No. 10–254, by Commission’s Secretary at 236 1. On November 1, 2012, the Wireless any of the following methods: Massachusetts Avenue NE., Suite 110, • Federal Communications Telecommunications Bureau released a Washington, DC 20002. The filing hours Commission’s Web Site: http:// Public Notice in which it sought at this location are 8:00 a.m. to 7:00 p.m. fjallfoss.fcc.gov/ecfs2/. Follow the updated comment in its ongoing review All hand deliveries must be held instructions for submitting comments. of the wireless hearing aid compatibility together with rubber bands or fasteners. • Mail. rules (WT Docket No. 10–254, DA 12– Any envelopes must be disposed of • People with Disabilities: Contact the 1745). The Public Notice set the before entering the building. • FCC to request reasonable deadline for filing comments at 30 days Commercial overnight mail (other accommodations (accessible format after its publication in the Federal than U.S. Postal Service Express Mail documents, sign language interpreters, Register, which occurred on November and Priority Mail) must be sent to 9300 CART, etc.) by email: [email protected] 26, 2012 (77 FR 70407). Accordingly, East Hampton Drive, Capitol Heights, the deadline for filing comments was set MD 20743. or phone: 202–418–0530 or TTY: 202– • 418–0432. at December 26, 2012. U.S. Postal Service first-class mail, For detailed instructions for 2. On its own motion, the Wireless Express Mail, and Priority Mail should submitting comments and additional Telecommunications Bureau grants an be addressed to 445 12th Street SW., information on the rulemaking process, extension of time within which to file Washington, DC 20554. see the SUPPLEMENTARY INFORMATION comments. The Bureau notes that One copy of each pleading must be section of this document. requests for extensions of time are not delivered electronically, by email or routinely granted. 47 CFR 1.46(a). Given facsimile, or if delivered as paper copy, FOR FURTHER INFORMATION CONTACT: by hand or messenger delivery, by Jennifer Flynn, Spectrum & Competition the proximity of the filing deadline to a commercial overnight courier, or by Policy Division, Wireless federal holiday, as well as the desire to first-class or overnight U.S. Postal Telecommunications Bureau, (202) 418– encourage thoughtful consideration of Service mail (according to the 0612 or by email [email protected]. the important issues raised in this proceeding, the Bureau believes that a procedures set forth above for paper SUPPLEMENTARY INFORMATION: This is a grant of additional time within which to filings), to the Commission’s duplicating summary of the Commission’s Public file comments will help to facilitate contractor, Best Copy and Printing, Inc., Notice in WT Docket No. 10–254, DA careful and deliberate consideration of at [email protected] or (202) 488– 12–1898, released November 27, 2012. these matters. Therefore, the Bureau 5563 (facsimile). The full text of the Public Notice is grants to all parties an extension of the available for public inspection and Federal Communications Commission. comment filing deadline until January 7, Jane E. Jackson, copying during business hours in the 2013. FCC’s Reference Information Center, Associate Chief, Wireless Portals II, 445 12th Street SW., Room Procedural Matters Telecommunications Bureau. CY–A257, Washington, DC 20554. 3. Pursuant to §§ 1.415 and 1.419 of [FR Doc. 2012–29357 Filed 12–4–12; 8:45 am] Copies may be purchased from the the Commission’s rules, 47 CFR 1.415, BILLING CODE 6712–01–P Commission’s duplicating contractor, 1.419, interested parties may file Best Copy and Printing, Inc. (BCPI), 445 comments and reply comments on or FEDERAL COMMUNICATIONS 12th Street SW., Room CY–B402, before the dates indicated on the first COMMISSION Washington, DC 20554, 202–488–5300 page of this document. Comments may or 800–378–3160 (voice), 202–488–5562 be filed using the Commission’s 47 CFR Part 76 (TTY), 202–488–5563 (fax), or you may Electronic Comment Filing System contact BCPI at its Web site: http:// (ECFS). See Electronic Filing of [MB Docket No. 12–68; DA 12–1871] www.BCPIWEB.com. When ordering Documents in Rulemaking Proceedings, Revision of the Commission’s Program documents from BCPI, please provide 63 FR 24121 (1998). Access Rules the appropriate FCC document number, • Electronic Filers: Comments may be for example, DA 12–1745. The filed electronically using the Internet by AGENCY: Federal Communications Comment Deadline Extended for accessing the ECFS: http:// Commission. Updated Information and Comment fjallfoss.fcc.gov/ecfs2/. ACTION: Proposed rule; extension of • Sought on Review of Hearing Aid Paper Filers: Parties who choose to comment and reply comment period. Compatibility Regulations Public Notice file by paper must file an original and is available on the Internet at the four copies of each filing. If more than SUMMARY: The Media Bureau extends Commission’s Web site at http:// one docket or rulemaking number the deadline for filing comments and www.fcc.gov/document/hearing-aid- appears in the caption of this reply comments on the Further Notice compatibility-review-additional- proceeding, filers must submit two of Proposed Rulemaking (‘‘FNPRM’’) in comments-sought and related additional copies for each additional this proceeding which was published in documents are also available by using docket or rulemaking number. the Federal Register on October 31, the search function for WT Docket No. Filings can be sent by hand or 2012. The extension will provide 10–254 on the Commission’s Electronic messenger delivery, by commercial commenters with sufficient time to Comment Filing System (ECFS) Web overnight courier, or by first-class or prepare comments and reply comments page at http://apps.fcc.gov/ecfs/. To overnight U.S. Postal Service mail in response to the FNPRM.
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DATES: The comment and reply of Proposed Rulemaking (‘‘FNPRM’’) on DEPARTMENT OF TRANSPORTATION comment period for the proposed rule revisions to the program access rules. published October 31, 2012 (77 FR The FNPRM set deadlines for filing National Highway Traffic Safety 66052) is extended. Submit comments comments and reply comments at 30 Administration on or before December 14, 2012 and and 45 days, respectively, after reply comments on or before January 14, publication of the FNPRM in the 49 CFR Part 571 2013. Federal Register. A summary of the [Docket No. NHTSA–2012–0175] ADDRESSES: You may submit comments, FNPRM was published in the Federal identified by MB Docket No. 12–68, by Register on October 31, 2012 (77 FR Public Meeting of the U.S.–Canada any of the following methods: 66052). Accordingly, the filing dates Regulatory Cooperation Council (RCC) • Federal Communications were initially established as November Motor Vehicles Working Group Commission’s Web site: http:// 30, 2012 for comments and December AGENCY: National Highway Traffic www.fcc.gov/cgb/ecfs/. Follow the 17, 2012 for reply comments. instructions for submitting comments. Safety Administration (NHTSA), DOT. • Mail: Filings can be sent by hand or 2. On November 14, 2012, the ACTION: Announcement of public messenger delivery, by commercial National Cable & Telecommunications meeting. overnight courier, or by first-class or Association (‘‘NCTA’’) filed a request to SUMMARY: overnight U.S. Postal Service mail extend the comment and reply comment The U.S.–Canada Regulatory (although the Commission continues to deadlines to December 14, 2012 and Cooperation Council (RCC) was created experience delays in receiving U.S. January 14, 2013, respectively. NCTA on February 4, 2011. After private sector Postal Service mail). All filings must be states that Hurricane Sandy has consultations and bilateral negotiations, addressed to the Commission’s disrupted business operations along the the RCC released the Joint Action Plan on Regulatory Cooperation on December Secretary, Office of the Secretary, northeast corridor, thereby hindering 7, 2011. The Joint Action Plan is a Federal Communications Commission. the ability of some of its members to • People with Disabilities: Contact the practical first step to increased gather information and prepare regulatory cooperation between the FCC to request reasonable comments for this proceeding. accommodations (accessible format United States and Canada. In order to Accordingly, NCTA requests a two-week implement the initiatives identified in documents, sign language interpreters, extension of the comment deadline to CART, etc.) by email: [email protected] the Joint Action Plan, bilateral working December 14, 2012. Because an groups led by senior officials from or phone: (202) 418–0530 or TTY: (202) identical two-week extension of the 418–0432. regulatory agencies have developed reply comment deadline would require work plans with concrete objectives, FOR FURTHER INFORMATION CONTACT: For reply comments to be filed during the deliverables and milestones for tangible additional information on this last week of December in the middle of progress within the RCC’s two-year proceeding, contact David Konczal, the holiday season, NCTA requests a mandate. On January 30 and 31, 2012, [email protected], or Kathy four-week extension of the reply the RCC and its bi-national working Berthot, [email protected], of the comment deadline. We grant the groups facilitated stakeholder meetings Media Bureau, Policy Division, (202) requested extension. As set forth in in Washington, DC. This notice 418–2120. Section 1.46 of the Commission’s rules, announces a public meeting of the RCC SUPPLEMENTARY INFORMATION: This is a the Commission’s policy is that Motor Vehicles Working Group. summary of the Order in MB Docket No. extensions of time for filing comments DATES: The public meeting will be held 12–68, DA 12–1871, adopted and in rulemaking proceedings shall not be on January 15, 2013. The meeting will released on November 19, 2012, which routinely granted. In this case, however, start at 9:30 a.m. and continue until 4:30 extends the comment and reply p.m., local time, or until all registered comment deadlines established in the an extension of the comment periods is speakers have been heard. FNPRM published under FCC No. 12– warranted to provide commenters with 123 at 77 FR 66052, October 31, 2012. sufficient time to prepare comments and ADDRESSES: The January 15, 2013 public The full text of this document is reply comments in response to the meeting will be held at the Patrick V. available for public inspection and FNPRM. McNamara Federal Building, 11th Floor, copying during normal business hours 3. Accordingly, it is ordered that, 477 Michigan Ave., Detroit, MI 48226. in the FCC Reference Center, Portals II, pursuant to section 4(i) of the The meeting site is accessible to individuals with disabilities. 445 12th Street SW., Room CY–A257, Communications Act of 1934, as Washington, DC 20554. The complete amended, 47 U.S.C. 154(i), and §§ 0.61, FOR FURTHER INFORMATION CONTACT: If text may also be purchased from the 0.283, and 1.46 of the Commission’s you would like to attend the public Commission’s copy contractor, Best rules, 47 CFR 0.61, 0.283, and 1.46, the meeting, please contact Mr. Christopher Copy and Printing, Inc., 445 12th Street Motion for Extension of Time filed by Morris, NHTSA Office of Rulemaking, by email at [email protected], SW., Room CY–B402, Washington, DC NCTA is granted, and the deadlines to by telephone at (202) 493–2218, or by 20554. The full text may also be file comments and reply comments in fax at (202) 366–5930. Please contact downloaded at: http://www.fcc.gov. this proceeding are extended to Alternative formats are available to Mr. Morris at least ten days before the December 14, 2012 and January 14, persons with disabilities by sending an meeting date of January 15, 2013. Please 2013, respectively. email to [email protected] or by calling provide the following information: the Consumer & Governmental Affairs Federal Communications Commission. Name, affiliation, address, email Bureau at (202) 418–0530 (voice), 202– Steven A. Broeckaert, address, and telephone number. 418–0432 (TTY). Senior Deputy Chief, Policy Division, Media For other questions regarding the RCC Bureau. Motor Vehicles Working Group, you Summary of the Order may contact Mr. Ezana Wondimneh, [FR Doc. 2012–29426 Filed 12–4–12; 8:45 am] 1. On October 5, 2012, the Chief of the NHTSA International Commission released a Further Notice BILLING CODE 6712–01–P Harmonization Division in the U.S., by
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email at [email protected], by presentations. Once we learn how many 2012, should have appeared in the telephone at (202) 366–0846, or by fax people have registered to speak at the Proposed Rules section of the issue. at (202) 366–5930, or Mr. Merz Rustom, meeting, we will allocate an appropriate [FR Doc. C1–2012–28820 Filed 12–4–12; 8:45 am] Director, Motor Vehicle Standards, amount of time to each participant, BILLING CODE 1505–01–D Research and Development at Transport allowing time for necessary breaks. In Canada, by email at addition, we will reserve a block of time [email protected], by telephone at for anyone else in the audience who DEPARTMENT OF COMMERCE (613) 998–2268, or by fax at (613) 990– wishes to give an oral presentation. 2913. We request that you bring three copies National Oceanic and Atmospheric SUPPLEMENTARY INFORMATION: The U.S.– of your statement or other material to Administration Canada Regulatory Cooperation Council the meeting. To accommodate as many was created on February 4, 2011. After speakers as possible, we prefer that 50 CFR Part 679 speakers not use any audio-visual aids private sector consultations and [Docket No. 120918468–2468–01] bilateral negotiations, the RCC released or computer slideshows; however, if the Joint Action Plan on Regulatory you plan to use such aids, you must RIN 0648–XC254 Cooperation on December 7, 2011. For provide those materials in advance of more information on the Joint Action the meeting and notify the contact Fisheries of the Exclusive Economic Plan on Regulatory Cooperation, see person in the FOR FURTHER INFORMATION Zone Off Alaska; Gulf of Alaska; http://www.trade.gov/rcc/rcc- CONTACT section above. Proposed 2013 and 2014 Harvest summary.asp. The Joint Action Plan is NHTSA and Transport Canada will Specifications for Groundfish a practical first step to increased conduct the meeting informally. AGENCY: National Marine Fisheries regulatory cooperation between the Presenters wishing to provide Service (NMFS), National Oceanic and United States and Canada. In order to supplementary information should Atmospheric Administration (NOAA), implement the initiatives identified in submit it to the contact person in the Commerce. the Joint Action Plan, bilateral working FOR FURTHER INFORMATION CONTACT groups led by senior officials from section above. ACTION: Proposed rule; request for comments. regulatory agencies have developed For security purposes, government- work plans with concrete objectives, issued photo identification is required SUMMARY: NMFS proposes 2013 and deliverables and milestones for tangible to enter the Patrick V. McNamara 2014 harvest specifications, progress within the RCC’s two-year Federal Building. Non-U.S. citizens may apportionments, and Pacific halibut mandate. On January 30 and 31, 2012, be required to show passports. To allow prohibited species catch limits for the the RCC and its bi-national working sufficient time to clear security and groundfish fishery of the Gulf of Alaska groups facilitated stakeholder meetings enter the building, NHTSA recommends (GOA). This action is necessary to in Washington, DC. that participants arrive 30 to 60 minutes establish harvest limits for groundfish The January 15, 2013 public meeting prior to the start of the event, and that during the 2013 and 2014 fishing years is being held pursuant to the RCC Motor luggage, laptop computers, and personal and to accomplish the goals and Vehicles Working Group Work Plan. For effects be kept to a minimum. objectives of the Fishery Management more information on the Work Plans, Plan for Groundfish of the Gulf of see http://www.trade.gov/rcc/ Christopher J. Bonanti, Associate Administrator for Rulemaking. Alaska. The intended effect of this documents/Existing-Motor-Vehicle- action is to conserve and manage the [FR Doc. 2012–29369 Filed 12–4–12; 8:45 am] Safety-Standards.pdf, or http:// groundfish resources in the GOA in www.trade.gov/rcc/ for future Work BILLING CODE 4910–59–P accordance with the Magnuson-Stevens Plans. Fishery Conservation and Management Public Meeting Procedures. The Act. public meeting provides a forum for the public to speak about topics within the DEPARTMENT OF COMMERCE DATES: Comments must be received by mandate of the RCC Motor Vehicles January 4, 2013. National Oceanic and Atmospheric Working Group. In order to comply with ADDRESSES: You may submit comments the occupancy limits of the meeting Administration on this document, identified by NOAA– space, attendance is limited to 100 NMFS–2012–0180, by any one of the persons, and pre-registration is required. 50 CFR Part 648 following methods: For space reasons, it is asked that you • Electronic Submissions: Submit all consider limiting your company’s or [Docket No. 120813331–2562–01] electronic public comments via the association’s delegation to 3–5 persons. Federal e-Rulemaking Portal at If you would like to attend the public RIN 0648–XC164 www.regulations.gov. To submit meeting as a speaker or as an observer, comments via the e-Rulemaking Portal, please contact the person identified Magnuson-Stevens Act Provisions; first click the ‘‘submit a comment’’ icon, under FOR FURTHER INFORMATION Fisheries of the Northeastern United then enter NOAA–NMFS–2012–0180 in CONTACT at least ten days before the States; Northeast Multispecies the keyword search. Locate the hearing. Depending on the available Fishery; Proposed Rule To Implement document you wish to comment on space, registration for persons attending a Targeted Acadian Redfish Fishery for from the resulting list and click on the the public hearing as observers may be Sector Vessels; Reopening of ‘‘Submit a Comment’’ icon on that line. accepted after that date. Comment Period • Mail: Address written comments to For planning purposes, each speaker Glenn Merrill, Assistant Regional Correction should anticipate speaking for Administrator, Sustainable Fisheries approximately ten minutes, although we Proposed rule document 2012–28820, Division, Alaska Region NMFS, Attn: may need to shorten that time if a large appearing on pages 70939–70940 in the Ellen Sebastian. Mail comments to: P.O. number of people wish to make issue of Wednesday, November 28, Box 21668, Juneau, AK 99802–1668.
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• Fax: Address written comments to Alaska (FMP). The Council prepared the be 7 percent, which would be Glenn Merrill, Assistant Regional FMP under the authority of the implemented in one step in year 1. The Administrator, Sustainable Fisheries Magnuson-Stevens Fishery Council used 1,973 mt as the baseline Division, Alaska Region NMFS, Attn: Conservation and Management Act for the proposed trawl halibut PSC limit Ellen Sebastian. Fax comments to: (907) (Magnuson-Stevens Act), 16 U.S.C. reductions. This is based on a deduction 586–7557. 1801, et seq. Regulations governing U.S. of 27 mt from the 2,000 mt trawl halibut • Hand delivery to the Federal fisheries and implementing the FMP PSC limit, per halibut PSC limit Building: Address written comments to appear at 50 CFR parts 600, 679, and reductions made in conjunction with Glenn Merrill, Assistant Regional 680. the implementation of the Central Gulf Administrator, Sustainable Fisheries The FMP and its implementing of Alaska Rockfish Program in 2011 (76 Division, Alaska Region NMFS, Attn: regulations require NMFS, after FR 81248, December 27, 2011). The Ellen Sebastian. Deliver comments to consultation with the Council, to Council recommended that the first year 709 West 9th Street, Room 420A, specify the total allowable catch (TAC) of implementation would occur in 2014 Juneau, AK. limits for each target species, the sum of and that all reductions would occur by Instructions: Comments must be which must be within the optimum 2016. submitted by one of the above methods yield (OY) range of 116,000 to 800,000 Amendment 95 would result in a new to ensure that the comments are metric tons (mt). Section 679.20(c)(1) trawl sector halibut PSC limit of 1,848 received, documented, and considered further requires NMFS to publish and mt (in 2014), 1,759 mt (in 2015), and by NMFS. Comments sent by any other solicit public comment on proposed 1,705 mt (in 2016 and later years). The method, to any other address or annual TACs, halibut prohibited species hook-and-line sector halibut PSC limits individual, or received after the end of catch (PSC) limits, and seasonal may vary annually, as these limits are the comment period, may not be allowances of pollock and Pacific cod. based on how the Pacific cod TAC is considered. All comments received are The proposed harvest specifications in annually apportioned between the a part of the public record and will Tables 1 through 20 of this document Central and Western regulatory areas of generally be posted for public viewing satisfy these requirements. For 2013 and the GOA. Based on 2012 Pacific cod on www.regulations.gov without change. 2014, the sum of the proposed TAC TACs in the Western and Central GOA All personal identifying information amounts is 447,752 mt. the hook-and-line C/P sector would (e.g., name, address) submitted Under § 679.20(c)(3), NMFS will receive a 109 mt halibut PSC limit. The voluntarily by the sender will be publish the final 2013 and 2014 harvest hook-and-line CV sector PSC limit publicly accessible. specifications after (1) considering would be 161 mt (in 2014), 152 mt (in Do not submit confidential business comments received within the comment 2015), and 147 mt (in 2016 and later information, or otherwise sensitive or period (see DATES), (2) consulting with years). protected information. NMFS will the Council at its December 2012 accept anonymous comments (enter meeting, and (3) considering Proposed Acceptable Biological Catch ‘‘N/A’’ in the required fields if you wish information presented in the Final EIS (ABC) and TAC Specifications to remain anonymous). Attachments to (see ADDRESSES) and the final 2012 In October 2012, the Council, its electronic comments will be accepted in SAFE report prepared for the 2013 and Scientific and Statistical Committee Microsoft Word or Excel, WordPerfect, 2014 groundfish fisheries. (SSC), and its Advisory Panel (AP) or Adobe PDF file formats only. Other Actions Potentially Affecting the reviewed the most recent biological and Electronic copies of the Alaska 2013 and 2014 Harvest Specifications harvest information about the condition Groundfish Harvest Specifications Final of groundfish stocks in the GOA. This Environmental Impact Statement (Final Halibut Prohibited Species Catch Limits information was compiled by the GOA EIS), Supplementary Information Report Revisions Groundfish Plan Team and presented in (SIR) to the EIS, and the Initial At its June 2012 meeting, the Council the final 2011 SAFE report for the GOA Regulatory Flexibility Analysis (IRFA) took final action to reduce halibut PSC groundfish fisheries, dated November prepared for this action may be obtained limits in the GOA trawl and hook-and- 2011 (see ADDRESSES). The amounts from http://www.regulations.gov or from line groundfish fisheries. The Council’s proposed for the 2013 and 2014 ABCs the Alaska Region Web site at http:// preferred alternative for Amendment 95 are based on the 2011 SAFE report, as alaskafisheries.noaa.gov. The final 2011 to the GOA FMP would change the discussed below. The AP and Council Stock Assessment and Fishery process for setting halibut PSC limits. recommended that the proposed 2013 Evaluation (SAFE) report for the Halibut PSC limits would be established and 2014 TACs be set equal to proposed groundfish resources of the GOA, dated in Federal regulations and would ABCs for all species and species groups, November 2011, is available from the remain in effect until changed by a with the exception of the species North Pacific Fishery Management subsequent Council action to amend categories further discussed below. The Council (Council) at 605 West 4th those regulations. proposed ABCs and TACs could be Avenue, Suite 306, Anchorage, AK If approved by the Secretary of changed in the final harvest 99501, phone 907–271–2809, or from Commerce, Amendment 95 would specifications depending on the most the Council’s Web site at http:// reduce the GOA halibut PSC limit for recent scientific information contained alaskafisheries.noaa.gov/npfmc. The the groundfish trawl gear sector and in the final 2012 SAFE report. The draft 2012 SAFE report for the GOA is groundfish catcher vessel (CV) hook- SAFE report contains a review of the available from the same source. and-line gear sector by 15 percent. The latest scientific analyses and estimates FOR FURTHER INFORMATION CONTACT: Council’s proposed reduction would be of each species’ biomass and other Obren Davis, 907–586–7228. phased in over 3 years: 7 percent in year biological parameters, as well as SUPPLEMENTARY INFORMATION: NMFS 1, 5 percent in year 2 (to 12 percent), summaries of the available information manages the GOA groundfish fisheries and 3 percent in year 3 (for a total of 15 on the GOA ecosystem and the in the exclusive economic zone (EEZ) of percent). The Council’s proposed economic condition of the groundfish the GOA under the Fishery Management reduction for the catcher/processor fisheries off Alaska. From these data and Plan for Groundfish of the Gulf of (C/P) hook-and-line gear sector would analyses, the Plan Team estimates an
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OFL and ABC for each species or are relatively stable: shallow-water since its inception in 1995. Genetic species group. flatfish, deep-water flatfish, rex sole, studies revealed that the pollock in PWS In November 2012, the Plan Team arrowtooth flounder, flathead sole, was not a separate stock from the updated the 2011 SAFE report to Pacific ocean perch, shortraker rockfish, combined W/C/WYK population. include new information collected rougheye rockfish, rougheye rockfish, Accordingly, the Council recommended during 2012, such as NMFS stock demersal shelf rockfish, thornyhead decreasing the W/C/WYK pollock ABC surveys, revised stock assessments, and rockfish, Atka mackerel, big skate, to account for the State’s PWS GHL. For catch data. The Plan Team compiled longnose skates, other skates, squids, 2013 and 2014, the PWS GHL for this information and produced the draft sharks, and sculpins. pollock is 2,770 mt, per the 2012 SAFE report for presentation at the The proposed ABCs and TACs are recommendation of State of Alaska December 2012 Council meeting. At that based on the best available biological fisheries managers. meeting, the Council will consider and socioeconomic information, The apportionment of annual pollock information in the draft 2012 SAFE including projected biomass trends, TAC among the Western and Central report, recommendations from the information on assumed distribution of Regulatory Areas of the GOA reflects the November 2012 Plan Team meeting and stock biomass, and revised methods seasonal biomass distribution and is December 2012 SSC and AP meetings, used to calculate stock biomass. The discussed in greater detail below. The public testimony, and relevant written FMP specifies the formulas, or tiers, to annual pollock TAC in the Western and public comments in making its be used to compute ABCs and OFLs. Central Regulatory Areas of the GOA is recommendations for the final 2013 and The formulas applicable to a particular apportioned among Statistical Areas 2014 harvest specifications. Pursuant to stock or stock complex are determined 610, 620, and 630, and divided equally section 3.2.3.4.1 of the FMP, the Council by the level of reliable information among each of the following four could recommend adjusting the TACs if available to the fisheries scientists. This seasons: the A season (January 20 ‘‘warranted on the basis of bycatch information is categorized into a through March 10), the B season (March considerations, management successive series of six tiers to define 10 through May 31), the C season uncertainty, or socioeconomic OFL and ABC amounts, with tier one (August 25 through October 1), and the considerations, or if required in order to representing the highest level of D season (October 1 through November cause the sum of the TACs to fall within information quality available and tier 1) (§ 679.23(d)(2)(i) through (iv), and the OY range.’’ six representing the lowest level of § 679.20(a)(5)(iv)(A) and (B)). Table 2 In previous years, the largest changes information quality available. lists these amounts. from the proposed to the final harvest The SSC adopted the proposed 2013 The AP, SSC, and Council specifications have been for OFLs and and 2014 OFLs and ABCs recommended recommended apportionment of the ABCs based on the most recent NMFS by the Plan Team for all groundfish ABC for Pacific cod in the GOA among stock surveys, which provide updated species. The Council adopted the SSC’s regulatory areas based on the three most estimates of stock biomass and spatial OFL and ABC recommendations and the recent NMFS summer trawl surveys. distribution, and changes to the models AP’s TAC recommendations. These The proposed 2013 and 2014 Pacific cod used for making stock assessments. amounts are unchanged from the final TACs are affected by the State’s GHL NMFS scientists presented updated and 2013 harvest specifications published in fishery for Pacific cod in State waters in new survey results, changes to the Federal Register on March 14, 2012 the Western and Central Regulatory assessment models, and accompanying (77 FR 15194). Areas, as well as in PWS. The Plan stock estimates at the September 2012 Team, SSC, AP, and Council Specification and Apportionment of Plan Team meeting, and the SSC recommended that the sum of all State TAC Amounts reviewed this information at the October and Federal water Pacific cod removals 2012 Council meeting. The species with The Council recommended proposed from the GOA not exceed ABC possible model changes are Pacific cod, 2013 and 2014 TACs that are equal to recommendations. Accordingly, the rex sole, dover sole, rock sole, sharks, proposed ABCs for all species and Council recommended reducing the and octopus. In November 2012, the species groups, with the exception of proposed 2013 and 2014 Pacific cod Plan Team considered updated stock Pacific cod, shallow-water flatfish, TACs from the proposed ABCs for the assessments for groundfish, which were arrowtooth flounder, flathead sole, other Eastern, Central, and Western included in the draft 2012 SAFE report. rockfish, and Atka mackerel. The Pacific Regulatory Areas to account for State If the draft 2012 SAFE report cod TACs are set to accommodate the GHLs. Therefore, the proposed 2013 and indicates that the stock biomass trend is State of Alaska’s (State) guideline 2014 Pacific cod TACs are less than the increasing for a species, then the final harvest levels (GHL) for Pacific cod so proposed ABCs by the following 2013 and 2014 harvest specifications for that the ABCs are not exceeded. The amounts: (1) Eastern GOA, 683 mt; (2) that species may reflect an increase from flathead sole, shallow-water flatfish, and Central GOA, 14,788 mt; and (3) the proposed harvest specifications. The arrowtooth flounder TACs are set to Western GOA, 7,280 mt. These amounts draft 2012 SAFE reports indicate that conserve the halibut PSC limit for use reflect the sum of the State’s 2013 and the biomass trend for octopuses may be in other fisheries. The other rockfish 2014 GHLs in these areas, which are 25 increasing. Conversely, if the draft 2012 TAC is set to reduce the potential percent of the Eastern, Central, and SAFE report indicates that the stock amount of discards in the Southeast Western GOA proposed ABCs. These are biomass trend is decreasing for a Outside (SEO) District. The Atka the same percentage amounts used to species, then the final 2013 and 2014 mackerel TAC is set to accommodate apportion the Pacific cod ABCs to State harvest specifications may reflect a incidental catch amounts of this species waters GHLs that were used in 2012. decrease from the proposed harvest in other directed fisheries. NMFS also is proposing seasonal specifications. The draft 2012 SAFE The ABC for the pollock stock in the apportionments of the annual Pacific reports indicate that the biomass trend combined Western, Central, and West cod TACs in the Western and Central for pollock, Pacific cod, sablefish, Yakutat Regulatory Areas (W/C/WYK) Regulatory Areas. Sixty percent of the northern rockfish, other rockfish, and has been adjusted to reflect the GHL annual TAC is apportioned to the A dusky rockfish may be decreasing. The established by the State for the Prince season for hook-and-line, pot, or jig gear biomass trends for the following species William Sound (PWS) pollock fishery from January 1 through June 10, and for
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trawl gear from January 20 through June proposed 2013 and 2014 TACs are assessed groundfish is 612,506 mt, 10. Forty percent of the annual TAC is higher than the final 2012 TACs which is higher than the final 2012 ABC apportioned to the B season for jig gear currently specified for the GOA total of 606,048 mt (77 FR 15194, March from June 10 through December 31, for groundfish fisheries (77 FR 15194, 14, 2012). hook-and-line or pot gear from March 14, 2012). The proposed 2013 Table 1 lists the proposed 2013 and September 1 through December 31, and and 2014 TACs for pollock, Pacific cod, 2014 OFLs, ABCs, TACs, and area for trawl gear from September 1 through flathead sole, and rougheye rockfish are November 1 (§§ 679.23(d)(3) and higher than the final 2012 TACs for apportionments of groundfish in the 679.20(a)(12)). these species. The proposed 2013 and GOA. These amounts are consistent The Council’s recommendation for 2014 TACs for sablefish, shallow-water with the biological condition of sablefish area apportionments also takes flatfish, rex sole, Pacific ocean perch, groundfish stocks as described in the into account the prohibition on the use northern rockfish, and pelagic shelf 2011 SAFE report, and adjusted for of trawl gear in the SEO District of the rockfish are lower than the final 2012 other biological and socioeconomic Eastern Regulatory Area and makes TACs for these species. The proposed considerations, including maintaining available five percent of the combined 2013 and 2014 TACs are equal to the the total TAC within the required OY Eastern Regulatory Area TACs to trawl final 2012 TACs for the remaining range. These proposed amounts and gear for use as incidental catch in other species. apportionments by area, season, and directed groundfish fisheries in the For 2013 and 2014, the Council sector are subject to change pending WYK District (§ 679.20(a)(4)(i)). Tables 4 recommended and NMFS proposes the consideration of the draft 2012 SAFE and 5 list these amounts. OFLs, ABCs and TACs listed in Table 1. report and the Council’s The sum of the proposed TACs for all The proposed ABCs reflect harvest recommendations for the final 2013 and GOA groundfish is 447,752 mt for 2013 amounts that are less than the specified 2014 harvest specifications during its and 2014, which is within the OY range overfishing levels. The sum of the December 2012 meeting. specified by the FMP. The sums of the proposed 2013 and 2014 ABCs for all
TABLE 1—PROPOSED 2013 AND 2014 ABCS, TACS, AND OFLSOFGROUNDFISH FOR THE WESTERN/CENTRAL/WEST YAKUTAT (W/C/WYK), WESTERN (W), CENTRAL (C), EASTERN (E) REGULATORY AREAS, AND IN THE WEST YAKUTAT (WYK), SOUTHEAST OUTSIDE (SEO), AND GULFWIDE (GW) DISTRICTS OF THE GULF OF ALASKA [Values are rounded to the nearest metric ton]
Species Area 1 OFL ABC TAC
Pollock 2 ...... Shumagin (610) ...... n/a 32,816 32,816 Chirikof (620) ...... n/a 49,662 49,662 Kodiak (630) ...... n/a 28,565 28,565 WYK (640) ...... n/a 3,517 3,517 W/C/WYK (subtotal) ...... 155,402 114,560 114,560 SEO (650) ...... 14,366 10,774 10,774 Total ...... 169,768 125,334 125,334
Pacific cod 3 ...... W ...... n/a 29,120 21,840 C ...... n/a 59,150 44,363 E ...... n/a 2,730 2,047 Total ...... 108,000 91,000 68,250
Sablefish 4 ...... W ...... n/a 1,757 1,757 C ...... n/a 5,686 5,686 WYK ...... n/a 2,219 2,219 SEO ...... n/a 3,132 3,132 E (WYK and SEO) (subtotal) ...... n/a 5,351 5,351 Total ...... 15,129 12,794 12,794
Shallow-water flatfish 6 ...... W ...... n/a 20,171 13,250 C ...... n/a 21,012 18,000 WYK ...... n/a 3,950 3,950 SEO ...... n/a 1,350 1,350 Total ...... 56,781 46,483 36,550
Deep-water flatfish 5 ...... W ...... n/a 176 176 C ...... n/a 2,308 2,308 WYK ...... n/a 1,581 1,581 SEO ...... n/a 1,061 1,061 Total ...... 6,834 5,126 5,126
Rex sole ...... W ...... n/a 1,283 1,283 C ...... n/a 6,291 6,291 WYK ...... n/a 821 821 SEO ...... n/a 1,037 1,037 Total ...... 12,326 9,432 9,432
Arrowtooth flounder ...... W ...... n/a 27,386 14,500 C ...... n/a 142,591 75,000 WYK ...... n/a 21,074 6,900
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TABLE 1—PROPOSED 2013 AND 2014 ABCS, TACS, AND OFLSOFGROUNDFISH FOR THE WESTERN/CENTRAL/WEST YAKUTAT (W/C/WYK), WESTERN (W), CENTRAL (C), EASTERN (E) REGULATORY AREAS, AND IN THE WEST YAKUTAT (WYK), SOUTHEAST OUTSIDE (SEO), AND GULFWIDE (GW) DISTRICTS OF THE GULF OF ALASKA—Continued [Values are rounded to the nearest metric ton]
Species Area 1 OFL ABC TAC
SEO ...... n/a 20,982 6,900 Total ...... 249,066 212,033 103,300
Flathead sole ...... W ...... n/a 15,518 8,650 C ...... n/a 26,205 15,400 WYK ...... n/a 4,623 4,623 SEO ...... n/a 1,735 1,735 Total ...... 60,219 48,081 30,408
Pacific ocean perch 7 ...... W ...... 2,364 2,050 2,050 C ...... 12,662 10,985 10,985 WYK ...... n/a 1,650 1,650 SEO ...... n/a 1,815 1,815 E (WYK and SEO) (subtotal) ...... 3,995 n/a n/a Total ...... 19,021 16,500 16,500
Northern rockfish 89 ...... W ...... n/a 2,017 2,017 C ...... n/a 3,136 3,136 E ...... n/a n/a n/a Total ...... 6,152 5,153 5,153
Shortraker rockfish 11 ...... W ...... n/a 104 104 C ...... n/a 452 452 E ...... n/a 525 525 Total ...... 1,441 1,081 1,081
Other rockfish 912 ...... W ...... n/a 44 44 C ...... n/a 606 606 WYK ...... n/a 230 230 SEO ...... n/a 3,165 200 Total ...... 5,305 4,045 1,080
Pelagic shelf rockfish 13 ...... W ...... n/a 381 381 C ...... n/a 3,581 3,581 WYK ...... n/a 504 504 SEO ...... n/a 296 296 Total ...... 5,822 4,762 4,762
Rougheye rockfish 10 ...... W ...... n/a 82 82 C ...... n/a 861 861 E ...... n/a 297 297 Total ...... 1,492 1,240 1,240
Demersal shelf rockfish 14 ...... SEO ...... 467 293 293
Thornyhead rockfish ...... W ...... n/a 150 150 C ...... n/a 766 766 E ...... n/a 749 749 Total ...... 2,220 1,665 1,665
Atka mackerel ...... GW ...... 6,200 4,700 2,000 Big skates 15 ...... W ...... n/a 469 469 C ...... n/a 1,793 1,793 E ...... n/a 1,505 1,505 Total ...... 5,023 3,767 3,767
Longnose skates 16 ...... W ...... n/a 70 70 C ...... n/a 1,879 1,879 E ...... n/a 676 676 Total ...... 3,500 2,625 2,625
Other skates 17 ...... GW ...... 2,706 2,030 2,030 Squids ...... GW ...... 1,530 1,148 1,148 Sharks ...... GW ...... 8,037 6,028 6,028 Octopus ...... GW ...... 1,941 1,455 1,455 Sculpins ...... GW ...... 7,641 5,731 5,731
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TABLE 1—PROPOSED 2013 AND 2014 ABCS, TACS, AND OFLSOFGROUNDFISH FOR THE WESTERN/CENTRAL/WEST YAKUTAT (W/C/WYK), WESTERN (W), CENTRAL (C), EASTERN (E) REGULATORY AREAS, AND IN THE WEST YAKUTAT (WYK), SOUTHEAST OUTSIDE (SEO), AND GULFWIDE (GW) DISTRICTS OF THE GULF OF ALASKA—Continued [Values are rounded to the nearest metric ton]
Species Area 1 OFL ABC TAC
Total ...... 756,621 612,506 447,752 1 Regulatory areas and districts are defined at § 679.2. (W=Western Gulf of Alaska; C=Central Gulf of Alaska; E=Eastern Gulf of Alaska; WYK=West Yakutat District; SEO=Southeast Outside District; GW=Gulf-wide). 2 Pollock is apportioned in the Western/Central Regulatory Areas among three statistical areas. Table 2 lists the proposed 2013 and 2014 sea- sonal apportionments. In the West Yakutat and Southeast Outside Districts of the Eastern Regulatory Area, pollock is not divided into seasonal allowances. 3 Section 679.20(a)(12)(i) requires the allocation of the Pacific cod TACs in the Western and Central Regulatory Areas of the GOA among gear and operational sectors. The annual Pacific cod TAC is apportioned among various sectors 60 percent to the A season and 40 percent to the B season in the Western and Central Regulatory Areas of the GOA. In the Eastern Regulatory Area of the GOA, Pacific cod is allocated 90 percent for processing by the inshore component and 10 percent for processing by the offshore component. Table 3 lists the proposed 2013 and 2014 Pacific cod seasonal apportionments. 4 Sablefish is allocated to hook-and-line and trawl gear in 2013 and trawl gear in 2014. Tables 4 and 5 list the proposed 2013 and 2014 alloca- tions of sablefish TACs. 5 ‘‘Deep-water flatfish’’ means Dover sole, Greenland turbot, Kamchatka flounder, and deep-sea sole. 6 ‘‘Shallow-water flatfish’’ means flatfish not including ‘‘deep-water flatfish,’’ flathead sole, rex sole, or arrowtooth flounder. 7 ‘‘Pacific ocean perch’’ means Sebastes alutus. 8 ‘‘Northern rockfish’’ means Sebastes polyspinous. For management purposes the 3 mt apportionment of ABC to the WYK District of the East- ern Gulf of Alaska has been included in the slope rockfish species group. 9 ‘‘Other rockfish’’ means Sebastes aurora (aurora), S. melanostomus (blackgill), S. paucispinis (bocaccio), S. goodei (chilipepper), S. crameri (darkblotch), S. elongatus (greenstriped), S. variegatus (harlequin), S. wilsoni (pygmy), S. babcocki (redbanded), S. proriger (redstripe), S. zacentrus (sharpchin), S. jordani (shortbelly), S. brevispinis (silvergray), S. diploproa (splitnose), S. saxicola (stripetail), S. miniatus (vermilion), S. reedi (yellowmouth), S. entomelas (widow), and S. flavidus (yellowtail). In the Eastern GOA only, other rockfish also includes northern rockfish, S. polyspinous. 10 ‘‘Rougheye rockfish’’ means Sebastes aleutianus (rougheye) and Sebastes melanostictus (blackspotted). 11 ‘‘Shortraker rockfish’’ means Sebastes borealis. 12 ‘‘Other rockfish’’ in the Western and Central Regulatory Areas and in the West Yakutat District means slope rockfish and demersal shelf rockfish. The ‘‘other rockfish’’ species group in the SEO District means slope rockfish. 13 ‘‘Pelagic shelf rockfish’’ means Sebastes variabilis (dusky). 14 ‘‘Demersal shelf rockfish’’ means Sebastes pinniger (canary), S. nebulosus (china), S. caurinus (copper), S. maliger (quillback), S. helvomaculatus (rosethorn), S. nigrocinctus (tiger), and S. ruberrimus (yelloweye). 15 ‘‘Big skate’’ means Raja binoculata. 16 ‘‘Longnose skate’’ means Raja rhina. 17 ‘‘Other skates’’ means Bathyraja spp.
Proposed Apportionment of Reserves § 679.20(a)(5)(iv)(B), the annual pollock reflect the migration patterns, Section 679.20(b)(2) requires NMFS to TAC specified for the Western and distribution of pollock, and the set aside 20 percent of each TAC for Central Regulatory Areas of the GOA is performance of the fishery in the area pollock, Pacific cod, flatfish, skates, apportioned into four equal seasonal during the A season for 2013 and 2014. sharks, squids, sculpins, and octopuses allowances of 25 percent. As established During the A season, the apportionment in reserves for possible apportionment by § 679.23(d)(2)(i) through (iv), the A, is based on an adjusted estimate of the at a later date during the fishing year. In B, C, and D season allowances are relative distribution of pollock biomass 2012, NMFS apportioned all of the available from January 20 through of approximately 23 percent, 55 percent, reserves in the final harvest March 10, March 10 through May 31, and 23 percent in Statistical Areas 610, specifications. For 2013 and 2014, August 25 through October 1, and 620, and 630, respectively. During the B NMFS proposes reapportionment of all October 1 through November 1, season, the apportionment is based on the reserves for pollock, Pacific cod, respectively. the relative distribution of pollock flatfish, skates, sharks, squids, sculpins, Pollock TACs in the Western and biomass of approximately 23 percent, 67 Central Regulatory Areas of the GOA are and octopuses in anticipation of the percent, and 10 percent in Statistical apportioned among Statistical Areas projected annual catch of these species. Areas 610, 620, and 630, respectively. 610, 620, and 630, pursuant to Table 1 reflects the apportionment of During the C and D seasons, the reserve amounts for these species and § 679.20(a)(5)(iv)(A). In the A and B seasons, the apportionments are in apportionment is based on the relative species groups. Each proposed TAC for distribution of pollock biomass of the above mentioned species categories proportion to the distribution of pollock approximately 36 percent, 28 percent, contains the full TAC recommended by biomass based on the four most recent and 35 percent in Statistical Areas 610, the Council, since no reserve was NMFS winter surveys. In the C and D 620, and 630, respectively. created from the relevant species and seasons, the apportionments are in species groups. proportion to the distribution of pollock Within any fishing year, the amount biomass based on the four most recent by which a seasonal allowance is Proposed Apportionments of Pollock NMFS summer surveys. For 2013 and underharvested or overharvested may be TAC Among Seasons and Regulatory 2014, the Council recommends, and added to, or subtracted from, Areas, and Allocations for Processing NMFS proposes, averaging the winter subsequent seasonal allowances in a by Inshore and Offshore Components and summer distribution of pollock in manner to be determined by the In the GOA, pollock is apportioned by the Central Regulatory Area for the A Regional Administrator season and area, and is further allocated season and instead of using the (§ 679.20(a)(5)(iv)(B)). The rollover between inshore and offshore distribution based on only the winter processing components. Pursuant to surveys. The average is intended to
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amount is limited to 20 percent of the TAC in all regulatory areas and all other than pollock, up to the maximum unharvested seasonal apportionment for seasonal allowances to vessels catching retainable amounts allowed under the statistical area. Any unharvested pollock for processing by the inshore § 679.20(e) and (f). At this time, these pollock above the 20 percent limit could component after subtraction of pollock incidental catch amounts of pollock are be further distributed to the other amounts that are projected by the unknown and will be determined statistical areas, in proportion to the Regional Administrator to be caught during the fishing year as NMFS estimated biomass in the subsequent incidentally by, or delivered to, the monitors the fishing activities in the season in those statistical areas offshore component engaged in directed offshore component. (§ 679.20(a)(5)(iv)(B)). The proposed fishing for other groundfish species. Table 2 lists the proposed 2013 and 2013 and 2014 pollock TACs in the Thus, the amount of pollock available 2014 seasonal biomass distribution of WYK District of 3,517 mt and SEO for harvest by vessels harvesting pollock pollock in the Western and Central District of 10,774 mt are not allocated by for processing by the offshore Regulatory Areas, area apportionments, season. component is that amount that will be and seasonal allowances. The amounts Section 679.20(a)(6)(i) requires the taken as incidental catch during of pollock for processing by the inshore allocation of 100 percent of the pollock directed fishing for groundfish species and offshore components are not shown.
TABLE 2—PROPOSED 2013 AND 2014 DISTRIBUTION OF POLLOCK IN THE CENTRAL AND WESTERN REGULATORY AREAS OF THE GULF OF ALASKA; SEASONAL BIOMASS DISTRIBUTION, AREA APPORTIONMENTS, AND SEASONAL ALLOWANCES OF ANNUAL TAC 1 [Values are rounded to the nearest metric ton]
Season 2 Shumagin (Area 610) Chirikof (Area 620) Kodiak (Area 630) Total
A (Jan 20–Mar 10) ...... 6,285 (22.64%) 15,202 (54.76%) 6,274 (21.15%) 27,761 B (Mar 10–May 31) ...... 6,285 (22.64%) 18,668 (67.25%) 2,806 (10.11%) 27,760 C (Aug 25–Oct 1) ...... 10,123 (36.47%) 7,896 (28.44%) 9,743 (32.19%) 27,761 D (Oct 1–Nov 1) ...... 10,123 (36.47%) 7,896 (28.44%) 9,743 (32.19%) 27,761
Annual Total 3 ...... 34,816 ...... 49,662 ...... 28,565 ...... 111,043 1 Area apportionments and seasonal allowances may not total precisely due to rounding. 2 As established by § 679.23(d)(2)(i) through (iv), the A, B, C, and D season allowances are available from January 20 to March 10, March 10 to May 31, August 25 to October 1, and October 1 to November 1, respectively. The amounts of pollock for processing by the inshore and off- shore components are not shown in this table. 3 The WYK and SEO District pollock TACs are not allocated by season and are not included in the total pollock TACs shown in this table.
Proposed Annual and Seasonal annual TAC to the A season and 40 percent of the annual Pacific cod TAC Apportionments of Pacific Cod percent of the annual TAC to the B in the Western GOA. This includes a season. base allocation of 1.5 percent and an Section 679.20(a)(12)(i) requires the allocation among gear and operational Under § 679.20(a)(12)(ii), any overage additional 1.0 percent because this sectors of the Pacific cod TACs in the or underage of the Pacific cod allowance sector harvested greater than 90 percent Western and Central Regulatory Areas of from the A season will be subtracted of its initial 2012 allocation in the the GOA. Section 679.20(a)(6)(ii) from, or added to, the subsequent B Western GOA. NMFS also proposes that requires the allocation between the season allowance. In addition, any the jig sector would receive 2.0 percent inshore and offshore components of the portion of the hook-and-line, trawl, pot, of the annual Pacific cod TAC in the Pacific cod TACs in the Eastern or jig sector allocations that are Central GOA. This also is because this Regulatory Area of the GOA. NMFS determined by NMFS as likely to go sector harvested greater than 90 percent allocates the proposed 2013 and 2014 unharvested by a sector may be of its initial 2012 allocation in the Pacific cod TAC based on these sector reapportioned to other sectors for Central GOA. The jig sector allocations allocations annually between the harvest during the remainder of the are further apportioned between the A inshore and offshore components in the fishery year. (60 percent) and B (40 percent) season. Eastern GOA; seasonally between Pursuant to § 679.20(a)(12)(i) NMFS The sector allocations based on gear vessels using jig gear, CVs less than 50 proposes the allocations of the proposed type, operation type, and vessel length feet in length overall using hook-and- 2013 and 2014 Pacific cod TACs in the overall are allocated the remainder of line gear, CVs equal to or greater than Western and Central Regulatory Areas of the annual Pacific cod TAC in the 50 in length overall using hook-and-line the GOA. In accordance with the FMP, Western and Central GOA. These gear, C/Ps using hook-and-line gear, CVs the annual jig sector allocations may amounts are slightly less than the 2013 using trawl gear, C/Ps using trawl gear, increase to up to 6 percent of the annual sector and seasonal amounts established and vessels using pot gear in the Central Western and Central GOA Pacific cod in the final 2012 and 2013 harvest GOA; and seasonally between vessels TACs depending on the annual specifications (77 FR 15195, March 14, using jig gear, CVs using hook-and-line performance of the jig sector (See Table 2012), due to the proposed increase in gear, C/Ps using hook-and-line gear, CVs 1 of Amendment 83 to the FMP for a the jig apportionments in the Western using trawl gear, and vessels using pot detailed discussion of the jig sector and Central GOA. Table 3 lists the gear in the Western GOA. The overall allocation process (76 FR 74670, seasonal apportionments and seasonal apportionments in the Western December 1, 2011)). NMFS proposes allocations of the proposed 2013 and and Central GOA are 60 percent of the that the jig sector would receive 2.5 2014 Pacific cod TACs.
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TABLE 3—PROPOSED 2013 AND 2014 SEASONAL APPORTIONMENTS AND ALLOCATIONS OF PACIFIC COD TAC AMOUNTS TO GEAR TYPES, OPERATIONAL TYPES, AND VESSEL LENGTH OVERALL IN THE WESTERN AND CENTRAL GULF OF ALASKA AND ALLOCATIONS FOR PROCESSING BY THE INSHORE AND OFFSHORE COMPONENTS IN THE EASTERN GULF OF ALASKA [Values are rounded to the nearest metric ton]
A Season B Season Annual Regulatory area and sector allocation Sector % of Seasonal Sector % of Seasonal (mt) annual non- allowances annual non- allowances jig TAC (mt) jig TAC (mt)
Western GOA: Jig (2.5% of TAC) ...... 546 N/A 328 N/A 218 Hook-and-line CV ...... 298 0.70 149 0.70 149 Hook-and-line C/P...... 4,216 10.90 2,321 8.90 1,895 Trawl CV...... 8,177 27.70 5,898 10.70 2,278 Trawl C/P ...... 511 0.90 192 1.50 319 Pot CV and Pot C/P ...... 8,092 19.80 4,216 18.20 3,876 Total ...... 21,840 60.00 13,104 40.00 8,736 Central GOA: Jig (2.0% of TAC) ...... 887 N/A 532 N/A 355 Hook-and-line < 50 CV ...... 6,348 9.32 4,050 5.29 2,298 Hook-and-line ≥ 50 CV...... 2,916 5.61 2,439 1.10 477 Hook-and-line C/P ...... 2,219 4.11 1,785 1.00 434 Trawl CV...... 18,079 21.13 9,189 20.45 8,890 Trawl C/P ...... 1,825 2.00 871 2.19 954 Pot CV and Pot C/P ...... 12,088 17.83 7,752 9.97 4,337 Total ...... 44,363 60.00 26,168 40.00 17,745
Eastern GOA ...... Inshore (90% of Annual TAC) Offshore (10% of Annual TAC)
2,047 1,842 205
Proposed Allocations of the Sablefish to trawl gear in the WYK District two years so that retention of incidental TAC Amounts to Vessels Using Hook- making the remainder of the WYK catch of sablefish by trawl gear could and-Line and Trawl Gear sablefish TAC available to vessels using commence in January in the second year Section 679.20(a)(4)(i) and (ii) require hook-and-line gear. As a result, NMFS of the groundfish harvest specifications. allocations of sablefish TACs for each of proposes to allocate 100 percent of the Since there is an annual NMFS survey the regulatory areas and districts to sablefish TAC in the SEO District to and assessment for sablefish and the hook-and-line and trawl gear. In the vessels using hook-and-line gear. This final harvest specifications are expected Western and Central Regulatory Areas, recommendation results in a proposed to be published before the IFQ season 80 percent of each TAC is allocated to 2013 allocation of 268 mt to trawl gear begins (typically, in early March), the hook-and-line gear, and 20 percent of and 5,083 mt to hook-and-line gear in Council recommended that the sablefish each TAC is allocated to trawl gear. In the Eastern GOA. Table 4 lists the TAC be set on an annual basis so that the Eastern Regulatory Area, 95 percent allocations of the proposed 2013 the best and most recent scientific of the TAC is allocated to hook-and-line sablefish TACs to hook-and-line and information could be considered in gear and 5 percent is allocated to trawl trawl gear. Table 5 lists the allocations recommending the ABCs and TACs. gear. The trawl gear allocation in the of the proposed 2014 sablefish TACs to With the exception of the trawl Eastern GOA may only be used to trawl gear. allocations that were provided to the support incidental catch of sablefish in The Council recommended that the Rockfish Program cooperatives, directed directed fisheries for other target species hook-and-line sablefish TAC be fishing for sablefish is closed for trawl (§ 679.20(a)(4)(i)). established annually to ensure that the gear for the fishing year. Also, fishing In recognition of the prohibition Individual Fishery Quota (IFQ) fishery for groundfish with trawl gear is against trawl gear in the SEO District of is conducted concurrent with the prohibited prior to January 20. the Eastern Regulatory Area, the Council halibut IFQ fishery and is based on the Therefore, it is not likely that the recommended and NMFS proposes the most recent survey information. The sablefish allocation to trawl gear would allocation of 5 percent of the combined Council also recommended that only the be reached before the effective date of Eastern Regulatory Area sablefish TAC trawl sablefish TAC be established for the final harvest specifications.
TABLE 4—PROPOSED 2013 SABLEFISH TAC AMOUNTS IN THE GULF OF ALASKA AND ALLOCATIONS TO HOOK-AND-LINE AND TRAWL GEAR [Values are rounded to the nearest metric ton]
Hook-and-line Trawl Area/district TAC allocation allocation
Western ...... 1,757 1,406 351 Central ...... 5,686 4,549 1,137 West Yakutat 1 ...... 2,219 1,951 268
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TABLE 4—PROPOSED 2013 SABLEFISH TAC AMOUNTS IN THE GULF OF ALASKA AND ALLOCATIONS TO HOOK-AND-LINE AND TRAWL GEAR—Continued [Values are rounded to the nearest metric ton]
Hook-and-line Trawl Area/district TAC allocation allocation
Southeast Outside ...... 3,132 3,132 0
Total ...... 12,794 11,038 1,756 1 The proposed trawl allocation is based on allocating 5 percent of the combined Eastern Regulatory Area (West Yakutat and Southeast Out- side districts combined) sablefish TAC to trawl gear in the West Yakutat district.
TABLE 5—PROPOSED 2014 SABLEFISH TAC AMOUNTS IN THE GULF OF ALASKA AND ALLOCATION TO TRAWL GEAR 1 [Values are rounded to the nearest metric ton]
Hook-and-line Trawl Area/district TAC allocation allocation
Western ...... 1,757 n/a 351 Central ...... 5,686 n/a 1,137 West Yakutat 2 ...... 2,219 n/a 268 Southeast Outside ...... 3,132 n/a 0
Total ...... 12,794 n/a 1,756 1 The Council recommended that harvest specifications for the hook-and-line gear sablefish Individual Fishing Quota fisheries be limited to 1 year. 2 The proposed trawl allocation is based on allocating 5 percent of the combined Eastern Regulatory Area (West Yakutat and Southeast Out- side districts combined) sablefish TAC to trawl gear in the West Yakutat district.
Proposed Apportionments to the Program also has an entry level fishery incrementally each year if the catch Central GOA Rockfish Program for rockfish primary species for vessels exceeds 90 percent of the allocation of using longline gear. Additionally, the a species. The incremental increase in These proposed 2013 and 2014 Rockfish Program continues to establish groundfish harvest specifications for the the allocation would continue each year sideboard limits to limit the ability of until it the maximum percent of the GOA include the various fishery harvesters operating under the Rockfish cooperative allocations and sideboard TAC for that species. In 2012, the catch Program from increasing their did not exceed 90 percent of any limitations established by the Central participation in other, non-Rockfish GOA Rockfish Program. Under the allocated rockfish species. Therefore, Program fisheries. Besides groundfish NMFS is not proposing an increase to Rockfish Program, the rockfish primary species, the Rockfish Program allocates species (Pacific ocean perch, northern the entry level longline fishery 2013 and a portion of the halibut PSC limit from 2014 allocations in the Central GOA. rockfish, and pelagic shelf rockfish) are the third season deep-water species Longline gear includes hook-and-line, allocated to participants after deducting fishery allowance for the GOA trawl jig, troll, and handline gear. The for incidental catch needs in other fisheries to Rockfish Program directed groundfish fisheries. participants (§ 679.81(d)). This includes remainder of the TACs for the rockfish The Rockfish Program assigns quota 117 mt to the CV sector and 74 mt to primary species would be allocated to share and cooperative quota to the C/P sector. the CV and C/P cooperatives. Table 6 participants for primary and secondary Section 679.81(a)(2)(ii) requires lists the allocations of the proposed species, allows a participant holding a allocations of 5 mt of Pacific ocean 2013 and 2014 TACs for each rockfish license limitation program (LLP) license perch, 5 mt of northern rockfish, and 30 primary species to the entry level with rockfish quota share to form a mt of pelagic shelf rockfish to the entry longline fishery, the incremental rockfish cooperative with other persons, level longline fishery in 2013 and 2014. increase for future years, and the and allows holders of C/P LLP licenses The allocation for the entry level maximum percent of the TAC for the to opt-out of the fishery. The Rockfish longline fishery would increase entry level longline fishery.
TABLE 6—PROPOSED 2013 AND 2014 ALLOCATIONS OF ROCKFISH PRIMARY SPECIES TO THE ENTRY LEVEL LONGLINE FISHERY IN THE CENTRAL GULF OF ALASKA
Up to Allocations of the Incremental increase per season if catch maximum Rockfish primary species proposed 2013 and 2014 TAC exceeds 90 percent of the percent of allocation TAC
Pacific ocean perch ...... 5 metric tons ...... 5 metric tons ...... 1 Northern rockfish ...... 5 metric tons ...... 5 metric tons ...... 2 Pelagic shelf rockfish ...... 30 metric tons ...... 20 metric tons ...... 5
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NMFS proposes allocations of of Pacific ocean perch, 125 mt of out of the program are not due to NMFS rockfish primary species among various northern rockfish, and 125 mt of pelagic until March 1 of each calendar year, components of the Rockfish Program. shelf rockfish. These amounts are based thereby preventing NMFS from Table 7 lists the proposed 2013 and on recent average incidental catches in calculating 2013 and 2014 allocations in 2014 allocations of rockfish in the the Central GOA by other groundfish conjunction with these proposed Central GOA to the entry level longline fisheries. harvest specifications. NMFS will post fishery and other participants in the Allocations between vessels belonging these allocations on the Alaska Region Rockfish Program, which include CV to CV or C/P cooperatives are not Web site at (http:// and C/P cooperatives. NMFS also included in these proposed harvest alaskafisheries.noaa.gov/ proposes setting aside incidental catch specifications. Rockfish Program sustainablefisheries/goarat/default.htm) amounts (ICAs) for other directed applications for CV cooperatives, C/P when they become available after March fisheries in the Central GOA of 900 mt cooperatives, and C/Ps electing to opt- 1.
TABLE 7—PROPOSED 2013 AND 2014 ALLOCATIONS OF ROCKFISH PRIMARY SPECIES IN THE CENTRAL GULF OF ALASKA TO THE ENTRY LEVEL LONGLINE FISHERY AND OTHER PARTICIPANTS IN THE ROCKFISH PROGRAM [Values are rounded to the nearest metric ton]
Initial Other Incidental allocation rockfish TAC minus to the program Rockfish primary species TAC catch ICA entry level allowance participants 2 longline1 fishery allocation
Pacific ocean perch ...... 10,985 900 10,085 5 10,080 Northern rockfish ...... 3,136 125 3,011 5 3,006 Pelagic shelf rockfish ...... 3,581 125 3,456 30 3,426
Total ...... 17,702 1,150 16,552 40 16,512 1 Longline gear includes hook-and-line, jig, troll, and handline gear (see 679.2 Definitions: Longline gear). 2 Other Rockfish Program participants include vessels in CV and C/P cooperatives.
Section 679.81(c) requires allocations the trawl gear allocation, and rockfish. Table 8 lists the of rockfish secondary species to thornyhead rockfish. C/P cooperatives apportionments of the proposed 2013 program participants in the Central receive allocations of sablefish from the and 2014 TACs of rockfish secondary GOA. CV cooperatives receive trawl allocation, rougheye rockfish, species in the Central GOA to CV and allocations of Pacific cod, sablefish from shortraker rockfish, and thornyhead C/P cooperatives.
TABLE 8—PROPOSED 2013 AND 2014 APPORTIONMENTS OF ROCKFISH SECONDARY SPECIES IN THE CENTRAL GOA TO CV AND C/P COOPERATIVES [Values are in metric tons]
CV cooperatives C/P cooperatives Central GOA Rockfish secondary species annual TAC Percentage of Apportionment Percentage of Apportionment TAC (mt) TAC (mt)
Pacific cod ...... 44,363 3.81 1,690 N/A N/A Sablefish ...... 5,686 6.78 386 3.51 200 Shortraker rockfish ...... 452 N/A N/A 40.00 181 Rougheye rockfish ...... 861 N/A N/A 58.87 507 Thornyhead rockfish ...... 766 7.84 60 26.50 203
Proposed Halibut Prohibited Species (76 FR 81248, December 27, 2011) and been apportioned 10 mt of the halibut Catch (PSC) Limits specified in Table 28d to 50 CFR part PSC limit in recognition of its small- 679. As discussed previously in this scale harvests of groundfish. Most Section 679.21(d) establishes annual preamble, at its June 2012 meeting the vessels in the DSR fishery are less than halibut PSC limit apportionments to Council took action to further reduce 60 ft (18.3 m) length overall and have trawl and hook-and-line gear, and the GOA halibut PSC limits. been exempt from observer coverage. authorizes the establishment of Implementation of those reductions may Therefore, observer data are not apportionments for pot gear. In October lead to adjustments or reductions to the available to verify actual halibut bycatch 2012, the Council recommended 2014 halibut PSC limits proposed in this amounts. NMFS estimates low halibut proposed halibut PSC limits of 1,973 mt action at the beginning of 2014. bycatch in the DSR fishery because (1) for trawl gear and 300 mt for hook-and- Ten mt of the 300 mt hook-and-line the duration of the DSR fisheries and line gear for the 2013 and 2014 halibut PSC limit is further allocated to the gear soak times are short, (2) the groundfish fisheries. This is a result of the demersal shelf rockfish (DSR) DSR fishery occurs in the winter when a 27 mt reduction to the halibut PSC fishery in the SEO District. The DSR less overlap occurs in the distribution of apportionment to trawl gear fisheries fishery is defined at DSR and halibut, and (3) the directed incorporated in the Rockfish Program § 679.21(d)(4)(iii)(A). This fishery has commercial DSR fishery has a low DSR
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TAC. The Alaska Department of Fish halibut IFQ permits and are therefore rates on a seasonal basis, (5) expected and Game sets the GHL for the DSR required to retain the halibut they catch changes in directed groundfish fishing fishery after estimates of DSR incidental while fishing sablefish IFQ, and (4) seasons, (6) expected actual start of catch in all fisheries (including halibut NMFS estimates negligible halibut fishing effort, and (7) economic effects and subsistence) and allocation to the mortality for the jig gear fisheries. of establishing seasonal halibut DSR sport fish fishery have been NMFS estimates halibut mortality is allocations on segments of the target deducted. Of the 293 mt TAC for DSR negligible in the jig gear fisheries given groundfish industry. in 2012, 128 mt were available for the the small amount of groundfish The final 2012 and 2013 harvest DSR commercial directed fishery, of harvested by jig gear (averaging 297 mt specifications (77 FR 15194, March 14, which 105 mt were harvested. annually from 2003 through 2011), the The FMP authorizes the Council to selective nature of jig gear, and the high 2012) summarized the Council’s and exempt specific gear from the halibut survival rates of halibut caught and NMFS’ findings with respect to halibut PSC limit. NMFS, after consultation released with jig gear. PSC for each of these FMP with the Council, proposes to exempt Section 679.21(d)(5) authorizes NMFS considerations. The Council’s and pot gear, jig gear, and the sablefish IFQ to seasonally apportion the halibut PSC NMFS’ findings for 2013 and 2014 are hook-and-line gear fishery categories limits after consultation with the unchanged from 2012, with one from the non-trawl halibut PSC limit for Council. The FMP and regulations exception. As previously mentioned, the 2013 and 2014. The Council require that the Council and NMFS total trawl gear PSC limit has been recommended and NMFS is proposing consider the following information in adjusted to 1,973 mt from 2,000 mt. these exemptions because: (1) Pot gear seasonally apportioning halibut PSC Table 9 lists the proposed 2013 and fisheries have low annual halibut limits: (1) Seasonal distribution of 2014 Pacific halibut PSC limits, bycatch mortality (averaging 19 mt halibut, (2) seasonal distribution of allowances, and apportionments. annually from 2001 through 2010), (2) target groundfish species relative to Section 679.21(d)(5)(iii) and (iv) specify IFQ program regulations prohibit halibut distribution, (3) expected that any underages or overages of a discard of halibut if any halibut IFQ halibut bycatch needs on a seasonal seasonal apportionment of a PSC limit permit holder on board a CV holds basis relative to changes in halibut will be deducted from or added to the unused halibut IFQ (§ 679.7(f)(11)), (3) biomass and expected catch of target next respective seasonal apportionment sablefish IFQ fishermen typically hold groundfish species, (4) expected bycatch within the fishing year.
Section 679.21(d)(3)(ii) authorizes limits are (1) a deep-water species seasonal apportionments of trawl further apportionment of the trawl category, composed of sablefish, halibut PSC limits between the deep- halibut PSC limit to trawl fishery rockfish, deep-water flatfish, rex sole, water and the shallow-water species categories. The annual apportionments and arrowtooth flounder; and (2) a categories. Based on public comment are based on each category’s shallow-water species category, and information presented in the final proportional share of the anticipated composed of pollock, Pacific cod, 2012 SAFE report, the Council may halibut bycatch mortality during a shallow-water flatfish, flathead sole, recommend or NMFS may make fishing year and optimization of the Atka mackerel, and ‘‘other species’’ changes to the seasonal, gear-type, or total amount of groundfish harvest (skates, sharks, squids, sculpins, and fishery category apportionments of under the halibut PSC limit. The fishery octopuses) (§ 679.21(d)(3)(iii)). Table 10 halibut PSC limits for the final 2013 and categories for the trawl halibut PSC lists the proposed 2013 and 2014 2014 harvest specifications.
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Section 679.21(d)(4) requires the ‘‘other than DSR’’ hook-and-line halibut percentages of 86 percent, 2 percent, ‘‘other than DSR’’ halibut PSC PSC limit between the hook-and-line CV and 12 percent. Table 11 lists the apportionment to vessels using hook- and C/P sectors were included in the proposed annual limits and seasonal and-line gear must be apportioned proposed rule to implement apportionments. between CVs and C/Ps. NMFS must Amendment 83 (76 FR 44700, July 26, No later than November 1 of each calculate the halibut PSC limit 2011) and is not repeated here. year, NMFS would calculate the apportionments for the entire GOA to For 2013 and 2014, NMFS proposes projected unused amount of halibut PSC hook-and-line CVs and C/Ps in that hook-and-line CV and hook-and- limit by either of the hook-and-line accordance with § 679.21(d)(4)(iii)(B)(1) line C/P sectors receive annual halibut sectors for the remainder of the year. and (2) in conjunction with these PSC limits of 173 mt and 117 mt, The projected unused amount of halibut harvest specifications. A comprehensive respectively. In addition, these annual PSC limit would be made available to description and example of the limits are divided between three the other hook-and-line sector for the calculations necessary to apportion the seasonal apportionments, using seasonal remainder of that fishing year.
TABLE 11—PROPOSED 2013 AND 2014 APPORTIONMENTS OF THE ‘‘OTHER HOOK-AND-LINE FISHERIES’’ HALIBUT PSC ALLOWANCE BETWEEN THE HOOK-AND-LINE GEAR CATCHER VESSEL AND CATCHER/PROCESSOR SECTORS [Values are in metric tons]
Percent of Sector ‘‘Other than Hook-and-line sector annual Sector annual Season Seasonal seasonal DSR’’ allowance allowance amount percentage amount
290 ...... Catcher Vessel ...... 59.69 173 January 1–June 10 ...... 86 149 June 10–September 1 ...... 2 3 September 1–December 12 21 31. Catcher/Processor ...... 40.31 117 January 1–June 10 ...... 86 101 June 10–September 1 ...... 2 2 September 1–December 12 14 31.
Estimated Halibut Bycatch in Prior and-line gear, and 38 mt for pot gear for Halibut bycatch restrictions Years a total halibut mortality of 1,763 mt. seasonally constrained trawl gear This halibut mortality was calculated fisheries during the 2012 fishing year. The best available information on using groundfish and halibut catch data Table 12 displays the closure dates for estimated halibut bycatch is data from the NMFS Alaska Region’s catch fisheries that resulted from the collected by fisheries observers during accounting system. This system attainment of seasonal or annual halibut 2012. The calculated halibut bycatch contains historical and recent catch PSC limits. NMFS does not know the mortality through October 20, 2012, is information compiled from each Alaska amount of groundfish that trawl gear 1,573 mt for trawl gear, 152 mt for hook- groundfish fishery. might have harvested if halibut PSC
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limits had not restricted some 2012 GOA groundfish fisheries.
TABLE 12—2012 FISHERY CLOSURES DUE TO ATTAINMENT OF PACIFIC HALIBUT PSC LIMITS
Fishery category Opening date Closure date Federal Register citation
Trawl Shallow-water, January 20, 2012 ...... February 24, 2012 ...... 77 FR 12213, February 29, 2012. Amendment 80 vessels, season 1. Trawl Shallow-water,1 sea- January 20, 2012 ...... March 26, 2012 ...... 77 FR 19146, March 30, 2012. son 1. Trawl Deep-water,1 season April 1, 2012 ...... April 19, 2012 ...... 77 FR 24154, April 23, 2012. 2. Trawl Shallow-water, season April 1, 2012 ...... May 31, 2012 ...... 77 FR 33103, June 5, 2012. 2. Trawl Shallow-water, season July 1, 2012 ...... July 14, 2012 ...... 77 FR 42193, July 18, 2012. 3. Trawl Shallow-water,1 sea- September 1, 2012 ...... September 2, 2012 ...... 77 FR 54837, September 6, 2012. son 4. Hook-and-line gear, all sec- January 1, 2012 ...... Remains open. tors and targets 2. 1 With the exception of vessels participating in the Central GOA Rockfish Program and vessels fishing for pollock using pelagic trawl gear. 2 With the exception of the IFQ sablefish fishery, which is open March 17, 2012, through November 7, 2012.
Current Estimates of Halibut Biomass decrease, as was done for the 2011 proposed annual halibut PSC limit of and Stock Condition fishery. 2,273 mt. Methods available for The 2012 commercial halibut catch reducing halibut bycatch include (1) The International Pacific Halibut limits were lower in all Alaska regions consistent monitoring through Commission (IPHC) annually assesses except Area 2C. The largest decreases in publication of vessel specific bycatch the abundance and potential yield of the the 2012 catch limit recommendations rates on the NMFS Alaska Region Web Pacific halibut using all available data for Alaska were for Area 3A, from 8,685 site at http://alaskafisheries.noaa.gov, from the commercial and sport fisheries, mt round weight in 2011 to 7,208 mt (2) modifications to gear, (3) changes in other removals, and scientific surveys. round weight in 2012; for Area 3B, from groundfish fishing seasons, (4) Additional information on the Pacific 4,542 mt in 2011 to 3,066 mt in 2012; individual transferable quota programs, halibut stock assessment may be found for Area 4A, from 1,458 mt in 2011 to and (5) time/area closures. in the IPHC’s 2011 Pacific halibut stock 948 mt in 2012; for Area 4B, from 1,318 With respect to fishing gear assessment (December 2011), available mt in 2011 to 1,130 mt in 2012; and for modifications, NMFS has implemented on the IPHC Web site at www.iphc.int. combined Areas CDE, from 2,250 mt in various regulations to address halibut The IPHC considered the 2011 Pacific 2011 to 1,491 mt in 2012. The only bycatch concerns that are associated halibut stock assessment for 2012 at its increase in catch limit with different gear types. The January 2012 annual meeting when it recommendations in Alaska was for definitions of the various gear types set the 2012 commercial halibut fishery Area 2C, from 1,409 mt round weight in defined at § 679.2 under ‘‘Authorized catch limits. The IPHC will consider the 2011 to 1,587 mt round weight in 2012. fishing gear’’ delineate a variety of 2012 Pacific halibut stock assessment Additional information on the Pacific different requirements and restrictions for 2013 at its January 2013 annual halibut stock assessment may be found by gear type. Many of these meeting when it set the 2013 in the IPHC’s 2011 Pacific halibut stock requirements are intended to decrease commercial halibut fishery catch limits. assessment (December 2011), available or minimize halibut bycatch by pot, The halibut resource is fully utilized. on the IPHC Web site at http:// trawl, and hook-and-line gear. Recent catches in the commercial www.iphc.int. The IPHC will consider For example, groundfish pots must be halibut fisheries in Alaska over the last the 2012 Pacific halibut stock constructed with biodegradable panels 18 years (1994 through 2011) have assessment at its January 2013 annual and tunnel openings to reduce halibut averaged 31,535 mt round weight per meeting when it will set the 2013 bycatch, thereby reducing halibut year. In January 2012, the IPHC commercial halibut fishery catch limits. mortality in the groundfish pot fisheries. recommended Alaska commercial catch Further, the definition of ‘‘pelagic trawl Other Considerations Associated With limits totaling 15,430 mt round weight gear’’ includes specific construction Halibut PSC for 2012, a 21.5 percent decrease from parameters and performance 19,662 mt in 2011. Through December The IPHC determines the allowable characteristics that distinguish it from 31, 2011, commercial hook-and-line directed commercial catch by first nonpelagic trawl gear, which is harvests of halibut off Alaska totaled accounting for recreational and designed for use in proximity to the 19,140 mt round weight. The IPHC staff subsistence catch, waste, and bycatch seafloor. Because halibut bycatch by recommendations for commercial catch mortality, and then provides the pelagic trawl gear is minimal, directed limits continue to be based on applying remainder to the directed fishery. fishing for pollock with pelagic trawl the Slow Up—Full Down policy of a 33 Accordingly, the IPHC will adjust the gear may continue even when the percent increase from the previous allowable 2013 commercial catch of halibut PSC limit for the shallow-water year’s catch limits when stock yields are halibut to account for the overall halibut species fishery is reached (see projected to increase, but uses a 100 PSC limit established for groundfish § 679.21(d)(7)(i)). Finally, all hook-and- percent decrease in recommended catch fisheries. NMFS expects the 2013 GOA line vessel operators are required to when stock yields are projected to groundfish fisheries to use the entire employ careful release measures when
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handling halibut bycatch Halibut Discard Mortality Rates the DMRs for the GOA groundfish (§ 679.7(a)(13)). These measures are fisheries using the 10-year mean DMRs To monitor halibut bycatch mortality intended to reduce handling mortality, for those fisheries. Long-term average allowances and apportionments, the thereby lowering overall halibut bycatch DMRs were not available for some Regional Administrator uses observed mortality in the groundfish fisheries, fisheries, so rates from the most recent and to increase the amount of halibut bycatch rates, discard mortality rates (DMRs), and estimates of years were used. For the squid, shark, groundfish harvested under the sculpin, octopus, and skate fisheries, available halibut mortality bycatch groundfish catch to project when a fishery’s halibut bycatch mortality where insufficient mortality data are limits. available, the mortality rate of halibut The FMP requires that the Council allowance or seasonal apportionment is caught in the Pacific cod fishery for that review recent halibut bycatch data and reached. The DMRs are based on the recommend proposed halibut PSC limits best information available, including gear type was recommended as a default in conjunction with developing information contained in the annual rate. The IPHC will analyze observer proposed groundfish harvest levels. SAFE report. data annually and recommend changes NMFS and the Council will review the NMFS proposes that the halibut to the DMRs when a fishery DMR shows methods listed here that are available DMRs developed and recommended by large variation from the mean. A for reducing halibut bycatch to the IPHC and the Council for the 2013– discussion of the DMRs and how the determine their effectiveness and will 2015 GOA groundfish fisheries be used IPHC establishes them is available from initiate changes to these PSC limits, as to monitor the proposed 2013 and 2014 the Council (see ADDRESSES). Table 13 necessary, in response to this review or halibut bycatch mortality allowances lists the proposed 2013 and 2014 DMRs. to public testimony and comment. (see Tables 9–11). The IPHC developed
TABLE 13—PROPOSED 2013 AND 2014 HALIBUT DISCARD MORTALITY RATES FOR VESSELS FISHING IN THE GULF OF ALASKA [Values are percent of halibut assumed to be dead]
Mortality rate Gear Target fishery (%)
Hook-and-line ...... Other fisheries 1 ...... 11 Skates ...... 11 Pacific cod ...... 11 Rockfish ...... 9 Trawl ...... Arrowtooth flounder ...... 73 Deep-water flatfish ...... 43 Flathead sole ...... 65 Non-pelagic pollock ...... 60 Other fisheries ...... 62 Pacific cod ...... 62 Pelagic pollock ...... 71 Rex sole ...... 69 Rockfish ...... 66 Sablefish ...... 71 Shallow-water flatfish ...... 67 Pot ...... Other fisheries ...... 17 Pacific cod ...... 17 1 Other fisheries includes all gear types for Atka mackerel, sculpins, sharks, skates, squids, octopuses, and hook-and-line sablefish.
Chinook Salmon Prohibited Species Western and Central GOA must be processing privileges under the AFA. Catch Limits retained until an observer at the Section 679.7(k)(1)(ii) prohibits listed In 2012, NMFS issued a final rule to processing facility that takes delivery of AFA C/Ps from harvesting any species implement Amendment 93 to the GOA the catch is provided an opportunity to of fish in the GOA. Additionally, FMP (77 FR 42629, July 20, 2012). count the number of salmon and to § 679.7(k)(1)(iv) prohibits listed AFA C/ Amendment 93 established separate collect any scientific data or biological Ps from processing any pollock Chinook salmon PSC limits in the samples from the salmon harvested in a directed pollock fishery Western and Central GOA in the (§ 679.21(h)(4)). in the GOA and any groundfish directed pollock fishery. These limits harvested in Statistical Area 630 of the American Fisheries Act (AFA) Catcher/ GOA. require NMFS to close the pollock Processor and Catcher Vessel directed fishery in the Western and Groundfish Sideboard Limits AFA CVs that are less than 125 ft Central regulatory areas of the GOA if (38.1 meters) length overall, have the applicable limit is reached Section 679.64 establishes groundfish annual landings of pollock in the Bering (§ 679.21(h)(6)). The annual Chinook harvesting and processing sideboard Sea and Aleutian Islands of less than salmon PSC limits in the pollock limits on AFA C/Ps and CVs in the 5,100 mt, and have made at least 40 directed fishery of 6,684 salmon in the GOA. These sideboard limits are landings of GOA groundfish from 1995 Western GOA and 18,316 salmon in the necessary to protect the interests of through 1997 are exempt from GOA Central GOA are set in regulation at fishermen and processors who do not sideboard limits under § 679.64(b)(2)(ii). § 679.21(h)(2)(i) and (ii). In addition, all directly benefit from the AFA from Sideboard limits for non-exempt AFA salmon (regardless of species), taken in those fishermen and processors who CVs operating in the GOA are based on the pollock directed fisheries in the receive exclusive harvesting and their traditional harvest levels of TAC in
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groundfish fisheries covered by the of each sideboard species from 1995 non-exempt AFA CVs. NMFS will FMP. Section 679.64(b)(3)(iii) through 1997 divided by the TAC for deduct all targeted or incidental catch of establishes the groundfish sideboard that species over the same period. sideboard species made by non-exempt limitations in the GOA based on the Table 14 lists the proposed 2013 and AFA CVs from the sideboard limits retained catch of non-exempt AFA CVs 2014 groundfish sideboard limits for listed in Table 14.
TABLE 14—PROPOSED 2013 AND 2014 GOA NON-EXEMPT AMERICAN FISHERIES ACT CATCHER VESSEL (CV) GROUNDFISH HARVEST SIDEBOARD LIMITS [Values are rounded to the nearest metric ton]
Ratio of 1995– 1997 Proposed 2013 Apportionments by season/ non-exempt Proposed 2013 and 2014 non- Species gear Area/component AFA CV catch and 2014 TACs exempt AFA CV to 1995–1997 sideboard limit TAC
Pollock ...... A Season—January 20– Shumagin (610) ...... 0.6047 6,285 3,801 March 10. Chirikof (620) ...... 0.1167 15,202 1,774 Kodiak (630) ...... 0.2028 6,274 1,272 B Season—March 10–May Shumagin (610) ...... 0.6047 6,285 3,801 31. Chirikof (620) ...... 0.1167 18,668 2,179 Kodiak (630) ...... 0.2028 2,806 569 C Season—August 25–Oc- Shumagin (610) ...... 0.6047 10,123 6,121 tober 1. Chirikof (620) ...... 0.1167 7,896 921 Kodiak (630) ...... 0.2028 9,743 1,976 D Season—October 1–No- Shumagin (610) ...... 0.6047 10,123 6,121 vember 1. Chirikof (620) ...... 0.1167 7,896 921 Kodiak (630) ...... 0.2028 9,743 1,976 Annual ...... WYK (640) ...... 0.3495 3,517 1,229 SEO (650) ...... 0.3495 10,774 3,766 Pacific cod ...... A Season 1—January 1– W ...... 0.1331 13,104 1,744 June 10. C ...... 0.0692 26,618 1,842 B Season) 2—September 1– W ...... 0.1331 8,736 1,163 December 31. C ...... 0.0692 17,745 1,228 Annual ...... E inshore ...... 0.0079 1,842 15 E offshore ...... 0.0078 205 2 Sablefish ...... Annual, trawl gear ...... W ...... 0.0000 351 0 C ...... 0.0642 1,137 73 E ...... 0.0433 268 12 Flatfish, shallow-water ...... Annual ...... W ...... 0.0156 13,250 207 C ...... 0.0587 18,000 1,057 E ...... 0.0126 5,300 67 Flatfish, deep-water ...... Annual ...... W ...... 0.0000 176 0 C ...... 0.0647 2,308 149 E ...... 0.0128 2,642 34 Rex sole ...... Annual ...... W ...... 0.0007 1,283 1 C ...... 0.0384 6,291 242 E ...... 0.0029 1,858 5 Arrowtooth flounder ...... Annual ...... W ...... 0.0021 14,500 30 C ...... 0.0280 75,000 2,100 E ...... 0.0002 13,800 3 Flathead sole ...... Annual ...... W ...... 0.0036 8,650 31 C ...... 0.0213 15,400 328 E ...... 0.0009 6,358 6 Pacific ocean perch ...... Annual ...... W ...... 0.0023 2,050 5 C ...... 0.0748 10,985 822 E ...... 0.0466 3,465 161 Northern rockfish ...... Annual ...... W ...... 0.0003 2,017 1 C ...... 0.0277 3,136 87 Shortraker rockfish ...... Annual ...... W ...... 0.0000 104 0 C ...... 0.0218 452 10 E ...... 0.0110 525 6 Other rockfish ...... Annual ...... W ...... 0.0034 44 0 C ...... 0.1699 606 103 E ...... 0.0000 430 0 Pelagic shelf rockfish ...... Annual ...... W ...... 0.0001 381 0 C ...... 0.0000 3,581 0 E ...... 0.0067 800 5 Rougheye rockfish ...... Annual ...... W ...... 0.0000 82 0 C ...... 0.0237 861 20 E ...... 0.0124 297 4
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TABLE 14—PROPOSED 2013 AND 2014 GOA NON-EXEMPT AMERICAN FISHERIES ACT CATCHER VESSEL (CV) GROUNDFISH HARVEST SIDEBOARD LIMITS—Continued [Values are rounded to the nearest metric ton]
Ratio of 1995– 1997 Proposed 2013 Apportionments by season/ non-exempt Proposed 2013 and 2014 non- Species gear Area/component AFA CV catch and 2014 TACs exempt AFA CV to 1995–1997 sideboard limit TAC
Demersal shelf rockfish ...... Annual ...... SEO ...... 0.0020 293 1 Thornyhead rockfish ...... Annual ...... W ...... 0.0280 150 4 C ...... 0.0280 766 21 E ...... 0.0280 749 21 Atka mackerel ...... Annual ...... Gulfwide ...... 0.0309 2,000 62 Big skates ...... Annual ...... W ...... 0.0063 469 3 C ...... 0.0063 1,793 11 E ...... 0.0063 1,505 9 Longnose skates ...... Annual ...... W ...... 0.0063 70 0 C ...... 0.0063 1,879 12 E ...... 0.0063 676 4 Other skates ...... Annual ...... Gulfwide ...... 0.0063 2,030 13 Squids ...... Annual ...... Gulfwide ...... 0.0063 1,148 7 Sharks ...... Annual ...... Gulfwide ...... 0.0063 6,028 38 Octopuses ...... Annual ...... Gulfwide ...... 0.0063 1,455 9 Sculpins ...... Annual ...... Gulfwide ...... 0.0063 5,731 36 1 The Pacific cod A season for trawl gear does not open until January 20. 2 The Pacific cod B season for trawl gear closes November 1.
Non-Exempt AFA Catcher Vessel based on the aggregate retained fishery from 1995 through 1997 Halibut PSC Limits groundfish catch by non-exempt AFA (§ 679.64(b)(4)). Table 15 lists the CVs in each PSC target category from proposed 2013 and 2014 non-exempt The halibut PSC sideboard limits for 1995 through 1997 divided by the AFA CV halibut PSC limits for vessels non-exempt AFA CVs in the GOA are retained catch of all vessels in that using trawl gear in the GOA.
TABLE 15—PROPOSED 2013 AND 2014 NON-EXEMPT AMERICAN FISHERIES ACT CATCHER VESSEL HALIBUT PROHIBITED SPECIES CATCH (PSC) LIMITS FOR VESSELS USING TRAWL GEAR IN THE GOA [PSC limits are rounded to the nearest whole metric ton]
Ratio of 1995– 1997 Proposed non-exempt Proposed 2013 and Season Season dates Target fishery AFA CV 2013 and 2014 retained catch 2014 PSC limit non-exempt to total AFA CV PSC retained catch limit
1 ...... January 20–April 1 ...... shallow-water ...... 0.340 444 151 deep-water ...... 0.070 99 7 2 ...... April 1–July 1 ...... shallow-water ...... 0.340 99 34 deep-water ...... 0.070 296 21 3 ...... July 1–September 1 ...... shallow-water ...... 0.340 197 67 deep-water ...... 0.070 395 28 4 ...... September 1–October 1 ...... shallow-water ...... 0.340 148 50 deep-water ...... 0.070 0 0 5 ...... October 1–December 31 ...... all targets ...... 0.205 296 61
Non-AFA Crab Vessel Groundfish historical landings in all GOA Fishery Resources (707 FR 10174, Sideboard Limits groundfish fisheries (except the fixed- March 2, 2005), Amendment 34 to the gear sablefish fishery). Sideboard limits Fishery Management Plan for Bering Section 680.22 establishes groundfish also apply to landings made using an Sea/Aleutian Island King and Tanner catch limits for vessels with a history of LLP license derived from the history of Crabs, and Amendment 83 (76 FR participation in the Bering Sea snow a vessel with sideboard limits, even if 74670, December 1, 2011). crab fishery to prevent these vessels from using the increased flexibility that license is used on another vessel. Table 16 lists these proposed 2013 provided by the Crab Rationalization The basis for these sideboard limits is and 2014 groundfish sideboard Program to expand their level of described in detail in the final rules limitations for non-AFA crab vessels. participation in the GOA groundfish implementing the major provisions of All targeted or incidental catch of fisheries. Sideboard limits restrict these the Allocation of Bering Sea and sideboard species made by non-AFA vessels’ catch to their collective Aleutian Islands King and Tanner Crab crab vessels or associated LLP licenses
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will be deducted from these sideboard limits.
TABLE 16—PROPOSED 2013 AND 2014 GOA NON-AMERICAN FISHERIES ACT CRAB VESSEL GROUNDFISH HARVEST SIDEBOARD LIMITS [Values are rounded to the nearest metric ton]
Ratio of 1996– 2000 non-AFA Proposed 2013 crab vessel Proposed 2013 and 2014 non- Species Season/gear Area/component/gear catch to 1996– and 2014 TACs AFA crab 2000 total vessel harvest sideboard limit
Pollock ...... A Season—January 20– Shumagin (610) ...... 0.0098 6,285 62 March 10. Chirikof (620) ...... 0.0031 15,202 47 Kodiak (630) ...... 0.0002 6,274 1 B Season—March 10–May Shumagin (610) ...... 0.0098 6,285 62 31. Chirikof (620) ...... 0.0031 18,668 58 Kodiak (630) ...... 0.0002 2,806 1 C Season—August 25–Oc- Shumagin (610) ...... 0.0098 10,123 99 tober 1. Chirikof (620) ...... 0.0031 7,896 24 Kodiak (630) ...... 0.0002 9,743 2 D Season—October 1–No- Shumagin (610) ...... 0.0098 10,123 99 vember 1. Chirikof (620) ...... 0.0031 7,896 24 Kodiak (630) ...... 0.0002 9,743 2 Annual ...... WYK (640) ...... 0.0000 3,517 0 SEO (650) ...... 0.0000 10,774 0 Pacific cod ...... A Season 1—January 1– W Jig CV ...... 0.0000 13,104 0 June 10. W Hook-and-line CV ...... 0.0004 13,104 5 January 1–June 10 ...... W Hook-and-line C/P ...... 0.0018 13,104 24 W Pot CV ...... 0.0997 13,104 1,306 W Pot C/P ...... 0.0078 13,104 102 W Trawl CV ...... 0.0007 13,104 9 C Jig CV ...... 0.0000 26,618 0 C Hook-and-line CV ...... 0.0001 26,618 3 C Hook-and-line C/P ...... 0.0012 26,618 32 C Pot CV ...... 0.0474 26,618 1,262 C Pot C/P ...... 0.0136 26,618 362 C Trawl CV ...... 0.0012 26,618 32 B Season 2—September 1– W Jig CV ...... 0.0000 8,736 0 December 31. W Hook-and-line CV ...... 0.0004 8,736 3 W Hook-and-line C/P ...... 0.0018 8,736 16 W Pot CV ...... 0.0997 8,736 871 W Pot C/P ...... 0.0078 8,736 68 W Trawl CV ...... 0.0007 8,736 6 C Jig CV ...... 0.0000 17,745 0 C Hook-and-line CV ...... 0.0001 17,745 2 C Hook-and-line C/P ...... 0.0012 17,745 21 C Pot CV ...... 0.0474 17,745 841 C Pot C/P ...... 0.0136 17,745 241 C Trawl CV ...... 0.0012 17,745 21 Annual ...... E inshore ...... 0.0110 1,842 20 E offshore ...... 0.0000 205 0 Sablefish ...... Annual, trawl gear ...... W ...... 0.0000 351 0 C ...... 0.0000 1,137 0 E ...... 0.0000 268 0 Flatfish, shallow-water ...... Annual ...... W ...... 0.0059 13,250 78 C ...... 0.0001 18,000 2 E ...... 0.0000 5,300 0 Flatfish, deep-water ...... Annual ...... W ...... 0.0035 176 1 C ...... 0.0000 2,308 0 E ...... 0.0000 2,642 0 Rex sole ...... Annual ...... W ...... 0.0000 1,283 0 C ...... 0.0000 6,291 0 E ...... 0.0000 1,858 0 Arrowtooth flounder ...... Annual ...... W ...... 0.0004 14,500 6 C ...... 0.0001 75,000 8 E ...... 0.0000 13,800 0 Flathead sole ...... Annual ...... W ...... 0.0002 8,650 2
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TABLE 16—PROPOSED 2013 AND 2014 GOA NON-AMERICAN FISHERIES ACT CRAB VESSEL GROUNDFISH HARVEST SIDEBOARD LIMITS—Continued [Values are rounded to the nearest metric ton]
Ratio of 1996– 2000 non-AFA Proposed 2013 crab vessel Proposed 2013 and 2014 non- Species Season/gear Area/component/gear catch to 1996– and 2014 TACs AFA crab 2000 total vessel harvest sideboard limit
C ...... 0.0004 15,400 6 E ...... 0.0000 6,358 0 Pacific ocean perch ...... Annual ...... W ...... 0.0000 2,050 0 C ...... 0.0000 10,985 0 E ...... 0.0000 3,465 0 Northern rockfish ...... Annual ...... W ...... 0.0005 2,017 1 C ...... 0.0000 3,136 0 Shortraker rockfish ...... Annual ...... W ...... 0.0013 104 0 C ...... 0.0012 452 1 E ...... 0.0009 525 0 Other rockfish ...... Annual ...... W ...... 0.0035 44 0 C ...... 0.0033 606 2 E ...... 0.0000 430 0 Pelagic shelf rockfish ...... Annual ...... W ...... 0.0017 381 1 C ...... 0.0000 3,581 0 E ...... 0.0000 800 0 Rougheye rockfish ...... Annual ...... W ...... 0.0067 82 1 C ...... 0.0047 861 4 E ...... 0.0008 297 0 Demersal shelf rockfish ...... Annual ...... SEO ...... 0.0000 293 0 Thornyhead rockfish ...... Annual ...... W ...... 0.0047 150 1 C ...... 0.0066 766 5 E ...... 0.0045 749 3 Atka mackerel ...... Annual ...... Gulfwide ...... 0.0000 2,000 0 Big skate ...... Annual ...... W ...... 0.0392 469 18 C ...... 0.0159 1,793 29 E ...... 0.0000 1,505 0 Longnose skate ...... Annual ...... W ...... 0.0392 70 3 C ...... 0.0159 1,879 30 E ...... 0.0000 676 0 Other skates ...... Annual ...... Gulfwide ...... 0.0176 2,030 36 Sharks ...... Annual ...... Gulfwide ...... 0.0176 1,148 20 Squids ...... Annual ...... Gulfwide ...... 0.0176 6,028 106 Octopuses ...... Annual ...... Gulfwide ...... 0.0176 1,455 26 Sculpins ...... Annual ...... Gulfwide ...... 0.0176 5,731 101 1 The Pacific cod A season for trawl gear does not open until January 20. 2 The Pacific cod B season for trawl gear closes November 1.
Rockfish Program Groundfish ocean perch, and pelagic shelf rockfish in the Western GOA and West Yakutat Sideboard and Halibut PSC Limitations (dusky rockfish) in the Western GOA District from July 1 through July 31. and West Yakutat Districts from July 1 Holders of C/P-designated LLP licenses The Rockfish Program establishes through July 31. Also, CVs may not that opt-out of participating in a three classes of sideboard provisions: participate in directed fishing for CV groundfish sideboard restrictions, rockfish cooperative will receive the arrowtooth flounder, deep-water portion of each sideboard limit that is C/P rockfish sideboard restrictions, and flatfish, and rex sole in the GOA from C/P opt-out vessel sideboard not assigned to rockfish cooperatives. July 1 through July 31 (§ 679.82(d)). Table 17 lists the proposed 2013 and restrictions. These sideboards are C/Ps participating in Rockfish 2014 Rockfish Program C/P sideboard intended to limit the ability of rockfish Program cooperatives are restricted by limits in the Western GOA and West harvesters to expand into other rockfish and halibut PSC sideboard fisheries. limitations. These C/Ps are prohibited Yakutat District. Due to confidentiality CVs participating in the Rockfish from directed fishing for northern requirements associated with fisheries Program may not participate in directed rockfish, Pacific ocean perch, and data, the sideboard limits for the West fishing for northern rockfish, Pacific pelagic shelf rockfish (dusky rockfish) Yakutat District are not displayed.
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TABLE 17—PROPOSED 2013 AND 2014 ROCKFISH PROGRAM HARVEST LIMITS FOR THE WEST YAKUTAT DISTRICT AND WESTERN GOA BY FISHERY FOR THE CATCHER/PROCESSOR SECTOR [Values are rounded to the nearest metric ton]
Proposed Proposed Area Fishery C/P sector 2013 and 2013 and (% of TAC) 2014 TACs 2014 C/P limit
Western GOA ...... Pelagic shelf rockfish ...... 72.3 ...... 381 275 Pacific ocean perch ...... 50.6 ...... 2,050 1,037 Northern rockfish ...... 74.3 ...... 2,017 1,499 West Yakutat District ...... Pelagic shelf rockfish ...... Confid.1 ...... 504 N/A Pacific ocean perch ...... Confid.1 ...... 1,650 N/A 1 Not released due to confidentiality requirements associated with fish ticket data established by NMFS and the State of Alaska.
The C/P sector is subject to halibut of participating in a rockfish cooperative sideboard ratios will be known. NMFS PSC sideboard limits for the trawl deep- are described in § 679.82(c), (e), and (f). will then calculate any applicable opt- water and shallow-water species Sideboards are linked to the catch out sideboards and post these fisheries from July 1 through July 31. No history of specific vessels that may allocations on the Alaska Region Web halibut PSC sideboard limits apply to choose to opt-out. The applications for site at http://alaskafisheries.noaa.gov/ the CV sector. C/Ps that opt-out of the C/Ps electing to opt-out are due to sustainablefisheries/goarat/default.htm) Rockfish Program would be able to NMFS on March 1 of each calendar when they have been prepared. access that portion of the deep-water year, thereby preventing NMFS from and shallow-water halibut PSC calculating proposed 2013 and 2014 Table 18 lists the 2013 and 2014 sideboard limit not assigned to C/P allocations. Once opt-out applications proposed Rockfish Program halibut PSC rockfish cooperatives. The sideboard (if any) are received in 2013, the ratios limits for the C/P sector. provisions for C/Ps that elect to opt-out and amounts used to calculate opt-out
TABLE 18—PROPOSED 2013 AND 2014 ROCKFISH PROGRAM HALIBUT MORTALITY LIMITS FOR THE CATCHER/PROCESSOR SECTOR [Values are rounded to the nearest metric ton]
Annual shal- Annual deep- Shallow-water Deep-water low-water spe- water species species fishery species fishery Annual halibut cies fishery fishery halibut Sector halibut PSC halibut PSC mortality limit halibut PSC PSC sideboard ratio sideboard ratio (mt) sideboard limit sideboard limit (percent) (percent) (mt) (mt)
Catcher/processor ...... 0.10 2.50 1,973 2 49
Amendment 80 Vessel Program Program established groundfish and perch, pelagic shelf rockfish, and Groundfish Sideboard and PSC Limits halibut PSC limits for Amendment 80 northern rockfish in the GOA. Program participants. Groundfish sideboard limits for Amendment 80 to the Fishery Amendment 80 Program vessels Management Plan for Groundfish of the Section 679.92 establishes groundfish harvesting sideboard limits on all operating in the GOA are based on their Bering Sea and Aleutian Islands average aggregate harvests from 1998 to Amendment 80 Program vessels, other Management Area (Amendment 80 2004. Table 19 lists the proposed 2013 than the F/V Golden Fleece, to amounts Program) established a limited access and 2014 sideboard limits for privilege program for the non-AFA trawl no greater than the limits shown in Amendment 80 Program vessels. All C/P sector. To limit the ability of Table 37 to part 679. Under regulations targeted or incidental catch of sideboard participants eligible for the Amendment at § 679.92(d), the F/V Golden Fleece is species made by Amendment 80 80 Program to expand their harvest prohibited from directed fishing for Program vessels will be deducted from efforts in the GOA, the Amendment 80 pollock, Pacific cod, Pacific ocean the sideboard limits in Table 19.
TABLE 19—PROPOSED 2013 AND 2014 GOA GROUNDFISH SIDEBOARD LIMITS FOR AMENDMENT 80 PROGRAM VESSELS [Values are rounded to the nearest metric ton]
Proposed 2013 Ratio of and 2014 Amendment 80 Proposed 2013 Amendment 80 Species Season Area sector vessels and 2014 TAC vessel 1998–2004 (mt) sideboards catch to TAC (mt)
Pollock ...... A Season—January 20– Shumagin (610) ...... 0.003 6,285 19 February 25. Chirikof (620) ...... 0.002 15,202 30 Kodiak (630) ...... 0.002 6,274 13
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TABLE 19—PROPOSED 2013 AND 2014 GOA GROUNDFISH SIDEBOARD LIMITS FOR AMENDMENT 80 PROGRAM VESSELS—Continued [Values are rounded to the nearest metric ton]
Proposed 2013 Ratio of and 2014 Amendment 80 Proposed 2013 Amendment 80 Species Season Area sector vessels and 2014 TAC vessel 1998–2004 (mt) sideboards catch to TAC (mt)
B Season—March 20–May Shumagin (610) ...... 0.003 6,285 19 31. Chirikof (620) ...... 0.002 18,668 37 Kodiak (630) ...... 0.002 2,806 6 C Season—August 25–Sep- Shumagin (610) ...... 0.003 10,123 30 tember 15. Chirikof (620) ...... 0.002 7,896 16 Kodiak (630) ...... 0.002 9,743 19 D Season—October 1–No- Shumagin (610) ...... 0.003 10,123 30 vember 1. Chirikof (620) ...... 0.002 7,896 16 Kodiak (630) ...... 0.002 9,743 19 Annual ...... WYK (640) ...... 0.002 3,517 7 Pacific cod ...... A Season 1—January 1– W ...... 0.020 13,104 262 June 10. C ...... 0.044 26,618 1,171 B Season 2—September 1– W ...... 0.020 8,736 175 December 31. C ...... 0.044 17,745 781 Annual ...... WYK ...... 0.034 2,047 70 Pacific ocean perch ...... Annual ...... W ...... 0.994 2,050 2,038 WYK ...... 0.961 1,650 1,586 Northern rockfish ...... Annual ...... W ...... 1.000 2,017 2,017 Pelagic shelf rockfish ...... Annual ...... W ...... 0.764 381 291 WYK ...... 0.896 504 452 1 The Pacific cod A season for trawl gear does not open until January 20. 2 The Pacific cod B season for trawl gear closes November 1.
The PSC sideboard limits for slightly lower than the average historic Table 20 lists the proposed 2013 and Amendment 80 Program vessels in the use to accommodate two factors: 2014 halibut PSC limits for Amendment GOA are based on the historic use of allocation of halibut PSC cooperative 80 Program vessels, as contained in halibut PSC by Amendment 80 Program quota under the Central GOA Rockfish Table 38 to 50 CFR part 679. vessels in each PSC target category from Program and the exemption of the F/V 1998 through 2004. These values are Golden Fleece from this restriction.
TABLE 20—PROPOSED 2013 AND 2014 HALIBUT PSC SIDEBOARD LIMITS FOR AMENDMENT 80 PROGRAM VESSELS IN THE GOA [Values are rounded to the nearest metric ton]
Historic Proposed 2013 Amendment Proposed and 2014 80 use of the 2013 and Amendment 80 Season Season dates Fishery category annual halibut 2014 annual vessel PSC PSC limit PSC limit sideboard limit (ratio) (mt) (mt)
1 ...... January 20–April 1 ...... shallow-water ...... 0.0048 1,973 9 deep-water ...... 0.0115 1,973 23 2 ...... April 1–July 1 ...... shallow-water ...... 0.0189 1,973 37 deep-water ...... 0.1072 1,973 212 3 ...... July 1–September 1 ...... shallow-water ...... 0.0146 1,973 29 deep-water ...... 0.0521 1,973 103 4 ...... September 1–October 1 ...... shallow-water ...... 0.0074 1,973 15 deep-water ...... 0.0014 1,973 3 5 ...... October 1–December 31 ...... shallow-water ...... 0.0227 1,973 45 deep-water ...... 0.0371 1,973 73
Classification consistent with the FMP and consistent with the Magnuson-Stevens NMFS has determined that the preliminarily determined that the Act and other applicable laws. proposed harvest specifications are proposed harvest specifications are
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This action is authorized under 50 ADDRESSES)). Because the 1,002 CVs and inconsistent with the objectives of this CFR 679.20 and is exempt from review 6 C/Ps meet this size standard, they are action, the Council’s preferred harvest under Executive Order 12866. considered to be small entities for the strategy, because it does not take NMFS prepared an EIS for this action purposes of this analysis. account of the most recent biological (see ADDRESSES) and made it available to The preferred alternative (Alternative information for this fishery. Harvest the public on January 12, 2007 (72 FR 2) was compared to four other rates are listed for each species category 1512). On February 13, 2007, NMFS alternatives. Alternative 1 would have for each year in the SAFE report (see issued the Record of Decision (ROD) for set TACs to generate fishing rates equal ADDRESSES). the EIS. Copies of the EIS and ROD for to the maximum permissible ABC (if the Alternative 4 reduces the TACs from this action are available from NMFS. full TAC were harvested), unless the the upper end of the OY range in the The EIS analyzes the environmental sum of TACs exceeded the GOA OY, in GOA, to its lower end of 116,000 mt, consequences of the proposed which case harvests would be limited to which would lead to significantly lower groundfish harvest specifications and its the OY. Alternative 3 would have set harvests of all species. Overall, this alternatives on resources in the action TACs to produce fishing rates equal to would reduce 2013 TACs by about 74 area. The EIS found no significant the most recent 5-year average fishing percent. This would lead to significant environmental consequences from the rate. Alternative 4 would have set TACs reductions in harvests of species proposed action or its alternatives. to equal the lower limit of the GOA OY harvested by small entities. While NMFS prepared an Initial Regulatory range. Alternative 5, the ‘‘no action reductions of this size would be Flexibility Analysis (IRFA) as required alternative,’’ would have set TACs equal associated with offsetting price by section 603 of the Regulatory to zero. increases, the size of these increases is Flexibility Act, analyzing the The TACs associated with the very uncertain. There are close methodology for establishing the preferred harvest strategy are those substitutes for GOA groundfish species relevant TACs. The IRFA evaluated the adopted by the Council in October 2012, available in significant quantities from impacts on small entities of alternative as per Alternative 2. OFLs and ABCs for the Bering Sea and Aleutian Islands harvest strategies for the groundfish the species were based on management area. While production fisheries in the EEZ off Alaska. As set recommendations prepared by the declines in the GOA would forth in the methodology, TACs are set Council’s GOA Plan Team in September undoubtedly be associated with to a level that fall within the range of 2012, and reviewed and modified by the significant price increases in the GOA, ABCs recommended by the SSC; the Council’s SSC in October 2012. The these increases would still be sum of the TACs must achieve the OY Council based its TAC constrained by production of specified in the FMP. While the specific recommendations on those of its AP, substitutes, and are very unlikely to numbers that the methodology may which were consistent with the SSC’s offset revenue declines from smaller produce vary from year to year, the OFL and ABC recommendations. production. Thus, this alternative would methodology itself remains constant. Alternative 1 selects harvest rates that have a detrimental impact on small A description of the proposed action, would allow fishermen to harvest stocks entities. why it is being considered, and the legal at the level of ABCs, unless total Alternative 5, which sets all harvests basis for this proposed action are harvests were constrained by the upper equal to zero, would have a significant contained in the preamble above. A bound of the GOA OY of 800,000 mt. As adverse economic impact on small copy of the analysis is available from shown in Table 1 of the preamble, the entities and would be contrary to NMFS (see ADDRESSES). A summary of sum of ABCs in 2013 and 2014 would obligations to achieve OY on a the IRFA follows. be about 612,506 mt, which falls below continuing basis, as mandated by the The action under consideration is a the upper bound of the OY range. The Magnuson-Stevens Act. harvest strategy to govern the catch of sum of TACs is 447,752 mt, which is The IRFA shows that, in 2011, there groundfish in the GOA. The preferred less than the sum of ABCs. In this were 1,049 individual catcher vessels alternative is the existing harvest instance, Alternative 1 is consistent with gross revenues less than or equal strategy in which TACs fall within the with the preferred alternative to $4 million. Some of these vessels are range of ABCs recommended by the (Alternative 2), meets the objectives of members of AFA inshore pollock SSC. This action is taken in accordance that action, and has small entity impacts cooperatives, GOA rockfish with the FMP prepared by the Council that are equivalent to the preferred cooperatives, or BSAI crab pursuant to the Magnuson-Stevens Act. alternative. In some instances, the rationalization cooperatives. Therefore, The directly regulated small entities selection of Alternative 1 would not under the RFA, it is the aggregate gross include approximately 1,002 CVs and reflect the practical implications that receipts of all participating members of approximately 6 C/Ps in the GOA. The increased TACs (where the sum of TACs the cooperative that must meet the entities directly regulated by this action equals the sum of ABCs) for some ‘‘under $4 million’’ threshold. Vessels are those that harvest groundfish in the species probably would not be fully that participate in these cooperatives are EEZ of the GOA and in parallel fisheries harvested. This could be due to a lack considered to be large entities within within State waters. These include of commercial or market interest in such the meaning of the RFA. After entities operating CVs and C/Ps within species. Additionally, an underharvest accounting for membership in these the action area and entities receiving of some TACs could result due to cooperatives, there are an estimated direct allocations of groundfish. CVs constraints such as the fixed, and 1,002 small catcher vessel entities and C/Ps are considered to be small therefore constraining, PSC limits remaining in the GOA groundfish entities if they have annual gross associated with the harvest of the GOA sector. This latter group of small vessels receipts of $4 million per year or less groundfish species. had average gross revenues of about from all economic activities, including Alternative 3 selects harvest rates $485,000, and median gross revenues of the revenue of their affiliated operations based on the most recent 5 years of $230,000. The 25th percentile of gross (see Table 37 to the Economic Status of harvest rates (for species in Tiers 1 revenues was about $79,000, and the the Groundfish off Alaska, 2011, in the through 3) or for the most recent 5 years 75th percentile was about $661,000. 2011 SAFE report, dated November of harvests (for species in Tiers 4 Under Alternative 5, all 1,049 2011, available from the Council (see through 6). This alternative is individual catcher vessels impacted by
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this rule would have gross revenues of and TACs to 2013 and 2014. As noted fishing activities conducted under this $0. in the IRFA, the Council may modify rule are discussed in the EIS and its Data presented in the IRFA indicates these OFLs, ABCs, and TACs in accompanying annual SIRs (see that in 2011, 9 catcher/processors December 2012, when it reviews the ADDRESSES). grossed less than $4 million. Three November 2012 SAFE reports from its vessels in this group were estimated to groundfish plan teams, and the Authority: 16 U.S.C. 773 et seq.; 16 U.S.C. be large entities because of their December 2012 Council meeting reports 1540(f); 16 U.S.C. 1801 et seq.; 16 U.S.C. affiliations with other vessels through of its SSC and AP. Because TACs in the 3631 et seq.; Pub. L. 105–277; Pub. L. 106– 31; Pub. L. 106–554; Pub. L. 108–199; Pub. an Amendment 80 cooperative and the proposed 2013 and 2014 harvest L. 108–447; Pub. L. 109–241; Pub. L. 109– Freezer Longline Conservation specifications are unchanged from the 479. Cooperative. After taking account of 2013 TACs, NMFS does not expect these affiliations, NMFS estimates that adverse impacts on small entities. Also, Dated: November 28, 2012. six of these vessels are small entities. NMFS does not expect any changes Alan D. Risenhoover, The average gross revenue for these 6 made by the Council in December 2012 Director, Office of Sustainable Fisheries, small catcher/processor entities was to have significant adverse impacts on Performing the Functions and Duties of the $1.17 million, and the median gross small entities. Deputy Assistant Administrator for revenue was $960,000. Under This action does not modify Regulatory Programs, National Marine Alternative 5, the 6 small catcher/ recordkeeping or reporting Fisheries Service. processor impacted by this rule would requirements, or duplicate, overlap, or [FR Doc. 2012–29137 Filed 12–4–12; 8:45 am] have gross revenues of $0. conflict with any Federal rules. BILLING CODE 3510–22–P The proposed harvest specifications Adverse impacts on marine mammals extend the current 2013 OFLs, ABCs, or endangered species resulting from
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Notices Federal Register Vol. 77, No. 234
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PURPOSE(S): technological safeguards appropriate for The request must include the To support the vetting of directors, classified and Sensitive but Unclassified requestor’s full name, his/her current officers, or other employees of systems are used to protect the records address and a return address for nongovernmental organizations who against unauthorized access. All transmitting the information. The apply for USAID contracts, grants, authorized government personnel and request shall be signed by either cooperative agreements or other funding authorized contractors with access to notarized signature or by signature or who apply for registration with the system must hold appropriate under penalty of perjury and reasonably USAID as Private and Voluntary security clearance, sign a non-disclosure specify the record contents being Organizations. The information agreement, and undergo both privacy sought. collected from these individuals is and security training. This system contains classified specifically used to conduct screening For paper records: Classified and information related to the government’s to ensure that USAID funds and USAID- Sensitive but Unclassified records are national security programs, records in funded activities are not purposefully or kept in an approved security container this system may be exempt from inadvertently used to provide support to at the USAID Washington headquarters, notification, access, and amendment as entities or individuals deemed to be a and at the relevant location(s) where permitted by subsection (j) and (k) of the risk to national security. USAID has a program. Access to these Privacy Act. records is limited to those authorized ROUTINE USES OF RECORDS MAINTAINED IN THE government personnel and authorized RECORD ACCESS PROCEDURES: SYSTEM, INCLUDING CATEGORIES OF USERS AND contractors who have a need for the Requests from individuals should be THE PURPOSES OF SUCH USES: records in the performance of their addressed or presented in person to the USAID may disclose relevant system official duties. same addresses as stated in the records in accordance with any current For electronic records: Records are Notification Section above. Requests and future blanket routine uses kept in a secure database in the USAID should be accompanied by information established for its record systems. See Washington headquarters. Access to the sufficient to identify the individual the Statement of General Routine Uses records is restricted to those authorized pursuant to Sec. 215.4(c) or (d) of the (and amendments), 42 FR 47371 government personnel and authorized Agency’s Regulations as published in (September 20, 1977); 59 FR 52954 contractors with a specific role in the this issue of the Federal Register. (October 20, 1994); 59 FR 62747 vetting process as part of the CONTESTING RECORD PROCEDURES: (December 6, 1994). Routine uses are performance of their official duties. The not meant to be mutually exclusive and PVS database is housed on and accessed An individual requesting amendment may overlap in some cases. from a Sensitive but Unclassified of a record maintained on himself or herself must identify the information to DISCLOSURE TO CONSUMER REPORTING computer network. Vetting requests, AGENCIES: analyses, and results will be stored be changed and the corrective action sought. Requests must follow the None. separately on a classified computer network. Both computer networks and ‘‘Notification Procedures’’ above. POLICIES AND PRACTICES FOR STORING, the PVS database require a user RECORD SOURCE CATEGORIES: RETRIEVING, PROTECTING, ACCESSING, identification name and password and RETAINING, AND DISPOSING OF RECORDS IN THE Information in this system is obtained approval from the Office of Security. An SYSTEM: from the non-governmental audit trail is maintained and organization’s official who is STORAGE: periodically reviewed to monitor access responsible for completing the Records in this system are stored in to the system. Authorized government application package required to compete both paper and electronic format. Paper personnel and authorized contractors for USAID funds or who apply for records are maintained by the USAID assigned roles in the vetting process are registration with USAID as a Private and regional offices when the information provided role-specific training to ensure Voluntary Organization. In the case of cannot be collected electronically. that they are knowledgeable in how to applications by an individual in his/her Electronic storage is on servers (hard protect personally identifiable own capacity, the information will be disk media) and magnetic tapes (or information. other backup media). collected directly from the individual RETENTION AND DISPOSAL: applicant. Information in this system RETRIEVABILITY: Records in this system will be may also be obtained from public Records in this system are retrieved retained and disposed of in accordance sources, agencies conducting national by individual name, date of birth, place with a records schedule approved by the security screening, law enforcement and of birth, social security numbers, National Archives and Records intelligence agency record systems, and passport numbers or other identifying Administration. other government databases. data specified under Categories of EXEMPTIONS CLAIMED FOR THE SYSTEM: Records in the System. SYSTEM MANAGER(S) AND ADDRESS: Chief, Counterterrorism and 22 CFR Part 215, Section 215.13 SAFEGUARDS: Information Security Division, Office of General Exemptions: USAID maintains all classified Security, United States Agency for (c) The systems of records to be records in an authorized security International Development, Ronald exempted under section (j)(2) of the Act, container with access limited to Reagan Building, 1300 Pennsylvania the provisions of the Act from which authorized government personnel and Avenue NW., Washington, DC 20523. they are being exempted, and the authorized contractors. Physical justification for the exemptions, are set security protections include guards and NOTIFICATION PROCEDURE: forth below: locked facilities requiring badges. Only Individuals requesting notification of (2) Partner Vetting System. This authorized government personnel and the existence of records on them must system is exempt from sections (c)(3) authorized contractors can access send the request in writing to the Chief and (4); (d); (e)(1), (2), and (3); (e)(4)(G), records within the system. USAID Privacy Officer, USAID, 2733 Crystal (H), and (I); (e)(5) and (8); (f), (g), and mandates and certifies that physical and Drive, 11th Floor, Arlington, Va. 22202. (h) of 5 U.S.C. 552a. These exemptions
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are necessary to insure the proper [57 FR 38277, Aug. 24, 1992, as the online instructions for submitting functioning of the law enforcement amended at 74 FR 17, Jan. 2, 2009] comments electronically. activity, to protect confidential sources Meredith Snee, All responses to this notice will be of information, to fulfill promises of Privacy Analyst. summarized and included in the request confidentiality, to maintain the integrity for Office of Management and Budget [FR Doc. 2012–29388 Filed 12–4–12; 8:45 am] of law enforcement procedures, to avoid (OMB) approval. All comments will be premature disclosure of the knowledge BILLING CODE P a matter of public record. of criminal activity and the evidentiary basis of possible enforcement actions, to FOR FURTHER INFORMATION CONTACT: prevent interference with law Requests for additional information or DEPARTMENT OF AGRICULTURE enforcement proceeding, to avoid the copies of this information collection should be directed to Mark Porter at disclosure of investigative techniques, Food and Nutrition Service to avoid endangering law enforcement (703) 305–0901. personnel, to maintain the ability to Agency Information Collection SUPPLEMENTARY INFORMATION: obtain candid and necessary Activities: Proposed Collection; Title: Supplemental Form for information, to fulfill commitments Comment Request; Supplemental Collecting Taxpayer Identifying made to sources to protect the Form for Collecting Taxpayer Numbers, FNS–711. confidentiality of information, to avoid Identifying Numbers endangering these sources, and to OMB Number: 0584–0501. facilitate proper selection or AGENCY: Food and Nutrition Service, Form Number: FNS–711. USDA. continuance of the best applicants or Expiration Date: January 31, 2013. ACTION: Notice. persons for a given position or contract. Type of Request: Extension of a Although the primary functions of SUMMARY: In accordance with the currently approved information USAID are not of a law enforcement collection. nature, the mandate to ensure USAID Paperwork Reduction Act of 1995, this funding is not purposefully or notice invites the general public and Abstract: Section 31001(y) of the Debt inadvertently used to provide support to other public agencies to comment on the Collection Improvement Act of 1996 entities or individuals deemed to be a Agency’s proposed information (Pub. L. 104–134), codified at 31 U.S.C. risk to national security necessarily collection of taxpayer identifying 3325(d), requires Federal agencies to requires coordination with law numbers from all persons and include the taxpayer identifying number enforcement and intelligence agencies organizations with which the Agency (TIN) of all persons or organizations as well as use of their information. Use has a direct payment relationship. This they pay whenever a request for of these agencies’ information collection is an extension of a currently payment is submitted to Federal necessitates the conveyance of these approved information collection. payment officials. Departmental other systems exemptions to protect the DATES: Written comments must be Regulation 2100–2 reflects the statutory information as stated. [57 FR 38277, received on or before February 4, 2013. provision at 31 U.S.C. 7701(c) which Aug. 24, 1992, as amended at 74 FR 16, ADDRESSES: Comments are invited on: requires all individuals and entities Jan. 2, 2009] (a) Whether the proposed collection of doing business with USDA to furnish a TIN. The purpose of the Supplemental 22 CFR 215.14—Specific Exemptions. information is necessary for the proper performance of the functions of the Form for Collecting Taxpayer (c) The systems of records to be agency, including whether the Identifying Numbers is to comply with exempted under section (k) of the Act, information shall have practical utility; Federal law by enabling the Agency to the provisions of the Act from which (b) the accuracy of the agency’s estimate legally obtain a TIN from all persons they are being exempted, and the of the burden of the proposed collection and organizations who are entered into justification for the exemptions, are set of information, including the validity of a direct payment relationship with FNS. forth below: the methodology and assumptions used; Affected Public: Individuals and (6) Partner Vetting System. This (c) ways to enhance the quality, utility, entities who enter into a direct payment system is exempt under 5 U.S.C. 552a and clarity of the information to be agreement with FNS under any of the (k)(1), (k)(2), and (k)(5) from the collected; and (d) ways to minimize the various nutrition and nutrition provision of 5 U.S.C. 552a (c)(3); (d); burden of the collection of information education programs administered by (e)(1); (e)(4)(G), (H), (I); and (f). These on those who are to respond, including FNS. exemptions are claimed to protect the use of appropriate automated, Estimated Number of Respondents: materials required by executive order to electronic, mechanical, or other 800. be kept secret in the interest of national technological collection techniques or Number of Responses per defense or foreign policy, to prevent other forms of information technology. Respondent: 1. subjects of investigation from frustrating Comments may be sent to Mark the investigatory process, to insure the Porter, Director, Office of Internal Estimated Number of Annual proper functioning and integrity of law Controls, Audits and Investigations, Responses: 800. enforcement activities, to prevent Food and Nutrition Service, U.S. Estimated Time per Response: 0.0833 disclosure of investigative techniques, Department of Agriculture, 3101 Park hours. to maintain the ability to obtain candid Center Drive, Room 733, Alexandria, VA Estimated Total Annual Burden on and necessary information, to fulfill 22302. Comments may also be Respondents: 67 hours. commitments made to sources to protect submitted via fax to the attention of the confidentiality of information, to Mark Porter at 703–605–0901 or via Dated: November 20, 2012. avoid endangering these sources, and to email to [email protected]. Audrey Rowe, facilitate proper selection or Comments will also be accepted through Administrator, Food and Nutrition Service. continuance of the best applicants or the Federal eRulemaking Portal. Go to [FR Doc. 2012–29386 Filed 12–4–12; 8:45 am] persons for a given position or contract. http://www.regulations.gov, and follow BILLING CODE 3410–30–P
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DEPARTMENT OF COMMERCE Entrepreneurship, Room 7019, 1401 issued thereunder; any regulation, Constitution Avenue, Washington, DC license, or order issued under the Economic Development Administration 20230; telephone: 202–482–4068; fax: International Emergency Economic 202–273–4781. Please reference ‘‘NACIE Powers Act (50 U.S.C. 1701–1706); 18 The National Advisory Council on December 11, 2012’’ in the subject line U.S.C. 793, 794 or 798; section 4(b) of Innovation and Entrepreneurship of your fax. the Internal Security Act of 1950 (50 Meeting of the National Advisory U.S.C. 783(b)), or section 38 of the Arms Council on Innovation and Dated: November 11, 2012. Nish Acharya, Export Control Act (22 U.S.C. 2778).’’ 15 Entrepreneurship CFR 766.25(a); see also Section 11(h) of Director, Office of Innovation & AGENCY: U.S. Department of Commerce. Entrepreneurship, U.S. Department of the EAA, 50 U.S.C. app. 2410(h). The denial of export privileges under this ACTION: Notice of an open meeting. Commerce. [FR Doc. 2012–28600 Filed 12–4–12; 8:45 am] provision may be for a period of up to 10 years from the date of the conviction. SUMMARY: The National Advisory BILLING CODE 3510–03–P Council on Innovation and 15 CFR 766.25(d); see also 50 U.S.C. Entrepreneurship will hold a meeting app. 2410(h). In addition, Section 750.8 on Tuesday, December 11, 2012. The DEPARTMENT OF COMMERCE of the Regulations states that the Bureau open meeting will be held from 10:00 of Industry and Security’s Office of a.m.–12:00 p.m. and will be open to the Bureau of Industry and Security Exporter Services may revoke any public via conference call. The meeting Bureau of Industry and Security (‘‘BIS’’) Order Denying Export Privileges will take place at the U.S. Department licenses previously issued in which the person had an interest in at the time of of Commerce, 1401 Constitution Avenue In the Matter of: Kue Sang Chun, currently NW., Washington DC 20230. The incarcerated at: Register Number 56727–060, his conviction. I have received notice of Chun’s Council was chartered on November 10, FCI Loretto, Federal Correctional Institution, conviction for violating AECA, and have 2009 to advise the Secretary of P.O. Box 1,000, Loretto, PA 15940, and with provided notice and an opportunity for Commerce on matter related to an address at: 578 Treeside Lane, Avon Lake, OH 44012. Chun to make a written submission to innovation and entrepreneurship in the BIS, as provided in Section 766.25 of United States. On November 10, 2011, in the U.S. District Court, Northern District of Ohio, the Regulations. I have received a DATE: December 11, 2012. submission from Chun. Based upon my Time: 10:00 a.m.–12:00 p.m. (EST). Kue Sang Chun (‘‘Chun’’) was convicted of violating Section 38 of the Arms review and consultations with BIS’s ADDRESSES: U.S. Department of Export Control Act (22 U.S.C. 2778 Office of Export Enforcement, including Commerce, 1401 Constitution Avenue (2000)) (‘‘AECA’’). Specifically, Chun its Director, and the facts available to NW., Washington, DC 20230. Please was convicted of knowingly exporting BIS, I have decided to deny Chun’s specify if any specific requests for and causing the export from the United export privileges under the Regulations participation two business days in States to South Korea of Infra Red Focal for a period of five years from the date advance. Last minute requests will be Plane Array detectors and Infra Red of Chun’s conviction. I have also accepted, but may be impossible to camera engines which are designated as decided to revoke all licenses issued complete. defense articles on the United States pursuant to the Act or Regulations in SUPPLEMENTARY INFORMATION: The Munitions List, without having first which Chun had an interest at the time purpose of the meeting is to discuss the obtained from the Department of State a of his conviction. Accordingly, it is hereby latest initiatives by the Administration license for such export or written authorization for such export. Chun was ordered and the Secretary of Commerce on the I. Until November 10, 2016, Kue Sang sentenced to 14 months in prison issues of innovation, entrepreneurship Chun, with last known addresses at: followed by two years of supervised and commercialization. The meeting currently incarcerated at: Register release. Chun is also listed on the U.S. will also discuss efforts by the U.S. Number 56727–060, FCI Loretto, Department of Commerce around Department of State Debarred List. Section 766.25 of the Export Federal Correctional Institution, P.O. manufacturing, exports and investment. Box 1,000, Loretto, PA 15940, and with Specific topics for discussion include Administration Regulations (‘‘EAR’’ or ‘‘Regulations’’) 1 provides, in pertinent an address at: 578 Treeside Lane, Avon manufacturing, investment, exports, Lake, OH 44012, and when acting for or innovation commercialization, part, that ‘‘[t]he Director of the Office of Exporter Services, in consultation with on behalf of Chun, his representatives, entrepreneurship, federal programs for assigns, agents or employees (the commercialization and technology the Director of the Office of Export Enforcement, may deny the export ‘‘Denied Person’’), may not, directly or transfer and a second term agenda indirectly, participate in any way in any supporting innovation, privileges of any person who has been convicted of a violation of the [Export transaction involving any commodity, entrepreneurship and software or technology (hereinafter commercialization with senior Administration Act (‘‘EAA’’)], the EAR, or any order, license or authorization collectively referred to as ‘‘item’’) Administration officials. Any member of exported or to be exported from the the public may submit pertinent 1 United States that is subject to the questions and comments concerning the The Regulations are currently codified in the Code of Federal Regulations at 15 CFR Parts 730– Regulations, including, but not limited Council’s affairs at any time before or 774 (2012). The Regulations issued pursuant to the to: after the meeting. Comments may be Export Administration Act (50 U.S.C. app. 2401– A. Applying for, obtaining, or using submitted to the Office of Innovation 2420 (2000)) (‘‘EAA’’). Since August 21, 2001, the EAA has been in lapse and the President, through any license, License Exception, or and Entrepreneurship at the contact Executive Order 13222 of August 17, 2001 (3 CFR, export control document; information below. Copies of the 2001 Comp. 783 (2002)), which has been extended B. Carrying on negotiations meeting minutes will be available by successive Presidential Notices, the most recent concerning, or ordering, buying, within 90 days. being that of August 15, 2012 (77 FR 49699 (Aug. 16, 2012)), has continued the Regulations in effect receiving, using, selling, delivering, FOR FURTHER INFORMATION CONTACT: Nish under the International Emergency Economic storing, disposing of, forwarding, Acharya, Office of Innovation and Powers Act (50 U.S.C. 1701, et seq. (2000)). transporting, financing, or otherwise
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servicing in any way, any transaction only items involved that are subject to CVD Operations, Office 3, Import involving any item exported or to be the Regulations are the foreign- Administration, U.S. Department of exported from the United States that is produced direct product of U.S.-origin Commerce, 14th Street and Constitution subject to the Regulations, or in any technology. Avenue NW., Washington, DC 20230; other activity subject to the Regulations; V. This Order is effective immediately telephone (202) 482–4793 and (202) or and shall remain in effect until 482–1503, respectively. C. Benefitting in any way from any November 10, 2016. SUPPLEMENTARY INFORMATION: transaction involving any item exported VI. In accordance with Part 756 of the or to be exported from the United States Regulations, Chun may file an appeal of Background that is subject to the Regulations, or in this Order with the Under Secretary of Following the Preliminary Results, we any other activity subject to the Commerce for Industry and Security. received a case brief from the Regulations. The appeal must be filed within 45 days Government of the People’s Republic of II. No person may, directly or from the date of this Order and must China (GOC) and the RZBC Companies indirectly, do any of the following: comply with the provisions of Part 756 on July 12, 2012, and a rebuttal brief A. Export or reexport to or on behalf of the Regulations. from Petitioners 2 on July 23, 2012. We of the Denied Person any item subject to VII. A copy of this Order shall be did not hold a hearing in this review, as the Regulations; delivered to the Chun. This Order shall one was not requested. B. Take any action that facilitates the be published in the Federal Register. Scope of the Order acquisition or attempted acquisition by Issued this _28th day of November, 2012. the Denied Person of the ownership, Bernard Kritzer, The merchandise subject to the order possession, or control of any item Director, Office of Exporter Services. is citric acid and certain citrate salts. subject to the Regulations that has been [FR Doc. 2012–29374 Filed 12–4–12; 8:45 am] The product is currently classified or will be exported from the United under the Harmonized Tariff Schedule BILLING CODE P States, including financing or other of the United States (HTSUS) item support activities related to a numbers 2918.14.0000, 2918.15.1000, transaction whereby the Denied Person DEPARTMENT OF COMMERCE 2918.15.5000, 3824.90.9290, and acquires or attempts to acquire such 3824.90.9290. Although the HTSUS ownership, possession or control; International Trade Administration numbers are provided for convenience C. Take any action to acquire from or [C–570–938] and customs purposes, the written to facilitate the acquisition or attempted product description, available in Citric acquisition from the Denied Person of Citric Acid and Certain Citrate Salts Acid and Certain Citrate Salts from the any item subject to the Regulations that From the People’s Republic of China: People’s Republic of China: Notice of has been exported from the United Final Results of Countervailing Duty Countervailing Duty Order, 74 FR 25705 States; (May 29, 2009), remains dispositive. D. Obtain from the Denied Person in Administrative Review; 2010 the United States any item subject to the AGENCY: Import Administration, Analysis of Comments Received Regulations with knowledge or reason International Trade Administration, All issues raised in the case briefs to know that the item will be, or is Department of Commerce. filed by the GOC and the RZBC intended to be, exported from the SUMMARY: The Department of Commerce Companies and the rebuttal brief filed United States; or (the Department) has completed its by Petitioners are addressed in the E. Engage in any transaction to service administrative review of the Memorandum from Christian Marsh, any item subject to the Regulations that countervailing duty (CVD) order on Deputy Assistant Secretary for has been or will be exported from the citric acid and certain citrate salts from Antidumping and Countervailing Duty United States and which is owned, the People’s Republic of China for the Operations, to Ronald K. Lorentzen, possessed or controlled by the Denied period January 1, 2010, through Acting Assistant Secretary for Import Person, or service any item, of whatever December 31, 2010. On June 5, 2012, we Administration, entitled ‘‘Issues and origin, that is owned, possessed or published the preliminary results of this Decision Memorandum for the Final controlled by the Denied Person if such review.1 Results of the Countervailing Duty service involves the use of any item We provided interested parties with Administrative Review of Citric Acid subject to the Regulations that has been an opportunity to comment on the and Certain Citrate Salts from the or will be exported from the United Preliminary Results. Our analysis of the People’s Republic of China,’’ signed States. For purposes of this paragraph, comments submitted has not resulted in concurrently with this notice (Issues servicing means installation, a change to the net subsidy rate for and Decision Memorandum), which is maintenance, repair, modification or RZBC Co., Ltd., RZBC Juxian Co., Ltd., hereby adopted by this notice. A list of testing. RZBC Imp. & Exp. Co., Ltd., and RZBC the issues raised is attached to this III. After notice and opportunity for Group Shareholding Co., Ltd. notice as Appendix I. The Issues and comment as provided in Section 766.23 (collectively, the RZBC Companies or Decision Memorandum is a public of the Regulations, any other person, RZBC). The final net subsidy rate for the document and is on file electronically firm, corporation, or business RZBC Companies is listed below in the via Import Administration’s organization related to Chun by section entitled ‘‘Final Results of Antidumping and Countervailing Duty affiliation, ownership, control or Review.’’ Centralized Electronic Service System position of responsibility in the conduct DATES: Effective Date: December 5, 2012. (IA ACCESS). IA ACCESS is available to of trade or related services may also be FOR FURTHER INFORMATION CONTACT: registered users at http:// subject to the provisions of this Order if Kristen Johnson or Patricia Tran, AD/ iaaccess.trade.gov and in the Central necessary to prevent evasion of the Records Unit, room 7046 of the main Order. 1 See Citric Acid and Certain Citrate Salts from IV. This Order does not prohibit any the People’s Republic of China: Preliminary Results 2 Petitioners are Archer Daniels Midland export, reexport, or other transaction of Countervailing Duty Administrative Review, 77 Company, Cargill, Incorporated, and Tate & Lyle subject to the Regulations where the FR 33167 (June 5, 2012) (Preliminary Results). Ingredients Americas LLC.
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Department of Commerce building. In written notification of return or FOR FURTHER INFORMATION CONTACT: addition, a complete version of the destruction of APO materials or Jennifer Meek or Mary Kolberg, Office of Issues and Decision Memorandum can conversion to judicial protective order is AD/CVD Operations, Office 1, Import be accessed directly on the internet at hereby requested. Failure to comply Administration, International Trade http://www.trade.gov/ia/. The signed with the regulations and the terms of an Administration, U.S. Department of Issues and Decision Memorandum and APO is a sanctionable violation. Commerce, 14th Street and Constitution the electronic versions of the Issues and We are issuing and publishing these Avenue NW., Washington, DC 20230; Decision Memorandum are identical in results in accordance with sections telephone: (202) 482–2778 and (202) content. 751(a)(1) and 777(i)(1) of the Tariff Act 482–1785, respectively. of 1930, as amended. Final Results of Review Background Dated: November 29, 2012. In accordance with 19 CFR In the Preliminary Results, the Ronald K. Lorentzen, 351.221(b)(5), we calculated a subsidy Department partially rescinded this rate for the mandatory respondent, the Acting Assistant Secretary for Import administrative review with respect to Administration. RZBC Companies. the following companies: Asia Pacific Appendix—Issues in Decision CIS (Wuxi) Co., Ltd.; Guangdong Producer/Exporter Net subsidy Memorandum Wireking Co., Ltd. (formerly known as rate Foshun Shunde Wireking Housewares & Comment 1: Authority to Apply CVD to the Hardware); Hangzhou Dunli Import & RZBC Co., Ltd., RZBC Juxian PRC Co., Ltd., RZBC Imp. & Comment 2: Double-Counting Export Co., Ltd. and Hangzhou Dunli Exp. Co., Ltd., and RZBC Comment 3: Countervailability of Industry Co., Ltd.; Hengtong Hardware Group Shareholding Co., Shandong Province Policy Loans Manufacturing (Huizhou) Co., Ltd.; Ltd ...... 5.27% Comment 4: Specificity Findings for Jiangsu Weixi Group Co.; and Leader Sulfuric Acid and Steam Coal Metal Industry Co., Ltd. (aka Marmon Assessment Rates Comment 5: Use of Tier One Benchmark Retail Services Asia). for Sulfuric Acid and Steam Coal The Department intends to issue Comment 6: Whether Certain Input Assessment appropriate assessment instructions Suppliers Are Government Authorities The Department will instruct U.S. directly to U.S. Customs and Border Comment 7: Rejection of RZBC’s Customs and Border Protection (CBP) to Submission Protection (CBP) 15 days after the date assess countervailing duties on all of publication of these final results, to Comment 8: Export Prices for Sulfuric Acid from India and Thailand appropriate entries. For the companies liquidate shipments of subject for which this review is rescinded, merchandise by the RZBC Companies [FR Doc. 2012–29429 Filed 12–4–12; 8:45 am] countervailing duties shall be assessed entered, or withdrawn from warehouse, BILLING CODE 3510–DS–P at rates equal to the cash deposit of for consumption on or after January 1, estimated countervailing duties required 2010, through December 31, 2010. DEPARTMENT OF COMMERCE at the time of entry, or withdrawal from Cash Deposit Instructions warehouse, for consumption, during the International Trade Administration period January 1, 2010, through The Department also intends to December 31, 2010, in accordance with instruct CBP to collect cash deposits of [C–570–942] 19 CFR 351.212(c)(1)(i). estimated countervailing duties in the The Department intends to issue amounts shown above on shipments of Certain Kitchen Appliance Shelving appropriate assessment instructions subject merchandise by the RZBC and Racks from the People’s Republic directly to CBP 15 days after publication Companies entered, or withdrawn from of China: Countervailing Duty of this notice. warehouse, for consumption on or after Administrative Review, 2010; the date of publication of the final Correction Dated: November 28, 2012 results of this review. For all non- Ronald K. Lorentzen, AGENCY: Import Administration, reviewed companies, we will instruct Acting Assistant Secretary for Import International Trade Administration, CBP to continue to collect cash deposits Administration. Department of Commerce. at the most recent company-specific or [FR Doc. 2012–29427 Filed 12–4–12; 8:45 am] country-wide rate applicable to the SUMMARY: On October 9, 2012, the BILLING CODE 3510–DS–P company. Accordingly, the cash deposit Department of Commerce (Department) rates that will be applied to companies published in the Federal Register a covered by this order, but not examined notice of preliminary results and partial DEPARTMENT OF COMMERCE rescission of administrative review in this review, are those established in International Trade Administration the most recently completed segment of concerning the countervailing duty the proceeding for each company. These order on certain kitchen appliance [Application No. 85–17A18] cash deposit requirements, when shelving and racks from the People’s imposed, shall remain in effect until Republic of China. See Certain Kitchen Export Trade Certificate of Review Appliance Shelving and Racks From the further notice. ACTION: People’s Republic of China: Notice of Application to Amend Administrative Protective Order Countervailing Duty Administrative the Export Trade Certificate of Review Review; 2010, 77 FR 61396 (October 9, Issued to U.S. Shippers Association No. This notice serves as a reminder to 85–17A18. parties subject to administrative 2012) (Preliminary Results). The protective order (APO) of their Preliminary Results inadvertently SUMMARY: The Office of Competition responsibility concerning the omitted the assessment instructions that and Economic Analysis (‘‘OCEA’’) of the disposition of proprietary information pertain to the rescission of review for International Trade Administration, disclosed under APO in accordance six producers/exporters. Department of Commerce, has received with 19 CFR 351.305(a)(3). Timely DATES: Effective Date: December 5, 2012. an application to amend an Export
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Trade Certificate of Review 18721, April 12, 2006). A summary of SUMMARY: Pursuant to the Order of the (‘‘Certificate’’). This notice summarizes the current application for an Binational Panel dated October 16, the proposed amendment and requests amendment follows. 2012, the panel review was completed comments relevant to whether the on November 29, 2012. Summary of the Application amended Certificate should be issued. FOR FURTHER INFORMATION CONTACT: FOR FURTHER INFORMATION CONTACT: Applicant: U.S. Shippers Association Ellen Bohon, United States Secretary, Joseph Flynn, Director, Office of (‘‘USSA’’), 3715 East Valley Drive, NAFTA Secretariat, Suite 2061, 14th Competition and Economic Analysis, Missouri City, Texas 77459. and Constitution Avenue, Washington, International Trade Administration, Contact: Antonio F De Santis, Project DC 20230, (202) 482–5438. Director. Telephone: (281) 437–1616. (202) 482–5131 (this is not a toll-free SUPPLEMENTARY INFORMATION: On Application No.: 85–17A18. number) or email at [email protected]. Date Deemed Submitted: November October 16, 2012, the Binational Panel SUPPLEMENTARY INFORMATION: Title III of 21, 2012. issued an Order granting a joint motion the Export Trading Company Act of Proposed Amendment: USSA seeks to filed by the Investigating Authority 1982 (15 U.S.C. 4001–21) authorizes the amend its Certificate to: Add each of the (U.S. Department of Commerce) and the Secretary of Commerce to issue Export following companies and persons as a Complainant (ThyssenKrupp Mexinox Trade Certificates of Review. An Export new ‘‘Member’’ of the Certificate within S.A. de C.V. and Mexinox USA, Inc.) to Trade Certificate of Review protects the the meaning of section 325.2(1) of the dismiss the panel review concerning the holder and the members identified in Regulations (15 CFR 325.2(1)): Department of Commerce’s final the Certificate from State and Federal (a) Phibro Animal Health Corporation, determination concerning Stainless government antitrust actions and from 300 Frank W. Burr Boulevard, Teaneck, Steel Sheet and Strip in Coils from private treble damage antitrust actions NJ 07666, and Mexico. The Secretariat was instructed for the export conduct specified in the (b) Altimore Consultants, LLC, 17202 to issue a Notice of Completion of Panel Certificate and carried out in Pleasant Road, Needville, TX 77461. Review on the 31st day following the compliance with its terms and In addition, the following member has issuance of the Notice of Final Panel conditions. Section 302(b)(1) of the been subject to a purchase: Action, if no request for an Export Trading Company Act of 1982 Rhodia, Inc., Cranbury, NJ 08512– Extraordinary Challenge Committee was and 15 CFR 325.6(a) require the 7500 has been purchased by Solvay filed. No such request was filed. Secretary to publish a notice in the America, Inc., Houston, TX 77098, Therefore, on the basis of the Panel Federal Register identifying the which also owns member Solvay Order and Rule 80 of the Article 1904 applicant and summarizing its proposed Chemicals, Inc. of the same address. Panel Rules, the Panel Review was export conduct. The following companies are deleted completed and the panelists were as members: discharged from their duties effective Request for Public Comments Hexion Specialty Chemicals, Houston, November 29, 2012. Interested parties may submit written TX; Dated: November 29, 2012. comments relevant to the determination KRATON Polymers U.S. LLC, Houston, Ellen M. Bohon, whether an amended Certificate should TX; United States Secretary, NAFTA Secretariat. be issued. If the comments include any Sartomer USA, LLC, Exton, PA; [FR Doc. 2012–29396 Filed 12–4–12; 8:45 am] Shell Chemical and Oil Products privileged or confidential business BILLING CODE 3510–GT–P information, it must be clearly marked Companies, Houston, TX; and a nonconfidential version of the Taminco, Inc., Taminco Higher Amines, comments (identified as such) should be Inc., and Taminco Methylamines, DEPARTMENT OF COMMERCE included. Any comments not marked as Inc., Allentown, PA . privileged or confidential business Dated: November 30, 2012. International Trade Administration information will be deemed to be Joseph E. Flynn, nonconfidential. North American Free-Trade Director, Office of Competition and Economic Agreement, Article 1904 NAFTA Panel An original and five (5) copies, plus Analysis. Reviews; Request for Panel Review two (2) copies of the nonconfidential [FR Doc. 2012–29408 Filed 12–4–12; 8:45 am] version, should be submitted no later BILLING CODE 3510–DR–P AGENCY: NAFTA Secretariat, United than 20 days after the date of this notice States Section, International Trade to: Export Trading Company Affairs, Administration, Department of International Trade Administration, DEPARTMENT OF COMMERCE Commerce. U.S. Department of Commerce, Room ACTION: Notice of First Request for Panel 7025, Washington, DC 20230. International Trade Administration Review. Information submitted by any person is exempt from disclosure under the North American Free Trade Agreement SUMMARY: On September 3, 2012, Freedom of Information Act (5 U.S.C. (NAFTA), Article 1904 Binational Panel Sanderson Farms. Inc., filed a First 552). However, nonconfidential versions Reviews Request for Panel Review with the of the comments will be made available AGENCY: NAFTA Secretariat, United Mexican Section of the NAFTA to the applicant if necessary for States Section, International Trade Secretariat pursuant to Article 1904 of determining whether or not to issue the Administration, Department of the North American Free Trade Certificate. Comments should refer to Commerce. Agreement. Panel Review was requested this application as ‘‘Export Trade of the Final resolution of the ACTION: Notice of Completion of Panel Certificate of Review, application Countervailing Duty Administrative Review of the Department of number 85–17A18.’’ Review, regarding the importation of Commerce’s final determination of The U.S. Shippers Association’s chicken leg quarters originating from the Stainless Steel Sheet and Strip in Coils original Certificate was issued on June United States of America. This from Mexico (Secretariat File No. USA– 3, 1986 (51 FR 20873, June 9, 1986), and determination was published in the MEX–2007–1904–01). last amended on April 6, 2006 (71 FR Diario Oficial de la Federacio´ n, on
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August 6, 2012. The NAFTA Secretariat Dated: November 29, 2012. Division at the address listed above. The has assigned Case Number MEX–USA– Ellen M. Bohon, request should set forth the specific 2012–1904–01 to this request. United States Secretary, NAFTA Secretariat. reasons why a hearing on this FOR FURTHER INFORMATION CONTACT: [FR Doc. 2012–29387 Filed 12–4–12; 8:45 am] application would be appropriate. Ellen M. Bohon, United States BILLING CODE 3510–GT–P FOR FURTHER INFORMATION CONTACT: Secretary, NAFTA Secretariat, Suite Colette Cairns or Amy Hapeman, (301) 2061, 14th and Constitution Avenue DEPARTMENT OF COMMERCE 427–8401. NW., Washington, DC 20230, (202) 482– 5438. SUPPLEMENTARY INFORMATION: The National Oceanic and Atmospheric subject permit is requested under the SUPPLEMENTARY INFORMATION: Chapter Administration authority of the Endangered Species Act 19 of the North American Free-Trade RIN 0648–XC372 of 1973, as amended (ESA; 16 U.S.C. Agreement (‘‘Agreement’’) established a 1531 et seq.) and the regulations mechanism to replace domestic judicial Endangered Species; File No. 17381 governing the taking, importing, and review of final determinations in AGENCY: National Marine Fisheries exporting of endangered and threatened antidumping and countervailing duty species (50 CFR 222–226). cases involving imports from a NAFTA Service (NMFS), National Oceanic and country with review by independent Atmospheric Administration (NOAA), The applicant requests a 5-year permit binational panels. When a Request for Commerce. to continue long-term research on the Panel Review is filed, a panel is ACTION: Notice; receipt of application. demographics and movements of green, established to act in place of national loggerhead, hawksbill, and Kemp’s SUMMARY: Notice is hereby given that courts to review expeditiously the final ridley sea turtles in Florida waters. This Kristen Hart, Ph.D., United States determination to determine whether it research would take place in and Geological Survey, Southeast Ecological around the Dry Tortugas National Park, conforms with the antidumping or Science Center, 3205 College Avenue, and in the coastal waters off Florida in countervailing duty law of the country Davie, FL 33314, has applied in due the Gulf of Mexico. The objectives of the that made the determination. form for a permit to take green (Chelonia research are to: (1) Obtain information Under Article 1904 of the Agreement, mydas), loggerhead (Caretta caretta), which came into force on January 1, hawksbill (Eretmochelys imbricata), and on fine-scale temporal and spatial 1994, the Government of the United Kemp’s ridley (Lepidochelys kempii) sea patterns of sea turtle habitat use and States, the Government of Canada, and turtles for the purposes of scientific movement patterns inside and outside the Government of Mexico established research. the National Park; (2) examine diet Rules of Procedure for Article 1904 through stable isotope analysis; and (3) DATES: Written, telefaxed, or emailed Binational Panel Reviews (‘‘Rules’’). determine genetic distinctiveness and comments must be received on or before These Rules were published in the connectivity to other populations. January 4, 2013. Federal Register on February 23, 1994 Researchers would capture sea turtles (59 FR 8686). ADDRESSES: The application and related by rodeo capture, cast net, tangle net, documents are available for review by dip net or hand capture. Turtles would A first Request for Panel Review was selecting Records Open for Public filed with the Mexican Section of the be weighed, measured, flipper tagged, Comment from the Features box on the passive integrated transponder tagged, NAFTA Secretariat, pursuant to Article Applications and Permits for Protected blood sampled, tissue sampled, scute 1904 of the Agreement, on September 3, Species (APPS) home page, https:// sampled, epibiota sampled, fecal 2012, requesting a panel review of the apps.nmfs.noaa.gov, and then selecting determination and order described File No. 17183 from the list of available sampled, undergo gastric lavage, above. applications. temporarily carapace marked, The Rules provide that: These documents are also available photographed, and released. A subset of upon written request or by appointment turtles would be fitted with some (a) A Party or interested person may combination of up to three telemetry challenge the final determination in in the following offices: tags—e.g., satellite tag, acoustic whole or in part by filing a Complaint Permits and Conservation Division, transmitter, and/or accelerometer,—and in accordance with Rule 39 within 30 Office of Protected Resources, NMFS, tracked; upon recapture, these animals days after the filing of the first Request 1315 East-West Highway, Room 13705, for Panel Review; Silver Spring, MD 20910; phone (301) would have the tags removed. 427–8401; fax (301) 713–0376; and Dated: November 30, 2012. (b) A Party, investigating authority or Southeast Region, NMFS, 263 13th P. Michael Payne, interested person that does not file a Avenue South, Saint Petersburg, FL Complaint but that intends to appear in 33701; phone (727) 824–5312; fax (727) Chief, Permits and Conservation Division, support of any reviewable portion of the 824–5309. Office of Protected Resources, National final determination may participate in Written comments on this application Marine Fisheries Service. the panel review by filing a Notice of should be submitted to the Chief, [FR Doc. 2012–29323 Filed 12–4–12; 8:45 am] Appearance in accordance with Rule 40 Permits and Conservation Division BILLING CODE 3510–22–P within 45 days after the filing of the first • By email to Request for Panel; and [email protected] (include (c) The panel review shall be limited the File No. in the subject line of the to the allegations of error of fact or law, email), including the jurisdiction of the • By facsimile to (301) 713–0376, or investigating authority, that are set out • At the address listed above. in the Complaints filed in panel review Those individuals requesting a public and the procedural and substantive hearing should submit a written request defenses raised in the panel review. to the Chief, Permits and Conservation
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DEPARTMENT OF COMMERCE harassment, a notice of a proposed The research group at UC Santa Cruz authorization is provided to the public operates in collaboration with two large- National Oceanic and Atmospheric for review. scale marine research programs: PISCO Administration Authorization for incidental takings and the Multi-agency Rocky Intertidal RIN 0648–XC283 shall be granted if NMFS finds that the Network. The research group at UC taking will have a negligible impact on Santa Cruz (PISCO) is responsible for Takes of Marine Mammals Incidental to the species or stock(s), will not have an many of the ongoing rocky intertidal Specified Activities; Taking Marine unmitigable adverse impact on the monitoring programs along the Pacific Mammals Incidental to Rocky Intertidal availability of the species or stock(s) for coast. Monitoring occurs at rocky Monitoring Surveys along the Oregon subsistence uses (where relevant), and if intertidal sites, often large bedrock and California Coasts the permissible methods of taking, other benches, from the high intertidal to the means of effecting the least practicable water’s edge. Long-term monitoring AGENCY: National Marine Fisheries impact on the species or stock and its projects include Community Structure Service (NMFS), National Oceanic and habitat, and requirements pertaining to Monitoring, Intertidal Biodiversity Atmospheric Administration (NOAA), the mitigation, monitoring and reporting Surveys, Marine Protected Area Commerce. of such takings are set forth. NMFS has Baseline Monitoring, Intertidal ACTION: Notice; issuance of an incidental defined ‘‘negligible impact’’ in 50 CFR Recruitment Monitoring, and Ocean harassment authorization. 216.103 as ‘‘* * * an impact resulting Acidification. Research is conducted from the specified activity that cannot throughout the year along the California SUMMARY: In accordance with the be reasonably expected to, and is not and Oregon coasts and will continue Marine Mammal Protection Act reasonably likely to, adversely affect the indefinitely. Most sites are sampled one (MMPA) regulations, notification is species or stock through effects on to three times per year over a 4–6 hour hereby given that NMFS has issued an annual rates of recruitment or survival.’’ period during a negative low tide series. Incidental Harassment Authorization Section 101(a)(5)(D) of the MMPA This IHA is only effective for a 12- (IHA) to the Partnership for established an expedited process by month period. The following specific Interdisciplinary Study of Coastal which citizens of the United States can aspects of the activities are likely to Oceans (PISCO) at the University of apply for an authorization to result in the take of marine mammals: California (UC) Santa Cruz to take incidentally take small numbers of Presence of survey personnel near marine mammals, by harassment, marine mammals by harassment. pinniped haulout sites and approach of incidental to rocky intertidal monitoring Section 101(a)(5)(D) establishes a 45-day survey personnel towards hauled out surveys. time limit for NMFS review of an pinnipeds. Take, by Level B harassment DATES: Effective December 3, 2012, application followed by a 30-day public only, of individuals of three species of through December 2, 2013. notice and comment period on any marine mammals is anticipated to result proposed authorizations for the ADDRESSES: A copy of the authorization, from the specified activity. application, and associated incidental harassment of marine mammals. Within 45 days of the close Description of the Specified Activity Environmental Assessment (EA) and of the comment period, NMFS must and Specified Geographic Region Finding of No Significant Impact either issue or deny the authorization. PISCO focuses on understanding the (FONSI) may be obtained by writing to Except with respect to certain activities nearshore ecosystems of the U.S. west Michael Payne, Chief, Permits and not pertinent here, the MMPA defines coast through a number of Conservation Division, Office of ‘‘harassment’’ as: ‘‘Any act of pursuit, interdisciplinary collaborations. PISCO Protected Resources, National Marine torment, or annoyance which (i) has the integrates long-term monitoring of Fisheries Service, 1315 East-West potential to injure a marine mammal or ecological and oceanographic processes Highway, Silver Spring, MD 20910, marine mammal stock in the wild [Level at dozens of sites with experimental telephoning the contact listed below A harassment]; or (ii) has the potential work in the lab and field. A short (see FOR FURTHER INFORMATION CONTACT), to disturb a marine mammal or marine description is contained here. or visiting the Internet at: http:// mammal stock in the wild by causing Additional information can be found in www.nmfs.noaa.gov/pr/permits/ disruption of behavioral patterns, PISCO’s application (see ADDRESSES) incidental.htm. Documents cited in this including, but not limited to, migration, and the Notice of Proposed IHA (77 FR notice may also be viewed, by breathing, nursing, breeding, feeding, or 64320, October 19, 2012). appointment, during regular business sheltering [Level B harassment].’’ Community Structure Monitoring hours, at the aforementioned address. involves the use of permanent photoplot FOR FURTHER INFORMATION CONTACT: Summary of Request quadrats which target specific algal and Candace Nachman, Office of Protected On July 18, 2012, NMFS received an invertebrate assemblages (e.g. mussels, Resources, NMFS, (301) 427–8401. application from PISCO for the taking of rockweeds, barnacles). This project SUPPLEMENTARY INFORMATION: marine mammals incidental to rocky provides managers with insight into the intertidal monitoring surveys along the causes and consequences of changes in Background Oregon and California coasts. NMFS species abundance. Each Community Sections 101(a)(5)(A) and (D) of the determined that the application was Structure site is surveyed over a 1-day MMPA (16 U.S.C. 1361 et seq.) direct adequate and complete on September period during a low tide series one to the Secretary of Commerce to allow, 11, 2012. On October 19, 2012, we three times a year. Sites, location, upon request, the incidental, but not published a notice in the Federal number of times sampled per year, and intentional, taking of small numbers of Register of our proposal to issue an IHA typical sampling months for each site marine mammals by U.S. citizens who with preliminary determinations and are presented in Table 1 in PISCO’s engage in a specified activity (other than explained the basis for the proposal and application (see ADDRESSES). commercial fishing) within a specified preliminary determinations (77 FR Biodiversity Surveys, which are part geographical region if certain findings 64320). The notice initiated a 30-day of a long-term monitoring project and are made and either regulations are public comment period. Responses are are conducted every 3–5 years at issued or, if the taking is limited to discussed below. established sites, involve point contact
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identification along permanent locations. Some sampling is anticipated Blancas. A small number of harbor seal transects, mobile invertebrate quadrat to occur in all months, except for pup takes are now included for Carmel counts, sea star band counts, and tidal January, August, and September. Point. Now that these corrections have height topographic measurements. Table The intertidal zones where PISCO been made, the take levels outlined in 2 in PISCO’s application (see conducts intertidal monitoring are also the table match with those described in ADDRESSES) lists established areas where pinnipeds can be found the text. Table 1 in this document biodiversity sites in Oregon and hauled out on the shore at or adjacent reflects the correct number of California. to some research sites. Accessing authorized take, by Level B harassment, In September 2007, the state of portions of the intertidal habitat may for each species. California began establishing a network cause incidental Level B (behavioral) of Marine Protected Areas along the harassment of pinnipeds through some Description of Marine Mammals in the California coast as part of the Marine unavoidable approaches if pinnipeds Area of the Specified Activity Life Protection Act (MLPA). Under are hauled out directly in the study Several pinniped species can be baseline monitoring programs funded by plots or while biologists walk from one found along the California and Oregon Sea Grant and the Ocean Protection location to another. No motorized coasts. The three that are most likely to Council, PISCO established additional equipment is involved in conducting occur at some of the research sites are intertidal monitoring sites in the Central these surveys. The species for which California sea lion, harbor seal, and Coast (Table 3 in PISCO’s application), Level B harassment is authorized are: northern elephant seal. None of these North Central Coast (Table 4 in PISCO’s California sea lions (Zalophus species are listed as threatened or application), and South Coast (Table 5 californianus californianus); harbor endangered under the U.S. Endangered in PISCO’s application) study regions. seals (Phoca vitulina richardii); and Species Act (ESA) or as depleted under Intertidal recruitment monitoring northern elephant seals (Mirounga the MMPA. On rare occasions, PISCO collects data on invertebrate larval angustirostris). researchers have seen very small recruitment on a monthly basis at two numbers (i.e., five or fewer) of Steller central California sites. Mussel and Comments and Responses sea lions at one of the sampling sites. other bivalve recruits are collected in A Notice of Proposed IHA was These sightings are rare. Therefore, mesh pot-scrubbers bolted into the published in the Federal Register on encounters are not expected. However, substrate. Barnacle recruits and cyprids October 19, 2012 (77 FR 64320) for if Steller sea lions are sighted before are collected on PVC plates covered in public comment. During the 30-day approaching a sampling site, researchers non-slip tape and bolted to the public comment period, NMFS received will abandon approach and return at a substrate. one letter from the Marine Mammal later date. For this reason, this species The Ocean Margin Ecosystems Group Commission (MMC). No other is not considered further in this IHA. for Acidification Studies is a National organizations or private citizens We refer the public to Carretta et al. Science Foundation funded project that provided comments on the proposed (2011) for general information on these involves research at eight sites along the issuance of an IHA for this activity. species which are presented below this California Current upwelling system Comment: The MMC notes that the section. The publication is available on from Southern California into Oregon. take table in the application the internet at: http:// PISCO is responsible for research at two underestimated the number of takes www.nmfs.noaa.gov/pr/pdfs/sars/ of these sites, Hopkins and Terrace based on the take estimation method po2011.pdf. Additional information on Point, located in the Monterey Bay within the text. If that problem is fixed, the status, distribution, seasonal region of mainland California. The then the MMC concurs with NMFS’ distribution, and life history can also be intention of this collaboration is to preliminary finding and recommends found in PISCO’s application and monitor oceanic pH on large spatial and that NMFS issue the requested IHA (1) NMFS’ Notice of Proposed IHA (77 FR temporal scales and to determine if any with the proposed mitigation and 64320, October 19, 2012). The relationship exists between changing monitoring measures and (2) after information has not changed and is ocean chemistry and the states of two revising the number of takes in the take therefore not repeated here. key intertidal organisms, the purple table to be consistent with the take California (southern) sea otters urchin and the California mussel. estimation method in the text of the (Enhydra lutris nereis), listed as application. threatened under the ESA and Specified Geographic Location and Response: NMFS has included all of categorized as depleted under the Activity Timeframe the mitigation and monitoring measures MMPA, usually range in coastal waters PISCO’s research is conducted proposed in the Notice of Proposed IHA within 2 km (1.2 mi) of shore. This throughout the year along the California (77 FR 64320, October 19, 2012) in the species is managed by the U.S. Fish and and Oregon coasts. Figures 1 through 4 issued IHA. Additionally, NMFS has Wildlife Service and is not considered in PISCO’s application depict regularly corrected the take estimates noted in further in this notice. sampled sites. Red stars in the figures Table 7 of PISCO’s application to match indicate sites where pinnipeds are the text contained on pages 16–18 of the Potential Effects of the Specified found during monitoring survey application. Specific changes that were Activity on Marine Mammals activities. Most sites are sampled one to made to the table include the removal The appearance of researchers may three times per year over a 1-day period of takes of northern elephant seals at have the potential to cause Level B (4–6 hours per site) during a negative Sea Ranch and Hopkins. The northern harassment of any pinnipeds hauled out low tide series. Due to the large number elephant seal takes at Hopkins were at sampling sites. Although marine of research sites, scheduling constraints, correctly moved to the harbor seal pup mammals are never deliberately the necessity for negative low tides and columns in the table to account for the approached by abalone survey favorable weather/ocean conditions, potential presence of harbor seal pups at personnel, approach may be exact survey dates are variable and that location. Take events per year were unavoidable if pinnipeds are hauled out difficult to predict. Table 1 in PISCO’s increased to three at Stillwater and in the immediate vicinity of the application (see ADDRESSES) outlines the Government Point and to two events per permanent study plots. Disturbance may typical sampling season for the various year at Carmel Point and Piedras result in reactions ranging from an
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animal simply becoming alert to the already occurred. In some instances, to detect pinnipeds before close presence of researchers (e.g., turning the bolts will need to be replaced or approach to avoid being seen by head, assuming a more upright posture) installed for new plots. Bolts are 7.6 to animals; (6) only flushing pinnipeds if to flushing from the haul-out site into 12.7 cm (2 to 5 in) long, stainless steel they are located in the sampling plots the water. NMFS does not consider the 1 cm (3⁄8 in) Hex or Carriage bolts. They and there are no other means to lesser reactions to constitute behavioral are installed by drilling a hole with a accomplish the survey (however, harassment, or Level B harassment battery powered DeWalt 24 volt rotary flushing must be done slowly and takes, but rather assumes that pinnipeds hammer drill with a 1 cm (3⁄8 in) bit. quietly so as not to cause a stampede); that move greater than 1 m (3.3 ft) or The bolts protrude 1.3–7.6 cm (0.5–3 in) (7) no intentional flushing if pups are change the speed or direction of their above the rock surface and are held in present at the sampling site; and (8) movement in response to the presence place with marine epoxy. Although the rescheduling sampling if Steller sea of researchers are behaviorally harassed, drill does produce noticeable noise, lions are present at the site. and thus subject to Level B taking. researchers have never observed an The methodologies and actions noted Animals that respond to the presence of instance where near-by or offshore in this section will be utilized and are researchers by becoming alert, but do marine mammals were disturbed by it. included as mitigation measures in the not move or change the nature of Any marine mammal at the site would IHA to ensure that impacts to marine locomotion as described, are not likely be disturbed by the presence of mammals are mitigated to the lowest considered to have been subject to researchers and retreat to a distance level practicable. The primary method behavioral harassment. NMFS’ Notice of where the noise of the drill would not of mitigating the risk of disturbance to Proposed IHA (77 FR 64320, October 19, increase the disturbance. In most pinnipeds, which will be in use at all 2012) contains information regarding instances, wind and wave noise also times, is the selection of judicious potential impacts to marine mammals drown out the noise of the drill. The routes of approach to study sites, from the specified activity. The installation of bolts and other sampling avoiding close contact with pinnipeds information has not changed and is equipment is conducted under the hauled out on shore, and the use of therefore not repeated here. appropriate permits (Monterey Bay extreme caution upon approach. In no Typically, even those reactions National Marine Sanctuary, California constituting Level B harassment would State Parks). Once a particular study has case will marine mammals be result at most in temporary, short-term ended, the respective sampling deliberately approached by survey disturbance. In any given study season, equipment is removed. No trash or field personnel, and in all cases every researchers will visit sites one to three gear is left at a site. Thus, the activity possible measure will be taken to select times per year for a total of 4–6 hours is not expected to have any habitat- a pathway of approach to study sites per visit. Therefore, disturbance of related effects, including to marine that minimizes the number of marine pinnipeds resulting from the presence of mammal prey species, that could cause mammals potentially harassed. In researchers lasts only for short periods significant or long-term consequences general, researchers will stay inshore of of time and is separated by significant for individual marine mammals or their pinnipeds whenever possible to allow amounts of time in which no populations. maximum escape to the ocean. Each disturbance occurs. Because such visit to a given study site will last for disturbance is sporadic, rather than Mitigation approximately 4–6 hours, after which chronic, and of low intensity, individual In order to issue an incidental take the site is vacated and can be re- marine mammals are unlikely to incur authorization (ITA) under Section occupied by any marine mammals that any detrimental impacts to vital rates or 101(a)(5)(D) of the MMPA, NMFS must, may have been disturbed by the ability to forage and, thus, loss of where applicable, set forth the presence of researchers. By arriving fitness. Correspondingly, even local permissible methods of taking pursuant before low tide, worker presence will populations, much less the overall to such activity, and other means of tend to encourage pinnipeds to move to stocks of animals, are extremely effecting the least practicable impact on other areas for the day before they haul unlikely to accrue any significantly such species or stock and its habitat, out and settle onto rocks at low tide. detrimental impacts. paying particular attention to rookeries, PISCO will suspend sampling and NMFS does not anticipate that the mating grounds, and areas of similar monitoring operations immediately if an activities would result in the injury, significance, and on the availability of injured marine mammal is found in the serious injury, or mortality of pinnipeds such species or stock for taking for vicinity of the project area and the because pups are only found at a couple certain subsistence uses (where monitoring activities could aggravate its of the sampling locations during certain relevant). condition. times of the year and that many PISCO shall implement several NMFS has carefully evaluated rookeries occur on the offshore islands mitigation measures to reduce potential PISCO’s proposed mitigation measures and not the mainland areas where the take by Level B (behavioral disturbance) and considered a range of other activities would occur. In addition, harassment. Measures include: (1) measures in the context of ensuring that researchers will exercise appropriate Conducting slow movements and NMFS prescribes the means of effecting caution approaching sites, especially staying close to the ground to prevent or the least practicable impact on the when pups are present and will redirect minimize stampeding; (2) avoiding loud affected marine mammal species and activities when pups are present. noises (i.e., using hushed voices); (3) avoiding pinnipeds along access ways to stocks and their habitat. Our evaluation Anticipated Effects on Marine Mammal sites by locating and taking a different of potential measures included Habitat access way and vacating the area as consideration of the following factors in The only habitat modification soon as sampling of the site is relation to one another: associated with the activity is the completed; (4) monitoring the offshore • The manner in which, and the placement of permanent bolts and other area for predators (such as killer whales degree to which, the successful sampling equipment in the intertidal. and white sharks) and avoid flushing of implementation of the measure is Bolts are installed during the set-up of pinnipeds when predators are observed expected to minimize adverse impacts a site and, at existing sites, this has in nearshore waters; (5) using binoculars to marine mammals;
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• the proven or likely efficacy of the regarding physical and biological changed direction and/or speed, or if specific measure to minimize adverse conditions pertaining to a site, as well the animal flushed into the water. impacts as planned; and as the date and time that research was Animals that became alert without such • the practicability of the measure for conducted will also be noted. movements were not considered applicant implementation. If at any time injury, serious injury, or harassed. Based on our evaluation of the final mortality of the species for which take For the purpose of this IHA, only mitigation measures, NMFS has is authorized should occur, or if take of Oregon and California sites that are determined that they provide the means any kind of any other marine mammal frequently sampled and have a marine of effecting the least practicable impact occurs, and such action may be a result mammal presence during sampling were on marine mammal species or stocks of the research, PISCO will suspend included in take estimates. Sites where and their habitat, paying particular research activities and contact NMFS only Biodiversity Surveys are conducted attention to rookeries, mating grounds, immediately to determine how best to were not included due to the and areas of similar significance. proceed to ensure that another injury or infrequency of sampling and rarity of Monitoring and Reporting death does not occur and to ensure that occurrences of pinnipeds during the applicant remains in compliance sampling. In addition, Steller sea lions In order to issue an ITA for an with the MMPA. are not included in take estimates as activity, Section 101(a)(5)(D) of the A draft final report must be submitted they will not be disturbed by MMPA states that NMFS must, where to NMFS Office of Protected Resources researchers or research activities since applicable, set forth ‘‘requirements within 60 days after the conclusion of activities will not occur or be suspended pertaining to the monitoring and the 2012–2013 field season or 60 days if Steller sea lions are present. A small reporting of such taking’’. The MMPA prior to the start of the next field season number of harbor seal and northern implementing regulations at 50 CFR if a new IHA will be requested. The elephant seal pup takes are anticipated 216.104 (a)(13) indicate that requests for report will include a summary of the as pups may be present at several sites ITAs must include the suggested means information gathered pursuant to the during spring and summer sampling of accomplishing the necessary monitoring requirements set forth in the Takes estimates are based on marine monitoring and reporting that will result IHA. A final report must be submitted mammal observations from each site. in increased knowledge of the species to the Director of the NMFS Office of Marine mammal observations are done and of the level of taking or impacts on Protected Resources and to the NMFS as part of PISCO site observations, populations of marine mammals that are Southwest Office Regional which include notes on physical and expected to be present in the proposed Administrator within 30 days after biological conditions at the site. The action area. receiving comments from NMFS on the maximum number of marine mammals, PISCO can add to the knowledge of draft final report. If no comments are by species, seen at any given time pinnipeds in California and Oregon by received from NMFS, the draft final throughout the sampling day is recorded noting observations of: (1) Unusual report will be considered to be the final at the conclusion of sampling. A marine behaviors, numbers, or distributions of report. mammal is counted if it is seen on pinnipeds, such that any potential access ways to the site, at the site, or Estimated Take by Incidental follow-up research can be conducted by immediately up-coast or down-coast of the appropriate personnel; (2) tag- Harassment the site. Marine mammals in the water bearing carcasses of pinnipeds, allowing Except with respect to certain immediately offshore are also recorded. transmittal of the information to activities not pertinent here, the MMPA Any other relevant information, appropriate agencies and personnel; and defines ‘‘harassment’’ as: any act of including the location of a marine (3) rare or unusual species of marine pursuit, torment, or annoyance which (i) mammal relevant to the site, any mammals for agency follow-up. has the potential to injure a marine unusual behavior, and the presence of Monitoring requirements in relation mammal or marine mammal stock in the pups is also noted. to PISCO’s rocky intertidal monitoring wild [Level A harassment]; or (ii) has These observations formed the basis include observations made by the the potential to disturb a marine from which researchers with extensive applicant. Information recorded will mammal or marine mammal stock in the knowledge and experience at each site include species counts (with numbers of wild by causing disruption of behavioral estimated the actual number of marine pups/juveniles when possible), numbers patterns, including, but not limited to, mammals that may be subject to take. In of observed disturbances, and migration, breathing, nursing, breeding, most cases the number of takes is based descriptions of the disturbance feeding, or sheltering [Level B on the maximum number of marine behaviors during the monitoring harassment]. mammals that have been observed at a surveys, including location, date, and All anticipated takes would be by site throughout the history of the site time of the event. In addition, Level B harassment, involving (2–3 observation per year for 5–10 years observations regarding the number and temporary changes in behavior. The or more). Section 6 in PISCO’s species of any marine mammals mitigation and monitoring measures are application outlines the number of visits observed, either in the water or hauled expected to minimize the possibility of per year for each sampling site and the out, at or adjacent to the site, will be injurious or lethal takes such that take potential number of pinnipeds recorded as part of field observations by injury, serious injury, or mortality is anticipated to be encountered at each during research activities. Observations considered remote. Animals hauled out site. of unusual behaviors, numbers, or close to the actual survey sites may be Since receipt of PISCO’s application distributions of pinnipeds will be disturbed by the presence of biologists and publication of the Notice of reported to NMFS so that any potential and may alter their behavior or attempt Proposed IHA, PISCO has indicated that follow-up observations can be to move away from the researchers. one of the sampling sites, Occulto conducted by the appropriate personnel. As discussed earlier, NMFS considers (34.88122, –120.63954), has developed a In addition, observations of tag-bearing an animal to have been harassed if it small presence of adult harbor seals. pinniped carcasses as well as any rare moved greater than 1 m (3.3 ft) in This site is visited three times per year or unusual species of marine mammals response to the researcher’s presence or for Community Structure Monitoring. will be reported to NMFS. Information if the animal was already moving and Based on this small presence, PISCO
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and NMFS estimate that there may be species or stock through effects on dependent pups are present, which will up to five takes of adult harbor seals per annual rates of recruitment or survival.’’ avoid mother/pup separation and event with up to three events per year. In making a negligible impact trampling of pups. This slight increase in the amount of determination, NMFS considers a Of the three marine mammal species adult harbor seal takes is small and does variety of factors, including but not anticipated to occur in the activity not change the overall percentage of the limited to: (1) The number of areas, none are listed under the ESA. population taken by Level B behavioral anticipated mortalities; (2) the number Table 1 in this document presents the harassment. Additionally, it does not and nature of anticipated injuries; (3) abundance of each species or stock, the alter the analysis supporting NMFS’ the number, nature, intensity, and authorized take estimates, and the preliminary determinations and was duration of Level B harassment; and (4) percentage of the affected populations considered and evaluated by NMFS the context in which the take occurs. or stocks that may be taken by prior to making final determinations in No injuries or mortalities are harassment. Based on these estimates, advance of its final decision on issuance anticipated to occur as a result of PISCO would take less than 1.6% of of the IHA. PISCO’s rocky intertidal monitoring, each species or stock. Because these are Based on this information, NMFS has and none are authorized. The behavioral maximum estimates, actual take authorized the take, by Level B harassments that could occur would be numbers are likely to be lower, as some harassment only, of 56 California sea of limited duration, as researchers only animals may select other haulout sites lions, 487 harbor seals, and 30 northern conduct sampling one to three times per the day the researchers are present. elephant seals. These numbers are year at each site for a total of 4–6 hours considered to be maximum take Based on the analysis contained per sampling event. Therefore, estimates; therefore, actual take may be herein of the likely effects of the disturbance will be limited to a short slightly less if animals decide to haul specified activity on marine mammals duration, allowing pinnipeds to out at a different location for the day or and their habitat, and taking into reoccupy the sites within a short animals are out foraging at the time of consideration the implementation of the amount of time. the survey activities. required mitigation and monitoring Some of the pinniped species may use measures, NMFS finds that the rocky Negligible Impact and Small Numbers some of the sites during certain times of intertidal monitoring program will Analysis and Determination year to conduct pupping and/or result in the incidental take of small NMFS has defined ‘‘negligible breeding. However, some of these numbers of marine mammals, by Level impact’’ in 50 CFR 216.103 as species prefer to use the offshore islands B harassment only, and that the total ‘‘* * * an impact resulting from the for these activities. At the sites where taking from the rocky intertidal specified activity that cannot be pups may be present, PISCO will monitoring program will have a reasonably expected to, and is not implement certain mitigation measures, negligible impact on the affected species reasonably likely to, adversely affect the such as no intentional flushing if or stocks.
TABLE 1—POPULATION ABUNDANCE ESTIMATES, TOTAL AUTHORIZED LEVEL B TAKE, AND PERCENTAGE OF POPULATION THAT MAY BE TAKEN FOR THE POTENTIALLY AFFECTED SPECIES DURING THE ROCKY INTERTIDAL MONITORING PROGRAM
Total authorized level B Percentage of stock or Species Abundance * take population
Harbor Seal ...... 30,196 487 1.6 California Sea Lion ...... 296,750 56 0.02 Northern Elephant Seal ...... 124,000 30 0.02 * Abundance estimates are taken from the 2011 U.S. Pacific Marine Mammal Stock Assessments (Carretta et al., 2012).
Impact on Availability of Affected determined that issuance of the IHA to Authorization Species or Stock for Taking for PISCO under section 101(a)(5)(D) of the Subsistence Uses MMPA will have no effect on species As a result of these determinations, NMFS has authorized the take of marine There are no relevant subsistence uses listed as threatened or endangered under the ESA. mammals incidental to PISCO’s rocky of marine mammals implicated by this intertidal monitoring research activities, action. Therefore, NMFS has National Environmental Policy Act provided the previously mentioned determined that the total taking of (NEPA) mitigation, monitoring, and reporting affected species or stocks would not requirements are incorporated. have an unmitigable adverse impact on NMFS has prepared an EA that the availability of such species or stocks includes an analysis of potential Dated: November 30, 2012. for taking for subsistence purposes. environmental effects associated with Matthew J. Brookhart, Endangered Species Act (ESA) NMFS’ issuance of an IHA to PISCO to Acting Deputy Director, Office of Protected take marine mammals incidental to Resources, National Marine Fisheries Service. None of the marine mammals for conducting rocky intertidal monitoring [FR Doc. 2012–29390 Filed 12–4–12; 8:45 am] which incidental take is authorized are surveys along the California and Oregon BILLING CODE 3510–22–P listed as threatened or endangered coasts. NMFS has finalized the EA and under the ESA. NMFS’ Permits and prepared a FONSI for this action. Conservation Division worked with the Therefore, preparation of an NMFS Southwest Regional Office to Environmental Impact Statement is not ensure that effects to Steller sea lions necessary. would be avoided and incidental take would not occur. Therefore, NMFS has
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DEPARTMENT OF DEFENSE • Federal eRulemaking Portal: http:// • Federal eRulemaking Portal: http:// www.regulations.gov. Follow the www.regulations.gov. Follow the Office of the Secretary instructions for submitting comments. instructions for submitting comments. • [Docket ID DoD–2012–OS–0044] Instructions: All submissions received Mail: Federal Docket Management must include the agency name, docket System Office, 4800 Mark Center Drive, Submission for OMB Review; number and title for this Federal 2nd Floor, East Tower, Suite 02G09, Comment Request Register document. The general policy Alexandria, VA 22350–3100. for comments and other submissions Instructions: All submissions received ACTION: Notice. from members of the public is to make must include the agency name, docket these submissions available for public number and title for this Federal The Department of Defense has viewing on the Internet at http:// Register document. The general policy submitted to OMB for clearance, the www.regulations.gov as they are for comments and other submissions following proposal for collection of from members of the public is to make information under the provisions of the received without change, including any these submissions available for public Paperwork Reduction Act (44 U.S.C. personal identifiers or contact viewing on the Internet at http:// Chapter 35). information. DoD Clearance Officer: Ms. Patricia www.regulations.gov as they are DATES: Consideration will be given to all Toppings. received without change, including any comments received by January 4, 2013. Written requests for copies of the personal identifiers or contact Title, Form, and OMB Number: information collection proposal should information. Project Time Record System; OMB be sent to Ms. Toppings at WHS/ESD/ Control Number 0704–0452. FOR FURTHER INFORMATION CONTACT: To Type of Request: Reinstatement. Information Management Division, 4800 request more information on this Number of Respondents: 1,200. Mark Center Drive, East Tower, Suite proposed information collection or to Responses per Respondent: 52. 02G09, Alexandria, VA 22350–3100. obtain a copy of the proposal and Annual Responses: 62,400. Dated: November 21, 2012. associated collection instruments, Average Burden per Response: 15 Aaron Siegel, please write to the Defense Logistics minutes. Alternate OSD Federal Register Liaison Agency), ATTN: Wide Area Workflow Annual Burden Hours: 15,600 hours. Officer, Department of Defense. (WAWF) Program Management Office Needs and Uses: Contractors working (PMO), 8725 John J. Kingman Road, Fort for the Defense Logistics Agency, [FR Doc. 2012–29337 Filed 12–4–12; 8:45 am] BILLING CODE 5001–06–P Belvoir, VA 22060–6221. Information Operations, J–6, log into an Title; Associated Form; and OMB automated project time record system Number: Wide Area Work Flow and annotate their time on applicable DEPARTMENT OF DEFENSE (WAWF); WAWF is not a forms based projects. The system collects the records application but it accepts any for the purpose of tracking workload/ Office of the Secretary supporting documentation as project activity for analysis and attachments, including the following reporting purposes, and labor [Docket ID DoD–2012–OS–0152] forms in PDF format: DD1375 Request distribution data against projects for for Payment of Funeral and/or financial purposes; and to monitor all Proposed Collection; Comment Internment Expenses (0704–0030); aspects of a contract from a financial Request SF182 Authorization, Agreement and perspective and to maintain financial AGENCY: Defense Logistics Agency, DoD. Certification of Training; SF270 Request and management records associated ACTION: Notice. for Advance or Reimbursement (0348– with the operations of the contract; and to evaluate and monitor the contractor 0004); SF1157 Claims for Witness SUMMARY: In compliance with Section Attendance Fees, Travel and performance and other matters 3506(c)(2)(A) of the Paperwork concerning the contract, i.e., making Miscellaneous Expenses. WAWF Reduction Act of 1995, the Defense captures and processes invoices and payments, and accounting for services Logistics Agency announces a proposed provided and received. Defense vouchers. The complete list of public information collection and seeks miscellaneous payment categories Logistics Agency, Information public comment on the provisions Operations, J–6, intends to execute this processed through WAWF is available thereof. Comments are invited on: (a) in appendix A of the DoD Guidebook for option on new contracts and, as Whether the collection of information is necessary, modify existing contract Miscellaneous Payments. necessary for the proper performance of Needs and Uses: Wide Area Workflow agreements. the functions of the agency, including (WAWF) is a DoD enterprise, Web-based Affected Public: Individuals; whether the information shall have businesses or other for profit; not-for- system that allows secure electronic practical utility; (b) the accuracy of the submission, acceptance and procession profit institutions. agency’s estimate of the burden of the Frequency: Weekly. of invoices and receiving reports in a reinstated information collection; (c) real-time, paperless environment, Respondent’s Obligation: Voluntary. ways to enhance the quality, utility, and OMB Desk Officer: Ms. Jasmeet resulting in complete transaction clarity of the information to be Seehra. visibility, fewer interest penalties and Written comments and collected; and (d) ways to minimize the reduced processing time. WAWF recommendations on the proposed burden of the information collection on provides the Department and its information collection should be sent to respondents, including through the use suppliers the single point of entry to Ms. Seehra at the Office of Management of automated collection techniques or generate, capture and process invoice, and Budget, Desk Officer for DoD, Room other forms of information technology. acceptance and payments related 10236, New Executive Office Building, DATES: Consideration will be given to all documentation and data to support the Washington, DC 20503. comments received by February 4, 2013. DoD asset visibility, tracking and You may also submit comments, ADDRESSES: You may submit comments, payment processes. WAWF also identified by docket number and title, identified by docket number and title, provides the department with a single by the following method: by any of the following methods: point of entry to generate, capture and
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process vouchers for miscellaneous Annual Burden Hours: 2,660 hours. The Department of Defense has payment claims. Information in Needs and Uses: The Defense submitted to OMB for clearance, the identifiable form must be collected to Logistics Agency uses the report as the following proposal for collection of verify the identity and banking principal instrument for measuring the information under the provisions of the information of claimants in order to performance of Cooperative Agreement Paperwork Reduction Act (44 U.S.C. ensure that benefits are paid to the awards made under 10 U.S.C. Chapter Chapter 35). correct individual. 142. DATES: Consideration will be given to all Affected Public: Dependents and Affected Public: State and local comments received by January 4, 2013. members of the general public to governments; private nonprofit Title, Form, and OMB Number: include Foreign Nationals and vendors organizations; Indian tribal Defense Logistics Agency Criminal providing goods or services to the DoD. organizations and Indian economic Incident Reporting System records, DLA Annual Burden Hours: 23,125. enterprises. Forms 1622, 1623, 1624A, and 1753; Number of Respondents: 2,775. Frequency: Quarterly. OMB Control Number 0704–TBD. Responses per Respondent: 1 to 50. Respondent’s Obligation: Required to Type of Request: New. Average Burden per Response: 10 obtain or retain benefits. Number of Respondents: 500. minutes. OMB Desk Officer: Ms. Jasmeet Responses per Respondent: 1. Frequency: On occasion for Seehra. Annual Responses: 500. individuals; more often for vendors. Written comments and Average Burden per Response: 2 SUPPLEMENTARY INFORMATION: recommendations on the proposed hours. information collection should be sent to Summary of Information Collection Annual Burden Hours: 1,000 hours. Ms. Seehra at the Office of Management Needs and Uses: Information in this The purpose of information collection and Budget, Desk Officer for DoD, Room system is used by DLA Office of the is to monitor the status of and 10236, New Executive Office Building, Inspector General (OIG), Investigations electronically process invoices, Washington, DC 20503. Division (ID), DLA Installation Support receiving reports and individual claims You may also submit comments, Offices, and the DLA Office of General for payment through the review and identified by docket number and title, Counsel personnel to monitor progress validation and approval phases for by the following method: of cases and to develop non-personal submission to the Defense Finance and • Federal eRulemaking Portal: http:// data on crime and criminal investigative Accounting Service (DFAS) for www.regulations.gov. Follow the support for the future. DLA General payment. instructions for submitting comments. Counsel also uses data to review cases, Dated: November 28, 2012. Instructions: All submissions received determine proper legal action, and Aaron Siegel, must include the agency name, docket coordinate on all available remedies. number and title for this Federal Alternate OSD Federal Register Liaison Information is released to DLA Officer, Department of Defense. Register document. The general policy managers who use the information to for comments and other submissions [FR Doc. 2012–29365 Filed 12–4–12; 8:45 am] determine actions required to correct from members of the public is to make the causes of loss and to take BILLING CODE 5001–06–P these submissions available for public appropriate action against DLA viewing on the Internet at http:// employees or contractors in cases of DEPARTMENT OF DEFENSE www.regulations.gov as they are their involvement. Records are also used received without change, including any by DLA to monitor the progress of Office of the Secretary personal identifiers or contact investigations, identify crime conducive information. conditions, and prepare crime [Docket ID DoD–2012–OS–0013] DoD Clearance Officer: Ms. Patricia vulnerability assessments. Toppings. Submission for OMB Review; Affected Public: Individuals or Written requests for copies of the Comment Request households. information collection proposal should Frequency: On occasion. ACTION: Notice. be sent to Ms. Toppings at WHS/ESD/ Respondent’s Obligation: Voluntary. Information Management Division, 4800 OMB Desk Officer: Ms. Jasmeet The Department of Defense has Mark Center Drive, East Tower, Suite Seehra. submitted to OMB for clearance, the 02G09, Alexandria, VA 22350–3100. Written comments and following proposal for collection of Dated: November 21, 2012. recommendations on the proposed information under the provisions of the Aaron Siegel, information collection should be sent to Paperwork Reduction Act (44 U.S.C. Alternate OSD Federal Register Liaison Ms. Seehra at the Office of Management Chapter 35). Officer, Department of Defense. and Budget, Desk Officer for DoD, Room DATES: Consideration will be given to all [FR Doc. 2012–29339 Filed 12–4–12; 8:45 am] 10236, New Executive Office Building, Washington, DC 20503. comments received by January 4, 2013. BILLING CODE 5001–06–P Title, Form, and OMB Number: You may also submit comments, Request for approval for Procurement identified by docket number and title, Technical Assistance Center DEPARTMENT OF DEFENSE by the following method: Cooperative Agreement Performance • Federal eRulemaking Portal: http:// Report, DLA Form 1806; OMB Control Office of the Secretary www.regulations.gov. Follow the Number 0704–0320. instructions for submitting comments. Type of Request: Reinstatement. [Docket ID DoD–2012–OS–0025] Instructions: All submissions received Number of Respondents: 95. must include the agency name, docket Responses per Respondent: 4. Submission for OMB Review; number and title for this Federal Annual Responses: 380. Comment Request Register document. The general policy Average Burden per Response: 7 for comments and other submissions ACTION: Notice. hours. from members of the public is to make
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these submissions available for public documentation of any special needs or Dated: November 21, 2012. viewing on the Internet at http:// health concerns regarding the child, to Aaron Siegel, www.regulations.gov as they are include documentation of food Alternate OSD Federal Register Liaison received without change, including any restrictions; physical abilities and Officer, Department of Defense. personal identifiers or contact limitations; physical, emotional, or [FR Doc. 2012–29340 Filed 12–4–12; 8:45 am] information. other special care requirements BILLING CODE 5001–06–P DOD Clearance Officer: Ms. Patricia (including restrictions or special Toppings. precautions concerning diet); special Written requests for copies of the services Individual Development Plans DEPARTMENT OF DEFENSE information collection proposal should (IDP) when special needs have already be sent to Ms. Toppings at WHS/ESD/ been diagnosed. Office of the Secretary Information Management Division, 4800 Enrollee records include all items [Docket ID DoD–2012–OS–0039] Mark Center Drive, East Tower, Suite listed above plus names and phone 02G09, Alexandria, VA 22350–3100. Submission for OMB Review; numbers of emergency points of contact; Comment Request Dated: November 21, 2012. medical, dental and insurance provider Aaron Siegel, data; medical examination reports, ACTION: Notice. Alternate OSD Federal Register Liaison health assessments and screening Officer, Department of Defense. results; immunization, allergy and The Department of Defense has [FR Doc. 2012–29342 Filed 12–4–12; 8:45 am] medication information; documentation submitted to OMB for clearance, the BILLING CODE 5001–06–P of Special Needs Resource Team (SNRT) following proposal for collection of meetings (when applicable) as well as information under the provisions of the serious event/incident report forms; Paperwork Reduction Act (44 U.S.C. DEPARTMENT OF DEFENSE symptoms records; and other records chapter 35). used to provide effective services. DATES: Consideration will be given to all Office of the Secretary Affected Public: Individuals or comments received by January 4, 2013. [Docket ID DoD–2012–OS–0037] households. Title, Form, and OMB Number: Militarily Critical Technical Data Submission for OMB Review; Frequency: On occasion. Agreement, DD Form 2354; OMB Comment Request Respondent’s Obligation: Required to Control Number 0704–0207. obtain or retain benefits. Type of Request: Reinstatement. ACTION: Notice. OMB Desk Officer: Ms. Jasmeet Number of Respondents: 8,000. Responses per Respondent: 1. The Department of Defense has Seehra. Annual Responses: 8,000. submitted to OMB for clearance, the Written comments and Average Burden per Response: 0.33 following proposal for collection of recommendations on the proposed hours (20 minutes). information under the provisions of the information collection should be sent to Annual Burden Hours: 2,667 hours. Paperwork Reduction Act (44 U.S.C. Ms. Seehra at the Office of Management Needs and Uses: The information Chapter 35). and Budget, Desk Officer for DoD, Room collection requirement is necessary as a DATES: Consideration will be given to all 10236, New Executive Office Building, basis for certifying enterprises or comments received by January 4, 2013. Washington, DC 20503. individuals to have access to DoD Title, Form, and OMB Number: The You may also submit comments, export-controlled militarily critical Application of Child Care Services identified by docket number and title, technical data subject to the provisions Form, DLA Form 1854; OMB Control by the following method: of 32 CFR part 250. Enterprises and Number 0704–TBD. individuals that need access to • Type of Request: New. Federal eRulemaking Portal: http:// unclassified DoD-controlled militarily Number of Respondents: 30. www.regulations.gov. Follow the critical technical data must certify on Responses per Respondent: 1. instructions for submitting comments. DD Form 2345, Militarily Critical Annual Responses: 30. Instructions: All submissions received Technical Data Agreement, that data Average Burden per Response: 0.33 must include the agency name, docket will be used only in ways that will hours (20 minutes). number and title for this Federal inhibit unauthorized access and Annual Burden Hours: 10 hours. Register document. The general policy maintain the protection afforded by U.S. Needs and Uses: The Application of for comments and other submissions export control laws. The information Child Care Services Form, DLA Form from members of the public is to make collected is disclosed only to the extent 1854, is used to request child care these submissions available for public consistent with prudent business services provided by DLA managed viewing on the Internet at http:// practices, current regulations, and facilities. Enrollee records are provided www.regulations.gov as they are statutory requirements and is so to the Child and Youth Programs received without change, including any indicated on the Privacy Act Statement Coordinator, the CDP Director, and the personal identifiers or contact of DD Form 2345. Headquarters DLA Inspection Team information. Affected Public: Individuals or upon request for the purpose of Households; businesses or other for DOD Clearance Officer: Ms. Patricia ensuring safe and effective services. profit; not-for-profit institutions. Toppings. Waiting List Applicant records Frequency: On occasion. include the names of the sponsor and Written requests for copies of the Respondent’s Obligation: Required to spouse (when applicable); home and information collection proposal should obtain or retain benefits. electronic mail addresses; work, home, be sent to Ms. Toppings at WHS/ESD/ OMB Desk Officer: Ms. Jasmeet cell telephone numbers; place of Information Management Division, 4800 Seehra. employment; rank or civilian pay grade; Mark Center Drive, East Tower, Suite Written comments and child’s name and birth date; 02G09, Alexandria, VA 22350–3100. recommendations on the proposed
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information collection should be sent to of automated collection techniques or networks, computer systems, and Ms. Seehra at the Office of Management other forms of information technology. databases. The records may also be used and Budget, Desk Officer for DoD, Room DATES: Consideration will be given to all by law enforcement officials to identify 10236, New Executive Office Building, comments received by February 4, 2013. the occurrence of and assist in the Washington, DC 20503. ADDRESSES: You may submit comments, prevention of computer misuse and/or You may also submit comments, identified by docket number and title, crime. Data, with all personal identifiers identified by docket number and title, by any of the following methods: removed, may be used by management by the following method: • for system efficiency, workload • Federal eRulemaking Portal: http:// Federal eRulemaking Portal: http:// www.regulations.gov. Follow the calculation, or reporting purposes. www.regulations.gov. Follow the instructions for submitting comments. Dated: November 30, 2012. instructions for submitting comments. • Mail: Federal Docket Management Aaron Siegel, Instructions: All submissions received System Office, 4800 Mark Center Drive, must include the agency name, docket Alternate OSD Federal Register Liaison East Tower, Suite 02G09, Alexandria, Officer, Department of Defense. number and title for this Federal VA 22350–3100. Register document. The general policy [FR Doc. 2012–29351 Filed 12–4–12; 8:45 am] Instructions: All submissions received for comments and other submissions BILLING CODE 5001–06–P must include the agency name, docket from members of the public is to make number and title for this Federal these submissions available for public Register document. The general policy viewing on the Internet at http:// DEPARTMENT OF DEFENSE for comments and other submissions www.regulations.gov as they are from members of the public is to make Office of the Secretary received without change, including any these submissions available for public personal identifiers or contact [Docket ID DoD–2012–OS–0017] viewing on the Internet at http:// information. DOD Clearance Officer: Ms. Patricia www.regulations.gov as they are Submission for OMB Review; Toppings. received without change, including any Comment Request Written requests for copies of the personal identifiers or contact information collection proposal should information. ACTION: Notice. be sent to Ms. Toppings at WHS/ESD/ FOR FURTHER INFORMATION CONTACT: To The Department of Defense has Information Management Division, 4800 request more information on this submitted to OMB for clearance, the Mark Center Drive, East Tower, Suite proposed information collection or to following proposal for collection of 02G09, Alexandria, VA 22350–3100. obtain a copy of the proposal and information under the provisions of the Dated: November 21, 2012. associated collection instruments, Paperwork Reduction Act (44 U.S.C. Aaron Siegel, please write to the Defense Logistics Chapter 35). Agency, DLA Information Operations Alternate OSD Federal Register Liaison DATES: Richmond, ATTN: Mr. Walter B. Gooch, Consideration will be given to all Officer, Department of Defense. comments received by January 4, 2013. [FR Doc. 2012–29336 Filed 12–4–12; 8:45 am] 8000 Jefferson Davis Highway, Richmond Virginia 23297–5000; or call Title, Form, and OMB Number: BILLING CODE 5001–06–P (804) 279–3075. Physical Fitness Facility/Recreation Title; Associated Form; and OMB Center Membership and Use Records; OMB Control Number 0704–TBD. DEPARTMENT OF DEFENSE Number: Account Management and Provisioning System (AMPS). OMB Type of Request: New. Number of Respondents: 1,000. Office of the Secretary Control Number 0704–TBD. Needs and Uses: System contains Responses per Respondent: 1. [Docket ID DoD–2012–OS–0153] records relating to requests for and Annual Responses: 1,000. grants of access to DLA computer Average Burden per Response: 15 Proposed Collection; Comment minutes. Request networks, systems, or databases. The records contain the individual’s name; Annual Burden Hours: 250 hours. AGENCY: Defense Logistics Agency, DoD. social security number; and citizenship. Needs and Uses: To collect facility ACTION: Notice. Once collected, AMPS encrypts the usage data to prepare monthly metrics SSN and makes it available for viewing and data management reports; to register SUMMARY: In compliance with Section only to the personnel security officer. applicants for classes; to notify users of 3506(c)(2)(A) of the Paperwork Once system access is approved or future events or cancellations in cases of Reduction Act of 1995, the Defense denied by the personnel security officer, emergency; and to develop workplace Logistics Agency announces a proposed the SSN is re-encrypted and then wellness programs based on customer public information collection and seeks deleted from the AMPS application. need. public comment on the provisions Affected Public: State, Local or Tribal Affected Public: Individuals or thereof. Comments are invited on: (a) Government; DoD Contractors. Households. Whether the collection of information is Annual Burden Hours: 4,000. Frequency: On occasion. necessary for the proper performance of Number of Respondents: 20,000. Respondent’s Obligation: Required to the functions of the agency, including Responses per Respondent: 1. obtain or retain benefits. whether the information shall have Average Burden per Response: 12 OMB Desk Officer: Ms. Jasmeet practical utility; (b) the accuracy of the minutes. Seehra. agency’s estimate of the burden of the Frequency: On occasion. Written comments and reinstated information collection; (c) SUPPLEMENTARY INFORMATION: recommendations on the proposed ways to enhance the quality, utility, and information collection should be sent to clarity of the information to be Summary of Information Collection Ms. Seehra at the Office of Management collected; and (d) ways to minimize the The system is maintained by DLA and Budget, Desk Officer for DoD, Room burden of the information collection on Information Operations to control and 10236, New Executive Office Building, respondents, including through the use track access to DLA-controlled Washington, DC 20503.
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You may also submit comments, clear recipients to ensure their DEPARTMENT OF DEFENSE identified by docket number and title, eligibility to conduct business with the by the following method: government. That they are not debarred Department of the Army • Federal eRulemaking Portal: http:// bidders; Specially Designated Nationals www.regulations.gov. Follow the (SDN) or Blocked Persons; have not [Docket ID USA–2012–0016] instructions for submitting comments. violated U.S. export laws; will not Instructions: All submissions received divert the property to denied/sanctioned Privacy Act of 1974; System of must include the agency name, docket countries, unauthorized destinations or Records number and title for this Federal sell to debarred/Bidder Experience List Register document. The general policy firms or individuals. The EUC informs AGENCY: Department of the Army, DoD. for comments and other submissions the recipients that when this property is ACTION: from members of the public is to make to be exported, they must comply with Notice to delete a System of these submissions available for public the International Traffic in Arms Records. viewing on the Internet at http:// Regulation (ITAR), 22 CFR 120 et seq.; www.regulations.gov as they are Export Administration Regulations SUMMARY: The Department of the Army received without change, including any (EAR), 15 CFR 730 et seq.; Office of is deleting a system of records notice in personal identifiers or contact Foreign Asset Controls (OFAC), 31 CFR its existing inventory of record systems information. 500 et seq.; and the United States subject to the Privacy Act of 1974 (5 DOD Clearance Officer: Ms. Patricia Customs Service rules and regulations. U.S.C. 552a), as amended. Toppings. Affected Public: Individuals; DATES: This proposed action will be Written requests for copies of the businesses or other for profit; not-for- effective on January 7, 2013 unless information collection proposal should profit institutions. comments are received which result in be sent to Ms. Toppings at WHS/ESD/ Frequency: On occasion. Information Management Division, 4800 a contrary determination. Comments Respondent’s Obligation: Required to Mark Center Drive, East Tower, Suite will be accepted on or before January 4, obtain or retain benefits. 02G09, Alexandria, VA 22350–3100. 2013. OMB Desk Officer: Ms. Jasmeet ADDRESSES: You may submit comments, Dated: November 21, 2012. Seehra. Aaron Siegel, identified by docket number and title, Written comments and by any of the following methods: Alternate OSD Federal Register Liaison recommendations on the proposed • Officer, Department of Defense. information collection should be sent to Federal Rulemaking Portal: http:// [FR Doc. 2012–29375 Filed 12–4–12; 8:45 am] Ms. Seehra at the Office of Management www.regulations.gov. Follow the BILLING CODE 5001–06–P and Budget, Desk Officer for DoD, Room instructions for submitting comments. 10236, New Executive Office Building, • Mail: Federal Docket Management Washington, DC 20503. DEPARTMENT OF DEFENSE System Office, 4800 Mark Center Drive, You may also submit comments, East Tower, 2nd Floor, Suite 02G09, Office of the Secretary identified by docket number and title, Alexandria, VA 22350–3100. by the following method: Instructions: All submissions received [Docket ID DoD–2012–OS–0014] • Federal eRulemaking Portal: http:// must include the agency name and Submission for OMB Review; www.regulations.gov. Follow the docket number for this Federal Register Comment Request instructions for submitting comments. document. The general policy for Instructions: All submissions received comments and other submissions from ACTION: Notice. must include the agency name, docket members of the public is to make these number and title for this Federal submissions available for public The Department of Defense has Register document. The general policy submitted to OMB for clearance, the viewing on the Internet at http:// for comments and other submissions www.regulations.gov as they are following proposal for collection of from members of the public is to make received without change, including any information under the provisions of the these submissions available for public personal identifiers or contact Paperwork Reduction Act (44 U.S.C. viewing on the Internet at http:// Chapter 35). www.regulations.gov as they are information. DATES: Consideration will be given to all received without change, including any FOR FURTHER INFORMATION CONTACT: Mr. comments received by January 4, 2013. personal identifiers or contact Leroy Jones, (703) 428–6815. Title, Form, and OMB Number: End- information. Use Certificate, DLA Form 1822; OMB DOD Clearance Officer: Ms. Patricia SUPPLEMENTARY INFORMATION: The Control Number 0704–0382. Type of Toppings. Department of the Army systems of Request: Reinstatement. Written requests for copies of the records notices subject to the Privacy Number of Respondents: 40,000. information collection proposal should Act of 1974 (5 U.S.C. 552a), as amended, Responses per Respondent: 1. be sent to Ms. Toppings at WHS/ESD/ have been published in the Federal Annual Responses: 40,000. Information Management Division, 4800 Register and are available from the Average Burden per Response: 0.33 Mark Center Drive, East Tower, Suite contact in FOR FURTHER INFORMATION hours (20 minutes). 02G09, Alexandria, VA 22350–3100. CONTACT. The proposed deletion is not Annual Burden Hours: 13,333 hours. within the purview of subsection (r) of Dated: November 21, 2012. Needs and Uses: All individuals the Privacy Act of 1974 (5 U.S.C. 552a), Aaron Siegel, wishing to acquire government property as amended, which requires the identified as Munitions List Items (MLI) Alternate OSD Federal Register Liaison submission of a new or altered system Officer, Department of Defense. or Commerce Control List Item (CCLI) report. must complete this form each time they [FR Doc. 2012–29341 Filed 12–4–12; 8:45 am] enter into a transaction. It is used to BILLING CODE 5001–06–P
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Dated: November 26, 2012. download the Injury Assessment Plan at DEPARTMENT OF ENERGY Aaron Siegel, www.hanfordnrda.org. Alternate OSD Federal Register Liaison Office of Energy Efficiency and SUPPLEMENTARY INFORMATION: The Injury Officer, Department of Defense. Renewable Energy Assessment Plan (Plan) is being released Deletion: to the public in accordance with the Apps for Vehicles Challenge A0215–2a CFSC Natural Resource Damage Assessment Regulations found at 43 CFR Part 11. In AGENCY: Office of Energy Efficiency and SYSTEM NAME: accordance with those regulations, since Renewable Energy, Department of Army Club Membership Files (June one or more natural resources located Energy. 21, 2001, 66 FR 33239). on the Hanford site have been ACTION: Notice of a Competition. REASON: contaminated with hazardous substances, including metals, organics SUMMARY: The U.S. Department of The records were copies of military and radionuclides, the Trustees will be Energy (DOE) announced the and government civilian applications conducting a Type B assessment. The administration of a prize competition for membership at Army clubs and are Plan is one of the first steps in the (Challenge) titled ‘‘Apps for Vehicles: no longer collected by the Community damage assessment process, the goal of improving safety and fuel efficiency and Family Support Centers or at clubs which is to restore, replace, or acquire through technology innovation’’. in the Army; therefore, the A0215–2a the equivalent of natural resources DATES: See, 1. Key Challenge Dates & CFSC, Army Club Membership Files injured by the release of hazardous Deadlines in SUPPLEMENTARY system of records notice can be deleted. substances. INFORMATION. Records have met the required National Archives and Records Administration Copies of the Injury Assessment Plan ADDRESSES: The Apps for Vehicles retention and have been destroyed. are available for public review at the Challenge is available for review, [FR Doc. 2012–29352 Filed 12–4–12; 8:45 am] following locations: participation and submissions at appsforvehicles.challenge.gov. BILLING CODE 5001–06–P Administrative Record and Public Information Repository, FOR FURTHER INFORMATION CONTACT: Mr. Ian Kalin, U.S. Department of Energy, 2440 Stevens Center Place, DEPARTMENT OF ENERGY Office of Energy Efficiency and Room 1101, Renewable Energy, EE–20, 1000 Notice of Availability of the Injury Richland, Washington 99352; Independence Ave. SW., Washington, DC 20585; email: [email protected]. Assessment Plan for the Hanford Site, Portland State University, Richland, WA Mr. Matthew Loveless, U.S. Branford P. Millar Library, Department of Energy, Office of Public AGENCY: Department of Energy. 1875 SW Park Avenue, Affairs, 7A–145, 1000 Independence ACTION: Notice and Request for Portland, Oregon 97201; Ave. SW., Washington, DC 20585; Comments. email: [email protected]. University of Washington, SUPPLEMENTARY INFORMATION: SUMMARY: The U.S. Department of Suzallo Library, Energy (DOE), on behalf of the Hanford I. Key Challenge Dates & Deadlines Natural Resource Trustee Council, Government Publications Department, October 1, 2012 = Vehicle Data announces the release of the Injury P.O. Box 352900, Challenge announced at the Energy Assessment Plan for the Hanford Site. Seattle, Washington 98195; Datapalooza. The Injury Assessment Plan describes December 5, 2012 = Challenge officially the activities that constitute the Washington State University, opens. currently proposed approach of the Tri-Cities Consolidated Information January 15, 2013 = Deadline for first natural resource trustees (DOE, Center, phase submittals. Department of the Interior (DOI), U.S. Room 101–L, February 1, 2013 = Phase I Finalist Fish and Wildlife Service, Department Teams announced. of Commerce National Oceanic and 2770 University Drive, Early February 2013 = Finalist Teams Atmospheric Administration, State of Richland, Washington 99354; engage industry leaders to refine Washington, State of Oregon, Gonzaga University Foley Center ideations and products. Confederated Tribes of the Umatilla Library, March 15, 2013 = Deadline for second Indian Reservation, Confederated Tribes phase; final product submittals. and Bands of the Yakama Nation, and 502 East Boone Avenue, April 1, 2013 = Winners announced. Nez Perce Tribe) for conducting the Spokane, Washington 99258. May 2013 = Final cash prizes disbursed. assessment of natural resources exposed FOR FURTHER INFORMATION CONTACT: To to hazardous substances. II. Introduction request further information about the DATES: Submit written comments on the Injury Assessment Plan for the Hanford The Administration launched the Injury Assessment Plan on or before Site, contact Larry Goldstein at 360– Energy Data Initiative in 2012 to liberate January 4, 2013. 407–6573, [email protected]. data as a fuel for innovation while ADDRESSES: Send written comments to rigorously protecting privacy. The Issued in Washington, DC on November 30, Larry Goldstein/Hanford Natural primary fuel for the Energy Data 2012. Resource Trustee Council Chair/ Initiative is open data. Open data can Washington State Department of Mark A. Gilbertson, take many forms but generally includes Ecology, Nuclear Waste Program, P.O. Deputy Assistant Secretary for Site information that is machine-readable, Box 47600, Olympia, Washington Restoration. freely accessible and in an industry- 98504–7600; via email to [FR Doc. 2012–29420 Filed 12–4–12; 8:45 am] standard format. In particular, open data [email protected]. You may BILLING CODE 6450–01–P from the private sector made available
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to consumers may spur a uniquely Phase II and each Finalist will be States who are at least eighteen years scalable degree of innovation. For awarded a small portion of the total old at the time of entry. example, enabling energy customers to cash pool, ranging from $1000 to $5000. C. Each Team that registers for the securely access their own household or During Phase II, Finalists will have an Challenge as an entity (or other than an building energy data—via a ‘‘Green opportunity to refine their Ideations individual), must be a lawfully Button’’ on their utility Web site—has with industry leaders supporting the organized entity established in fueled the next generation of energy Challenge. These industry leaders will accordance with applicable State laws efficiency products and services. Within provide some combination of: technical and in good standing in their respective this context, the U.S. Department of guidance, customer analysis, market jurisdiction, with operations in the U.S. Energy (DOE) is launching the Apps for assessments, IT roadmap or its Territories or a foreign legal entity Vehicles Challenge: Improving Safety recommendations, and general having an officially recognized place of and Fuel Efficiency through Technology consulting. Following consultation with business in the U.S. or its Territories. Innovation (the Challenge). It is worth industry leaders, Finalists will have a The Team must be able to receive reiterating that safety—such as period of time to complete and submit payments that are legally made from the preventing distracted driving—is an their final software applications, web U.S. in U.S. dollars. essential goal of the Challenge. technology, or products (‘‘Products’’) for D. The Team must have a bank The Challenge seeks to provide Phase II. Phase II winner(s) will be account into which funds can be legally drivers access to their own vehicle’s invited to a public announcement event deposited from the U.S. in U.S. dollars. data, safely and securely, in a readable, hosted by DOE and its supporters and E. Based on the subject matter of the useful common syntax and format. A will also be highlighted on DOE’s web Competition, the type of work that it full description of the open data from site. For the purposes of this Challenge, possibly will require, and the likelihood vehicles is in Section V, but generally the term Submissions (‘‘Submissions’’) of any claims for death, bodily injury, or includes text-based information on refers to the total portfolio of Phase I property damage, or loss potentially things like vehicle speed, brake Ideations and Phase II Products. The resulting from challenge participation, position, headlights on/off, and distance total cash prize pool, inclusive of all Participant is not required to obtain covered since restart. This vehicle data cash awards available to be made in liability insurance or demonstrate fiscal has long been available to mechanics Phases I and II, is $50,000. responsibility in order to participate in and technicians using specialized this Competition. equipment. But by applying open data IV. Authority and Prize Amount F. The Team and all its Contestant principles, individuals will be able to This Challenge is being conducted members must agree to assume any and readily access this on-board data under the authority of the America all risks related to the Challenge and directly through Bluetooth, USB, and COMPETES Act of 2010, 15 U.S.C. waive all claims against the Federal other standard hardware. Associated § 3719. The total dollar amount of the Government and related entities, except platforms will enable vehicle owners to prize pool is $50,000.00, subject to the in cases of willful misconduct, for any provide this data to authorized third- availability of funds. DOE reserves the injury, death, damage, or loss of party developers to create and then right to suspend, cancel, extend, or personal property, revenue or profits, deliver new apps, products, and curtail the Challenge as required or whether direct, indirect, or services. As a result, these third-party determined by appropriate DOE consequential, arising from their developers will help Americans while officials. Nothing within this document participation in the competition, also creating jobs. or in any documents supporting the whether the injury, death, damage, or Under Federal initiatives like the ‘‘EV Challenge shall be construed as loss arises through negligence or Everywhere’’ Grand Challenge and new obligating DOE or any other Federal otherwise. fuel economy standards, the DOE’s agency or instrumentality to any G. The Team shall submit all required Vehicles Technology program has a expenditure of appropriated funds, or documentation in English and any long-term role to play in the any obligation or expenditure of funds monetary figures shall be stated or acceleration of automotive technology. in excess of or in advance of available referenced in U.S. dollars. Looking to a near-term project that can appropriations. DOE will award a single H. DOE employees, employees of support this vision, a prize-based dollar amount to winning Team(s) and sponsoring organizations (including Challenge is an effective method to spur each Team is solely responsible for participating industry leaders and innovation with step-jump additions in allocating any prize amount among its employees of their associated or the availability of new open data. member Contestants as they deem affiliated organizations), and members of their immediate family (spouses, III. The Prize appropriate. DOE will not arbitrate, intervene, advise on, or resolve any children, siblings, parents), and persons This Challenge prize is a three-part matters between entrant members. It living in the same household as such combination of: (1) A cash award; (2) an will be up to the winning Team to persons, whether or not related, are not opportunity to work directly with reallocate the prize money among its eligible to participate in the Challenge. industry leaders; and (3) an opportunity member Contestants, if they deem it VI. Open Data Specifications to be recognized at a public appropriate. announcement of the final winners. The There are many electrical and digital Challenge prize will be awarded in V. Prize Eligibility systems operating within vehicles. For phases and component pieces in two To be eligible to compete within this this Challenge, the data resources that phases of competition. Phase I of the Challenge all of the requirements stated are to be used by entrants are the Challenge will cast a wide net to gather below must be met: datasets that can be directly and legally compelling ideas, business plans, A. All Challenge entrants must be accessed by vehicle owners on their product development plans, and very- identified in their Challenge Submission own cars. The principal example of this early-stage products (‘‘Ideations’’) that under a named Team (‘‘Team’’). data stream is available through the address the Challenge’s goals. Phase I B. Each Team member(s) onboard diagnostics port, also known as concludes with a selection of Finalists (‘‘Contestant’’) must be: citizens or OBD–II, which has been mandatory for that will be permitted to continue into permanent residents of the United U.S. cars since 1996. The OBD–II port
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contains hundreds of data messages Each of the four criteria categories The winners of the Popular Choice regarding engine and transmission below has equal importance in the Awards will be determined on the basis operation as communicated through the evaluation (i.e. 25% weighting for each). of the verified vote counts, as vehicle’s controller area network, which determined by DOE, and DOE reserves Common Criteria for Both Phases is referred to as the CAN. The OBD–II the right to suspend, cancel or extend port also frequently contains Potential Impact: Each Submission the Popular Choice Product voting information on operator-adjustable will be rated on the strength of its period at any time for any reason. items such as headlight or windshield potential to help individuals, VIII. Submission Requirements wiper status. Additional hardware is organizations, and communities make commercially available for individuals informed decisions to improve their fuel The Administrator’s computer, within to directly access their own vehicles’ efficiency. the DOE’s Office of Energy Efficiency OBD–II data. However, to remove the Creativity and Innovation: Each and Renewable Energy, is the official need to acquire special hardware for Submission will be rated for the degree time-keeping device for this Challenge. this Challenge and to level the playing of new thinking it brings to applications The rules for Submissions—defined field, sample data will be provided by for the transportation sector, and the above as referring to both the Phase I DOE and supporters of the Challenge creativity shown in designing for Ideations and Phase II Products—by (‘‘Sample Vehicle Data’’). The Sample impact. Teams are as follows: Vehicle Data will contain the following Use of Open Vehicle Data: Each (a) Visit http://AppsforVehicles. representative types of data fields: Submission must make use of open challenge.gov and click ‘‘Sign Up’’ to 1. Ignition status (on/off). vehicle data. Judges will be looking at create a ChallengePost account, or click 2. Engine speed (average engine speed both the depth of usage for each data ‘‘Log In’’ and log in with an existing can be calculated). stream and the breadth of different data ChallengePost account. 3. Vehicle speed (average vehicle streams that are integrated. The (b) Register your interest in speed can be calculated). combination of the Sample Vehicle Data participating by clicking ‘‘Accept this 4. Fuel level. with other data sets—such as those that Challenge’’ on the Challenge Web site in 5. Fuel consumed since restart. are universally generated by smart order to receive important Challenge 6. Odometer. phones—is highly encouraged. You can updates. Registration is free; no 7. Distance covered since restart. find other sample datasets at http:// purchase necessary. 8. Longitude and latitude. www.energy.gov/developer. (c) After you sign up on Challenge.gov, a confirmation email will 9. Fuel efficiency. Special Criteria for Phase I Ideations 10. Condition based maintenance. be sent to the email address you 11. Brake pedal status (on/off). Plan Viability: Each Submission will provided. Use the confirmation email to 12. Headlamp status (on/off). be rated on the completeness of the verify your email address. As a 13. High beam status (on/off). Ideation and the evidence—such as can registered Contestant, you will then be 14. Windshield wiper status (on/off). be demonstrated by documented/ able to enter the Challenge by 15. ABS status (on/off). demonstrated experience—that the submitting an application that conforms 16. Accelerator pedal position. Team’s proposal can actually be created to the requirements set forth herein. 17. Torque at transmission. in the remaining time period of the (d) Explore the Sample Vehicle Data 18. Parking brake status (on/off). Challenge. and other resources available at 19. Door open status (open/closed). Special Criteria for Phase II Products energy.gov/developer. 20. Steering wheel angle. (e) For Phase I, create an Ideation. For 21. Transmission gear. Implementation: Each Submission Phase II, create a Product. Both The above list of example data will be rated on its ability to be Submissions must use the Sample streams is not comprehensive and is immediately used by consumers, such Vehicle Data. subject to change. Multiple sets of data as a vehicle owner being able to (f) Phase I Submission Requirements: detailing different driving cycles may be download an app onto their smartphone Between noon EST on December 5, 2012 made available. from a Web site or mobile app platform. and noon EST on January 15, 2013, visit There are additional manufacturer User experience and interactive Appsfor Vehicles.challenge.gov confirm proprietary data fields that also stream capabilities will also be assessed. that you have read and agree to the through the OBD–II port. Such Preference will be given to applications/ Official Rules, and submit your proprietary and confidential data—such products that are accessible to a range application by including: as those that deal with air bags—shall of consumers, including those with 1. A web link to your Submission. not be provided or considered at any disabilities. Phase II needs to result in 2. A text description of your point in the Challenge. real products that can be used; not just Submission. Use of open vehicle data is mandatory illustrations or demonstrations. 3. At least one photograph, image, to be considered for a prize in this Submissions will be judged by an graphic, or design that visually captures Challenge. However, combining the expert panel as well as the public. The key attributes of your Submission. value of this data with other non-open expert judging panel will be appointed 4. Optionally, Submissions may data—such as mashing up/combining by DOE, may include both Federal and include other data in addition to the the OBD–II with GPS technologies on a non-Federal personnel, and will Sample Vehicle Data to be used when smart phone—is highly encouraged. determine Phase I and Phase II winners. judging the Submission. The Popular Choice Product will be (g) Phase II Submission Requirements: VII. Evaluation Criteria determined by public vote on Between noon EST on January 15, 2013 The protection of safety and privacy Challenge.gov. Public votes may be and noon EST on March 15, 2013, visit are paramount to both DOE’s Energy displayed on the Challenge Web site, on AppsforVehicles.challenge.gov, confirm Data Initiative and this Challenge. Any a real-time basis, before being verified that you have read and agree to the business plan or product that presents a for integrity. These unverified votes will Official Rules, and submit your clear or potential violation of this not necessarily reflect accurately the application by including: principle will be rejected by the judges. voting for the Popular Choice Awards. 1. A Web link to your Submission.
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2. A text description of your must be submitted to such third party or 10. It is an express condition of Submission. app store for review before the end of Submission and eligibility that each 3. At least one photograph, image, the Challenge period. For any software Team warrants and represents that the graphic, or design that visually captures platform that is not easily shared on the Team’s Submission is solely owned by key attributes of your Submission. web before store approval, such as the Team, that the Submission is wholly 4. Optionally, Submissions may Apple iPhone, you may submit your original with the Team, and that no include other data in addition to the working software Product using a web other party has any ownership rights or Sample Vehicle Data to be used when framework designed for those platforms ownership interest in the Submission. judging the Submission. (such as PhoneGap), and provide the 11. A Team may contract with a third 5. The Product must also include a required link to a video of your working party for technical assistance to create demonstration video with contained application. DOE may request access to the Submission, provided the Ideation audio to present the Product’s purpose, the Product in person or via device or Product is solely the Team’s work value, navigation, and functionality. provisioning to verify any criteria or product and the result of the Team’s (h) Submission Rights: functionality of your Product. ideas and creativity and the Team owns 1. You must permit use of your 6. Security—Submissions must be free all rights to it. Submission by both the public and DOE of malware. Contestant agrees that DOE 12. Each Submission must be in free of charge throughout the Challenge may conduct testing on the Product to English or, if in a language other than and for 12 consecutive months determine whether malware or other English, the Submission must be following the announcement of the security threats may be present. DOE accompanied by an English translation Challenge winners. may disqualify the Product if, in DOE’s of the text. 2. By sending in the Submission to judgment, the Product may damage 13. Submissions will not be accepted this Challenge, you grant to DOE, and Government or others’ equipment or if they contain any matter that, in the the other supporters a royalty-free operating environment. sole discretion of DOE or its judges, is license to: (i) post on Challenge.gov indecent, obscene, defamatory, libelous, 7. No Previous Winners—Contestant your Submission(s) and a link to the in bad taste, or demonstrates a lack of may not submit a Submission that is downloadable Product in the online respect for public morals or conduct. If substantially similar to a Submission store of the applicable software platform DOE, or the judges, in their discretion, that has previously been submitted by (e.g., Google Play) or, if not distributed find any Submission to be unacceptable, the Team to another contest and won a through such platform, to your Web site; then such Submission shall be deemed prize. and (ii) publicize the names of disqualified. Challenge participants (including the 8. The DOE will also screen 14. Winners are responsible for both individual members of a team) and Submissions for Team eligibility, IT reporting and paying all applicable winners and their Submissions through security, and compliance with Federal, state, and local taxes payable media and events of DOE’s choosing. Challenge.gov’s Terms of Participation. from any prize amounts awarded under Such license shall remain in force for Once a Submission has been submitted, this Challenge. the Team cannot make any changes or the duration of the Challenge and for a IX. Additional Terms and Conditions period of no less than 12 consecutive alterations to any part of the months following the announcement of Submission. Ideations and Products Challenge Subject to Applicable Law: the Challenge winners. failing to meet Submission requirements the Challenge is subject to all applicable (h) Submission Requirements: In or other Submission screenings will be Federal laws and regulations. order for Submissions to be eligible to deemed ineligible to win a prize. Registering for this Challenge win this Challenge, they must meet the Posting an app to constitutes each Team and/or following requirements: AppsforVehicles.challenge.gov does not Contestant’s agreement to these Official 1. Acceptable platforms—The constitute DOE’s final determination of Rules (‘‘Official Rules’’) and Submission must be designed for the Team eligibility. administrative decisions, which are Web, a personal computer, a mobile 9. Each Submission must be original, final and binding in all matters related handheld device, console, or any the work of the Team, and must not to the Challenge. Eligibility for a prize platform broadly accessible on the open infringe, misappropriate, or otherwise award is contingent upon fulfilling all Internet. violate the lawful rights of any requirements set forth herein. 2. Data used—The Submission must individual or organization including Judges: The finalist Submissions will utilize some portion of the Sample intellectual property rights and be judged by the judges listed at Vehicle Data. The use of data from other proprietary rights, privacy rights, or any AppsforVehicles.challenge.gov or by sources in conjunction with Sample other rights of any person or entity. another qualified judging panel selected Vehicle Data is strongly encouraged. Each Team further represents and by DOE at its sole discretion. The 3. No DOE logo—The Submission warrants to DOE and the other sponsors judging panel will judge the must not use DOE’s logo or official seal that the Submission, and any use Submissions on the judging criteria in the Submission, and must not claim thereof by DOE or the other sponsors (or identified in these Challenge rules in DOE endorsement. any of their respective partners, order to select winners in each category. 4. Functionality/Accuracy—A subsidiaries and affiliates), shall not: (i) Publicity: Except where prohibited, Submission may be disqualified if the Be defamatory or libelous in any participation in the Challenge software application fails to function as manner toward any person, (ii) constitutes each winner’s consent to expressed in the description and video constitute or result in any DOE’s and its agents’ use of each provided by the user, or if the software misappropriation or other violation of winner’s name, likeness, photograph, application provides inaccurate any person’s publicity rights or right of voice, biographical information, information. privacy, or (iii) infringe, misappropriate, opinions, and/or hometown and state 5. Third Party Approval— or otherwise violate any intellectual information for promotional purposes Submissions requiring approval from a property rights, proprietary rights, through any form of media, worldwide, third party, such as an app store, in privacy rights, moral rights, or any other without further permission, payment, or order to be accessible to the public, rights of any person or entity. consideration.
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Liability and Insurance: Any and all information technology. When Filed Date: 11/19/12. information provided by or obtained evaluating Submissions for this contest, Accession Number: 20121119–5200. from the Federal Government is without the extent to which a Submission Comments Due: 5 p.m. ET 12/10/12. any warranty or representation complies with the requirements for Docket Numbers: ER13–242–001. whatsoever, including but not limited to accessible technology required by Applicants: Midwest Independent its suitability for any particular purpose. Section 508 will be considered. Transmission System Operator, Inc. Upon registration, all participants agree Public Voting: DOE is not responsible Description: SA 2013 G586 2nd to assume and, thereby, have assumed for, nor is it required to count, Amended GIA to be effective 11/1/2012. any and all risks of injury or loss in incomplete, late, misdirected, damaged, Filed Date: 11/27/12. connection with or in any way arising unlawful, or illicit votes, including Accession Number: 20121127–5237. from participation in this competition, those secured through payment or Comments Due: 5 p.m. ET 12/18/12. development of any application or the achieved through automated means. Docket Numbers: ER13–413–002. use of any application by the IX. Contact Information Applicants: USG Oregon LLC. participants or any third-party. Upon Description: Amended USGO Tariff registration all participants agree to and, Department of Energy, Office of Public Filing to be effective 1/17/2013. thereby, do waive and release any and Affairs, 7A–145, Attn: Vehicle Data Filed Date: 11/27/12. all claims or causes of action against the Challenge, 1000 Independence Ave. Accession Number: 20121127–5120. Federal Government and its officers, SW., Washington, DC 20585. Comments Due: 5 p.m. ET 12/18/12. For questions about these official employees and agents for any and all Docket Numbers: ER13–464–000. injury and damage of any nature rules, contact Applicants: Arizona Public Service whatsoever (whether existing or [email protected]. Company. thereafter arising, whether direct, Issued in Washington, DC on November 29, Description: APS Service Agreement indirect, or consequential and whether 2012. No. 324 Foothills Solar Project LGIA, foreseeable or not), arising from their Ian J. Kalin, Amendment 1 to be effective 11/30/ participation in the contest, whether the Presidential Innovation Fellow, Office of 2012. claim or cause of action arises under Energy Efficiency and Renewable Energy. Filed Date: 11/27/12. contract or tort. Upon registration, all [FR Doc. 2012–29416 Filed 12–4–12; 8:45 am] Accession Number: 20121127–5135. participants agree to and, thereby, shall BILLING CODE 6450–01–P Comments Due: 5 p.m. ET 12/18/12. indemnify and hold harmless the Docket Numbers: ER13–465–000. Federal Government and its officers, Applicants: New England Power Pool employees and agents for any and all DEPARTMENT OF ENERGY Participants Committee, ISO New injury and damage of any nature England Inc. whatsoever (whether existing or Federal Energy Regulatory Description: MR1 Rev. Rel. to thereafter arising, whether direct, Commission Procurement of 10-Min. Non-Spinning indirect, or consequential and whether Combined Notice of Filings #1 Res in FRM to be effective 3/1/2013. foreseeable or not), including but not Filed Date: 11/27/12. limited to any damage that may result Take notice that the Commission Accession Number: 20121127–5163. from a virus, malware, etc., to received the following electric corporate Comments Due: 5 p.m. ET 12/18/12. Government computer systems or data, filings: or to the systems or data of end-users of Docket Numbers: ER13–466–000. Docket Numbers: EC06–129–005. Applicants: Shipley Choice, LLC. the software and/or application(s) Applicants: Capital Research and Description: Initial Application for which results, in whole or in part, from Management Company. Market-Based Rate Authority to be the fault, negligence, or wrongful act or Description: Request for Amended effective 1/26/2013. omission of the participants or Order Under Section 203 of the Federal Filed Date: 11/27/12. participants’ officers, employees or Power Act of Capital Research and Accession Number: 20121127–5243. agents. Management Company, et. al. Comments Due: 5 p.m. ET 12/18/12. Records Retention and FOIA: All Filed Date: 11/28/12. Docket Numbers: ER13–467–000. materials submitted to DOE as part of a Accession Number: 20121128–5025. Submission become DOE records and Comments Due: 5 p.m. ET 12/19/12. Applicants: Southern California cannot be returned. No confidential Edison Company. Docket Numbers: EC13–48–000. Description: Amended SGIA and DSA information will be accepted with any Applicants: NewPage Corporation, GS to Sunshine Canyon Landfill Project to Submission. Submitters will be notified Funds. of any Freedom of Information Act Description: Joint Application of New be effective 11/29/2012. Filed Date: 11/28/12. requests for their Submissions in Page Corporation, et. al. for Accession Number: 20121128–5000. accordance with 29 CFR § 70.26. Authorization Under Section 203 of the Comments Due: 5 p.m. ET 12/19/12. 508 Compliance: Participants should Federal Power Act and Request for keep in mind that the Department of Expedited Consideration. Docket Numbers: ER13–468–000. Energy considers universal accessibility Filed Date: 11/27/12. Applicants: Footprint Power LLC. to information a priority for all Accession Number: 20121127–5264. Description: Request for Waiver of individuals, including individuals with Comments Due: 5 p.m. ET 12/18/12. Footprint Power LLC. disabilities. In this regard, the Take notice that the Commission Filed Date: 11/28/12. Department is strongly committed to received the following electric rate Accession Number: 20121128–5056. meeting its compliance obligations filings: Comments Due: 5 p.m. ET 12/19/12. under Section 508 of the Rehabilitation Docket Numbers: ER12–2480–002. The filings are accessible in the Act of 1973, as amended, to ensure the Applicants: Alcoa Power Generating Commission’s eLibrary system by accessibility of its programs and Inc. clicking on the links or querying the activities to individuals with Description: Refiling of Yadkin docket number. disabilities. This obligation includes OATT—ER12–2480 to be effective 11/ Any person desiring to intervene or acquiring accessible electronic and 15/2012. protest in any of the above proceedings
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must file in accordance with Rules 211 listed as a contact for an intervenor authorization, under 18 CFR part 34, of and 214 of the Commission’s must create and validate an future issuances of securities and Regulations (18 CFR 385.211 and eRegistration account using the assumptions of liability is December 19, 385.214) on or before 5:00 p.m. Eastern eRegistration link. Select the eFiling 2012. time on the specified comment date. link to log on and submit the The Commission encourages Protests may be considered, but intervention or protests. electronic submission of protests and intervention is necessary to become a Persons unable to file electronically interventions in lieu of paper, using the party to the proceeding. should submit an original and 14 copies FERC Online links at http:// eFiling is encouraged. More detailed of the intervention or protest to the www.ferc.gov. To facilitate electronic information relating to filing Federal Energy Regulatory Commission, service, persons with Internet access requirements, interventions, protests, 888 First Street NE., Washington, DC who will eFile a document and/or be service, and qualifying facilities filings 20426. listed as a contact for an intervenor can be found at: http://www.ferc.gov/ The filings in the above-referenced must create and validate an docs-filing/efiling/filing-req.pdf. For proceeding(s) are accessible in the eRegistration account using the other information, call (866) 208–3676 Commission’s eLibrary system by eRegistration link. Select the eFiling (toll free). For TTY, call (202) 502–8659. clicking on the appropriate link in the link to log on and submit the Dated: November 28, 2012. above list. They are also available for intervention or protests. Persons unable to file electronically Nathaniel J. Davis, Sr., review in the Commission’s Public Reference Room in Washington, DC. should submit an original and 14 copies Deputy Secretary. There is an eSubscription link on the of the intervention or protest to the [FR Doc. 2012–29346 Filed 12–4–12; 8:45 am] web site that enables subscribers to Federal Energy Regulatory Commission, BILLING CODE 6717–01–P receive email notification when a 888 First Street NE., Washington, DC document is added to a subscribed 20426. docket(s). For assistance with any FERC The filings in the above-referenced DEPARTMENT OF ENERGY Online service, please email proceeding(s) are accessible in the Commission’s eLibrary system by Federal Energy Regulatory [email protected]. or call clicking on the appropriate link in the Commission (866) 208–3676 (toll free). For TTY, call (202) 502–8659. above list. They are also available for [Docket No. ER13–454–000] review in the Commission’s Public Dated: November 29, 2012. Reference Room in Washington, DC. NDR Energy Group, LLC; Nathaniel J. Davis, Sr., There is an eSubscription link on the Supplemental Notice That Initial Deputy Secretary. Web site that enables subscribers to Market-Based Rate Filing Includes [FR Doc. 2012–29347 Filed 12–4–12; 8:45 am] receive email notification when a Request for Blanket Section 204 BILLING CODE 6717–01–P document is added to a subscribed Authorization docket(s). For assistance with any FERC Online service, please email This is a supplemental notice in the DEPARTMENT OF ENERGY above-referenced proceeding, of NDR [email protected], or call (866) 208–3676 (toll free). For TTY, call Energy Group, LLC’s application for Federal Energy Regulatory (202) 502–8659. market-based rate authority, with an Commission accompanying rate schedule, noting that Dated: November 29, 2012. such application includes a request for [Docket No. ER13–466–000] Nathaniel J. Davis, Sr., blanket authorization, under 18 CFR Shipley Choice, LLC; Supplemental Deputy Secretary. Part 34, of future issuances of securities Notice That Initial Market-Based Rate [FR Doc. 2012–29345 Filed 12–4–12; 8:45 am] and assumptions of liability. Filing Includes Request for Blanket BILLING CODE 6717–01–P Any person desiring to intervene or to Section 204 Authorization protest should file with the Federal Energy Regulatory Commission, 888 This is a supplemental notice in the ENVIRONMENTAL PROTECTION First Street NE., Washington, DC 20426, above-referenced proceeding, of Shipley AGENCY in accordance with Rules 211 and 214 Choice, LLC’s application for market- of the Commission’s Rules of Practice based rate authority, with an [EPA–HQ–OPP–2012–0390; FRL–9371–2] and Procedure (18 CFR 385.211 and accompanying rate schedule, noting that 385.214). Anyone filing a motion to such application includes a request for Notice of Receipt of Pesticide intervene or protest must serve a copy blanket authorization, under 18 CFR Products; Registration Applications of that document on the Applicant. part 34, of future issuances of securities AGENCY: Environmental Protection Notice is hereby given that the and assumptions of liability. Agency (EPA). deadline for filing protests with regard Any person desiring to intervene or to ACTION: Notice. to the applicant’s request for blanket protest should file with the Federal authorization, under 18 CFR part 34, of Energy Regulatory Commission, 888 SUMMARY: EPA has received applications future issuances of securities and First Street NE., Washington, DC 20426, to register pesticide products containing assumptions of liability is December 19, in accordance with Rules 211 and 214 an active ingredient not included in any 2012. of the Commission’s Rules of Practice currently registered pesticide products. The Commission encourages and Procedure (18 CFR 385.211 and Pursuant to the Federal Insecticide, electronic submission of protests and 385.214). Anyone filing a motion to Fungicide, and Rodenticide Act interventions in lieu of paper, using the intervene or protest must serve a copy (FIFRA), EPA is hereby providing notice FERC Online links at http:// of that document on the Applicant. of receipt and opportunity to comment www.ferc.gov. To facilitate electronic Notice is hereby given that the on these applications. service, persons with Internet access deadline for filing protests with regard DATES: Comments must be received on who will eFile a document and/or be to the applicant’s request for blanket or before January 4, 2013.
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ADDRESSES: Submit your comments, the part or all of the information that www.epa.gov/pesticides/regulating/ identified by docket identification (ID) you claim to be CBI. For CBI registration-public-involvement.html). number and the EPA File Symbol for the information in a disk or CD–ROM that EPA received the following applications product of interest as shown in the body you mail to EPA, mark the outside of the to register pesticide products containing of this document, by one of the disk or CD–ROM as CBI and then an active ingredient not included in any following methods: identify electronically within the disk or currently registered products: • Federal eRulemaking Portal: http:// CD–ROM the specific information that 1. EPA File Symbol: 43808–R. Docket www.regulations.gov. Follow the online is claimed as CBI. In addition to one ID Number: EPA–HQ–OPP–2012–0815. instructions for submitting comments. complete version of the comment that Applicant: State of Florida, Department Do not submit electronically any includes information claimed as CBI, a of Citrus, 605 East Main Street, P.O. Box information you consider to be copy of the comment that does not 9010, Bartow, FL 33831–9010. Active Confidential Business Information (CBI) contain the information claimed as CBI ingredient: 5-chloro-3-methyl-4-nitro- or other information whose disclosure is must be submitted for inclusion in the 1H-pyrazole (CMNP) and its metabolite restricted by statute. public docket. Information so marked (5-chloro-4-nitro-1H-pyrazol-3-yl)- • Mail: OPP Docket, Environmental will not be disclosed except in methanol (CHNP) at 96.5%. Product Protection Agency Docket Center (EPA/ accordance with procedures set forth in type: Plant regulator. Proposed uses: DC), (28221T), 1200 Pennsylvania Ave. 40 CFR part 2. Manufacturing Use Only. Contact: Tony NW., Washington, DC 20460–0001. 2. Tips for preparing your comments. Kish, (703) 308–9443, email address: • Hand Delivery: To make special When submitting comments, remember [email protected]. arrangements for hand delivery or to: 2. EPA File Symbol: 43808–E. Docket delivery of boxed information, please i. Identify the document by docket ID ID Number: EPA–HQ–OPP–2012–0815. follow the instructions at http:// number and other identifying Applicant: State of Florida, Department www.epa.gov/dockets/contacts.htm. information (subject heading, Federal of Citrus, 605 East Main Street, P.O. Box Additional instructions on commenting Register date and page number). 9010, Bartow, FL 33831–9010. Active or visiting the docket, along with more ii. Follow directions. The Agency may ingredient: 5-chloro-3-methyl-4-nitro- information about dockets generally, is ask you to respond to specific questions 1H-pyrazole (CMNP) and its metabolite available at or organize comments by referencing a (5-chloro-4-nitro-1H-pyrazol-3-yl)- http://www.epa.gov/dockets. Code of Federal Regulations (CFR) part methanol (CHNP) at17%. Product type: FOR FURTHER INFORMATION CONTACT: A or section number. Plant regulator (Abscission Agent). contact person is listed at the end of iii. Explain why you agree or disagree; Proposed use: Oranges. Contact: Tony each registration application summary suggest alternatives and substitute Kish, (703) 308–9443, email address: and may be contacted by telephone, language for your requested changes. [email protected]. email, or mail. Mail correspondence to iv. Describe any assumptions and List of Subjects the Registration Division (RD) (7505P), provide any technical information and/ Office of Pesticide Programs, or data that you used. Environmental protection, Pesticides Environmental Protection Agency, 1200 v. If you estimate potential costs or and pest. Pennsylvania Ave. NW., Washington, burdens, explain how you arrived at your estimate in sufficient detail to Dated: November 26, 2012. DC 20460–0001. As part of the mailing G. Jeffrey Herndon, address, include the contact person’s allow for it to be reproduced. vi. Provide specific examples to Acting Director, Registration Division, Office name, division, and mail code. illustrate your concerns and suggest of Pesticide Programs. SUPPLEMENTARY INFORMATION: alternatives. [FR Doc. 2012–29249 Filed 12–4–12; 8:45 am] I. General Information vii. Explain your views as clearly as BILLING CODE 6560–50–P possible, avoiding the use of profanity A. Does this Action Apply to Me? or personal threats. You may be potentially affected by viii. Make sure to submit your ENVIRONMENTAL PROTECTION this action if you are an agricultural comments by the comment period AGENCY deadline identified. producer, food manufacturer, or [EPA–HQ–OPP–2009–1017; FRL–9370–4] pesticide manufacturer. The following II. Registration Applications list of North American Industrial Notice of Receipt of Requests to Classification System (NAICS) codes is EPA has received applications to Voluntarily Cancel Certain Pesticide not intended to be exhaustive, but rather register pesticide products containing Registrations provides a guide to help readers an active ingredient not included in any determine whether this document currently registered pesticide products. AGENCY: Environmental Protection applies to them. Potentially affected Pursuant to the provisions of FIFRA Agency (EPA). entities may include: section 3(c)(4), EPA is hereby providing ACTION: Notice. • Crop production (NAICS code 111). notice of receipt and opportunity to • Animal production (NAICS code comment on these applications. Notice SUMMARY: In accordance with the 112). of receipt of these applications does not Federal Insecticide, Fungicide, and • Food manufacturing (NAICS code imply a decision by the Agency on these Rodenticide Act (FIFRA), EPA is issuing 311). applications. For actions being a notice of receipt of requests by • Pesticide manufacturing (NAICS evaluated under the Agency’s public registrants to voluntarily cancel certain code 32532). participation process for registration pesticide registrations. EPA intends to actions, there will be an additional grant these requests at the close of the B. What Should I Consider as I Prepare opportunity for a 30-day public comment period for this announcement My Comments for EPA? comment period on the proposed unless the Agency receives substantive 1. Submitting CBI. Do not submit this decision. Please see the Agency’s public comments within the comment period information to EPA through participation Web site for additional that would merit its further review of regulations.gov or email. Clearly mark information on this process (http:// the requests, or unless the registrants
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withdraw its requests. If these requests Division (7508P), Office of Pesticide i. Identify the document by docket ID are granted, any sale, distribution, or Programs, Environmental Protection number and other identifying use of products listed in this notice will Agency, 1200 Pennsylvania Ave. NW., information (subject heading, Federal be permitted after the registration has Washington, DC 20460–0001; telephone Register date and page number). been cancelled only if such sale, number: (703) 308–8195; email address: ii. Follow directions. The Agency may distribution, or use is consistent with [email protected]. ask you to respond to specific questions the terms as described in the final order. SUPPLEMENTARY INFORMATION: or organize comments by referencing a DATES: Comments must be received on Code of Federal Regulations (CFR) part or before January 4, 2013. I. General Information or section number. ADDRESSES: Submit your comments, A. Does this action apply to me? iii. Explain why you agree or disagree; identified by docket identification (ID) This action is directed to the public suggest alternatives and substitute number EPA–HQ–OPP–2009–1017, by in general, and may be of interest to a language for your requested changes. one of the following methods: iv. Describe any assumptions and • wide range of stakeholders including Federal eRulemaking Portal: http:// environmental, human health, and provide any technical information and/ www.regulations.gov. Follow the online agricultural advocates; the chemical or data that you used. instructions for submitting comments. industry; pesticide users; and members v. If you estimate potential costs or Do not submit electronically any of the public interested in the sale, burdens, explain how you arrived at information you consider to be distribution, or use of pesticides. your estimate in suf Confidential Business Information (CBI) vi. Provide specific examples to or other information whose disclosure is B. What should I consider as I prepare illustrate your concerns and suggest restricted by statute. my comments for EPA? alternatives. • Mail: OPP Docket, Environmental 1. Submitting CBI. Do not submit this vii. Explain your views as clearly as Protection Agency Docket Center (EPA/ information to EPA through possible, avoiding the use of profanity DC), (28221T), 1200 Pennsylvania Ave. regulations.gov or email. Clearly mark or personal threats. NW., Washington, DC 20460–0001. the part or all of the information that viii. Make sure to submit your Submit written withdrawal request by you claim to be CBI. For CBI comments by the comment period mail to: Pesticide Re-evaluation information in a disk or CD–ROM that deadline identified. Division (7508P), Office of Pesticide you mail to EPA, mark the outside of the II. What action is the agency taking? Programs, Environmental Protection disk or CD–ROM as CBI and then Agency, 1200 Pennsylvania Ave. NW., identify electronically within the disk or This notice announces receipt by the Washington, DC 20460–0001. ATTN: CD–ROM the specific information that Agency of requests from registrants to John W. Pates, Jr. cancel 43 pesticide products registered • is claimed as CBI. In addition to one Hand Delivery: To make special complete version of the comment that under FIFRA section 3 or 24(c). These arrangements for hand delivery or includes information claimed as CBI, a registrations are listed in sequence by delivery of boxed information, please copy of the comment that does not registration number (or company follow the instructions at http:// contain the information claimed as CBI number and 24(c) number) in Table 1 of www.epa.gov/dockets/contacts.htm. must be submitted for inclusion in the this unit. Additional instructions on commenting public docket. Information so marked Unless the Agency determines that or visiting the docket, along with more will not be disclosed except in there are substantive comments that information about dockets generally, is accordance with procedures set forth in warrant further review of the requests or available at http://www.epa.gov/ 40 CFR part 2. the registrants withdraw their requests, dockets. 2. Tips for preparing your comments. EPA intends to issue orders in the FOR FURTHER INFORMATION CONTACT: John When submitting comments, remember Federal Register canceling all of the W. Pates, Jr., Pesticide Re-evaluation to: affected registrations.
TABLE 1—REGISTRATIONS WITH PENDING REQUESTS FOR CANCELLATION
Registration No. Product name Chemical name
000100–00641 ...... Banner Fungicide ...... Propiconazole. 000100–00781 ...... Orbit 45W Fungicide ...... Propiconazole. 000352–00558 ...... DuPont Muster Herbicide ...... Ethametsulfuron. 000352–00559 ...... DuPont Ethametsulfuron Methyl Technical Herbicide ...... Ethametsulfuron. 000499–00518 ...... Prescription Treatment Brand 2% Propoxur Bait ...... Propoxur. 009404–00087 ...... Permethrin 0.25% Insecticide Granules ...... Permethrin. 009404–00088 ...... Sunniland Chinch Bug & Mole Cricket Spray ...... Permethrin. 010163–00298 ...... GWN–3772 Technical ...... Tribenuron-methyl. 010466–00024 ...... Ultrafresh 300 DD Nonionic ...... Triclosan/Tributyltin oxide (no inert use). 010466–00043 ...... T-Bate ...... Tributyltin oxide (no inert use). 010807–00146 ...... Weed-A-Cide Concentrate ...... Prometon. 010807–00206 ...... Misty Weed-A-Cide CF ...... Prometon. 010807–00444 ...... CB Fogger IV ...... Tetramethrin/Esfenvalerate. 010807–00451 ...... Bee, Wasp & Hornet Jet Stream ...... Phenothrin/Tetramethrin. 028293–00293 ...... Unicorn 30 Day Flea & Tick Treatment ...... Permethrin. 028293–00357 ...... Unicorn 45% Permethrin Fly & Tick Insecticide ...... Permethrin. 028293–00358 ...... Unicorn 45% Permethrin Flee & Tick Insecticide ...... Permethrin. 038167–00029 ...... Mach 2 1.5G ...... Benzoic acid,4-chloro-,2-benzoyl-2-(1,1-dimethylethyl) hy- drazide. 061483–00058 ...... Pentacon-7 ...... Pentachlorophenol. 061483–00059 ...... Pentacon-10 ...... Pentachlorophenol.
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TABLE 1—REGISTRATIONS WITH PENDING REQUESTS FOR CANCELLATION—Continued
Registration No. Product name Chemical name
062719–00351 ...... Dursban HF Insecticidal Concentrate ...... Chlorpyrifos. 062719–00352 ...... Dursban W Insecticidal Chemical ...... Chlorpyrifos. 062719–00364 ...... Dursban 20 MEC Microencapsulated Insecticidal Con- Chlorpyrifos. centrate. 066222–00025 ...... Pramitol 1.5% Liquid Vegetation Killer ...... Prometon. 066222–00044 ...... Pramitol 1.8L ...... Prometon. 066222–00045 ...... Pramitol 2.2L ...... Prometon. 066222–00052 ...... Pramitol 1.8 RTU ...... Prometon. 066222–00118 ...... Bumper 41.8 EC Calif ...... Propiconazole. 066330–00037 ...... Chloropicrin ...... Chloropicrin. 066330–00047 ...... TM–442 ...... Chloropicrin. 066330–00228 ...... Malathion Technical ...... Malathion (no inert use). 066330–00248 ...... Malathion 8EC ...... Malathion (no inert use). 066330–00325 ...... Propiconazole 14.3% T&O ...... Propiconazole. 066330–00331 ...... Bifenthrin 13% MUP ...... Bifenthrin. 068451–00003 ...... Deltamethrin Technical Insecticide (micronized) ...... Deltamethrin. 068451–00004 ...... Deltamethrin Technical Insecticide ...... Deltamethrin. 073327–00011 ...... Green Light Conquest Indoor & Outdoor Pest Control ...... Permethrin. 073327–00012 ...... Green Light Conquest Insecticide Concentrate ...... Permethrin. 075829–00001 ...... H2Pro Maintenance Treatment ...... Silver. 081880–00020 ...... MON 12036 Herbicide ...... Halosulfuron-methyl. 088058–00002 ...... Chlorothalonil 720 Fungicide ...... Chlorothalonil. CA900030 ...... Pest Strip ...... Amvac Small Insect Strip.
Table 2 of this unit includes the this unit, in sequence by EPA company numbers of the products listed in this names and addresses of record for all number. This number corresponds to unit. registrants of the products in Table 1 of the first part of the EPA registration
TABLE 2—REGISTRANTS REQUESTING VOLUNTARY CANCELLATION
EPA Company No. Company name and address
100 ...... Syngenta Crop Protection, LLC, 410 Swing Rd., P.O. Box 18300, Greensboro, NC 27419–8300. 352 ...... E.I. DuPont de Nemours and Company (S300/419), Manager, Reg- istration & Regulatory Affairs, 1007 Market St., Wilmington, DE 19898–0001. 499 ...... Whitmire Micro-Gen Research Laboratories, Inc., Agent: BASF Cor- poration, 3568 Tree Court Industrial Blvd., St. Louis, MO 63122– 6682. 9404 ...... Sunniland Corporation, P.O. Box 8001, Sanford, FL 32772–8001. 10163 ...... Gowan Company, P.O. Box 5569, Yuma, AZ 853668844. 10466 ...... Thomas Research Associates, Shenstone Estates, 17804 Braemar Plaza, Leesburg, VA 20176–7046. 10807 ...... Amreo, Inc., 990 Industrial Park Dr., Marietta, GA 30062. 28293 ...... Phaeton Corporation, P.O. Box 1019, Salem, VA 24153. 38167 ...... Helena Chemical Company, D/B/A Setre Chemical Company, 225 Schilling Blvd., Suite 300, Collierville, TN 38017. 61483 ...... KMG-Bernuth, Inc., 9555 W. Sam Houston Parkway South, Suite 600, Houston, TX 77099. 62719 ...... Dow Agrosciences, LLC, 9330 Zionsville Rd., 308/2E, Indianapolis, IN 46268–1054. 66222 ...... Makhteshim Agan of North America, Inc., 3120 Highwoods Blvd., Suite 100, Raleigh, NC 27604. 66330 ...... Arysta Lifescience North America, LLC, 15401 Weston Parkway, Suite 150, Cary, NC 27513. 68451 ...... Intervet, Inc., 556 Morris Avenue, S5–2145A, Summit, NJ 07901. 73327 ...... Swiss Farms Products, 3993 Howard Hughs Parkway, Suite 250, Las Vegas, NV 89109–6754. 75829 ...... Garrison Dental Solutions, 150 Dewitt Lane, Ispring Lake, MI 49456. 81880 ...... Canyon Group, LLC, C/O Gowan Company, 370 S. Main St., Yuma, AZ 85364. 88058 ...... Orion Ato, LLC, Agent: Source Dynamics, LLC, S122230 E. Del Norte, Yuma, AZ 85377–7355. CA 900030 ...... California Dept. of Food and Agriculture, 1220 N. Street Room 221, Sacramento, CA 95814.
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III. What is the agency’s authority for the pesticides identified in Table 1 of Vermont Avenue NW., Washington, DC taking this action? Unit II., except for export consistent 20571. Section 6(f)(1) of FIFRA provides that with FIFRA section 17 or for proper Agenda: Presentation on recent a registrant of a pesticide product may disposal. Persons other than registrants developments in Sub-Saharan Africa at any time request that any of its will generally be allowed to sell, markets by Ex-Im Bank staff; an update pesticide registrations be canceled. distribute, or use existing stocks until on Ex-Im Bank’s on-going business FIFRA further provides that, before such stocks are exhausted, provided that development initiatives in the region; acting on the request, EPA must publish such sale, distribution, or use is and Committee discussion of current a notice of receipt of any such request consistent with the terms of the challenges and opportunities for U.S. in the Federal Register. previously approved labeling on, or that exporters. Public Participation: The meeting will Section 6(f)(1)(B) of FIFRA requires accompanied, the canceled products. be open to public participation and the that before acting on a request for A. Registration No. 066330–00037 last 10 minutes will be set aside for oral voluntary cancellation, EPA must The continued sale and distribution of questions or comments. Members of the provide a 30-day public comment existing stocks of this product will be public may also file written statement(s) period on the request for voluntary allowed through December 1, 2012. before or after the meeting. If you plan cancellation or use termination. In Additionally, the use of existing stocks to attend, a photo ID must be presented addition, FIFRA section 6(f)(1)(C) of this product will be allowed until at the guard’s desk as part of the requires that EPA provide a 180-day those existing stocks are exhausted. clearance process into the building and comment period on a request for you may contact Exa Richards to be voluntary cancellation or termination of B. Registration No. 066330–00047 placed on an attendee list. If any person any minor agricultural use before The continued sale and distribution of wishes auxiliary aids (e.g., a sign granting the request, unless: existing stocks of this product will be language interpreter) or other special 1. The registrants request a waiver of allowed through December 1, 2012. accommodations, please contact, prior the comment period, or Additionally, the use of existing stocks to December 5, 2012, Exa Richards, 811 2. The EPA Administrator determines of this product will be allowed until Vermont Avenue NW., Washington, DC that continued use of the pesticide those existing stocks are exhausted. 20571, (202) 565–3455. would pose an unreasonable adverse effect on the environment. List of Subjects FURTHER INFORMATION: For further The registrants in Table 2 of Unit II. information, please contact Exa Environmental protection, Pesticides Richards, 811 Vermont Avenue NW., have requested that EPA waive the 180- and pests. day comment period. Accordingly, EPA Washington, DC 20571; (202) 565–3455. Dated: November 21, 2012. will provide a 30-day comment period Lisa V. Terry, Richard P. Keigwin, Jr., on the proposed requests. Assistant General Counsel. Director, Pesticide Re-evaluation Division, IV. Procedures for Withdrawal of Office of Pesticide Programs. [FR Doc. 2012–29257 Filed 12–4–12; 8:45 am] Request [FR Doc. 2012–29384 Filed 12–4–12; 8:45 am] BILLING CODE 6690–01–P Registrants who choose to withdraw a BILLING CODE 6560–50–P request for cancellation should submit such withdrawal in writing to the FEDERAL COMMUNICATIONS person listed under FOR FURTHER COMMISSION EXPORT-IMPORT BANK OF THE INFORMATION CONTACT. If the products UNITED STATES Information Collection Being Reviewed have been subject to a previous by the Federal Communications cancellation action, the effective date of Notice of Open Special Meeting of the Commission Under Delegated cancellation and all other provisions of Sub-Saharan Africa Advisory Authority any earlier cancellation action are Committee of the Export-Import Bank controlling. of the United States (Ex-Im Bank) AGENCY: Federal Communications Commission. V. Provisions for Disposition of Existing SUMMARY: The Sub-Saharan Africa ACTION: Notice; request for comments. Stocks Advisory Committee was established by Existing stocks are those stocks of Public Law 105–121, November 26, SUMMARY: As part of its continuing effort registered pesticide products that are 1997, to advise the Board of Directors on to reduce paperwork burden and as currently in the United States and that the development and implementation of required by the Paperwork Reduction were packaged, labeled, and released for policies and programs designed to Act (PRA) of 1995 (44 U.S.C. 3501– shipment prior to the effective date of support the expansion of Ex-Im Bank’s 3520), the Federal Communications the cancellation action. Because the financial commitments in Sub-Saharan Commission invites the general public Agency has identified no significant Africa under its loan, guarantee, and and other Federal agencies to take this potential risk concerns associated with insurance programs. Further, the opportunity to comment on the these pesticide products, upon Committee shall make following information collection(s). cancellation of the products identified recommendations on how Ex-Im Bank Comments are requested concerning: in Table 1 of Unit II., EPA anticipates can facilitate greater support by U.S. Whether the proposed collection of allowing registrants to sell and commercial banks for trade with Sub- information is necessary for the proper distribute existing stocks of these Saharan Africa. performance of the functions of the products (except for registration no. Time and Place: Monday, December Commission, including whether the 066330–00037 and 066330–00047) for 1 17, 2012, between 10:30 a.m. and 12:30 information shall have practical utility; year after publication of the p.m. Security processing will be the accuracy of the Commission’s Cancellation Order in the Federal necessary for reentry into the building. burden estimate; ways to enhance the Register. Thereafter, registrants will be The meeting will be held at Ex-Im Bank quality, utility, and clarity of the prohibited from selling or distributing in the Main Conference Room 326, 811 information collected; ways to minimize
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the burden of the collection of Needs and Uses: The Commission is the streamlined station identification information on the respondents, submitting this expiring information requirements which amend including the use of automated collection to the Office of Management requirements from once every 15 collection techniques or other forms of and Budget (OMB) for approval of an minutes to once an hour. information technology; and ways to extension request (no change in the Federal Communications Commission. further reduce the information burden public reporting and/or third party Marlene H. Dortch, for small business concerns with fewer disclosure requirements). There is no Secretary, Office of the Secretary, Office of than 25 employees. change in the Commission’s previous Managing Director. The FCC may not conduct or sponsor burden estimates. [FR Doc. 2012–29344 Filed 12–4–12; 8:45 am] a collection of information unless it Section 80.302 of the Commission’s displays a currently valid OMB control rules states that when changes occur in BILLING CODE 6712–01–P number. No person shall be subject to the operation of a public coast station any penalty for failing to comply with which include discontinuance, FEDERAL COMMUNICATIONS a collection of information subject to the relocation, reduction or suspension of a COMMISSION Paperwork Reduction Act (PRA) that watch required to be maintained on does not display a valid OMB control 2182 kHz or 156.800 MHz, notification Information Collection Being Reviewed number. must be may be the licensee to the by the Federal Communications DATES: Written Paperwork Reduction nearest district office of the U.S. Coast Commission Act (PRA) comments should be Guard as soon as practicable. This notification must include the estimated AGENCY: Federal Communications submitted on or before February 4, 2013. Commission. If you anticipate that you will be or know resumption time of the watch. OMB Control Number: 3060–0599. ACTION: Notice and request for submitting PRA comments, but find it comments. difficult to do so within the period of Title: Sections 90.425 and 90.467, Station Identification. time allowed by this notice, you should SUMMARY: As part of its continuing effort Form Number: N/A. advise the FCC contact listed below as to reduce paperwork burden and as Type of Review: Extension of a soon as possible. required by the Paperwork Reduction currently approved collection. ADDRESSES: Submit your PRA comments Respondents: Business or other for- Act (PRA) of 1995 (44 U.S.C. 3501– 3520), the Federal Communications to Nicholas A. Fraser, Office of profit entities and state, local or tribal Commission invites the general public Management and Budget, via fax at 202– government. 395–5167 or via Internet at Number of Respondents: 209 and other Federal agencies to take this [email protected] and respondents; 209 responses. opportunity to comment on the to Judith B.Herman, Federal Estimated Time per Response: 1.66 following information collection(s). Communications Commission, via the hours (10 minutes). Comments are requested concerning: Internet at [email protected]. To Frequency of Response: On occasion Whether the proposed collection of submit your PRA comments by email reporting requirement. information is necessary for the proper send them to: [email protected]. Obligation to Respond: Required to performance of the functions of the Commission, including whether the FOR FURTHER INFORMATION CONTACT: obtain or retain benefits. Statutory Judith B. Herman, Office of Managing authority for this information collection information shall have practical utility; the accuracy of the Commission’s Director, (202) 418–0214. is contained in 47 U.S.C. sections 151(i), burden estimate; ways to enhance the SUPPLEMENTARY INFORMATION: 309(j) and 332 as amended by the Communications Act of 1934, as quality, utility, and clarity of the OMB Control Number: 3060–0286. information collected; ways to minimize Title: Section 80.302, Notice of amended. Total Annual Burden: 347 hours. the burden of the collection of Discontinuance, Reduction or information on the respondents, Impairment of Service Involving a Total Annual Cost: N/A. Privacy Impact Assessment: N/A. including the use of automated Distress Watch. collection techniques or other forms of Form Number: N/A. Nature and Extent of Confidentiality: information technology; and ways to Type of Review: Extension of a There is no need for confidentiality. further reduce the information burden currently approved collection. Needs and Uses: The Commission is for small business concerns with fewer Respondents: Business or other for- submitting this expiring information than 25 employees. The FCC may not profit entities, not-for-profit institutions collection to the Office of Management conduct or sponsor a collection of and state, local or tribal government. and Budget (OMB) for approval of an information unless it displays a Number of Respondents: 160 extension request (no change in the currently valid OMB control number. respondents; 160 responses. public reporting requirement). There is No person shall be subject to any Estimated Time per Response: 1 hour. no change in the Commission’s (2010) Frequency of Response: On occasion burden estimates. penalty for failing to comply with a reporting requirement. Sections 90.425 and 90.647, Station collection of information subject to the Obligation to Respond: Required to Identification set forth station Paperwork Reduction Act (PRA) that obtain or retain benefits. Statutory identification requirements under these does not display a valid OMB control authority for this information collection rule sections. Section 90.425(e) states number. is contained in 47 U.S.C. sections 151— that 929–930 MHz nationwide paging DATES: Written Paperwork Reduction 155, 301—609 of the Communications licensees and MTA-based SMR Act (PRA) comments should be Act of 1934, as amended; and 3 UST licensees or MTA or Economic Area submitted on or before February 4, 2013. 3450, 3 UST 4726 and 12 UST 2377. (EA)-based SMR licensees are exempt If you anticipate that you will be Total Annual Burden: 160 hours. from meeting these identification submitting PRA comments, but find it Total Annual Cost: N/A. requirements as opposed to all other difficult to do so within the period of Privacy Impact Assessment: N/A. Commercial Mobile Radio Service time allowed by this notice, you should Nature and Extent of Confidentiality: (CMRS). Further the remaining CMRS advise the FCC contact listed below as There is no need for confidentiality. providers need comply only once with soon as possible.
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ADDRESSES: Submit your PRA comments Federal Communications Commission. Synopsis to Benish Shah, Federal Marlene H. Dortch, The April 2012 Public Notice Communications Commission, via the Secretary, Office of the Secretary, Office of Internet at [email protected]. To Managing Director. addressed unresolved petitions for exemption that were filed before submit your PRA comments by email [FR Doc. 2012–29343 Filed 12–4–12; 8:45 am] send them to: [email protected]. passage of the Twenty-First Century BILLING CODE 6712–01–P Communications and Video FOR FURTHER INFORMATION CONTACT: Accessibility Act (CVAA) on October 8, Benish Shah, Office of Managing 2010. Although some of these petitions Director, (202) 418–7866. FEDERAL COMMUNICATIONS COMMISSION were previously placed on public SUPPLEMENTARY INFORMATION: notice, no decision to grant or to deny OMB Approval Number: 3060–0059. was ever made regarding these petitions. [CG Docket No. 06–181; DA 12–1833] Title: Statement Regarding the Because considerable time had passed Importation of Radio Frequency Devices Notice of Exemption Dismissals and since many of these petitions were first Capable of Harmful Interference. Obligation To Begin Providing Closed filed, and various circumstances Form No.: FCC 740. Captioning including, but not limited to, the Type of Review: Extension of a financial status of the petitioners and currently approved collection. AGENCY: Federal Communications the cost of captioning may have Commission. changed, the Bureau required each Respondents: Business or other for- petitioner whose petition was listed in profit entities. ACTION: Notice. the April 2012 Public Notice to do one Number of Respondents: 10,000 SUMMARY: In this document, the of the following by July 5, 2012: (1) File respondents, 2,000,000 responses. Commission, via the Consumer and an affirmation with the Commission that Estimated Time per Response: 30 sec Governmental Affairs Bureau (Bureau) its previously submitted petition and (.0084 hours). identifies the petitions that were supporting information were accurate Frequency of Response: One time dismissed pursuant to the procedures and up-to-date; (2) file updated reporting requirement and third party described in the Bureau’s April 2012 information in accordance with the disclosure. Public Notice. Also, this document Commission’s rules to support its claim Obligation to Respond: Required to serves to remind these petitioners of that captioning its program(s) would be obtain or retain benefits. Statutory their obligation to provide closed economically burdensome; or (3) authority for this collection of captioning, unless they have already withdraw its previously submitted information is contained in 47 U.S.C. filed a new petition for exemption with petition. The April 2012 Public Notice sections 154(i), 157(a), 302(a), 303(b), the Commission. alerted petitioners that if they did not 303(f), 303(g) and 303(r). FOR FURTHER INFORMATION CONTACT: take one of the steps listed above by July Total Annual Burden: 33,600 hours. Traci Randolph, Consumer and 5, 2012, their petitions would be Total Annual Costs: N/A. Governmental Affairs Bureau, at (202) dismissed without prejudice on July 5, Privacy Act Impact Assessment: N/A. 418–0569 (voice), (202) 418–0537 2012. The Bureau sent a copy of the Nature and Extent of Confidentiality: (TTY); email: [email protected]. April 2012 Public Notice, along with instructions on filing updated There are no confidentiality issues. SUPPLEMENTARY INFORMATION: This is a information, by certified mail, return Needs and Uses: The Commission synopsis of the Commission’s Public receipt requested, to each petitioner at will submit this expiring information Notice, document DA 12–1833, released its last known address. collection to the Office of Management November 14, 2012, in CG Docket No. and Budget (OMB) after this 60 day 06–181. The full text of this document The petitioners listed in the document comment period in order to obtain the and copies of any subsequently filed DA 12–1833 Appendix did not take one full three year clearance from them. documents in this matter will be of the above steps by July 5, 2012; The FCC, working in conjunction available for public inspection and therefore, their respective petitions were with the U.S. Customs Service is copying during regular business hours dismissed on July 5, 2012. Accordingly, responsible for the regulation of both at the FCC Reference Information these petitioners were required to begin authorized radio services and devices Center, Portals II, 445 12th Street SW., captioning their programs on July 6, that can cause interference. FCC Form Room CY–A257, Washington, DC 20554. 2012. In this regard, the Bureau notes 740 must be completed for each radio Document DA 12–1833 and copies of that if the programming that was the frequency device which is imported into subsequently filed documents in this subject of a petition listed herein aired the United States, and is used to keep matter may also be purchased from the without captions after the dismissal date non-compliant devices from being Commission’s duplicating contractor, of July 5, 2012, the video programming distributed to the general public, Best Copying and Printing, Inc. (BCPI), distributor that aired such programming thereby reducing the potential for at Portals II, 445 12th Street SW., Room may be in violation of the Commission’s harmful interference being caused to CY–B402, Washington, DC 20554. closed captioning rules from that date authorized communications. FCC Form Customers may contact BCPI at its Web up until the time that a new petition is 740 is submitted to the U.S. Customs site: http://www.bcpiweb.com, or by filed. Service and Border Patrol electronically calling (202) 488–5300. Document DA If any petitioner listed in DA 12–1833 or in a few cases paper format. The FCC 12–1833 and the Appendix listing the filed a new petition after July 6, 2012, Form 740 is not submitted to the petitions dismissed on July 5, 2012, such petition is considered pending as Federal Communications Commission. pursuant to DA 12–514 can also be of the date it was received at the When a violation is discovered, the FCC downloaded in Word or Portable Commission. While a petition for can issue a fine. If a product is Document Format (PDF) at: http:// exemption is pending, the video suspected of illegal entry, the FCC www.fcc.gov/encyclopedia/ programming that is subject to the works with the U.S. Customs Service to economically-burdensome-exemption- petition is exempt from the closed resolve the issue. closed-captioning-requirements. captioning requirements.
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Federal Communications Commission. since May/June 2012 in the China port collections of information are Karen Peltz Strauss, of Xingang,’’ and that ‘‘Cosco Container incorporated into the official OMB Deputy Chief, Consumer and Governmental Lines America failed to actively inventory of currently approved Affairs Bureau. participate’’ in an informal dispute collections of information. Copies of the [FR Doc. 2012–29358 Filed 12–4–12; 8:45 am] resolution processes pursued by Paperwork Reduction Act Submission, BILLING CODE 6712–01–P ‘‘shipper’’ through the Commission’s supporting statements and approved Office of Consumer Affairs and Dispute collection of information instruments Resolution Services. Therefore, are placed into OMB’s public docket FEDERAL MARITIME COMMISSION Complainant alleges that ‘‘shipper files. The Federal Reserve may not remains unable to retrieve his cargo conduct or sponsor, and the respondent Notice of Agreements Filed valued at USD$164,176.81,’’ and that is not required to respond to, an Respondent is in violation of sections information collection that has been The Commission hereby gives notice 10(b)(1), 10(b)(3), 10(b)(4), 10(b)(4)(D), extended, revised, or implemented on or of the filing of the following agreements 10(b)(4)(E), and 10(b)(10) of the Ocean after October 1, 1995, unless it displays under the Shipping Act of 1984. Shipping Reform Act of 1988. a currently valid OMB control number. Interested parties may submit comments Complainant requests that the DATES: on the agreements to the Secretary, Comments must be submitted on Commission order Respondent to ‘‘cease or before February 4, 2013. Federal Maritime Commission, and desist from the aforesaid violations Washington, DC 20573, within ten days ADDRESSES: You may submit comments, of said acts; to establish and put in force identified by FR 2230, by any of the of the date this notice appears in the such practices as the Commission Federal Register. Copies of the following methods: determines to be lawful and reasonable; • agreements are available through the Agency Web Site: http:// to pay to said Complainant by way of www.federalreserve.gov. Follow the Commission’s Web site (www.fmc.gov) reparations and damages for the or by contacting the Office of instructions for submitting comments at unlawful conduct herein described the http://www.federalreserve.gov/ Agreements at (202)–523–5793 or sum of $164,176.81 with interest and [email protected]. generalinfo/foia/ProposedRegs.cfm. attorney’s fees (or time spent fees) or • Federal eRulemaking Portal: http:// Agreement No.: 011707–009. other such sum as the Commission may Title: Gulf/South America Discussion www.regulations.gov. Follow the determine to be proper as an award of Agreement. instructions for submitting comments. Parties: BBC Chartering & Logistic reparations; and that such other and • Email: GMBH & Co. KG; Industrial Maritime further order or orders be made as the [email protected]. Carriers LLC; Seaboard Marine, Ltd.; Commission determines to be just and Include OMB number in the subject line and West Coast Industrial Express, LLC. proper in the premises.’’ The full text of of the message. Filing Party: Wade S. Hooker, Esq.; the complaint can be found in the • Fax: (202) 452–3819 or (202) 452– 211 Central Park W; New York, NY Commission’s Electronic Reading Room 3102. 10024. at www.fmc.gov. • Mail: Robert deV. Frierson, Synopsis: The amendment removes This proceeding has been assigned to Secretary, Board of Governors of the BBC Chartering & Logistic GMBH & Co. the Office of Administrative Law Judges. Federal Reserve System, 20th Street and KG as a party to the agreement. The initial decision of the presiding Constitution Avenue NW., Washington, officer in this proceeding shall be issued By Order of the Federal Maritime DC 20551. by November 29, 2013 and the final All public comments are available Commission. decision of the Commission shall be Dated: November 30, 2012. from the Board’s web site at issued by March 31, 2014. Rachel E. Dickon, www.federalreserve.gov/generalinfo/ Assistant Secretary. Karen V. Gregory, foia/ProposedRegs.cfm as submitted, Secretary. unless modified for technical reasons. [FR Doc. 2012–29421 Filed 12–4–12; 8:45 am] Accordingly, your comments will not be [FR Doc. 2012–29399 Filed 12–4–12; 8:45 am] BILLING CODE 6730–01–P edited to remove any identifying or BILLING CODE 6730–01–P contact information. Public comments FEDERAL MARITIME COMMISSION may also be viewed electronically or in paper form in Room MP–500 of the [DOCKET NO. 12–10] FEDERAL RESERVE SYSTEM Board’s Martin Building (20th and C Streets NW.) between 9:00 a.m. and 5:00 SBI International, Inc. v. Mr. Howard Proposed Agency Information Collection Activities; Comment p.m. on weekdays. Finkel c/o Cosco Container Lines; Additionally, commenters may send a Request Notice of Filing of Complaint and copy of their comments to the OMB Assignment AGENCY: Board of Governors of the Desk Officer—Shagufta Ahmed—Office Notice is given that a complaint has Federal Reserve System. of Information and Regulatory Affairs, been filed with the Federal Maritime SUMMARY: On June 15, 1984, the Office Office of Management and Budget, New Commission (Commission) by SBI of Management and Budget (OMB) Executive Office Building, Room 10235 International, Inc., a corporation delegated to the Board of Governors of 725 17th Street NW., Washington, DC registered in Florida, hereinafter the Federal Reserve System (Board) its 20503 or by fax to (202) 395–6974. ‘‘Complainant,’’ against Mr. Howard approval authority under the Paperwork FOR FURTHER INFORMATION CONTACT: A Finkel c/o Cosco Container Lines, Reduction Act (PRA), pursuant to 5 CFR copy of the PRA OMB submission, hereinafter ‘‘Respondent.’’ 1320.16, to approve of and assign OMB including the proposed reporting form Complainant alleges that ‘‘4 control numbers to collection of and instructions, supporting statement, refrigerated containers originating from information requests and requirements and other documentation will be placed the USA port of Wilmington, NC conducted or sponsored by the Board into OMB’s public docket files, once consisting of USA frozen poultry under conditions set forth in 5 CFR part approved. These documents will also be belonging to the Shipper were detained 1320 Appendix A.1. Board-approved made available on the Federal Reserve
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Board’s public Web site at: http:// nonbank subsidiaries of foreign banks used by all filing institutions to report www.federalreserve.gov/boarddocs/ supervised by the Federal Reserve. suspicious activity as of April 1, 2013. reportforms/review.cfm or may be Estimated annual reporting hours: The BSA–SAR would integrate four requested from the agency clearance 139,515 hours. institution-specific SARs into one data officer, whose name appears below. Estimated average hours per response: collection. The previous five parts of the Federal Reserve Board Clearance 1.5 hours. SAR–DI remain with changes to their Officer — Cynthia Ayouch — Division Number of respondents: 6,000. titles and order of completion. Fields of Research and Statistics, Board of General description of report: The from other industry SARs that may be Governors of the Federal Reserve BSA–SAR is mandatory, pursuant to new to depository institutions as well as System, Washington, DC 20551 (202) authority contained in the following specific data fields that are new to all 452–3829. Telecommunications Device statutes: 12 U.S.C. 248(a)(1), 625, types of industry filers have been for the Deaf (TDD) users may contact 1844(c), 3105(c)(2), 3106(a), and 1818(s). identified. Please use the following link (202) 263–4869, Board of Governors of SARs are exempt from Freedom of for a detailed listing of all the proposed the Federal Reserve System, Information Act (FOIA) disclosure by 31 revisions. http://www.federalreserve. Washington, DC 20551. U.S.C. 5319 and FIOA exemption 3 gov/reportforms/review.cfm. SUPPLEMENTARY INFORMATION: which incorporates into the FOIA Board of Governors of the Federal Reserve certain nondisclosure provisions that System, November 29, 2012. Request for Comment on Information are contained in other federal statutes, Collection Proposal Robert deV. Frierson, 5 U.S.C. 552(b)(3), and by FOIA Secretary of the Board. The following information collection, exemption 7, which generally exempts [FR Doc. 2012–29312 Filed 12–4–12; 8:45 am] which is being handled under this from public disclosure ‘‘records or BILLING CODE 6210–01–P delegated authority, has received initial information compiled for law Board approval and is hereby published enforcement purposes,’’ 5 U.S.C. for comment. At the end of the comment 552(b)(7). Additionally, pursuant to 31 period, the proposed information U.S.C. 5318(g), officers and employees DEPARTMENT OF HEALTH AND collection, along with an analysis of of the Federal government are generally HUMAN SERVICES comments and recommendations forbidden from disclosing the contents Delegation of Authorities received, will be submitted to the Board of a SAR, or even acknowledging that a for final approval under OMB delegated SAR exists, to a party involved in a Notice is hereby given that I have authority. Comments are invited on the transaction that is the subject of a SAR. delegated to the Administrator, Health following: Finally, information contained in SARs Resources and Services Administration a. Whether the proposed collection of may be exempt from certain disclosure (HRSA), the authorities vested in the information is necessary for the proper and other requirements of the Privacy Secretary under Section 1861(aa)(4)(B) performance of the Federal Reserve’s Act pursuant to 5 U.S.C. 552a(k)(2). (42 U.S.C. 1395x(aa)(4)(B)) of the Social functions; including whether the Abstract: Since 1996, the federal Security Act (the Act), as amended, and information has practical utility; banking agencies (the Federal Reserve Section 1905(l)(2)(B)(iii) (42 U.S.C. b. The accuracy of the Federal Board, the Office of the Comptroller of 1396d(l)(2)(B)(iii)) of the Act, as Reserve’s estimate of the burden of the the Currency, the Federal Deposit amended, to make determinations that proposed information collection, Insurance Corporation, and the National entities meet the requirements for including the validity of the Credit Union Administration) and the receiving a grant under section 330 of methodology and assumptions used; Department of the Treasury’s Financial the Public Health Service Act, as c. Ways to enhance the quality, Crimes Enforcement Network (FinCEN) amended, and to qualify to be federally utility, and clarity of the information to have required certain types of financial qualified health centers (FQHCs). be collected; institutions to report known or I hereby amend the authorities d. Ways to minimize the burden of suspected violations of law and delegated to CMS under Title XVIII of information collection on respondents, suspicious transactions. To fulfill these the Act (42 U.S.C. 1395 et seq.) and Title including through the use of automated requirements, supervised banking XIX of the Act (42 U.S.C. 1396 et seq.) collection techniques or other forms of organizations file SARs. Law that were published in the Federal information technology; and enforcement agencies use the Register notice on September 6, 1984 e. Estimates of capital or start up costs information submitted on the reporting and contained in Section F.50.— and costs of operation, maintenance, form to initiate investigations and the Limitations of Authority, 2.—Under and purchase of services to provide Federal Reserve uses the information in Title XVIII of the Social Security Act (42 information. the examination and oversight of U.S.C. 1395 et. seq), is amended by supervised institutions. adding the following paragraph: Proposal To Approve Under OMB Current Actions: As BSA f. The Health Resources and Services Delegated Authority the Extension for administrator, FinCEN is transitioning Administration shall exercise the Three Years, With Revision, of the from industry specific paper forms to authority under section 1861(aa)(4)(B) Following Report electronic submissions. Based on type, (42 U.S.C. 1395x(aa)(4)(B)) of the Social Report title: Bank Secrecy Act financial institutions (depository Security Act to make determinations Suspicious Activity Report (BSA–SAR). institutions, broker-dealers in securities, that entities meet the requirements for Agency form number: FR 2230. futures commission merchants and receiving a grant under section 330 of OMB control number: 7100–0212. introducing brokers in commodities, the Public Health Service Act, and to Frequency: On occasion. insurance companies, mutual funds, qualify as a federally qualified health Reporters: State member banks, bank money services businesses, and casinos) center. This authority will not extend to holding companies and their nonbank currently provide data on four separate issues of payment rates or provider subsidiaries, Edge and agreement forms. FinCEN has proposed to have enrollment under Title XVIII of the Act. corporations, and the U.S. branches and one electronically-filed dynamic and Section F.50.—Limitations of Authority, agencies, representative offices, and interactive BSA–SAR that would be 3.—Under Title XIX of the Social
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Security Act (42 U.S.C. 1396 et. seq), is following summary of proposed Reporting Requirement Technical amended by adding the following collections for public comment. Specifications.’’ Furthermore, the paragraph: Interested persons are invited to send standards and criteria describe how the d. The Health Resources and Services comments regarding this burden DVCs should validate the sponsoring Administration shall exercise the estimate or any other aspect of this organizations’ compilations of reported authority under section 1905(l)(2)(B)(iii) collection of information, including any data, taking into account appropriate (42 U.S.C. 1396d(l)(2)(B)(iii)) of the of the following subjects: (1) The data exclusions, and verifying Social Security Act to make necessity and utility of the proposed calculations, source code, and determinations that entities meet the information collection for the proper algorithms. The data validation reviews requirements for receiving a grant under performance of the Agency’s function; are conducted at the contract level given section 330 of the Public Health Service (2) the accuracy of the estimated that the Medicare Part C and Part D data Act, and to qualify as a federally burden; (3) ways to enhance the quality, are generally available at the contract qualified health center. This authority utility, and clarity of the information to level and the contract is the basis of any will not extend to issues of payment be collected; and (4) the use of legal and accountability issues rates or provider enrollment under Title automated collection techniques or concerning the rendering of services. XIX of the Act. other forms of information technology to The review is conducted over a three- I instruct HRSA to consult and minimize the information collection month period following the final collaborate with CMS, as appropriate. burden. submission of data by the sponsoring HRSA will notify the appropriate Type of Information Collection organizations. In addition to the ‘‘Data regional office of its determination that Request: Revision of a currently Validation Standards’’ described in entities meet the requirements to qualify approved collection; Title: Medicare Appendix 1, the DVCs employ a set of as an FQHC in order to ensure that Part C and Part D Data Validation (42 information collection tools when CMS’ provider enrollment process CFR 422.516g and 423.514g); Use: The performing their reviews, which are continues without interruption. Centers for Medicare and Medicaid included in the appendices described This delegation of authority excludes Services (CMS) established reporting below: requirements for Medicare Part C and the authority to issue regulations, to Appendix 2: ‘‘Organizational Part D sponsoring organizations establish advisory committees and Assessment Instrument’’ councils, and appoint their members, (Medicare Advantage Organizations Appendix 3: ‘‘Data Extraction and [MAOs], Cost Plans, and Medicare Part and shall be exercised in accordance Sampling Instructions’’ with the Department’s applicable D sponsors) under the authority Appendix 4: ‘‘Instructions for the policies, procedures, and guidelines. described in 42 CFR 422.516(a) and Findings Data Collection Form’’ I hereby affirm and ratify any actions 423.514(a), respectively. Under these Appendix 5: ‘‘Findings Data Collection taken by the Administrator, HRSA, and reporting requirements, each sponsoring Form (FDCF)’’ organization must submit Medicare Part Administrator, CMS, or other HRSA and Data collected via ‘‘Medicare Part C CMS officials, which involve the C, Medicare Part D, or Medicare Part C and Part D data (depending on the type and Part D Reporting Requirements exercise of the authorities prior to the Technical Specifications’’ is an integral effective date of this delegation of of contracts they have in place with CMS). resource for oversight, monitoring, authority. compliance and auditing activities These authorities may be re-delegated. In order for the reported data to be useful for monitoring and performance necessary to ensure quality provision of This delegation of authority is the Medicare benefits to beneficiaries. effective upon date of signature. measurement, it must be reliable, valid, complete, and comparable among CMS uses the data collected through the Authority: 44 U.S.C. 3101. sponsoring organizations. In 2009, CMS Medicare Data Validation Program to Dated: November 15, 2012. developed the data validation program substantiate the data collected via Kathleen Sebelius, as a mechanism to verify the data ‘‘Medicare Part C and Part D Reporting Secretary. reported are accurate, valid, and Requirements Technical Specifications.’’ If CMS detects data [FR Doc. 2012–29409 Filed 12–4–12; 8:45 am] reliable. To maintain the independence anomalies, the CMS division with BILLING CODE 4150–03–P of the validation process, sponsoring organizations do not use their own staff primary responsibility for the applicable to conduct the data validation. Instead, reporting requirement assists with DEPARTMENT OF HEALTH AND sponsoring organizations are determining a resolution. HUMAN SERVICES responsible for hiring external, The hour burden on industry is independent data validation contractors estimated at 179,301 total hours, or 879 Centers for Medicare & Medicaid (DVCs) who meet a minimum set of hours for one contract within one Services qualifications and credentials. organization reporting both Part C and CMS developed standards and data Part D reporting sections. The validation [Document Identifiers CMS–10305] validation criteria for specific Medicare would require 378 hours from the Agency Information Collection Part C and Part D reporting sponsoring organization and 501 from Activities: Submission for OMB requirements that the DVCs use in the DVCs. The estimates are based on Review; Comment Request validating the sponsoring organizations’ the total number of Part C and/or Part data. These standards and criteria are D reporting sections, the average AGENCY: Centers for Medicare & described in Appendix 1 ‘‘Data number of sponsors, and the average Medicaid Services, HHS. Validation Standards.’’ The data number of contracts by type (Part C, Part In compliance with the requirement validation standards for each reporting D, Part C/D) being validated as well as of section 3506(c)(2)(A) of the section include standard instructions a level of effort associated with the Paperwork Reduction Act of 1995, the relating to the types of information that individual activities associated with the Centers for Medicare & Medicaid should be reviewed, and reporting data validation process. Form Number: Services (CMS), Department of Health section criteria (MSC) that are aligned CMS–10305 (OMB#: 0938–1115); and Human Services, is publishing the with the ‘‘Medicare Part C and Part D Frequency: Reporting—Annually;
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Affected Public: sponsoring DEPARTMENT OF HEALTH AND D of the Social Security Act to organizations. Number of Respondents: HUMAN SERVICES administer the Child Support 135; Total Annual Responses: 657; Total Enforcement Program. The purpose of Annual Hours: 179,301. (For policy Administration for Children and this form is to enable each State and questions regarding this collection Families Tribe to meet its statutory and contact Terry Lied at 410–786–8973. For regulatory requirement to report child Proposed Information Collection all other issues call 410–786–1326.) support collection activity during the Activity; Comment Request To obtain copies of the supporting preceding quarter, including collection received, collections remaining statement and any related forms for the Proposed Projects undistributed from previous quarters, if proposed paperwork collections Title: Form OCSE–396–A, Child any, and the distribution and referenced above, access CMS Web Site Support Enforcement Program disbursement of collections. address at http://www.cms.hhs.gov/ Expenditure Report, Form OCSE–34–A, PaperworkReductionActof1995, or Child Support Enforcement Program The Administration for Children and Email your request, including your Collection Report. Families provides Federal funding to address, phone number, OMB number, OMB No.: 0970–0181. States for the Child Support Enforcement Program at the rate of 66 and CMS document identifier, to Note: This Comment Request supersedes percent for all allowable and legitimate [email protected], or call the the Comment Request published November administrative costs of this program. Reports Clearance Office on (410) 786– 28, 2012 (77 FR 71005), concerning OMB (Federal funding is also provided to 1326. Control No. 0970–0181. Tribes at the rates of 80 or 90 percent. Description: Form OCSE–396–A is a To be assured consideration, However, in accordance with program financial report submitted following the comments and recommendations for the regulations, Tribes are not required to proposed information collections must end of each fiscal quarter by each State with an approved plan under title IV– submit Form OCSE–396–A and use, be received by the OMB desk officer at instead, quarterly submissions of OMB the address below, no later than 5 p.m. D of the Social Security Act to administer the Child Support Standard Form 425. SF–425 is not on January 4, 2013. Enforcement Program. The purpose of included in this comment request.) OMB, Office of Information and this form is to enable each State to meet The information collected in these Regulatory Affairs, Attention: CMS its statutory and regulatory requirement reports is used by this agency to Desk Officer, Fax Number: (202) 395– to report program expenditures made in calculate quarterly Federal grant awards 6974, Email: the preceding fiscal quarter and to and incentive payments to States, to [email protected]. estimate program expenditures to be enable oversight of the financial made in the upcoming fiscal quarter and management of the program for both Dated: November 29, 2012. to estimate the amount of incentive States and Tribes and may be included Martique Jones, payments to be earned in the upcoming in statistical and financial reports Director, Regulations Development Group, quarter. available to the public. Division B, Office of Strategic Operations and Form OCSE–34–A is a financial report Respondents: States (including Puerto Regulatory Affairs. submitted following the end of each Rico, Guam, the Virgin Islands and the [FR Doc. 2012–29308 Filed 12–4–12; 8:45 am] fiscal quarter by each State and Tribe District of Columbia) and Tribes with BILLING CODE 4120–01–P with an approved plan under title IV– approved title IV–D plans.
ANNUAL BURDEN ESTIMATES
Number of Average Instrument Number of responses per burden hours Total burden respondents respondent per response hours
OCSE–396A ...... 54 4 6 1,296 OCSE–34A ...... 112 4 14 6,272
Estimated Total Annual Burden [email protected]. All requests other forms of information technology. Hours: 7,568. should be identified by the title of the Consideration will be given to In compliance with the requirements information collection. comments and suggestions submitted of Section 506(c)(2)(A) of the Paperwork The Department specifically requests within 60 days of this publication. Reduction Act of 1995, the comments on: (a) Whether the proposed Robert Sargis, Administration for Children and collection of information is necessary Reports Clearance Officer. Families is soliciting public comment for the proper performance of the on the specific aspects of the functions of the agency, including [FR Doc. 2012–29264 Filed 12–4–12; 8:45 am] information collection described above. whether the information shall have BILLING CODE 4184–01–P Copies of the proposed collection of practical utility; (b) the accuracy of the information can be obtained and agency’s estimate of the burden of the comments may be forwarded by writing proposed collection of information; (c) to the Administration for Children and the quality, utility, and clarity of the Families, Office of Planning, Research information to be collected; and (d) and Evaluation, 370 L’Enfant ways to minimize the burden of the Promenade, SW., Washington, DC collection of information on 20447, Attn: ACF Reports Clearance respondents, including through the use Officer. Email address: of automated collection techniques or
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DEPARTMENT OF HEALTH AND manufacturers of certain drug products Agency. This PRA analysis covers the HUMAN SERVICES to notify FDA at least 6 months before information collection resulting from discontinuance of manufacture of the the October 18, 2007, final rule and also Food and Drug Administration products. The interim final rule includes estimates of how the number of [Docket No. FDA–2012–N–0813] modified the term ‘‘discontinuance’’ Notifications of Discontinuance and and clarified the term ‘‘sole Certifications of Good Cause may Agency Information Collection manufacturer’’ with respect to increase as a result of the interim final Activities; Submission for Office of notification of discontinuance rule. requirements. The broader reporting Management and Budget Review; A. Notification of Discontinuance Comment Request; Applications for resulting from these changes will enable Food and Drug Administration FDA to improve its collection and Under § 314.81(b)(3)(iii), at least 6 Approval To Market a New Drug; distribution of drug shortage months before a sole manufacturer Revision of Postmarketing Reporting information to physician and patient intends to discontinue manufacture of a Requirements—Discontinuance organizations and to work with drug product subject to section 506C of manufacturers and other stakeholders to the FD&C Act, the manufacturer must AGENCY: Food and Drug Administration, respond to potential drug shortages. send us notification of the HHS. Sections 314.81(b)(3)(iii) and 314.91 discontinuance. The notification of ACTION: Notice. (21 CFR 314.81(b)(3)(iii) and 314.91) of discontinuance generally contains the FDA’s regulations implement section name of the manufacturer, the name of SUMMARY: The Food and Drug 506C of the FD&C Act (21 U.S.C. 355c). the product to be discontinued, the Administration (FDA) is announcing Section 314.81(b)(3)(iii) requires entities reason for the discontinuance, and the that a proposed collection of who are the sole manufacturers of date of discontinuance. FDA will work information has been submitted to the certain drug products to notify us at with relevant manufacturers during the Office of Management and Budget least 6 months before discontinuance of 6-month notification period to help (OMB) for review and clearance under manufacture of the product. For the minimize the effect of the the Paperwork Reduction Act of 1995. regulations to apply, a product must discontinuance on patients and health DATES: Fax written comments on the meet the following three criteria: care providers, and to distribute collection of information by January 4, 1. The product must be life appropriate information about the 2013. supporting, life sustaining, or intended discontinuance to physician and patient ADDRESSES: To ensure that comments on for use in the prevention of a organizations. The interim final rule the information collection are received, debilitating disease or condition; added definitions of ‘‘discontinuance’’ OMB recommends that written 2. The product must have been and ‘‘sole manufacturer’’ to comments be faxed to the Office of approved by FDA under section 505(b) § 314.81(b)(3)(iii). The inclusion of these Information and Regulatory Affairs, or 505(j) (21 U.S.C. 355(b) or 355(j)) of definitions expands notification OMB, Attn: FDA Desk Officer, FAX: the FD&C Act; and requirements under § 314.81(b)(3)(iii) to 3. The product must not have been 202–395–7285, or emailed to additional discontinuance originally derived from human tissue [email protected]. All circumstances and clarifies the scope of and replaced by a recombinant product. comments should be identified with the manufacturers who must report Under § 314.81(b)(3)(iii)(c), FDA will OMB control number 0910–0699. Also discontinuances. The interim final rule publicly disclose information about include the FDA docket number found also required that notifications of drug products subject to section 506C in brackets in the heading of this discontinuance be submitted either that are to be discontinued. Section document. electronically or by telephone according 314.91 allows us to reduce the 6-month to instructions on FDA’s Drug Shortage FOR FURTHER INFORMATION CONTACT: Ila notification period if we find that good Web site at http://www.fda.gov/Drugs/ S. Mizrachi, Office of Information cause exists for the reduction. A DrugSafety/DrugShortages. This change Management, Food and Drug manufacturer may request that we ensures that the appropriate offices are Administration, 1350 Piccard Dr., PI50– reduce the notification period by timely notified of all relevant 400B, Rockville, MD 20850, 301–796– certifying that good cause for the discontinuances. It also reflects existing 7726, [email protected]. reduction exists. practice for submitting notices of SUPPLEMENTARY INFORMATION: In FDA added §§ 314.81(b)(3)(iii) and discontinuance, and reduces the burden compliance with 44 U.S.C. 3507, FDA 314.91 to its regulations in the Federal on industry to submit multiple copies of has submitted the following proposed Register of October 18, 2007 (72 FR the notification. collection of information to OMB for 58993). Sections 314.81(b)(3)(iii) and B. Certification of Good Cause review and clearance. 314.91 require two new reporting requirements to FDA that are subject to FDA may reduce the 6-month Applications for Food and Drug OMB approval under the PRA: notification period if we find good cause Administration Approval To Market a Notification of Discontinuance and for the reduction. As described in New Drug; Revision of Postmarketing Certification of Good Cause. The § 314.91, a manufacturer can request a Reporting Requirements— December 19, 2011, interim final rule reduction in the notification period by Discontinuance—(OMB Control added two new definitions to submitting written certification that Number 0910–0699)—Reinstatement § 314.81(b)(3)(iii): ‘‘Discontinuance’’ good cause exists to the following FDA published an interim final rule and ‘‘sole manufacturer.’’ The interim designated offices: (1) The Center for on December 19, 2011 (76 FR 78530), final rule clarified the scope of Drug Evaluation and Research (CDER) amending its postmarketing reporting manufacturers required to report and Drug Shortage Coordinator at the regulations implementing certain expanded the range of circumstances address of the Director of CDER; (2) the provisions of the Federal Food, Drug required to be reported to the Agency CDER Drug Registration and Listing and Cosmetic Act (FD&C Act). The under § 314.81(b)(3)(iii), but did not Team, Division of Compliance Risk provisions of the FD&C Act require change the substantive content of the Management and Surveillance in CDER; manufacturers who are the sole reports required to be submitted to the and (3) the director of either the CDER
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division or the Center for Biologics §§ 314.81(b)(3)(iii) and 314.91, as per year notifying us of a product Evaluation and Research office that is amended by the interim final rule. discontinuance under these regulations. responsible for reviewing the Notification of Discontinuance: Based Certification of Good Cause: Based on application. The following on data collected from the CDER Drug data collected from the CDER drug circumstances may establish good Shortage Coordinator since December shortage coordinator since 2007, one cause: 17, 2007, when §§ 314.81(b)(3)(iii) and manufacturer each year reported a • A public health problem may result discontinuance of one drug product from continuation of manufacturing for 314.91 went into effect, one manufacturer during each year reported under section 506C of the FD&C Act and the 6-month period (§ 314.91(d)(1)); its implementing regulations. Each • to FDA a discontinuance of one drug A biomaterials shortage prevents manufacturer has the opportunity under product meeting the criteria of section the continuation of manufacturing for § 314.91 to request a reduction in the 6- 506C and its implementing regulations the 6-month period (§ 314.91(d)(2)); month notification period by certifying • (i.e., the drug product was approved A liability problem may exist for to us that good cause exists for the under section 505(b) or (j) of the FD&C the manufacturer if the manufacturing is reduction. The Agency has received no Act, the drug product was ‘‘life- continued for the 6-month period certifications of good cause since 2007. (§ 314.91(d)(3)); supporting, life-sustaining or intended • Although we expect we will receive an Continuation of the manufacturing for use in the prevention of a increase in the number of reports of for the 6-month period may cause debilitating disease or condition,’’ the discontinuances as a result of the substantial economic hardship for the drug product was produced by a sole changes in the interim final rule, manufacturer (§ 314.91(d)(4)); manufacturer, and the drug product was because of the limited circumstances • The manufacturer has filed for permanently discontinued). CDER’s under which good cause can be bankruptcy under chapter 7 or 11 of title Drug Shortages Coordinator tracked 220 requested or would be appropriately 11, United States Code (§ 314.91(d)(5)); drug shortages between January and • granted, we do not expect a The manufacturer can stop making October of 2011. The Agency estimates the product but still distribute it to correspondingly large increase in the that 30 percent (66) of these shortages number of manufacturers requesting a satisfy existing market need for 6 would relate to discontinuances subject months (§ 314.91(d)(6)); or certification of good cause. We estimate • to mandatory reporting under section that only five manufacturers will Other good cause exists for a 506C of the FD&C Act as a result of the reduction in the notification period request a certification of good cause interim final rule. Adjusting to include (§ 314.91(d7) (7)). each year. Therefore, the number of an additional 2 months of reporting With each certification described respondents is estimated to be five. The previously, the manufacturer must (November and December), we estimate total annual responses are the total describe in detail the basis for its that FDA will receive a total of 80 number of certifications of good cause conclusion that such circumstances notifications of a discontinuance per that are expected to be submitted to us exist. We require that the written year under section 506C of the FD&C in a year. We estimate that the total certification that good cause exists be Act, as amended by the interim final annual responses will remain small, submitted to the offices identified rule. Based on experience, a averaging one response per respondent. previously to ensure that our efforts to manufacturer submits only one The hours per response is the estimated address the discontinuance take place in notification of a discontinuance per number of hours that a respondent a timely manner. The interim final rule year, thus the total number of spends preparing the detailed made no changes to the requirements or manufacturers who would be required information certifying that good cause process for certification of good cause. to notify us of a discontinuance would exists for a reduction in the notification Description of Respondents: An be 80. Therefore, the number of period, including the time it takes to applicant that is the sole manufacturer respondents is estimated to be 80. The gather and copy the documents. We and who is discontinuing manufacture hours per response is the estimated estimate that approximately 16 hours on of a drug product that meets the number of hours that a respondent average are needed per response. following criteria: (1) Is life supporting, would spend preparing the information Therefore, we estimate that 80 hours life sustaining, or intended for use in to be submitted with a notification of will be spent per year by respondents the prevention of a debilitating disease product discontinuance, including the certifying that good cause exists for a or condition; (2) was approved by FDA time it takes to gather and copy the reduction in the 6-month notification under section 505(b) or (j) of the FD&C statement. Based on experience in period under § 314.91. Act; and (3) was not originally derived working with manufacturers to submit In the Federal Register of August 1, from human tissue and replaced by a notifications under § 314.81(b)(3)(iii), 2012 (77 FR 45619), FDA published a recombinant product. we estimate that approximately 2 hours 60-day notice requesting public Burden Estimate: The table below on average are needed per response. We comment on the proposed collection of provides an estimate of the annual do not expect the changes in the interim information. No comments were reporting burden for notification of a final rule to affect the number of hours received. product discontinuance and per response. Therefore, we estimate FDA estimates the burden of this certification of good cause under that respondents will spend 160 hours collection of information as follows:
TABLE 1—ESTIMATED ANNUAL REPORTING BURDEN1
Number of Average 21 CFR Section Number of responses per Total annual burden per Total hours respondents respondent responses response
Notification of Discontinuance (314.81(b)(3)(iii) ...... 80 1 80 2 160 Certification of Good Cause (314.91) ...... 5 1 5 16 80
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TABLE 1—ESTIMATED ANNUAL REPORTING BURDEN1—Continued
Number of Average 21 CFR Section Number of responses per Total annual burden per Total hours respondents respondent responses response
Total ...... 240 1There are no capital costs or operating and maintenance costs associated with this collection of information.
Dated: November 30, 2012. The Tobacco Control Act (Pub. L. depicting the negative health Leslie Kux, 111–31) amends the Federal Food, Drug, consequences of smoking to accompany Assistant Commissioner for Policy. and Cosmetic Act (the FD&C Act) to the label statements specified in [FR Doc. 2012–29327 Filed 12–4–12; 8:45 am] grant FDA authority to regulate the subsection (a)(1).’’ The study proposed BILLING CODE 4160–01–P manufacture, marketing, and here is an effort by FDA to collect data distribution of tobacco products to concerning graphic warnings on protect the public health and to reduce cigarette packages and their impact on DEPARTMENT OF HEALTH AND tobacco use by minors. consumer perceptions, attitudes, and HUMAN SERVICES The purpose of this submission is to behavior with respect to smoking. request OMB approval to conduct Web- On June 22, 2011, FDA issued a final Food and Drug Administration based surveys to evaluate the relative rule in the Federal Register of June 22, 2011 (76 FR 36628), entitled ‘‘Required [Docket No FDA–2012–N–0273] effectiveness of various graphic health warnings on cigarette packs, which will Warnings for Cigarette Packages and Agency Information Collection inform the Agency’s efforts to Advertisements,’’ which specified nine Activities; Submission for Office of implement the mandatory graphic graphic images to accompany the new Management and Budget Review; warnings required by the Tobacco textual warnings for cigarettes. Comment Review; Experimental Study Control Act. Although the rule was scheduled to of Graphic Cigarette Warning Labels become effective 15 months after it Experimental Study of Graphic issued, a panel of the U.S. Court of AGENCY: Food and Drug Administration, Cigarette Warning Labels (OMB Control Appeals of the District of Columbia HHS. Number 0910–0668—Reinstatement) held, on August 24, 2012, that the rule ACTION: Notice. The current approval for this in its current form violates the First information collection expired October Amendment. FDA expects that the SUMMARY: The Food and Drug 31, 2012. FDA seeks to reinstate the information that FDA proposes to Administration (FDA) is announcing collection and to reflect that there is no collect will be relevant to FDA’s that a reinstatement collection of change in the reporting burden. At this regulation of cigarette warnings no information has been submitted to the time, the Agency is not collecting the matter the final outcome of the current Office of Management and Budget information, but awaits OMB review litigation. (OMB) for review and clearance under and approval, and therefore believes This study, the Experimental Study of the Paperwork Reduction Act of 1995 that we are not in violation of the PRA. Graphic Cigarette Warning Labels, is a (the PRA). Tobacco products are responsible for voluntary annual experimental survey DATES: Fax written comments on the more than 400,000 deaths each year. of consumers. The purpose of the study collection of information by January 4, The Centers for Disease Control and is to assess the effectiveness of various 2013. Prevention report that approximately 46 graphic warnings on cigarette packs for achieving three communication goals: ADDRESSES: To ensure that comments on million U.S. adults smoke cigarettes in the information collection are received, the United States, even though this (1) Conveying information about various OMB recommends that written behavior will result in death or health risks of smoking; (2) encouraging comments be faxed to the Office of disability for half of all regular users. cessation of smoking among current Information and Regulatory Affairs, Paralleling this enormous health burden smokers; and (3) discouraging initiation OMB, Attn: FDA Desk Officer, FAX: is the economic burden of tobacco use, of smoking among youth and former 202–395–7285, or emailed to which is estimated to total $193 billion smokers. The study will collect data [email protected]. All annually in medical expenditures and from various groups of consumers, comments should be identified with the lost productivity. Curbing the including current smokers aged 13 years OMB control number 0910–0668. Also significant adverse consequences of and older, former smokers aged 13 years include the FDA docket number found tobacco use is one of the most important and older, and non-smokers aged in brackets in the heading of this public health goals of our time. between 13 and 25 years who may be document. On June 22, 2009, the President susceptible to initiation of smoking. The signed the Tobacco Control Act (Pub. L. study goals are to: (1) Measure FOR FURTHER INFORMATION CONTACT: 111–31) into law. The Tobacco Control consumer attitudes, beliefs, and Daniel Gittleson, Office of Information Act granted FDA authority to regulate intended behaviors related to cigarette Management, Food and Drug the manufacture, marketing, and smoking in response to graphic warning Administration, 1350 Piccard Dr., PI50– distribution of tobacco products to labels; (2) determine whether consumer 400B, Rockville, MD 20850, 301–796– protect the public health generally and responses to graphic warning labels 5156, [email protected]. to reduce tobacco use by minors. differ across various groups based on SUPPLEMENTARY INFORMATION: In Section 201 of the Tobacco Control Act, smoking status, age, or other compliance with 44 U.S.C. 3507, FDA which amends section 4 of the Federal demographic variables; and (3) evaluate has submitted the following proposed Cigarette Labeling and Advertising Act the relative effectiveness of various collection of information to OMB for (15 U.S.C. 1333), requires FDA to issue graphic images associated with each of review and clearance. ‘‘regulations that require color graphics the nine warning statements specified in
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the Tobacco Control Act for achieving comments that were not PRA-related PRA to ensure the greatest possible each of the communication goals. The and that were outside the scope of this public benefit from and maximize the information collected from the study collection of information. FDA also utility of the information. FDA notes in will help inform the Agency’s efforts to received a comment that asked FDA to response to this comment that the study implement the mandatory graphic provide more detail about the design of and copies of the instruments used to health warnings required by the the proposed consumer research study collect this information are described in Tobacco Control Act. to allow for meaningful public detail as part of the overall package The experimental study data will be comments. The commenter also submitted to OMB for review. The study collected from participants of an encouraged FDA to provide additional and copies of the instrument were made Internet panel of approximately 43,000 information for public comment, available to the public during the people. Participation in the original information collection period. experimental study is voluntary. including details of the protocol, screen, In the Federal Register of March 27, questionnaire, and actual graphic They will also be available to the public 2012 (77 FR 18250), FDA published a warnings images to be used with study at www.reginfo.gov once OMB receives 60-day notice requesting public participants to enhance the quality, the package for review. comment on its proposed collection of utility, and clarity of the information to FDA estimates the burden of this information. FDA received eight be collected and further the goals of the collection of information as follows:
TABLE 1—ESTIMATED ANNUAL REPORTING BURDEN 1
No. of Portion of study No. of responses per Total annual Average burden Total hours respondents respondent responses per response
Pretest ...... 60 1 60 0.5 (30 minutes) .. 30 Screener ...... 15,000 1 15,000 0.016 (1 minute) .. 240 Experimental Survey ...... 5,400 1 5,400 0.5 (30 minutes) .. 2,700
Total ...... 2,970 1 There are no capital costs or operating and maintenance costs associated with this collection of information.
FDA’s burden estimate is based on ACTION: Notice of meeting; request for be accessible at http:// prior experience with Internet panel comments. www.regulations.gov. It may be viewed experiments similar to the study at the Division of Dockets Management proposed here. Sixty panel members The Food and Drug Administration (HFA–305), Food and Drug will take part in a pretest of the study, (FDA) is announcing the following Administration, 5630 Fishers Lane, rm. meeting: Animal Drug User Fee Act. The estimated to last 30 minutes (0.5 hours), 1061, Rockville, MD. A transcript will topic to be discussed is proposed for a total of 30 hours. Approximately also be available in either hardcopy or recommendations for the 15,000 respondents will complete a on CD–ROM, after submission of a screener to determine eligibility for reauthorization of the Animal Drug User Fee Act (ADUFA III). Freedom of Information request. Written participation in the study, estimated to requests are to be sent to the Division take 1 minute (0.016 hours), for a total Date and Time: The meeting will be held on December 18, 2012, from 9 a.m. of Freedom of Information (ELEM– of 240 hours. Fifty-four hundred 1029), Food and Drug Administration, respondents will complete the full to 12 p.m. 12420 Parklawn Dr., Element Bldg., study, estimated to last 30 minutes (0.5 Location: The meeting will be held at Rockville, MD 20857. hours), for a total of 2,700 hours. The FDA’s Metro Park North Campus, 7519 total estimated burden is 2,970 hours Standish Pl., third floor, Meeting Room Comments: Interested persons may (30 hours plus 240 hours plus 2,700 A, Rockville, MD 20855. There is submit either written comments hours). parking near the building. regarding this meeting to the Division of Contact: Jacqueline Farmer, Center for Dated: November 29, 2012. Dockets Management (see Transcripts) Veterinary Medicine (HFV–10), Food or electronic comments to http:// Leslie Kux, and Drug Administration, 7519 Standish www.regulations.gov. It is only Assistant Commissioner for Policy. Pl., Rockville, MD 20855, 240–276– necessary to send one set of comments. [FR Doc. 2012–29321 Filed 12–4–12; 8:45 am] 8695, FAX: 240–276–9744, email: Identify comments with the docket BILLING CODE 4160–01–P [email protected]. number found in brackets in the Registration and Requests for Oral heading of this document. Received Presentations: Send registration comments may be seen in the Division DEPARTMENT OF HEALTH AND information (including name, title, firm of Dockets Management between 9 a.m. HUMAN SERVICES name, address, telephone, and fax number), and written material and and 4 p.m., Monday through Friday, and Food and Drug Administration requests to make oral presentations, to will be posted to the docket at http:// the contact person by December 11, www.regulations.gov. So that FDA can consider comments and revise the [Docket No. FDA–2011–N–0656] 2012. If you need special accommodations recommendations as necessary, we Animal Drug User Fee Act; Public due to a disability, please contact request that comments be submitted to Meeting; Request for Comments Jacqueline Farmer at least 7 days in the docket by January 4, 2013. advance. SUPPLEMENTARY INFORMATION: AGENCY: Food and Drug Administration, Transcripts: Please be advised that as HHS. soon as a transcript is available, it will
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I. The ADUFA Program reactivations of such supplemental the application or submission includes applications within 180 days after a foreign manufacturing facility. A. What is ADUFA? What does it do? submission date. FDA has published a number of • FDA considers the timely review of Manufacturing supplemental new reports that provide useful background the safety and effectiveness of new animal drug applications and on ADUFA I and ADUFA II. ADUFA- animal drug applications (NADAs) to be reactivations of such supplemental related Federal Register notices, central to the Agency’s mission to applications within 120 days after guidances, legislation, performance protect and promote the public health. submission date. • reports, and financial reports can be Prior to 2004, the timeliness and Investigational new animal drug found at: http://www.fda.gov/For predictability of the new animal drug study submissions within 180 days after Industry/UserFees/AnimalDrugUserFee review program was a concern. The submission date. ActADUFA/default.htm. Animal Drug User Fee Act enacted in • Investigational new animal drug 2003 (Pub. L. 108–130; hereinafter submissions consisting of protocols II. Proposed ADUFA III referred to as ‘‘ADUFA I’’), authorized without substantial data within 60 days Recommendations after submission date. FDA to collect user fees that were to be A. Enhancing the Process for Premarket • Administrative new animal drug dedicated to expediting the review of Review new animal drug applications in applications within 60 days after accordance with certain performance submission date. We are proposing changes to the goals and to expand and modernize the With the reauthorization of ADUFA performance goals that ADUFA II new animal drug review program. The for an additional 5 years under ADUFA established to further enhance the Agency agreed, under this new Act, to II (FY 2009 to FY 2013), FDA agreed to process for review of animal drug meet a comprehensive set of enhance and further improve the review applications. performance goals established to show process via the following changes. The ERA procedure implemented as significant improvement in the A key improvement under ADUFA II part of ADUFA II resulted in an increase timeliness and predictability of the new is the ‘‘end-review amendment’’ (ERA) in the number of one-cycle reviews; animal drug review process. The process that allows FDA reviewers to however, certain challenges associated implementation of ADUFA I provided a work with the drug sponsor to amend with the process restricted its full significant funding increase that certain pending submissions. The ERA utilization. We are proposing, among enabled FDA to increase the number of process allows us to decrease the other changes, to further improve the staff dedicated to the new animal drug number of review cycles, which review process by replacing the ERA application review process by 30 ultimately leads to a shorter time to with shorter review times for certain percent since 2003. approval. Improved communication resubmissions and reactivations. To In 2008, before ADUFA I expired, early in the process has the greatest allow time for the programming and Congress passed the Animal Drug User potential of reducing review cycles. The system changes required to make this Fee Amendments of 2008 (Pub. L. 110– greatest impact of this new tool in the and other changes, we are proposing to 316; hereinafter referred to as ‘‘ADUFA first 3 years under ADUFA II has been maintain the ADUFA II ERA process II’’) which included an extension of with submissions of investigational new and associated review performance ADUFA for an additional 5 years—fiscal animal drug (INAD) studies and study goals for FY 2014 for non-administrative year (FY) 2009 to FY 2013. ADUFA II protocols, which are the earliest review animal drug applications, non- performance goals were established processes impacted by ADUFA manufacturing supplemental animal based on ADUFA I FY 2008 review performance goals. drug applications, investigational timeframes. In addition, FDA provided The development of an electronic animal drug study submissions, and program enhancements to reduce review submission tool has enabled sponsors to investigational animal drug submissions cycles and improve communications submit applications and submissions consisting of protocols without during reviews. The ADUFA programs electronically, and has provided FDA substantial data. reviewers with the ability to evaluate have enabled FDA to speed up the Starting on October 1, 2014 (for FYs application review process for new submissions online. The joint participation of FDA and the 2015 to 2018), we are proposing to animal drugs without compromising the discontinue the ERA procedures and quality of the Agency’s review. regulated industry in 10 public workshops by the end of FY 2013 on replace them with the process for B. ADUFA Achievements mutually agreed-upon topics has shorter review times for reactivations As part of ADUFA I, FDA established enhanced communication and and resubmissions. The performance review performance goals that were transparency on topics critical to the goals listed below for the shorter phased in over a 5-year period. These animal drug review and approval reactivation and resubmission times performance goals, set from FY 2004 process. To date, FDA and the regulated only apply when the sponsor provides through FY 2008, enabled FDA to industry have participated in eight submissions for the NADA and the achieve progressive, yearly workshops with the final two planned INAD through the use of the eSubmitter improvements in the time allotted for for FY 2013. electronic submission tool. review of new animal drug applications. FDA is committed to improving the The Agency will review and act on 90 By the final year of ADUFA I ending on animal drug review and business percent of non-administrative NADAs September 30, 2008, FDA reviewed and processes to facilitate the timely within 180 days after the submission acted on 90 percent of the following scheduling and conducting of foreign date. An application is incomplete if it submission types within the times preapproval inspections. Because of would require additional data or specified: processes developed under ADUFA II, information to enable the Agency to • New animal drug applications and sponsors are now able to voluntarily complete a comprehensive review of the reactivations of such applications submit an annual facilities list and application and reach a decision on the within 180 days after submission date. notification 30 days prior to submitting issue(s) presented in the application. • Non-manufacturing supplemental an NADA, a supplemental NADA, or an The Agency will review and act on 90 new animal drug applications and INAD submission to inform FDA that percent of reactivated applications:
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• Within 180 days after the • Within 180 days after the 514.8(c)(2)(i)(A) and (D) within 60 days reactivated NADA submission date if resubmitted INAD study submission after the submission date. Qualifying the Agency determines and notifies the date if the Agency determines and labeling supplements are defined as sponsor that the deficiencies are notifies the sponsor that the deficiencies those submitted through the use of the substantial; are substantial; eSubmitter electronic submission tool, • Within 135 days after the • Within 60 days after the for which the sponsor provides and reactivated NADA submission date if resubmitted INAD study submission certifies a complete list of label changes the Agency determines and notifies the date if the Agency determines and made in the application and that CVM sponsor that the deficiencies are not notifies the sponsor that the deficiencies can determine upon initial review do substantial; and the NADA reactivation are not substantial; and the not decrease the safety of drug use. must be submitted no more than 120 resubmission must be submitted no The Agency will review and act on 90 days after the Agency’s dated more than 120 days after the Agency’s percent of non-qualifying supplemental incomplete letter to qualify for the dated incomplete letter to qualify for the applications within 180 days after the shorter review time; and shorter review time; and submission date. • Within 180 days after the • Within 180 days after the C. Performance Goals Proposal reactivated NADA submission date if resubmitted INAD study submission Affecting All Fiscal Years of ADUFA III the NADA reactivation is submitted date if the resubmission is submitted (2014 to 2018) after 120 days of the Agency’s dated after 120 days of the Agency’s dated incomplete letter or new substantial incomplete letter or new substantial The Agency will maintain the ADUFA information is provided in the information is provided in the II goals regarding work queue reactivated application. resubmission. procedures, timely meetings with The Agency will review and act on 90 The Agency will review and act on 90 industry, review of administrative percent of non-manufacturing percent of INAD submissions consisting NADAs, and preapproval foreign supplemental animal drug applications of protocols without data that the inspections. (i.e., supplemental animal drug Agency and the sponsor consider to be The Agency will review and act on 90 applications for which safety or an essential part of the basis for making percent of manufacturing supplemental effectiveness data are required) within the decision to approve or not approve animal drug applications within 120 180 days after the submission date. A an animal drug application or days after the submission date. A supplemental application is incomplete supplemental animal drug application submission is incomplete if it would if it would require additional data or within 50 days after the submission require additional data or information to information to enable the Agency to date. An INAD protocol without data enable the Agency to complete a complete a comprehensive review of the submission is incomplete if it would comprehensive review of the supplement and reach a decision on the require additional information to enable submission and reach a decision on the issue(s) presented in the supplement. the Agency to complete a issue(s) presented in the submission. • • The Agency will review and act on comprehensive review of the protocol If the Agency determines and 90 percent of reactivated supplements: and reach a decision on the issue(s) notifies the sponsor that the deficiencies • Within 180 days after the presented in the protocol. are not substantial for manufacturing resubmission date if the Agency The Agency will review and act on 90 supplements requiring prior approval determines and notifies the sponsor that percent of resubmitted INAD protocol according to § 514.8(b), the Agency will the deficiencies are substantial. without data submissions: permit the manufacturing supplements • Within 135 days after the • Within 50 days after the to be resubmitted as ‘‘Supplement— resubmission date if the Agency resubmission date if the Agency Changes Being Effected in 30 Days’’ as determines and notifies the sponsor that determines and notifies the sponsor that described in § 514.8(b)(3). the deficiencies are not substantial; and the deficiencies are substantial; • If the Agency determines and the resubmission to the supplemental • Within 20 days after the notifies the sponsor that the deficiencies application must be submitted no more resubmitted INAD protocol without data are substantial or new substantial than 120 days after the Agency’s dated submission date if the Agency information is provided in the incomplete letter to qualify for the determines and notifies the sponsor that resubmission, the Agency will review shorter review time; and the deficiencies are not substantial; and and act on 90 percent of reactivated • Within 180 days after the the resubmission must be submitted no manufacturing supplements within 120 resubmission date if the resubmission to more than 120 days after the Agency’s days after the resubmission date. the supplemental application is dated nonconcurrence letter to qualify The Agency will permit comparability submitted after 120 days of the Agency’s for the shorter review time; and protocols as described in § 514.8(b)(2)(v) dated incomplete letter or new • Within 50 days after the to be submitted as protocols without substantial information is provided in resubmission date if the resubmission is substantial data in an INAD file. The the resubmission. submitted after 120 days of the Agency’s Agency will review and act on 90 The Agency will review and act on 90 dated nonconcurrence letter or new percent of INAD submissions consisting percent of INAD study submissions substantial information is provided in of protocols without substantial data within 180 days after the submission the resubmission. within 50 days after the submission date date. An INAD study submission is of the protocol. incomplete if it would require B. Additional Review Enhancements The Agency will develop guidance for additional data or information to enable Proposal for FYs 2015 to 2018 a two-phased Chemistry, the Agency to complete a The Agency will review and act on 90 Manufacturing, and Controls (CMC) comprehensive review of the percent of microbial food safety hazard technical section submission and review submission and reach a decision on the characterization submissions within 100 process under the INAD file by the end issue(s) presented in the submission. days after the submission date. of FY 2014. The Agency will review and act on 90 The Agency will review and act on 90 The Agency and the regulated percent of resubmitted INAD study percent of qualifying labeling industry agree that data and/or submissions: supplements as described in 21 CFR information which uniquely describes
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the general attributes of the new animal it adequately captures changes in FDA’s presentation by FDA and we will drug (e.g., the known characteristics of workload during ADUFA III. provide an opportunity for other the drug that can impact safety, organizations and individuals to make E. Impact of ADUFA III Enhancements effectiveness, and/or quality) needs to presentations at the meeting or to on User Fee Revenue be submitted early in the new animal submit written comments to the docket. drug development process in order to The following table summarizes the So that FDA can consider comments enable the parties to reach agreement at FY 2014 baseline and added funding to and revise the recommendations as a presubmission conference or to begin support ADUFA III program: necessary, we request that comments be review of a protocol. Predicated on submitted to the docket by January 4, submission of this information: Financial baseline Dollars 2013. • The Agency will allow short 1 Dated: December 3, 2012. justifications within INAD protocols FY 2014 Base Revenue ...... 21,600,000 without data submissions that are One-Time Information Tech- Leslie Kux, nology (IT) Funding ...... 2,000,000 Assistant Commissioner for Policy. limited in scope. Total Statutory Revenue for FY • [FR Doc. 2012–29498 Filed 12–3–12; 4:15 pm] The Agency will allow for the 2014 ...... 23,600,000 concurrent submission of supporting BILLING CODE 4160–01–P data and protocols provided that the 1 For each year in FY 2015 to FY 2018, the protocol is not submitted until the annual fee revenue will be further adjusted ac- cording to the new statutory provision for the DEPARTMENT OF HEALTH AND supporting data has been in the inflation adjuster and may be further adjusted Agency’s queue for at least 50 days. by the workload adjuster. In fiscal years 2016 HUMAN SERVICES The Agency will allow for the to 2018, if applicable, the annual fee revenue inclusion of this data and/or is subject to a number of possible adjust- Food and Drug Administration ments, including for inflation and collection information in presubmission shortfalls. [Docket No. FDA–2011–N–0655] conferences, however it would not preclude holding a presubmission The statutory revenue for 2009, the Animal Generic Drug User Fee Act; conference without such data. first year of ADUFA II, was $15,260,000. Public Meeting; Request for Comments Presubmission conferences will be held The statutory revenue for the first year approximately 100 days after the of ADUFA III will be $23,600,000, AGENCY: Food and Drug Administration, submission of the data supporting the which includes one-time IT funding in HHS. request. the amount of $2,000,000 for FY 2014. ACTION: Notice of meeting; request for The Agency and the regulated The statute specifies annual revenue of comments. industry agree that dosage $21,600,000 for each of the FY 2015 characterization is part of the through FY 2018, however this amount The Food and Drug Administration effectiveness technical section of an is subject to a number of possible (FDA) is announcing the following investigational new animal drug file. In adjustments, including for inflation and meeting: Animal Generic Drug User Fee instances where data and/or information collection shortfalls. Act. The topic to be discussed is about the dosage is integral to the Additionally, ADUFA III offers the proposed recommendations for the review of a protocol, the Agency and the following financial recommendations: reauthorization of the Animal Generic regulated industry agree that this data • A new provision for recovering Drug User Fee Act (AGDUFA II). and/or information should be submitted collection shortfalls is being offered to Date and Time: The meeting will be as supporting data well in advance of ensure adequate funding for the animal held on December 18, 2012, from 1 p.m. the protocol submission. drug review process. For example, when to 4 p.m. The Agency agrees to explore the FDA sets fees for FY 2016, it may add Location: The meeting will be held at feasibility of pursuing statutory to the fee revenue the amount of any FDA’s Metro Park North Campus, 7519 revisions, consistent with the Agency’s shortfall in fees collected in FY 2014. Standish Pl., third floor, Meeting Room mission to protect and promote the This process would follow in A, Rockville, MD 20855. There is public health, that may expand the use subsequent years through the final year parking near the building. of conditional approvals to other adjustment, as specified in the statute. Contact: Jacqueline Farmer, Center for appropriate categories of new animal • FDA has modified the fee revenue Veterinary Medicine (HFV–10), Food drug applications and that may modify distribution from 25 percent for each fee and Drug Administration, 7519 Standish the current requirement that the use of type in ADUFA II to 20 percent in Pl., Rockville, MD 20855, 240–276– multiple new animal drugs in the same application, 27 percent in product, 27 8695, FAX: 240–276–9744, email: medicated feed be subject to an percent in sponsor, and 26 percent in [email protected]. approved application. establishment fees in ADUFA III. The Registration and Requests for Oral purpose of changing the fee distribution Presentations: Send registration D. ADUFA III Enhancements for a is to increase the revenue stream information (including name, title, firm Modified Inflation Adjuster and stability, reduce application fee costs, name, address, telephone, and fax Workload Adjuster and minimize the potential for number), and written material and ADUFA III financial enhancements collection shortfalls. requests to make oral presentations, to include a new statutory inflation the contact person by December 11, adjuster provision that accounts for III. What information should you know 2012. changes in FDA’s costs related to about the meeting? If you need special accommodations payroll compensation and benefits as We will convene a public meeting to due to a disability, please contact well as changes in nonpayroll costs hear the public’s views on the proposed Jacqueline Farmer at least 7 days in through use of the Consumer Price recommendations for reauthorization of advance. Index. ADUFA III also modifies the base the ADUFA program. We will conduct Transcripts: Please be advised that as years for calculating the workload the meeting on December 18, 2012, at soon as a transcript is available, it will adjuster, as specified in the ADUFA III FDA’s Metro Park North Campus (see be accessible at http:// performance goals letter, to ensure that Location). The meeting will include a www.regulations.gov. It may be viewed
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at the Division of Dockets Management drug (JINAD) submissions and to enable established to further enhance the (HFA–305), Food and Drug FDA to speed up the application review process for review of generic animal Administration, 5630 Fishers Lane, Rm. process for generic new animal drugs drug applications. 1061, Rockville, MD. A transcript will without compromising the quality of the The Agency will review and act on 90 also be available in either hardcopy or Agency’s review. percent of non-administrative ANADAs on CD–ROM, after submission of a within 270 days after the submission B. AGDUFA Achievements Freedom of Information request. Written date. An application is incomplete if it requests are to be sent to the Division AGDUFA I established increasingly would require additional data or of Freedom of Information (ELEM– stringent review performance goals over information to enable the Agency to 1029), Food and Drug Administration, a 5-year period from FY 2009 through complete a comprehensive review of the 12420 Parklawn Dr., Element Bldg., FY 2013. Based on those performance application and reach a decision on the Rockville, MD 20857. goals, in the final year of AGDUFA I (FY issue(s) presented in the application. Comments: Interested persons may 2013) FDA has agreed to review and act The Agency will review and act on 90 submit either written comments on 90 percent of the following percent of reactivated applications: regarding this meeting to the Division of submission types within the specified • Within 190 days after the Dockets Management (see Transcripts) timeframes: reactivated ANADA submission date if or electronic comments to http://www. • Original ANADAs and reactivations the Agency determines that the regulations.gov. It is only necessary to within 270 days after the submission deficiencies are not substantial; send one set of comments. Identify date. • Within 270 days after the comments with the docket number • Administrative ANADAs within reactivated ANADA submission date if found in brackets in the heading of this 100 days after the submission date. the Agency determines that the document. Received comments may be • Manufacturing supplemental deficiencies are substantial or new seen in the Division of Dockets ANADAs and reactivations within 270 substantial information is provided. Management between 9 a.m. and 4 p.m., days after the submission date. The Agency will review and act on 90 Monday through Friday, and will be • JINAD study submissions within percent of manufacturing supplemental posted to the docket at http://www. 270 days after the submission date. ANADAs within 270 days after the regulations.gov. So that FDA can • JINAD protocol submissions within submission date. A submission is consider comments and revise the 100 days after submission date. incomplete if it would require recommendations as necessary, we In the 3 years of AGDUFA I review additional data or information to enable request that comments be submitted to performance evaluated to date (FY 2009 the Agency to complete a the docket by January 4, 2013. to FY 2011) FDA has exceeded all comprehensive review of the SUPPLEMENTARY INFORMATION: performance goals for ANADAs, submission and reach a decision on the manufacturing supplements, JINAD data issue(s) presented in the submission. • I. The AGDUFA Program submissions, and administrative If the Agency determines that the A. What is AGDUFA? What does it do? ANADAs. FDA did not meet the FY deficiencies are not substantial for 2009 performance goal for JINAD manufacturing supplements requiring FDA considers the timely review of protocol submissions, with 86 percent prior approval according to 21 CFR abbreviated new animal drug reviewed by the goal for that year but 514.8(b), the Agency will permit the applications (ANADAs) to be central to has exceeded the performance goal for manufacturing supplements to be the Agency’s mission to protect and JINAD protocol submissions in FY 2010 resubmitted as ‘‘Supplement-Changes promote the public health. Prior to and FY 2011. The additional resources Being Effected in 30 Days’’ as described 2009, the timeliness and predictability provided under AGDUFA I enabled in 21 CFR 514.8(b)(3). of the generic animal drug review • FDA to completely eliminate the If the Agency determines that the program was a concern. The Animal backlog of ANADA and JINAD deficiencies are substantial or new Generic Drug User Fee Act enacted in submissions by August 2010. substantial information is provided in 2008 (Pub. L. 110–316; hereinafter FDA has published a number of the resubmission, the Agency will referred to as ‘‘AGDUFA I’’) amended reports that provide useful background review and act on 90 percent of the Federal Food, Drug, and Cosmetic on AGDUFA I. AGDUFA-related reactivated manufacturing supplements Act (the FD&C Act) to authorize the Federal Register notices, guidances, within 270 days after the resubmission FDA’s first-ever generic animal drug legislation, performance reports, and date. user fee program. AGDUFA I provides financial reports can be found at: http:// The Agency will review and act on 90 FDA with additional funds to enhance www.fda.gov/ForIndustry/UserFees/ percent of JINAD study submissions the performance of the generic animal AnimalGenericDrugUserFeeAct within 270 days after the submission drug review process. Furthermore, the AGDUFA/default.htm. date. A JINAD study submission is authorization of AGDUFA I enabled incomplete if it would require FDA’s continued assurance that generic II. Proposed AGDUFA II additional data or information to enable animal drug products are safe and Recommendations the Agency to complete a effective, and enabled FDA’s continued A. Enhancing the Process for Premarket comprehensive review of the support for lower cost alternatives to Review submission and reach a decision on the brand name drugs for consumers. issue(s) presented in the submission. Under AGDUFA I, FDA agreed to We are proposing to maintain the The Agency will review and act on 90 meet review performance goals for AGDUFA I goals regarding work queue percent of resubmitted JINAD study certain submissions over 5 years from procedures, timely meetings with submissions: fiscal year (FY) 2009 through FY 2013. industry, review of administrative • Within 90 days after the JINAD The purpose of establishing these ANADAs, review of protocols without study resubmission date if the Agency review performance goals was to substantial data, and amending similar determines that the deficiencies are not expedite the review of ANADAs and applications and submissions. We are substantial; reactivations, supplemental ANADAs, proposing the following changes to the • Within 270 days after the JINAD and generic investigational new animal performance goals that AGDUFA I study resubmission date if the Agency
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determines that the deficiencies are C. Impact of AGDUFA II Enhancements DEPARTMENT OF HEALTH AND substantial or new substantial on User Fee Revenue HUMAN SERVICES information is provided in the resubmission. The following table summarizes FY National Institutes of Health 2014 baseline and added funding to The Agency will permit comparability support AGDUFA II program, as well as Agency Information Collection protocols as described in 21 CFR the AGDUFA II total 5-year revenue: Activities: Proposed Collection; 514.8(b)(2)(v) to be submitted as Comment Request; Generic Clearance protocols without substantial data in a Financial baseline Dollars for the Collection of Qualitative JINAD file. The Agency will continue to Feedback on Agency Service Delivery review and act on 90 percent of JINAD FY 2014 Base Revenue 1 ...... 6,478,000 submissions consisting of protocols One-Time Information Tech- SUMMARY: As part of a Federal without substantial data within 100 nology (IT) Funding ...... 850,000 Government-wide effort to streamline days after the submission date. the process to seek feedback from the The Agency will develop guidance for Total Statutory Revenue public on service delivery, the National for FY 2014 ...... 7,328,000 a two-phased Chemistry, Institute of Allergy and Infectious Manufacturing, and Controls technical Total Financial Funding Diseases (NIAID), National Institutes of section submission and review process Health (NIH), has submitted a Generic under the JINAD file by the end of FY Total 5-Year Revenue ...... 38,100,000 Information Collection Request (Generic 2014. ICR): ‘‘Generic Clearance for the 1 For each year in FY 2015 to FY 2018, the The Agency will develop and annual statutory revenue amounts established Collection of Qualitative Feedback on implement a question based review in section 741(b) of the FD&C Act may be fur- Agency Service Delivery’’ to OMB for process for bioequivalence submissions ther adjusted by the workload adjuster for FY approval under the Paperwork 2015 to FY 2018 user fee revenues. by the end of FY 2016. At its discretion, Reduction Act (PRA) (44 U.S.C. 3501 et seq.). the Agency may extend the timeline for The total 5-year revenue for AGDUFA completion if necessary, depending on I was $27,100,000. The total 5-year DATES: Comments must be submitted available resources. revenue for AGDUFA II will be within 30-days after publication of this To improve the timeliness and $38,100,000, which also includes one- notice in the Federal Register. predictability of foreign preapproval time IT funding in the amount of ADDRESSES: Written comments and/or inspections (PAIs), sponsors may $850,000 for FY 2014. suggestions regarding the item(s) contained in this notice, especially voluntarily submit, at the beginning of Additionally, the fee revenue regarding the estimated public burden the calendar year, a list of foreign distribution has been modified from 30 and associated response time, should be manufacturing facilities that are percent in application fees, 35 percent directed to the: Office of Management included in abbreviated animal drug in product fees, and 35 percent in and Budget, Office of Regulatory Affairs, applications, supplemental animal drug sponsor fees under AGDUFA I to 25 [email protected] or by applications, or investigational animal percent in application fees, 37.5 percent fax to 202–395–6974, Attention: Desk drug submissions and may be subject to in product fees, and 37.5 percent in Officer for NIH. foreign PAIs for the following fiscal sponsor fees under AGDUFA II. The year. purpose of changing the fee distribution FOR FURTHER INFORMATION CONTACT: To If such a list is voluntarily submitted, is to increase the revenue stream request more information on the the sponsor should submit a notification stability and reduce application fee proposed project or to obtain a copy of 30 days prior to submitting an costs. the data collection plans and abbreviated animal drug application, an instruments, contact Brandie K. Taylor, abbreviated supplemental animal drug III. What information should you know MA, Strategic Planning and Evaluation application, or generic investigational about the meeting? Branch, Office of Strategic Planning and Initiative Development, NIAID, NIH, animal drug submission that informs the We will convene a public meeting to 6610 Rockledge Drive, Room 2502, Agency that the application includes a hear the public’s views on the proposed MSC, 6620, Bethesda, MD 20892, by foreign manufacturing facility. Should recommendations for reauthorization of phone at (301) 451–3068 or Email your any changes to the annual list occur AGDUFA I. The public meeting will be request, including your address to: after its submission to the Agency, the held on December 18, 2012, at FDA’s [email protected]. sponsor may provide the updated Metro Park North Campus (see information to the Agency. Location). The meeting will include a SUPPLEMENTARY INFORMATION: B. AGDUFA II Enhancements for a presentation by FDA, and we will also Title: Generic Clearance for the Modified Inflation Adjuster and provide an opportunity for other Collection of Qualitative Feedback on Workload Adjuster organizations and individuals to make Agency Service Delivery (NIAID) . presentations at the meeting or to Abstract: The information collection Similar to AGDUFA I, we agreed to a submit written comments to the docket. activity will garner qualitative customer fixed inflation adjuster over the 5-year So that FDA can consider comments and stakeholder feedback in an efficient, period that results in the statutory and revise the recommendations as timely manner, in accordance with the revenues specified in sections 741(b) necessary, we request that comments be Administration’s commitment to and 741(g)(3) of FD&C Act (21 U.S.C. submitted to the docket by January 4, improving service delivery. By 379j–21(b) and 379–21(g)(3)). 2013. qualitative feedback we mean AGDUFA II also modifies the base information that provides useful Dated: December 3, 2012. years for calculating the workload insights on perceptions and opinions, adjuster, as specified in the AGDUFA II Leslie Kux, but are not statistical surveys that yield performance goals letter, to ensure that Assistant Commissioner for Policy. quantitative results that can be it adequately captures changes in FDA’s [FR Doc. 2012–29499 Filed 11–26–12; 4:15 pm] generalized to the population of study. workload during AGDUFA II. BILLING CODE 4160–01–P This feedback will provide insights into
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customer or stakeholder perceptions, unless it displays a currently valid This notice is being published less than 15 experiences and expectations, provide Office of Management and Budget days prior to the meeting due to the timing an early warning of issues with service, control number. limitations imposed by the review and funding cycle. or focus attention on areas where Dated: November 27, 2012. Name of Committee: Center for Scientific communication, training or changes in Shamay D. Knox, Review Special Emphasis Panel; Member operations might improve delivery of NIAID Project Clearance Liaison. Conflict: Biobehavioral Mechanisms of products or services. These collections Emotion, Stress and Health. will allow for ongoing, collaborative and [FR Doc. 2012–29403 Filed 12–4–12; 8:45 am] Date: January 4, 2013. actionable communications between the BILLING CODE 4140–01–P Time: 12:00 p.m. to 1:30 p.m. Agency and its customers and Agenda: To review and evaluate grant stakeholders. It will also allow feedback applications. DEPARTMENT OF HEALTH AND Place: National Institutes of Health, 6701 to contribute directly to the HUMAN SERVICES Rockledge Drive, Bethesda, MD 20892, improvement of program management. (Telephone Conference Call). Feedback collected under this generic National Institutes of Health Contact Person: Melissa Gerald, Ph.D., clearance will provide useful Scientific Review Officer, Center for information, but it will not yield data Center for Scientific Review; Notice of Scientific Review, National Institutes of that can be generalized to the overall Closed Meetings Health, 6701 Rockledge Drive, Room 3172, population. This type of generic MSC 7848, Bethesda, MD 20892, (301) 408– clearance for qualitative information Pursuant to section 10(d) of the 9107, [email protected]. will not be used for quantitative Federal Advisory Committee Act, as (Catalogue of Federal Domestic Assistance information collections that are amended (5 U.S.C. App.), notice is Program Nos. 93.306, Comparative Medicine; hereby given of the following meetings. 93.333, Clinical Research, 93.306, 93.333, designed to yield reliably actionable 93.337, 93.393–93.396, 93.837–93.844, results, such as monitoring trends over The meetings will be closed to the public in accordance with the 93.846–93.878, 93.892, 93.893, National time or documenting program Institutes of Health, HHS) performance. Such data uses require provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Dated: November 28, 2012. more rigorous designs that address: the David Clary, target population to which as amended. The grant applications and the discussions could disclose Program Analyst, Office of Federal Advisory generalizations will be made, the Committee Policy. sampling frame, the sample design confidential trade secrets or commercial [FR Doc. 2012–29304 Filed 12–4–12; 8:45 am] (including stratification and clustering), property such as patentable material, the precision requirements or power and personal information concerning BILLING CODE 4140–01–P calculations that justify the proposed individuals associated with the grant sample size, the expected response rate, applications, the disclosure of which would constitute a clearly unwarranted DEPARTMENT OF HEALTH AND methods for assessing potential non- HUMAN SERVICES response bias, the protocols for data invasion of personal privacy. collection, and any testing procedures Name of Committee: Center for Scientific National Institutes of Health that were or will be undertaken prior Review Special Emphasis Panel, Member fielding the study. Depending on the Conflict: AIDS and AIDS Related Research. National Institute of Neurological degree of influence the results are likely Date: December 12, 2012. Disorders and Stroke; Notice of Closed Time: 11:00 a.m. to 3:00 p.m. Meetings to have, such collections may still be Agenda: To review and evaluate grant eligible for submission for other generic applications. Pursuant to section 10(d) of the mechanisms that are designed to yield Place: National Institutes of Health, 6701 Federal Advisory Committee Act, as quantitative results. Rockledge Drive, Bethesda, MD 20892, amended (5 U.S.C. App.), notice is The Agency received no comments in (Virtual Meeting). hereby given of the following meetings. response to the 60-day notice published Contact Person: Mary Clare Walker, Ph.D., The meetings will be closed to the Scientific Review Officer, Center for in the Federal Register of December 22, public in accordance with the 2010 (75 FR 80542). Scientific Review, National Institutes of Health, 6701 Rockledge Drive, Room 5208, provisions set forth in sections Below we provide the NIAID’s 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., projected average estimates for the next MSC 7852, Bethesda, MD 20892, (301) 435– 1165, [email protected]. as amended. The grant applications and three years: This notice is being published less than 15 the discussions could disclose Current Actions: New collection of days prior to the meeting due to the timing confidential trade secrets or commercial information. limitations imposed by the review and property such as patentable materials, Type of Review: New Collection. funding cycle. Affected Public: Individuals and and personal information concerning Name of Committee: Center for Scientific individuals associated with the grant Households, Businesses and Review Special Emphasis Panel Member Organizations, State, Local or Tribal Conflict: AIDS Clinical Studies and applications, the disclosure of which Government. Epidemiology Study Section. would constitute a clearly unwarranted Average Expected Annual Number of Date: December 13, 2012. invasion of personal privacy. activities: 25. Time: 11:00 a.m. to 1:00 p.m. Name of Committee: National Institute of Respondents: 28,000. Agenda: To review and evaluate grant Neurological Disorders and Stroke Special Annual responses: 28,000. applications. Emphasis Panel; Review of Career Frequency of Response: Once per Place: National Institutes of Health, 6701 Development Award. request. Rockledge Drive, Bethesda, MD 20892, Date: December 18, 2012. (Telephone Conference Call). Average minutes per response: Ranges Time: 9:00 a.m. to 10:00 a.m. Contact Person: Mark P Rubert, Ph.D., Agenda: To review and evaluate grant from 15 minutes to 120 minutes. Scientific Review Officer, Center for applications. Burden hours: 16,100 hours. Scientific Review, National Institutes of Place: National Institutes of Health, An agency may not conduct or Health, 6701 Rockledge Drive, Room 5218, Neuroscience Center, 6001 Executive sponsor, and a person is not required to MSC 7852, Bethesda, MD 20892, 301–435– Boulevard, Rockville, MD 20852, (Telephone respond to, a collection of information 1775, [email protected]. Conference Call).
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Contact Person: Raul A. Saavedra, Ph.D., applications, the disclosure of which The meeting will be open to the Scientific Review Officer, Scientific Review would constitute a clearly unwarranted public as indicated below, with Branch, Division of Extramural Research, invasion of personal privacy. attendance limited to space available. NINDS/NIH/DHHS, NSC, 6001 Executive Individuals who plan to attend and Blvd., Suite 3208, MSC 9529, Bethesda, MD Name of Committee: National Advisory 20892–9529, (301) 496–9223, Council for Nursing Research. need special assistance, such as sign [email protected]. Date: January 22–23, 2013. language interpretation or other Name of Committee: National Institute of Open: January 22, 2013, 1:00 p.m. to 5:00 reasonable accommodations, should Neurological Disorders and Stroke Special p.m. notify the Contact Person listed below Emphasis Panel; Ancillary Studies SEP. Agenda: Discussion of Program Policies in advance of the meeting. Date: December 21, 2012. and Issues. Time: 9:30 a.m. to 12:30 p.m. Place: National Institutes of Health, The portions of the meeting devoted Agenda: To review and evaluate grant Building 31, 31 Center Drive, Conference to the review and evaluation of journals applications. Room 6, Bethesda, MD 20892. for potential indexing by the National Place: National Institutes of Health Closed: January 23, 2013, 9:00 a.m. to 1:00 Library of Medicine will be closed to the Neuroscience Center, 6001 Executive p.m. public in accordance with the Boulevard, Rockville, MD 20852, (Telephone Agenda: To review and evaluate grant provisions set forth in section Conference Call). applications. 552b(c)(9)(B), Title 5 U.S.C., as Contact Person: Shanta Rajaram, Ph.D., Place: National Institutes of Health, amended. Premature disclosure of the Scientific Review Officer, Scientific Review Building 31, 31 Center Drive, Conference Branch, Division of Extramural Research, titles of the journals as potential titles to Room 6, Bethesda, MD 20892. be indexed by the National Library of NINDS/NIH/DHHS, NSC, 6001 Executive Contact Person: Ann R. Knebel, Ph.D., RN, Blvd., Suite 3208, MSC 9529, Bethesda, MD FAAN, Deputy Director, National Institute of Medicine, the discussions, and the 20892–9529, (301) 435–6033, Nursing Research, National Institutes of presence of individuals associated with [email protected]. Health, 31 Center Drive, Building 31, Room these publications could significantly (Catalogue of Federal Domestic Assistance 5B05, Bethesda, MD 20892, 301–496–8230, frustrate the review and evaluation of Program Nos. 93.853, Clinical Research [email protected]. individual journals. Related to Neurological Disorders; 93.854, Any interested person may file written Name of Committee: Literature Selection Biological Basis Research in the comments with the committee by forwarding Technical Review Committee. Neurosciences, National Institutes of Health, the statement to the Contact Person listed on HHS) this notice. The statement should include the Date: February 21–22, 2013. Open: February 21, 2013, 9:00 a.m. to 11:00 Dated: November 28, 2012. name, address, telephone number and when applicable, the business or professional a.m. Carolyn A. Baum, affiliation of the interested person. Agenda: Administrative. Program Analyst, Office of Federal Advisory In the interest of security, NIH has Place: National Library of Medicine, Committee Policy. instituted stringent procedures for entrance Building 38, 2nd Floor, Board Room, 8600 Rockville Pike, Bethesda, MD 20894. [FR Doc. 2012–29297 Filed 12–4–12; 8:45 am] onto the NIH campus. All visitor vehicles, Closed: February 21, 2013, 11:00 a.m. to BILLING CODE 4140–01–P including taxicabs, hotel, and airport shuttles will be inspected before being allowed on 5:00 p.m. campus. Visitors will be asked to show one Agenda: To review and evaluate journals form of identification (for example, a as potential titles to be indexed by the DEPARTMENT OF HEALTH AND National Library of Medicine. HUMAN SERVICES government-issued photo ID, driver’s license, or passport) and to state the purpose of their Place: National Library of Medicine, Building 38, 2nd Floor, Board Room, 8600 National Institutes of Health visit. Information is also available on the Institute’s/Center’s home page: www.nih.gov/ Rockville Pike, Bethesda, MD 20894. _ Closed: February 22, 2013, 8:30 a.m. to National Institute Of Nursing Research; ninr/a advisory.html, where an agenda and any additional information for the meeting 2:00 p.m. Notice of Meeting will be posted when available. Agenda: To review and evaluate journals as potential titles to be indexed by the Pursuant to section 10(d) of the (Catalogue of Federal Domestic Assistance National Library of Medicine. Federal Advisory Committee Act, as Program Nos. 93.361, Nursing Research, Place: National Library of Medicine, amended (5 U.S.C. App.), notice is National Institutes of Health, HHS) Building 38, 2nd Floor, Board Room, 8600 hereby given of a meeting of the Dated: November 29, 2012. Rockville Pike, Bethesda, MD 20894. National Advisory Council for Nursing Michelle Trout, Contact Person: Joyce Backus, M.S.L.S., Acting Associate Director, Division of Library Research. Program Analyst, Office of Federal Advisory Operations, National Library of Medicine, The meeting will be open to the Committee Policy. public as indicated below, with 8600 Rockville Pike, Building 38, Room [FR Doc. 2012–29296 Filed 12–4–12; 8:45 am] attendance limited to space available. 2W04, Bethesda, MD 20892, 301–496–6921, Individuals who plan to attend and BILLING CODE 4140–01–P [email protected]. Any interested person may file written need special assistance, such as sign comments with the committee by forwarding language interpretation or other DEPARTMENT OF HEALTH AND the statement to the Contact Person listed on reasonable accommodations, should HUMAN SERVICES this notice. The statement should include the notify the Contact Person listed below name, address, telephone number and when in advance of the meeting. National Institutes of Health applicable, the business or professional The meeting will be closed to the affiliation of the interested person. public in accordance with the National Library of Medicine; Notice of In the interest of security, NIH has provisions set forth in sections Meeting instituted stringent procedures for entrance 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., onto the NIH campus. All visitor vehicles, as amended. The grant applications and Pursuant to section 10(d) of the including taxicabs, hotel, and airport shuttles will be inspected before being allowed on the discussions could disclose Federal Advisory Committee Act, as campus. Visitors will be asked to show one confidential trade secrets or commercial amended (5 U.S.C. App), notice is form of identification (for example, a property such as patentable material, hereby given of a meeting of the government-issued photo ID, driver’s license, and personal information concerning Literature Selection Technical Review or passport) and to state the purpose of their individuals associated with the grant Committee. visit.
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(Catalogue of Federal Domestic Assistance Place: National Library of Medicine, DEPARTMENT OF HEALTH AND Program No. 93.879, Medical Library Building 38, 2nd Floor, Conference Room B, HUMAN SERVICES Assistance, National Institutes of Health, 8600 Rockville Pike, Bethesda, MD 20892. HHS). Contact Person: Donald A.B. Lindberg, MD, National Institutes of Health Dated: November 29, 2012. Director, National Library of Medicine, 8600 Michelle Trout, Rockville Pike, Bethesda, MD 20892, 301– National Institute of Allergy and Infectious Diseases; Notice of Closed Program Analyst, Office of Federal Advisory 496–6221, [email protected]. Committee Policy. Name of Committee: Board of Regents of Meetings the National Library of Medicine. [FR Doc. 2012–29294 Filed 12–4–12; 8:45 am] Pursuant to section 10(d) of the BILLING CODE 4140–01–P Date: February 5–6, 2013. Open: February 5, 2013, 9:00 a.m. to 4:15 Federal Advisory Committee Act, as p.m. amended (5 U.S.C. App.), notice is hereby given of the following meetings. DEPARTMENT OF HEALTH AND Agenda: Program Discussion. HUMAN SERVICES Place: National Library of Medicine, The meetings will be closed to the Building 38, 2nd Floor, Board Room, 8600 public in accordance with the National Institutes of Health Rockville Pike, Bethesda, MD 20892. provisions set forth in sections Closed: February 5, 2013, 4:15 p.m. to 4:45 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., National Library of Medicine; Notice of p.m. as amended. The grant applications and Meetings Agenda: To review and evaluate grant the discussions could disclose applications. confidential trade secrets or commercial Pursuant to section 10(d) of the Place: National Library of Medicine, property such as patentable material, Federal Advisory Committee Act, as Building 38, 2nd Floor, Board Room, 8600 and personal information concerning amended (5 U.S.C. App), notice is Rockville Pike, Bethesda, MD 20892. individuals associated with the grant hereby given of meetings of the Board of Open: February 6, 2013, 9:00 a.m. to 12:00 applications, the disclosure of which Regents of the National Library of p.m. would constitute a clearly unwarranted Medicine. Agenda: Program Discussion. invasion of personal privacy. Place: National Library of Medicine, The meeting will be open to the Name of Committee: National Institute of public as indicated below, with Building 38, 2nd Floor, Board Room, 8600 Allergy and Infectious Diseases Special attendance limited to space available. Rockville Pike, Bethesda, MD 20892. Emphasis Panel; NIAID Investigator Initiated Individuals who plan to attend and Contact Person: Donald A.B. Lindberg, MD, Program Project Applications (P01). need special assistance, such as sign Director, National Library of Medicine, 8600 Date: January 29, 2013. language interpretation or other Rockville Pike, Bethesda, MD 20892, 301– Time: 10:00 a.m. to 3:00 p.m. reasonable accommodations, should 496–6221, [email protected]. Agenda: To review and evaluate grant notify the Contact Person listed below Any interested person may file written applications. in advance of the meeting. comments with the committee by forwarding Place: National Institutes of Health, Room 3120, 6700B Rockledge Drive, Bethesda, MD The meeting will be closed to the the statement to the Contact Person listed on this notice. The statement should include the 20817, (Telephone Conference Call). public in accordance with the Contact Person: Lynn Rust, Ph.D., name, address, telephone number and when provisions set forth in sections Scientific Review Officer, Scientific Review 552b(c)(4) and 552b(c)(6), Title 5 USC, applicable, the business or professional Program, Division of Extramural Activities, affiliation of the interested person. as amended. The grant applications and NIAID/NIH/DHHS, 6700B Rockledge Drive, In the interest of security, NIH has the discussions could disclose MSC 7616, Bethesda, MD 20892, 301–402– instituted stringent procedures for entrance confidential trade secrets or commercial 3938, [email protected]. onto the NIH campus. All visitor vehicles, property such as patentable materials, Name of Committee: National Institute of including taxicabs, hotel, and airport shuttles and personal information concerning Allergy and Infectious Diseases Special will be inspected before being allowed on Emphasis Panel; NIAID Investigator Initiated individuals associated with the grant campus. Visitors will be asked to show one Program Project Application (P01). applications, the disclosure of which form of identification (for example, a Date: February 6, 2013. would constitute a clearly unwarranted government-issued photo ID, driver’s license, Time: 11:00 a.m. to 2:30 p.m. invasion of personal privacy. or passport) and to state the purpose of their Agenda: To review and evaluate grant Name of Committee: Board of Regents of visit. applications. the National Library of Medicine Extramural Information is also available on the Place: National Institutes of Health, Room 3120, 6700B Rockledge Drive, Bethesda, MD Programs Subcommittee. Institute’s/Center’s home page: Date: February 4, 2013. 20817, (Telephone Conference Call). www.nlm.nih.gov/od/bor/bor.html, where an Contact Person: Lynn Rust, Ph.D., Closed: 2:30 p.m. to 4:00 p.m. agenda and any additional information for Agenda: To review and evaluate grant Scientific Review Officer, Scientific Review the meeting will be posted when available. applications. Program, Division of Extramural Activities, Place: National Library of Medicine, (Catalogue of Federal Domestic Assistance NIAID/NIH/DHHS, 6700B Rockledge Drive, Building 38, 2nd Floor, Conference Room B, Program No. 93.879, Medical Library MSC 7616, Bethesda, MD 20892, 301–402– 8600 Rockville Pike, Bethesda, MD 20892. Assistance, National Institutes of Health, 3938, [email protected]. Contact Person: Donald A.B. Lindberg, MD, HHS). (Catalogue of Federal Domestic Assistance Director, National Library of Medicine, 8600 Program Nos. 93.855, Allergy, Immunology, Rockville Pike, Bethesda, MD 20892, 301– Dated: November 29, 2012. and Transplantation Research; 93.856, 496–6221, [email protected]. Michelle Trout, Microbiology and Infectious Diseases Name of Committee: Board of Regents of Program Analyst, Office of the Federal Research, National Institutes of Health, HHS) the National Library of Medicine Advisory Committee Policy. Dated: November 28, 2012. Subcommittee on Outreach and Public [FR Doc. 2012–29295 Filed 12–4–12; 8:45 am] David Clary, Information. Date: February 5, 2013. BILLING CODE 4140–01–P Program Analyst, Office of Federal Advisory Open: 7:45 a.m. to 8:45 a.m. Committee Policy. Agenda: To review and discuss outreach [FR Doc. 2012–29301 Filed 12–4–12; 8:45 am] activities. BILLING CODE 4140–01–P
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DEPARTMENT OF HEALTH AND representative of an organization may be (Catalogue of Federal Domestic Assistance HUMAN SERVICES allowed to present oral comments and if Program No. 93.879, Medical Library accepted by the committee, presentations Assistance, National Institutes of Health, National Institutes of Health may be limited to five minutes. Both printed HHS) and electronic copies are requested for the Dated: November 29, 2012. record. In addition, any interested person National Institute on Drug Abuse; Michelle Trout, Notice of Meeting may file written comments with the committee by forwarding their statement to Program Analyst, Office of the Federal Pursuant to section 10(d) of the the Contact Person listed on this notice. The Advisory Committee Policy. Federal Advisory Committee Act, as statement should include the name, address, [FR Doc. 2012–29291 Filed 12–4–12; 8:45 am] amended (5 U.S.C. App.), notice is telephone number and when applicable, the BILLING CODE 4140–01–P hereby given of a meeting of the business or professional affiliation of the interested person. National Advisory Council on Drug Information is also available on the DEPARTMENT OF HEALTH AND Abuse. Institute’s/Center’s home page: The meeting will be open to the www.drugabuse.gov/NACDA/ HUMAN SERVICES public as indicated below, with NACDAHome.html, where an agenda and attendance limited to space available. any additional information for the meeting National Institutes of Health Individuals who plan to attend and will be posted when available. National Institute of Biomedical need special assistance, such as sign (Catalogue of Federal Domestic Assistance Imaging and Bioengineering; Notice of language interpretation or other Program Nos.: 93.279, Drug Abuse and Meeting reasonable accommodations, should Addiction Research Programs, National notify the Contact Person listed below Institutes of Health, HHS) Pursuant to section 10(d) of the in advance of the meeting. Dated: November 29, 2012. Federal Advisory Committee Act, as The meeting will be closed to the Michelle Trout, amended (5 U.S.C. App.), notice is public in accordance with the Program Analyst, Office of Federal Advisory hereby given of a meeting of the provisions set forth in sections Committee Policy. National Advisory Council for 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., [FR Doc. 2012–29299 Filed 12–4–12; 8:45 am] Biomedical Imaging and Bioengineering. as amended. The grant applications and BILLING CODE 4140–01–P The meeting will be open to the the discussions could disclose public as indicated below. This will be confidential trade secrets or commercial a virtual meeting. Please log on to the property such as patentable material, DEPARTMENT OF HEALTH AND following URL: https:// and personal information concerning HUMAN SERVICES webmeeting.nih.gov/nacbibopen/ to join individuals associated with the grant the open session. If you have questions applications, the disclosure of which National Institutes of Health please notify the Contact Person listed would constitute a clearly unwarranted below in advance of the meeting. invasion of personal privacy. National Library of Medicine; Notice of The meeting will be closed to the Name of Committee: National Advisory Closed Meeting public in accordance with the Council on Drug Abuse. provisions set forth in sections Date: February 5–6, 2013. Pursuant to section 10(d) of the Federal Advisory Committee Act, as 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Closed: February 5, 2013, 2:00 p.m. to 5:00 as amended. The grant applications p.m. amended (5 U.S.C. App), notice is Agenda: To review and evaluate grant hereby given of the following meeting. and/or contract proposals and the applications. The meeting will be closed to the discussions could disclose confidential Place: National Institutes of Health, public in accordance with the trade secrets or commercial property Neuroscience Center, 6001 Executive provisions set forth in sections such as patentable material, and Boulevard, Conference Rooms C & D, 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., personal information concerning Rockville, MD 20852. individuals associated with the grant Open: February 6, 2013, 8:30 a.m. to 1:00 as amended. The grant applications and the discussions could disclose applications and/or contract proposals, p.m. the disclosure of which would Agenda: This portion of the meeting will confidential trade secrets or commercial be open to the public for announcements and property such as patentable materials, constitute a clearly unwarranted reports of administrative, legislative and and personal information concerning invasion of personal privacy. program developments in the drug abuse individuals associated with the grant Name of Committee: National Advisory field. applications, the disclosure of which Council for Biomedical Imaging and Place: National Institutes of Health, would constitute a clearly unwarranted Bioengineering NACBIB, January 25, 2013, Neuroscience Center, 6001 Executive Virtual Meeting. Boulevard, Conference Rooms C & D, invasion of personal privacy. Date: January 25, 2013. Rockville, MD 20852. Name of Committee: National Library of Open: 11:00 a.m. to 11:30 a.m. Contact Person: Teresa Levitin, Ph.D., Medicine Special Emphasis Panel; Conflict Agenda: Report from the Institute Director Director, Office of Extramural Affairs, R01/K99/K22. and other Institute Staff. National Institute on Drug Abuse, NIH, Date: January 25, 2013. Place: National Institutes of Health, Two DHHS, Room 4243, MSC 9550, 6001 Time: 12:00 p.m. to 4:00 p.m. Democracy Plaza, 6707 Democracy Executive Boulevard, Bethesda, MD 20892– Agenda: To review and evaluate grant Boulevard, Suite 200, Room 241, Bethesda, 89550, (301) 443–2755, tlevitin.nida.nih.gov. applications. MD 20892. Any member of the public interested in Place: National Library of Medicine, 6705 Closed: 11:45 a.m. to 1:00 p.m. presenting oral comments to the committee Rockledge Drive, Suite 301, Bethesda, MD Agenda: To review and evaluate grant may notify the Contact Person listed on this 20817, (Telephone Conference Call). applications and/or proposals. notice at least 10 days in advance of the Contact Person: Zoe H. Huang, MD, Place: National Institutes of Health, Two meeting. Interested individuals and Scientific Review Officer, Extramural Democracy Plaza, 6707 Democracy representatives of organizations may submit Programs, National Library of Medicine, NIH, Boulevard, Suite 200, Room 241, Bethesda, a letter of intent, a brief description of the 6705 Rockledge Drive, Suite 301, Bethesda, MD 20892. organization represented, and a short MD 20892–7968, 301–594–4937, Contact Person: Anthony Demsey, Ph.D., description of the oral presentation. Only one [email protected]. Director, National Institute of Biomedical
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Imaging and Bioengineering, 6707 (Catalogue of Federal Domestic Assistance Extramural Affairs, National Institute on Democracy Boulevard, Room 241, Bethesda, Program Nos. 93.855, Allergy, Immunology, Drug Abuse, NIH, DHHS, 6001 Executive MD 20892. and Transplantation Research; 93.856, Blvd., Room 4238, MSC 9550, Bethesda, MD Any interested person may file written Microbiology and Infectious Diseases 20892–9550, 301–402–6626, comments with the committee by forwarding Research, National Institutes of Health, HHS) [email protected]. the statement to the Contact Person listed on Dated: November 28, 2012. This notice is being published less than 15 this notice. The statement should include the David Clary, days prior to the meeting due to the timing name, address, telephone number and when applicable, the business or professional Program Analyst, Office of Federal Advisory limitations imposed by the review and affiliation of the interested person. Committee Policy. funding cycle. Information is also available on the [FR Doc. 2012–29303 Filed 12–4–12; 8:45 am] (Catalogue of Federal Domestic Assistance Institute’s/Center’s home page: http:// BILLING CODE 4140–01–P Program Nos.: 93.279, Drug Abuse and www.nibib1.nih.gov/about/NACBIB/ Addiction Research Programs, National NACBIB.htm, where an agenda and any Institutes of Health, HHS) additional information for the meeting will DEPARTMENT OF HEALTH AND Dated: November 29, 2012. be posted when available. HUMAN SERVICES Dated: November 29, 2012. Michelle Trout, David Clary, National Institutes of Health Program Analyst, Office of Federal Advisory Committee Policy. Program Analyst, Office of Federal Advisory National Institute on Drug Abuse; [FR Doc. 2012–29298 Filed 12–4–12; 8:45 am] Committee Policy. Notice of Closed Meetings [FR Doc. 2012–29300 Filed 12–4–12; 8:45 am] BILLING CODE 4140–01–P BILLING CODE 4140–01–P Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended (5 U.S.C. App), notice is DEPARTMENT OF HEALTH AND DEPARTMENT OF HEALTH AND hereby given of the following meeting. HUMAN SERVICES HUMAN SERVICES The meeting will be closed to the public in accordance with the National Institutes of Health National Institutes of Health provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 USC, National Library of Medicine; Notice of National Institute of Allergy and as amended. The grant applications and Closed Meeting Infectious Diseases; Notice of Closed the discussions could disclose Meeting confidential trade secrets or commercial Pursuant to section 10(d) of the Federal Advisory Committee Act, as Pursuant to section 10(d) of the property such as patentable materials, and personal information concerning amended (5 U.S.C. App), notice is Federal Advisory Committee Act, as hereby given of the meetings. amended (5 U.S.C. App.), notice is individuals associated with the grant hereby given of the following meeting. applications, the disclosure of which The meeting will be closed to the The meeting will be closed to the would constitute a clearly unwarranted public in accordance with the public in accordance with the invasion of personal privacy. provisions set forth in sections provisions set forth in sections Name of Committee: National Institute on 552b(c)(4) and 552b(c)(6), Title 5 USC, 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Drug Abuse Special Emphasis Panel; NIH as amended. The grant applications and as amended. The grant applications and Pathway to Independence Award (Parent the discussions could disclose the discussions could disclose K99/R00). confidential trade secrets or commercial confidential trade secrets or commercial Date: December 10, 2012. property such as patentable materials, Time: 11:00 a.m. to 1:00 p.m. property such as patentable material, and personal information concerning Agenda: To review and evaluate grant individuals associated with the grant and personal information concerning applications. individuals associated with the grant Place: National Institutes of Health applications, the disclosure of which applications, the disclosure of which Neuroscience Center, 6001 Executive would constitute a clearly unwarranted would constitute a clearly unwarranted Boulevard, Rockville, MD 20852, (Telephone invasion of personal privacy. invasion of personal privacy. Conference Call). Name of Committee: Biomedical Library Contact Person: Elaine Lazar-Wesley, and Informatics Review Committee. Name of Committee: National Institute of Ph.D., Scientific Review Officer, Office of Date: March 7–8, 2013. Allergy and Infectious Diseases Special Extramural Affairs, National Institute on Emphasis Panel; PAR–10–271, NIAID Drug Abuse, NIH, DHHS, Room 4245, MSC Time: March 7, 2013, 8:00 a.m. to 6:00 p.m. Investigator Initiated Program Project 9550, 6001 Executive Blvd., Bethesda, MD Agenda: To review and evaluate grant Application (P01). 20892–9550, 301–451–4530, [email protected]. applications. Date: December 18, 2012. This notice is being published less than 15 Place: National Library of Medicine, Time: 12:00 a.m. to 4:00 p.m. days prior to the meeting due to the timing Building 38, 2nd Floor, Board Room, 8600 Agenda: To review and evaluate grant limitations imposed by the review and Rockville Pike, Bethesda, MD 20892. applications. funding cycle. Time: March 8, 2013, 8:00 a.m. to 2:00 p.m. Place: National Institutes of Health, 6700B Name of Committee: National Institute on Agenda: To review and evaluate grant Rockledge Drive, Bethesda, MD 20817, Drug Abuse Special Emphasis Panel; applications. (Telephone Conference Call). Cognitive Remediation and Work Therapy. Contact Person: Arthur A. Petrosian, Ph.D., Contact Person: Maja Maric, Ph.D., Date: December 13, 2012. Chief Scientific Review Officer, Division of Scientific Review Officer, Scientific Review Time: 10:00 a.m. to 12:00 p.m. Program, Division of Extramural Activities, Extramural Programs, National Library of Agenda: To review and evaluate grant Medicine, 6705 Rockledge Drive, Suite 301, DHHS/NIH/NIAID, 6700B Rockledge Drive, applications. Room 3266, Bethesda, MD 20892–7616, 301– Bethesda, MD 20892–7968, 301–496–4253, Place: National Institutes of Health, [email protected]. 451–2634, [email protected]. Neuroscience Center, 6001 Executive This notice is being published less than 15 Boulevard, Rockville, MD 20852, (Telephone (Catalogue of Federal Domestic Assistance days prior to the meeting due to the timing Conference Call). Program No. 93.879, Medical Library limitations imposed by the review and Contact Person: Gerald L. McLaughlin, Assistance, National Institutes of Health, funding cycle. Ph.D., Scientific Review Officer, Office of HHS)
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Dated: November 29, 2012. DEPARTMENT OF HOUSING AND by HUD to the housing credit allocating Michelle Trout, URBAN DEVELOPMENT agencies of each state, the District of Columbia and the Commonwealth of Program Analyst, Office of the Federal [Docket No. FR–5604–N–12] Advisory Committee Policy. Puerto Rico. This Notice also lists the following [FR Doc. 2012–29292 Filed 12–4–12; 8:45 am] Notice of Submission of Proposed Information Collection to OMB; information: BILLING CODE 4140–01–P Title of Proposal: Tax Credit Comment Request: Notice of Assistance Program (TCAP). Requirements for Reporting for the Tax Description of Information Collection: Credit Assistance Program (TCAP) DEPARTMENT OF HEALTH AND This is a revision of an already HUMAN SERVICES AGENCY: Office of the Chief Information approved information collection. The Officer, HUD. Department of Housing and Urban National Institutes of Health ACTION: Notice of proposed information Development is seeking review of the Paperwork Reduction Act requirements Center for Scientific Review; Notice of collection. associated with the Tax Credit Closed Meeting SUMMARY: The proposed information Assistance Program (TCAP). collection requirement described below Each TCAP grantee is required to use Pursuant to section 10(d) of the has been submitted to the Office of IDIS to report on project level Federal Advisory Committee Act, as Management and Budget (OMB) for information including the following amended (5 U.S.C. App.), notice is review, as required by the Paperwork information identified in the Office of hereby given of the following meeting. Reduction Act. The Department is Management and Budget (OMB) Initial The meeting will be closed to the soliciting public comments on the Implementing Guidance for the public in accordance with the subject proposal. American Recovery and Reinvestment provisions set forth in sections DATES: Comments Due Date: February 4, Act of 2009 issued On February 18, 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., 2013. 2009. Specifically, the guidance requires as amended. The grant applications and ADDRESSES: Interested persons are quarterly reporting on: the discussions could disclose invited to submit comments regarding (1) The total amount of recovery funds received from that agency; confidential trade secrets or commercial this proposal. Comments should refer to (2) The amount of recovery funds the proposal by name/or OMB approval property such as patentable material, received that were obligated and number and should be sent to: LaRuth and personal information concerning expended to projects or activities. This M.Harper, Correspondence Unit individuals associated with the grant reporting will also include unobligated Supervisor, U.S. Department of Housing applications, the disclosure of which Allotment balances to facilitate and Urban Development, 451 Seventh would constitute a clearly unwarranted reconciliations. invasion of personal privacy. Street SW., Room 7223 Washington, DC (3) A detailed list of all projects or 20410; email: activities for which recovery funds were Name of Committee: Center for Scientific [email protected]. Review Special Emphasis Panel; PAR 10– obligated and expended, including: 135: Understanding and Promoting Health FOR FURTHER INFORMATION CONTACT: (A) The name of the project or Literacy (R21). Danielle Frazier, Affordable Housing activity; Date: December 5, 2012. Specialist, DGHF, Department of (B) A description of the project or Time: 10:00 a.m. to 12:00 p.m. Housing and Urban Development, 451 activity; (C) An evaluation of the completion Agenda: To review and evaluate grant Seventh Street SW., Washington, DC status of the project or activity; applications. 20410; email: [email protected]; (D) An estimate of the number of jobs Place: National Institutes of Health, 6701 telephone (202) 402–7354. This is not a created and the number of jobs retained Rockledge Drive, Bethesda, MD 20892, toll-free number. Copies of available by the project or activity; and (Telephone Conference Call). documents submitted to OMB may be obtained from Ms. Frazier. (E) For infrastructure investments Contact Person: Rebecca Henry, Ph.D., made by State and local governments, Scientific Review Officer, Center for SUPPLEMENTARY INFORMATION: This the purpose, total cost, and rationale of Scientific Review, National Institutes of Notice will inform the public that the the agency for funding the infrastructure Health, 6701 Rockledge Drive, Room 3222, U.S. Department of Housing and Urban investment with funds made available MSC 7808, Bethesda, MD 20892, 301–435– Development (HUD) will submit revised under this Act, and name of the person 1717, [email protected]. information collection to OMB for to contact at the agency if there are This notice is being published less than 15 review for the Tax Credit Assistance concerns with the infrastructure days prior to the meeting due to the timing Program (TCAP), which is authorized investment. limitations imposed by the review and under the American Recovery and (4) Detailed information on any funding cycle. Reinvestment Act (ARRA) of 2009, as subcontracts or subgrants awarded by (Catalogue of Federal Domestic Assistance required by the Paperwork Reduction the recipient to include the data Program Nos. 93.306, Comparative Medicine; Act of 1995 (44 U.S.C. Chapter 35 as elements required to comply with the 93.333, Clinical Research, 93.306, 93.333, amended. This program provided $2.25 Federal Funding Accountability and 93.337, 93.393–93.396, 93.837–93.844, billion of grant funding for capital Transparency act of 2006 (Pub. L. 109– 93.846–93.878, 93.892, 93.893, National investment in Low Income Housing Tax 282), allowing aggregate reporting on Institutes of Health, HHS) Credit (LIHTC) projects, which could awards below $25,000 or to individuals, Dated: November 29, 2012. not move forward because the economic as prescribed by the Director of OMB. crisis reduced the private capital Michelle Trout, OMB Control Number: 2506–0181. available to them. HUD is administering Agency Form Numbers: None. Program Analyst, Office of Federal Advisory these funds as the Tax Credit Assistance Members of Affected Public: State Committee Policy. Program (TCAP). TCAP grant amounts housing credit agencies. [FR Doc. 2012–29305 Filed 12–4–12; 8:45 am] were determined by a formula Estimation of the total numbers of BILLING CODE 4140–01–P established in ARRA and were awarded hours needed to prepare the information
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collection including number of of the total number of record keeping hours. The number of respondents is 52. respondents, frequency of responses, and reporting hours per response is 11 The total hours requested is 8,320. and hours of responses: An estimation
Number of Number of Total Hours per Cost per Paperwork requirement respondents responses responses response Total hours response * Total cost
IDIS Activity Completion ...... 52 14 728 10 7,280 $290.00 $211,120 Grantee Website Reporting ...... 52 20 1,040 1 1,040 14.50 30,1600
Total Paperwork Burden ...... 8,320 ...... 241,280 (* This figure is based on GS–11 salary.)
Authority: The Paperwork Reduction Act Mae’s production activities, pooling, Dated: November 7, 2012. of 1995, 44 U.S.C. Chapter 35, as amended. reporting and risk management efforts. Kevin R. Cooke, Dated: November 29, 2012. DATES: Effective Date: This proposal Deputy Chief Information Officer. Clifford Taffet, shall become effective, without further GINNIE MAE/TN.01 General Deputy Assistant Secretary, Office notice, January 4, 2013, unless of Community Planning & Development. comments are received during or before SYSTEM NAME: [FR Doc. 2012–29354 Filed 12–4–12; 8:45 am] this period which would result in a Enterprise Wide Operational Data BILLING CODE 4210–67–P contrary determination. Store (EWODS) Comments Due Date: January 4, 2013. SYSTEM LOCATION: ADDRESSES: Interested persons are DEPARTMENT OF HOUSING AND invited to submit comments regarding Bank of New York Mellon (Contractor URBAN DEVELOPMENT this notice to the Rules Docket Clerk, site), New York, New York. Access is Office of General Counsel, U.S. authorized via application and approval [Docket No. FR–5613–N–11] process for rights and privileges Department of Housing and Urban administered by Ginnie Mae’s Security Development, 451 Seventh Street SW., Privacy Act of 1974; Notice of a New Officer. System of Records, Enterprise Wide Room 10276, Washington, DC 20410– Operations Data Store 3000. Communications should refer to CATEGORIES OF INDIVIDUALS COVERED BY THE the above docket number and title. FAX SYSTEM: AGENCY: Office of the Chief Information comments are not acceptable. A copy of Categories of individuals covered by Officer. each communication submitted will be this system include individual borrower ACTION: Notification of New Privacy Act available for public inspection and data associated with government System of Records, Enterprise Wide copying between 8:00 a.m. and 5:00 insured or guaranteed mortgage loans Operations Data Store. p.m. weekdays at the above address. that are the underlying collateral for FOR FURTHER INFORMATION CONTACT: Ginnie Mae-guaranteed mortgage- SUMMARY: Pursuant to the provision of backed securities (MBS); issuers and the Privacy Act of 1974, as amended (5 Inquiries pertaining to Privacy Act records, contact Donna Robinson- document custodians involved in the U.S.C. 552a), the U.S. Department of pooling, certification, and monthly Housing and Urban Development (HUD) Staton, Chief Privacy Officer, telephone number (202) 402–8073, 451 Seventh reporting process; and individuals who is providing notice of its intent to currently or previously held physical establish a new system of records, the Street SW., Washington, DC 20410 (Attention: Capitol View Building, 4th certificates of Ginnie Mae-guaranteed Enterprise Wide Operations Data Store mortgage-backed securities. (EWODS) for one of its Departmental Floor) [The above telephone number is Offices, the Government Mortgage not a toll free number]. A CATEGORIES OF RECORDS IN THE SYSTEM: telecommunications device for hearing- National Associate (Ginnie Mae), Office Information collected and nature and speech-impaired persons (TTY) is of Mortgage-Back Securities (MBS), collected are defined in the following available by calling the Federal which focuses on guaranteeing Ginnie four categories: Mae investors a timely payment of Information Relay Service’s toll-free 1. Loan origination and servicing data: principal and interest on MBS backed telephone number (800) 877–8339. Borrower/co-borrower name, Social by federally insured or guaranteed SUPPLEMENTARY INFORMATION: Pursuant Security Number, gender, date of birth, loans. The EWODS is to serve as a to the Privacy Act of 1974 (5 U.S.C. and income and other financial data central back-end repository to manage 552a), as amended, notice is given that (such as credit score) of the borrower various reporting, pooling, and risk HUD proposes to establish a new system and any co-borrower; property address, management activities associated with of records. The system report was mortgage amount, origination date, the mortgage-backed securities process. submitted to the Office of Management funding date, payments made, The EWODS production activities will and Budget (OMB), the Senate maximum claim amount, payment typically maintain data submitted to Committee on Homeland Security and option selected by the borrower, Ginnie Mae by Issuers who issue Governmental Affairs, and the House remaining amount of principal that may securities backed by insured or Committee on Government Reform be drawn by the borrower, reasons for guaranteed mortgage loans, mainly pursuant to Paragraph 4c of Appendix l delinquency, unique identifiers those administered for HUD’s Federal to OMB Circular No. A–130, ‘‘Federal assigned by insuring agencies, such as Housing Administration or the U.S. Agencies Responsibilities for the Federal Housing Administration Department of Veterans Affairs. The Maintaining Records About (FHA), U.S. Department of Veterans EWODS system is expected to Individuals,’’ July 25, 1994 (59 FR Affairs (VA), U.S. Department of standardize the mortgage-backed 37914). Agriculture Rural Development (RD) securities activities and improve Authority: 5 U.S.C. 552a; 88 Stat. 1896; 42 formerly the Rural Housing Service and significantly the efficiency of Ginnie U.S.C. 3535(d). Farmers Home Administration, or HUD
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Office of Public and Indian Housing mortgage loans. Ginnie Mae must collect for disaster contingency. Hard copy data (PIH), the loan number assigned by the borrower SSNs so that it may, if it submissions are imaged by a third-party issuer, the loan number assigned by the extinguishes an issuer and begins to vendor and stored securely at the Mortgage Electronic Registrations service the mortgage loans, comply with contractor’s office or at a secured offsite System, and Ginnie Mae loan number. IRS reporting requirements, including document storage facility. 2. Physical security holders the requirement to provide the IRS and RETRIEVABILITY: (investors) data: Social Security borrowers with information returns Number/Tax ID, name, mailing address, regarding interest received on which For loan origination and servicing phone number, or email address of Ginnie Mae must identify the borrower data, information will be retrieved by those holding the security. SSNs. borrower/co-borrower name, Social 3. Issuer and document custodian Security Number, property address, data: Name, title, and phone number of ROUTINE USES OF RECORDS MAINTAINED IN THE Ginnie Mae loan number, MERS loan the issuer and document custodian SYSTEM, INCLUDING CATEGORIES OF USERS AND number, loan number assigned by the THE PURPOSES OF SUCH USES: employees involved in the pooling, issuer, or unique identifiers assigned by certification, and monthly reporting In addition to those disclosures insuring agencies. For physical security process. generally permitted under 5 U.S.C. holders (investors) data, information can 4. Security Level Data: Ginnie Mae 552a(b) of the Privacy Act (Accordingly, be retrieved by Social Security Number/ pool number, Committee on Uniform discretionary disclosures that may apply Tax ID, name, address, phone number, Securities Identification Procedures to EWODS 1), other routine uses are as or email address. For loan issuers and (CUSIP) number, pool issuance follows: document custodians, information can characteristics, maturity date, security (a) To the public for the purpose of be retrieved by name and phone rate, and pool balance amount. achieving a fair and open market in number. For security-level data, Ginnie Mae-guaranteed single and information can be retrieved by Ginnie AUTHORITY FOR MAINTENANCE OF THE SYSTEM: multiclass securities by making Mae pool number of CUSIP. Section 306(g) of the National information available to investors that Housing Act, 12 U.S.C. 1721(g). The should lead to greater investor SAFEGUARDS: collection of Social Security Numbers confidence and more accurate pricing Electronic records are maintained in a are authorized pursuant to the Internal on these securities that could decrease secured computer network behind a Revenue Service Code 26 U.S.C. 6109 the cost of individual borrowing. In all firewall. Access to records is limited to and 26 C.F.R. 1.6049–4 and 1.6050H–2. cases, the public will access on Ginnie authorized personnel. All information Mae’s Web site a public use file that will that is stored on EWODS is accessed PURPOSE(S): be maintained for such purposes and according to user rights and privileges Ginnie Mae uses the information will only contain [de-identified] data that are authenticated by the access collected in EWODS to administer and that is structured to protect borrower manager for the system. Paper-based carry out its functions as guarantor of and co-borrower confidentiality where records are kept in a secure location at securities under Section 306(g) of the identities may be discerned. The contractor’s site with limited access to National Housing Act, 12 U.S.C. authority for this routine use is Section authorized personnel. 1721(g). The primary purpose of this 306(g) of the National Housing Act, 5 RETENTION AND DISPOSAL: system of records is to serve as a central U.S.C. 552a and the SORN when back-end repository to house loan In accordance with HUD Records published to establish the routine use. Disposition Schedule 2225.6, Appendix origination and servicing, security (b) To other Federal agencies to 64. Records are retained for at least 7 holder, issuer, document custodian, and ascertain if the loan is insured or years after pool maturity or when all security-level data associated with guaranteed by a Federal agency under claims arising under the pool have been government insured and guaranteed an eligible insuring or guaranteeing satisfied, whichever is later. After which mortgage loans that are underlying authority. The authority for this routine paper records are shredded or burned, collateral for Ginnie Mae-guaranteed use is Section 306(g) of the National and/or media records are disposed of mortgage-backed securities. The system Housing Act, 5 U.S.C. 552a and the pursuant to Federal media sanitization maintains data submitted to Ginnie Mae SORN when published to establish the requirements. by issuers who issue securities backed routine use. by insured or guaranteed mortgage (c) To the Internal Revenue Service SYSTEM MANAGER(S) AND ADDRESS: loans, mainly those administered for and to state and local governments—for Ginnie Mae, Office of Securities HUD’s Federal Housing Administration reporting payments for interest. The Operations, U.S. Department of Housing or the U.S. Department of Veterans authority is Section 306(g) of the and Urban Development, 550 12th Affairs. The data housed in the system National Housing Act, 26 U.S.C. 6109, Street SW., 3rd Floor, Washington, DC is necessary to support the pooling 26 CFR 1.6049–4, 5 U.S.C. 552a, and the 20024. process by which eligible issuers create SORN when published to establish the Ginnie Mae-guaranteed MBS. The routine use. RECORD ACCESS AND NOTIFICATION system also captures security-level data PROCEDURES: that is created for the purposes of POLICIES AND PRACTICES FOR STORING, The Department’s rules for providing disclosure, and security holder RETRIEVING, ACCESSING, RETAINING, AND access to records to the individual information that is used to ensure DISPOSING OF RECORDS IN THE SYSTEM: concerned appear in 24 CFR part 16. timely payment of a pro rata share of the STORAGE: Since the Borrowers and Co-borrowers principal and interest on the underlying Electronic files are stored on servers information associated with loan mortgage loans in a security, net of and back-up files are stored on tapes. originations in EWODS is collected and servicing and guaranty fees, to MBS Servers are stored in a secured server submitted to Ginnie Mae by issuers investors. If Ginnie Mae defaults and room and at an offsite secured facility responsible for the loan data, individual extinguishes an issuer, then one of borrowers and co-borrowers seeking to Ginnie Mae’s functions as guarantor of 1 http://portal.hud.gov/hudportal/documents/ determine whether this system of securities will be to begin servicing the huddoc?id=append1.pdf. records contains information about
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them, or those seeking access to such DEPARTMENT OF HOUSING AND waivers of regulations that HUD has loan records, should address inquiries URBAN DEVELOPMENT approved, by publishing a notice in the to or contact the appropriate mortgagee Federal Register. These notices (each [Docket No. FR–5639–N–03] identified on their loan payment covering the period since the most statements. Ginnie Mae does not have Notice of Regulatory Waiver Requests recent previous notification) shall: the ability to modify these types of Granted for the Third Quarter of a. Identify the project, activity, or records within EWODS. Any other Calendar Year 2012 undertaking involved; written requests must provide b. Describe the nature of the provision verification of your identity by AGENCY: Office of the General Counsel, waived and the designation of the providing two proofs of official HUD. provision; identification. Your verification of ACTION: Notice. c. Indicate the name and title of the identity must include your original person who granted the waiver request; SUMMARY: Section 106 of the Department signature and must be notarized. d. Describe briefly the grounds for of Housing and Urban Development For physical security holders approval of the request; and (investors) data, written requests must Reform Act of 1989 (the HUD Reform Act) requires HUD to publish quarterly e. State how additional information include full name, Social Security about a particular waiver may be Number/Tax ID, mailing address, and Federal Register notices of all regulatory waivers that HUD has obtained. phone number of the requestor. Section 106 of the HUD Reform Act For loan issuers, issuer proxy, and approved. Each notice covers the quarterly period since the previous also contains requirements applicable to guarantor’s data, written request must waivers of HUD handbook provisions include name, title, mailing address, Federal Register notice. The purpose of that are not relevant to the purpose of and phone number of the requestor. this notice is to comply with the this notice. All requests should be directed to requirements of section 106 of the HUD Ginnie Mae, Office of Securities Reform Act. This notice contains a list This notice follows procedures Operations, U.S. Department of Housing of regulatory waivers granted by HUD provided in HUD’s Statement of Policy and Urban Development, 550 12th during the period beginning on July 1, on Waiver of Regulations and Directives Street SW., 3rd Floor, Washington, DC 2012, and ending on September 30, issued on April 22, 1991 (56 FR 16337). 20024. Attention: Privacy Officer. 2012. In accordance with those procedures and with the requirements of section FOR FURTHER INFORMATION CONTACT: CONTESTING RECORD PROCEDURES: For 106 of the HUD Reform Act, waivers of The procedures for requesting general information about this notice, regulations are granted by the Assistant amendment or correction of records contact Camille E. Acevedo, Associate Secretary with jurisdiction over the appear in 24 CFR part 16. If additional General Counsel for Legislation and regulations for which a waiver was Regulations, Department of Housing and information is needed, contact: requested. In those cases in which a Urban Development, 451 7th Street SW., (i) In relation to contesting contents of General Deputy Assistant Secretary Room 10282, Washington, DC 20410– records, the Departmental Privacy granted the waiver, the General Deputy 0500, telephone 202–708–1793 (this is Officer, U.S. Department of Housing and Assistant Secretary was serving in the not a toll-free number). Persons with Urban Development, 451 Seventh Street absence of the Assistant Secretary in hearing- or speech-impairments may SW., Room 2256, Washington, DC accordance with the office’s Order of access this number through TTY by 20410; and Succession. calling the toll-free Federal Relay (ii) In relation to appeals of initial This notice covers waivers of denials, HUD, Departmental Privacy Service at 800–877–8339. For information concerning a regulations granted by HUD from July 1, Appeals Officer, Office of General 2012 through September 30, 2012. For Counsel, U.S. Department of Housing particular waiver that was granted and for which public notice is provided in ease of reference, the waivers granted by and Urban Development, 451 Seventh HUD are listed by HUD program office Street SW., Washington, DC 20410. this document, contact the person whose name and address follow the (for example, the Office of Community RECORD SOURCE CATEGORIES: description of the waiver granted in the Planning and Development, the Office For loan origination data, records are accompanying list of waivers that have of Fair Housing and Equal Opportunity, established using information received been granted in the third quarter of the Office of Housing, and the Office of from issuers of Ginnie Mae-guaranteed calendar year 2012. Public and Indian Housing, etc.). Within mortgage-backed securities via system SUPPLEMENTARY INFORMATION: Section each program office grouping, the interface or via hard-copy form. For 106 of the HUD Reform Act added a waivers are listed sequentially by the physical security holders (investors) new section 7(q) to the Department of regulatory section of title 24 of the Code data, records were established from Housing and Urban Development Act of Federal Regulations (CFR) that is information received by lenders creating (42 U.S.C. 3535(q)), which provides being waived. For example, a waiver of the security, via hard copy forms. that: a provision in 24 CFR part 58 would be Physical securities are still held by 1. Any waiver of a regulation must be listed before a waiver of a provision in investors but are no longer issued by in writing and must specify the grounds 24 CFR part 570. Ginnie Mae. For loan issuers and issuer for approving the waiver; Where more than one regulatory proxy data, records are established 2. Authority to approve a waiver of a provision is involved in the grant of a using information from the initial regulation may be delegated by the particular waiver request, the action is approval process, via hard copy Secretary only to an individual of listed under the section number of the application forms. Assistant Secretary or equivalent rank, first regulatory requirement that appears and the person to whom authority to in 24 CFR and that is being waived. For SYSTEMS EXEMPTED FROM CERTAIN PROVISIONS waive is delegated must also have example, a waiver of both § 58.73 and OF THE ACT: authority to issue the particular § 58.74 would appear sequentially in the None. regulation to be waived; listing under § 58.73. [FR Doc. 2012–29356 Filed 12–4–12; 8:45 am] 3. Not less than quarterly, the Waiver of regulations that involve the BILLING CODE 4210–67–P Secretary must notify the public of all same initial regulatory citation are in
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time sequence beginning with the certification have been approved, neither a Housing and Urban Development, 451 earliest-dated regulatory waiver. recipient nor any participant in the Seventh Street SW., Room 7164, Washington, Should HUD receive additional development process may commit non-HUD DC 20410, telephone (202) 708–2684. • information about waivers granted funds on or undertake an activity or project Regulation: 24 CFR 92.503(b)(3). under a program listed in 24 CFR 58.1(b) if Project/Activity: Each of the following during the period covered by this report the activity or project would have an adverse cities requested a waiver of the repayment (the third quarter of calendar year 2012) environmental impact or limit the choice of provision at 24 CFR 92.503(b)(3) so that the before the next report is published (the reasonable alternatives.’’ city could repay its HOME investment trust fourth quarter of calendar year 2012), Granted By: Mark Johnston, Acting fund local account and use the repaid funds HUD will include any additional Assistant Secretary for Community Planning for eligible affordable housing activities: waivers granted for the third quarter in and Development. Washington, DC, City of Durham, North the next report. Date Granted: August, 22, 2012. Carolina, City of Rochester, New York and Accordingly, information about Reason Waived: The project at issue was City of Utica, New York. approved waiver requests pertaining to determined to be one that would further the Nature of Requirements: The HOME funds HUD mission and advance HUD program repayment provision at 24 CFR 92.503(b)(3) HUD regulations is provided in the goals to develop viable, quality communities states: ‘‘If the HOME funds were disbursed Appendix that follows this notice. and affordable housing. It was also from the participating jurisdiction’s HOME Dated: November 27, 2012. determined that the grantee unknowingly Investment Trust Fund Treasury account, Helen R. Kanovsky, violated the regulation, but that no HUD they must be repaid to the Treasury account. funds had been committed at the time of the If the HOME funds were disbursed from the General Counsel. violation. Based on the environmental participating jurisdiction’s HOME Investment Appendix— assessments and the HUD field inspection, it Trust Fund local account, they must be was determined that granting the waiver repaid to the local account.’’ Listing of Waivers of Regulatory would not result in any unmitigated, adverse Granted By: Mark Johnston, Acting Requirements Granted by Offices of the environmental impact. Assistant Secretary for Community Planning Department of Housing and Urban Contact: James Potter, Office of and Development. Development July 1, 2012 through September Environment and Energy, Office of Date Granted: July through September, 30, 2012 Community Planning and Development, 2012. Note to Reader: More information about Department of Housing and Urban Reasons Waived: Waivers were granted to the granting of these waivers, including a Development, 451 Seventh Street SW., Room permit the cities to repay their HOME copy of the waiver request and approval, may 7248, Washington, DC 20410, telephone (202) investment trust fund local account to make be obtained by contacting the person whose 708–4225. the funds available for eligible affordable name is listed as the contact person directly • Regulation: 24 CFR 91.15(a)(2). housing activities. The cities were obligated after each set of regulatory waivers granted. Project/Activity: The City of East St. Louis, to repay HOME funds for projects that were The regulatory waivers granted appear in Illinois requested a waiver of 24 CFR terminated before completion to the HOME the following order: 91.15(a)(2), in order to obtain an extension, grant from which they were expended. If all I. Regulatory Waivers Granted by the Office for a period of 60 days, of the City’s or a portion of the total repayment was of Community Planning and submission deadline for its Fiscal Year (FY) repaid to an expired account, the repayment Development. 2012 Annual Action Plan. would have been received by HUD but II. Regulatory Waivers Granted by the Office Nature of Requirements: The Consolidated retained by the U.S. Treasury. As a result, the of Housing. Plan regulation at 24 CFR 91.15(a)(2) requires repaid funds would have no longer been III. Regulatory Waivers Granted by the Office a participating jurisdiction to submit its available for the cities to use in eligible of Public and Indian Housing. Annual Action Plan no later than August 16 affordable housing activities. The waivers of the Federal fiscal year for which grant were granted to permit the cities’ to repay I. Regulatory Waivers Granted by the Office funds were appropriated. their local HOME Investment Trust Fund of Community Planning and Development Granted By: Mark Johnston, Acting accounts instead of their HOME Investment For further information about the following Assistant Secretary for Community Planning Trust Treasury accounts and make the repaid regulatory waivers, please see the name of and Development. funds available for investment in additional the contact person that immediately follows Date Granted: August 7, 2012. HOME-eligible activities. the description of the waiver granted. Reasons Waived: The City of East St. Louis Contact: Virginia Sardone, Office of • Regulation: 24 CFR 58.22(a). had relinquished its entitlement status under Affordable Housing, Office of Community Project/Activity: Muskegon County, the Community Development Block Grant Planning and Development, Department of Michigan, requested a waiver of 24 CFR (CDBG) program and joined the St. Clair Housing and Urban Development, 451 58.22(a) for some NSP2 activities in the City Urban County for FY 2012. Because the City Seventh Street SW., Room 7164, Washington, of Muskegon. The proposed project was the relinquished its CDBG entitlement status DC 20410, telephone (202) 708–2684. rehabilitation of single family housing. A after the September 30 statutory deadline for • Regulation: 24 CFR 570.308(a)(1). waiver was needed because the grantee inclusion of CDBG entitlement grantees in Project/Activity: Because of the difficulties committed non-HUD funds to acquire several the HOME Investment Partnerships Program experienced by the village of Bolingbrook, properties prior to the approval of the (HOME) formula for the next fiscal year, the Illinois (‘‘the village’’), with regard to its environmental review as well as prior to the City was not considered part of the St. Clair capacity to administer its CDBG program, the submission and HUD approval of the Request County Urban County for purposes of village received several findings. Therefore, for Release of Funds (RROF). allocation of FY 2012 HOME funds. The City the village and Will County, where the Nature of Requirement: The HUD did not understand that it remained a village is located, determined that permitting environmental regulation under 24 CFR separate participating jurisdiction for the the county to administer the village’s CDBG 58.22(a) pertaining to limitations on activities HOME program and, consequently, did not program would alleviate the village’s pending clearance require: ‘‘Neither a take the necessary steps to develop an difficulties in this regard. In September 2012, recipient nor any participant in the Annual Action Plan for its FY 2012 HOME the village and county submitted a request to development process, including public or funds. By the time the City realized its HUD to permit Bolingbrook to be included in private nonprofit or for-profit entities, or any predicament, the City could not meet the Will County s CDBG program during FY 2013 of their contractors, may commit HUD citizen participation requirements and and FY 2014 for the purpose of planning and assistance under a program listed in 24 CFR submit its FY 2012 Annual Action Plan by implementing a joint housing and 58.1(b) on an activity or project until HUD or the August 16, 2012, submission deadline. community development program. the state has approved the recipient’s Request For these reasons, HUD granted the waiver. Nature of Requirement: HUD’s regulation for Release of Funds (RROF) and the related Contact: Virginia Sardone, Office of at 24 CFR 570.308(a)(1) states that a joint certification from the responsible entity. In Affordable Housing, Office of Community request shall only be considered if submitted addition, until the RROF and the related Planning and Development, Department of at the time an urban county is seeking a three
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year qualification or requalification as an Contact: Steve Johnson, Office of Block abandonment rates due to significant urban county. Will County re-qualified in FY Grant Assistance, Entitlement Communities population and job loss. With the additional 2011 for FYs 2012–2014, and will not re- Division, Office of Community Planning and funds, the City advised that it would target qualify until FY 2014. Development, Department of Housing and the University Park neighborhood where Granted By: Mark Johnston, Acting Urban Development, 451 Seventh Street SW., there are a high number of properties Assistant Secretary for Community Planning Room 7282, Washington, DC 20410, requiring immediate demolition to remove and Development. telephone (202) 708–1577. safety hazards and the destabilizing influence Date Granted: September 24, 2012. • Regulation: Section II.H.3.F of the of the blighted properties. Reason Waived: 24 CFR 570.308(a)(1) was Neighborhood Stabilization Program (NSP) 3 Contact: Jessie Handforth Kome, Deputy waived so that Will County and the village Notice, published on October 19, 2010, at 75 Director, Office of Block Grant Assistance, of Bolingbrook would be permitted to enter FR 64333 (NSP3 Notice), in accordance with Office of Community Planning and into a joint agreement for FY 2013 and FY Title XII of Division A under the heading Development, Department of Housing and 2014. Community Planning and Development: Urban Development, 451 Seventh Street SW., Contact: Gloria Coates, Office of Block Community Development Fund of the Room 7286, Washington, DC 20410, Grant Assistance, Entitlement Communities American Recovery and Reinvestment Act of telephone (202) 402–5539. Division, Office of Community and Planning 2009. • Regulation: Section II.H.3.F of the Development, Department of Housing and Project/Activity: The city of Dearborn, Neighborhood Stabilization Program (NSP) 3 Urban Development, 451 Seventh Street SW., Michigan requested a waiver of the 10 Notice, published on October 19, 2010, at 75 Room 7282, Washington, DC 20410, percent demolition cap under NSP which FR 64333 (NSP3 Notice), in accordance with telephone (202) 708–1577. restricts grantees from spending more than 10 Title XII of Division A under the heading • Regulation: Section II.F. of the May 4, percent of total grant funds on demolition Community Planning and Development: 2009, Federal Register notice, ‘‘Notice of activities. The city of Dearborn requested a Community Development Fund of the Program Requirements for Community waiver to spend $256,839 or approximately American Recovery and Reinvestment Act of Development Block Grant Program Funding 25 percent of its NSP3 allocation on 2009. under the American Recovery and demolition of blighted structures. Project/Activity: The city of Houston, Reinvestment Act of 2009.’’ Funding under Nature of Requirement: Section II.H.3.F of Texas requested a waiver of the 10 percent this notice is referred to as CDBG–R funding. the NSP3 Notice provides that a grantee may demolition cap under NSP which restricts Project/Activity: Recent natural disasters not use more than ten percent of its grant for grantees from spending more than 10 percent negatively affected some grantees’ ability to demolition activities. of total grant funds on demolition activities. complete CDBG–R funded activities, and Granted By: Mark Johnston, Acting The city of Houston requested a waiver to thus their ability to expend all of their Assistant Secretary for Community Planning spend $1,000,000 or approximately 29 c CDBG–R funds by the September 30 deadline and Development. for expending funds. Nineteen grantees in percent of its NSP3 allocation on demolition Date Granted: July 25, 2012. nine states received Major Disaster of blighted structures. Reason Waived: The City provided Declarations issued by the President since Nature of Requirement: Section II.H.3.F of statistical data evidencing high vacancy and July 1, 2012, and had not drawn down 100 the NSP3 Notice provides that a grantee may abandonment rates due to significant percent of their CDBG–R funds or had not not use more than ten percent of its grant for population and job loss. The City explained completed their CDBG–R program activities. demolition activities. that there are a high number of properties Completion of Wayne County, Michigan’s Granted By: Mark Johnston, Acting CDBG–R funded activity was delayed when requiring immediate demolition to remove Assistant Secretary for Community Planning misunderstandings concerning the safety hazards and the destabilizing influence and Development. applicability of program requirements of the blighted properties. Date Granted: August 10, 2012. delayed processing of an amendment to the Contact: Jessie Handforth Kome, Deputy Reason Waived: The City provided county’s Action Plan, leaving insufficient Director, Office of Block Grant Assistance, statistical data evidencing high numbers of time for the county to complete its activity. Office of Community Planning and blighted and condemned properties. The City Nature of Requirement: Title XII of Development, Department of Housing and explained that the ability to use additional Division A of the American Recovery and Urban Development, 451 Seventh Street SW., NSP funds for demolition will allow for the Reinvestment Act of 2009 (Pub. L. 111–005, Room 7286, Washington, DC 20410, removal of blighted housing units which will telephone (202) 402–5539. help stabilize neighborhoods by eliminating approved February 17, 2009) (the Recovery • Act) appropriated $1 billion to carry out the Regulation: Section II.H.3.F of the safety concerns, reducing crime, and Community Development Block Grant Neighborhood Stabilization Program (NSP) 3 increasing the feasibility for future (CDBG) program under Title I of the Housing Notice, published on October 19, 2010, at 75 development and community investment. and Community Development Act of 1974 FR 64333 (NSP3 Notice), in accordance with Contact: Jessie Handforth Kome, Deputy (42 U.S.C. 5301, et seq.) on an expedited Title XII of Division A under the heading Director, Office of Block Grant Assistance, basis. HUD established the CDBG–R program Community Planning and Development: Office of Community Planning and requirements in a May 4, 2009 Federal Community Development Fund of the Development, Department of Housing and Register notice. Section II.F. of that Notice American Recovery and Reinvestment Act of Urban Development, 451 Seventh Street SW., required that grantees expend their entire 2009. Room 7286, Washington, DC 20410, allocation of CDBG–R funds by September Project/Activity: The city of Gary, Indiana telephone (202) 402–5539. 30, 2012. The Notice also specified that any requested a waiver of the 10 percent II. Regulatory Waivers Granted by the Office funds not expended by September 30, 2012, demolition cap under NSP which restricts of Housing—Federal Housing will be recaptured by HUD and returned to grantees from spending more than 10 percent Administration (FHA) the U.S. Treasury. of total grant funds on demolition activities. Granted By: Mark Johnston, Acting The city of Gary requested a waiver to spend For further information about the following Assistant Secretary for Community Planning $815,358 or approximately thirty percent of regulatory waivers, please see the name of and Development. its NSP3 allocation on demolition of blighted the contact person that immediately follows Date Granted: September 28, 2012. structures. the description of the waiver granted. Reason Waived: The September 30, 2012 Nature of Requirement: Section II.H.3.F of • Regulation: 24 CFR 203.43f(c)(i) and 24 expenditure deadline in Section II.F. of the the NSP3 Notice provides that a grantee may CFR 203.43f (d)(ii). May 4, 2009, Federal Register notice was not use more than ten percent of its grant for Project/Activity: Title II manufactured waived to allow the 19 grantees that suffered demolition activities. homes located within a Federal Emergency the effects of recent major disasters an Granted By: Mark Johnston, Acting Management Agency (FEMA) designated additional 30 days to finish expending their Assistant Secretary for Community Planning Special Flood Hazard Area (SFHA) in the CDBG–R funds. This same provision was and Development. State of Louisiana. waived to allow Wayne County, Michigan an Date Granted: August 7, 2012. Nature of Requirement: The applicable additional 90 days to finish expending its Reason Waived: The City provided regulations state that the finished grade CDBG–R funds. statistical data evidencing high vacancy and beneath both new and existing manufactured
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homes shall be at or above the 100 year Nature of Requirement: HUD’s regulation recordation of a Rental Use Agreement. The return frequency flood elevation. at 24 CFR 219.220(b), which governs the property will be preserved for a period of an Granted By: Carol J. Galante, Acting repayment of operating assistance provided additional 35 years as affordable housing. Assistant Secretary for Housing-Federal under the Flexible Subsidy Program for Contact: Mark B. Van Kirk, Director, Office Housing Commissioner. Troubled Projects prior to May 1, 1996, of Asset Management, Office of Housing, Date Granted: July 24, 2012. states: ‘‘Assistance that has been paid to a Department of Housing and Urban Reason Waived: Failure to extend the project owner under this subpart must be Development, 451 Seventh Street SW., Room waiver would interrupt the sale of repaid at the earlier of the expiration of the 6160, Washington, DC 20410, telephone (202) manufactured housing in the State of term of the mortgage, termination of these 708–3730. Louisiana, which is located in a FEMA actions would typically terminate FHA • Regulation: 24 CFR 219.220(b)(1995). designated SFHA, as such homes would be involvement with the property, and the Project/Activity: Coronado Gardens forced to comply with a more onerous and Flexible Subsidy loan would be repaid, in Cooperative, Lansing, Michigan—FHA costly flood hazard requirement or may not whole, at that time.’’ Project Number 047–44008. The 64-unit qualify for FHA insured financing without Granted by: Carol J. Galante, Acting family project is in need of repair. The owner the waiver. Assistant Secretary for Housing-Federal is unable to make the needed repairs and Contact: Peter Gillispie, Office of Single Housing Commissioner. repay the Flexible Subsidy Operating Family Program Development, Office of Date Granted: August 21, 2012. Assistance Loans at maturity. Housing, Department of Housing and Urban Reason Waived: The owner requested and Nature of Requirement: HUD’s regulation Development, 451 Seventh Street SW., Room was granted waiver of the requirement to at 24 CFR 219.220(b), which governs the 9270, Washington, DC 20410, telephone (202) defer repayment of the Flexible Subsidy repayment of operating assistance provided 402–3000. Operating Assistance Loan because the under the Flexible Subsidy Program for • Regulation: 24 CFR 219.220(b) (1995 owner had insufficient funds available to Troubled Projects prior to May 1, 1996, CFR edition). repay the loan upon maturity. It was states: ‘‘Assistance that has been paid to a Project/Activity: Asbury Harris Epworth determined that waiver of this regulation project owner under this subpart must be Towers, Atlanta, Georgia—FHA Project would allow for a refinance of the loan which repaid at the earlier of the expiration of the Number 061–44803. The property consists of will provide mortgage proceeds necessary for term of the mortgage, termination of these 160 one-bedroom units for the elderly and the recapitalization and substantial actions would typically terminate FHA handicapped and is in dire need of rehabilitation of the project and the involvement with the property, and the rehabilitation. The owner is unable to preservation of the project’s 90 units as Flexible Subsidy loan would be repaid, in rehabilitate the property and repay the affordable housing. The owner will be whole, at that time.’’ Flexible Subsidy loan at the time the loan required to execute and record a Rental Use Granted by: Carol J. Galante, Acting Assistant Secretary for Housing-Federal matures. Agreement for the 40-year term of the re- Nature of Requirement: HUD’s regulation Housing Commissioner. amortized Flexible Subsidy Loan. at 24 CFR 219.220(b), which governs the Date Granted: September 4, 2012. Contact: Mark B. Van Kirk, Director, Office repayment of operating assistance provided Reason Waived: The owner requested and of Asset Management, Office of Housing, under the Flexible Subsidy Program for was granted waiver of the requirement to Department of Housing and Urban Troubled Projects prior to May 1, 1996, defer repayment of the Flexible Subsidy Development, 451 Seventh Street SW., Room states: ‘‘Assistance that has been paid to a Operating Assistance Loan because the 6160, Washington, DC 20410, telephone (202) project owner under this subpart must be owner had insufficient funds available to 708–3730. repaid at the earlier of the expiration of the • repay the loan upon maturity. It was term of the mortgage, termination of these Regulation: 24 CFR 219.220(b)(1995). determined that waiver of this regulation was actions would typically terminate FHA Project/Activity: Westlake Christian necessary for recapitalization of the project to involvement with the property, and the Terrace East, Oakland, California—FHA permit needed repairs to be made at the Flexible Subsidy loan would be repaid, in Project Number 121–SH054. The 200-unit property. The deferment will preserve this whole, at that time.’’ affordable housing project for the elderly is much-needed affordable housing for a period Granted by: Carol J. Galante, Acting in dire need of redevelopment. The owner is of an additional 35 years through execution Assistant Secretary for Housing-Federal unable to rehabilitate the property and repay and recordation of a Rental Use Agreement. Housing Commissioner. the Flexible Subsidy Loan in full upon Contact: Mark B. Van Kirk, Director, Office Date Granted: August 21, 2012. maturity. of Asset Management, Office of Housing, Reason Waived: The owner requested and Nature of Requirement: HUD’s regulation Department of Housing and Urban was granted waiver of the requirement to at 24 CFR 219.220(b), which governs the Development, 451 Seventh Street SW., Room defer repayment of the Flexible Subsidy repayment of operating assistance provided 6160, Washington, DC 20410, telephone (202) Operating Assistance Loan because the under the Flexible Subsidy Program for 708–3730. project does not have sufficient funds to Troubled Projects prior to May 1, 1996, • Regulation: 24 CFR 232.3. repay the loan upon maturity. This waiver states: ‘‘Assistance that has been paid to a Project/Activity: Autumn Leaves at will allow the owner of Asbury Harris project owner under this subpart must be Arlington (Autumn Leaves) is an assisted Epworth Towers to refinance their loan and repaid at the earlier of the expiration of the living facility and has a license for 43 beds address the health and safety issues at the term of the mortgage, termination of these in 34 units. Currently, Autumn Leaves property. There is an overwhelming demand actions would typically terminate FHA operates 43 memory care beds. The project is for elderly affordable housing in Atlanta. involvement with the property, and the located in Arlington, TX. This waiver will allow the project to be Flexible Subsidy loan would be repaid, in Nature of Requirement: HUD’s regulation preserved as affordable housing for an whole, at that time.’’ at 24 CFR 232.3 mandates that in a board and additional 20 years through execution and Granted by: Carol J. Galante, Acting care home or assisted living facility, not less recordation of a Rental Use Agreement. Assistant Secretary for Housing-Federal than one full bathroom must be provided for Contact: Mark B. Van Kirk, Director, Office Housing Commissioner. every four residents. Also, the bathroom of Asset Management, Office of Housing, Date Granted: August 31, 2012. cannot be accessed from a public corridor or Department of Housing and Urban Reason Waived: The owner requested and area. Development, 451 Seventh Street SW., Room was granted waiver of the requirement to Granted By: Carol J. Galante, Acting 6160, Washington, DC 20410, telephone (202) defer repayment of the Flexible Subsidy Assistant Secretary for Housing—Federal 708–3730. Operating Assistance Loan because the Housing Commissioner. • Regulation: 24 CFR 219.220(b)(1995). owner had insufficient funds available to Date Granted: August 1, 2012. Project/Activity: Bethel Apartments, both repay the loan upon maturity and Reason Waived: HUD granted the waiver Alexandria, Louisiana—FHA Project Number rehabilitate the property. It was determined because the memory care residents of 059–35027. The 90-unit project is in need of that waiver of this regulation would allow Autumn Leaves are assisted and supervised, urgent repairs. The owner is unable to make refinancing to recapitalize the property and while bathing. The bathing/shower rooms are the necessary repairs and repay the Flexible preserve the 200 units of much-needed specifically designed to provide enough Subsidy Loan upon maturity. affordable housing through execution and space for staff to safely assist the residents.
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Contact: Vance T. Morris, Special Nature of Requirement: HUD’s regulation 6138, Washington, DC 20410, telephone (202) Assistant, Office of Healthcare Programs, at 24 CFR 232.3 mandates in a board and care 708–3000. Office of Housing, Department of Housing home or assisted living facility that the • Regulation: 24 CFR 891.100(d). and Urban Development, 451 Seventh Street bathroom cannot be accessed from a public Project/Activity: Reliable Housing SW., Room 9172 Washington, DC 20410, corridor or area. Apartments, Beaver Falls, PA, Project telephone (202) 402–2419. Granted By: Carol J. Galante, Acting Number: 033–HD115/PA28–Q091–005. • Regulation: 24 CFR 232.3. Assistant Secretary for Housing—Federal Nature of Requirement: Section 891.100(d) Project/Activity: Century Assisted Living Housing Commissioner. prohibits amendment of the amount of the has a license for 26 Alzheimer units and Date Granted: September 28, 2012. approved capital advance funds prior to operates in two separate buildings, Building Reason Waived: HUD granted the waiver closing. A and Building B. The waiver is for Building on the basis that the Alzheimer Care Granted by: Carol J. Galante, Acting A. The project is located in Carbondale, IL. residents of Country House all need Assistant Secretary for Housing-Federal Nature of Requirement: HUD’s regulation assistance with bathing. The bathing/shower Housing Commissioner. at 24 CFR 232.3 mandates in a board and care rooms provide enough space for staff to Date Granted: July 17, 2012. home or assisted living facility that the safely assist the residents. Country House has Reason Waived: The project is bathroom cannot be accessed from a public concluded that this arrangement is safer for economically designed and comparable in corridor or area. the residents. cost to similar projects in the area, and the Granted By: Carol J. Galante, Acting Contact: Vance T. Morris, Special sponsor/owner exhausted all efforts to obtain Assistant Secretary for Housing—Federal Assistant, Office of Healthcare Programs, additional funding from other sources. Housing Commissioner. Office of Housing, Department of Housing Contact: Catherine M. Brennan, Director, Date Granted: August 1, 2012. and Urban Development, 451 Seventh Street Office of Housing Assistance and Grant Reason Waived: HUD granted the waiver SW., Room 9172, Washington, DC 20410, Administration, Office of Housing, because it was determined that certain telephone (202) 402–3000, telephone (202) Department of Housing and Urban residents of Century Assisted Living’s 402–2419. Development, 451 Seventh Street SW., Room Building A are more acute and need • Regulation: Mortgagee Letter 2011–22, 6138, Washington, DC 20410, telephone (202) 708–3000. assistance and supervision while bathing. Condominium Approval Process for Single • Century Assisted Living has concluded that Family Housing—Consolidation and Update Regulation: 24 CFR 891.100(d). this arrangement is safer for the residents. In of Approval Requirements. Project/Activity: Ashlawn View Group addition, there is insufficient space in Project/activity: Properties eligible for Home, Danville, VA, Project Number: 051– Building A to convert its existing half FHA-insured mortgages. HD147/VA36–Q091–003. Nature of Requirement: Section 891.100(d) bathroom rooms to full bathrooms. Nature of Requirement: Mortgagee Letter prohibits amendment of the amount of the Contact: Vance T. Morris, Special 2011–22 and the attached Condominium approved capital advance funds prior to Assistant, Office of Healthcare Programs, Project Approval and Processing Guide closing. Office of Housing, Department of Housing consolidated and updated the requirements Granted by: Carol J. Galante, Acting and Urban Development, 451 Seventh Street and procedures that constitute the Assistant Secretary for Housing-Federal SW., Room 9172, Washington, DC 20410, Condominium Approval Process. Housing Commissioner. telephone (202) 402–2419. Granted By: Carol J. Galante, Acting • Date Granted: August 3, 2012. Regulation: 24 CFR 232.3. Assistant Secretary for Housing—Federal Reason Waived: The project is Project/Activity: The Lodge at Eskaton Housing Commissioner. economically designed and comparable in Village (Eskaton Village) has a license for 74 Date Granted: September 13, 2012. cost to similar projects in the area, and the beds in 64 units. Currently, Eskaton Village Reason Waived: By Mortgagee Letter 2012– sponsor/owner exhausted all efforts to obtain operates 40 assisted living units for 40 18, issued September 13, 2012, HUD waived additional funding from other sources. residents and 24 dementia care units for 24 certain provisions of Mortgagee Letter 2011– Contact: Catherine M. Brennan, Director, residents. 22 and put in place temporary condominium Office of Housing Assistance and Grant Nature of Requirement: HUD’s regulation approval policy provisions. HUD determined Administration, Office of Housing, at 24 CFR 232.3 mandates in a board and care that certain policy adjustments were Department of Housing and Urban home or assisted living facility that the temporarily needed to address current Development, 451 Seventh Street SW., Room bathroom cannot be accessed from a public housing market conditions. 6138, Washington, DC 20410, telephone (202) corridor or area. Contact: Joanne B. Kuczma, Director, Home 708–3000. Granted By: Carol J. Galante, Acting Mortgage Insurance Division, Office of • Regulation: 24 CFR 891.100(d). Assistant Secretary for Housing—Federal Housing, Department of Housing and Urban Project/Activity: Dogwood Manor Housing Commissioner. Development, 451 Seventh Street SW., Room Apartments, Oak Ridge, TN, Project Number: Date Granted: August 1, 2012. 9278, Washington, DC 20410–8000, 087–EE073/TN37–S101–002. Reason Waived: HUD granted the waiver telephone (202) 708–4308. Nature of Requirement: Section 891.100(d) • on the basis that the residents of Eskaton Regulation: 24 CFR 891.100(d). prohibits amendment of the amount of the Village’s dementia care wing are fully Project/Activity: Renaissance Gardens, approved capital advance funds prior to assisted and supervised while bathing. For Baltimore, MD, Project Number: 052–EE065/ closing. safety reasons, the 24 dementia care residents MD06–S101–002. Granted by: Carol J. Galante, Acting use two shower rooms and a tub room for Nature of Requirement: Section 891.100(d) Assistant Secretary for Housing-Federal bathing. This allows for staff to provide prohibits amendment of the amount of the Housing Commissioner. assistance to the residents. Eskaton Village approved capital advance funds prior to Date Granted: September 17, 2012. also concluded that this arrangement is safer closing. Reason Waived: The project is for the residents. Granted by: Carol J. Galante, Acting economically designed and comparable in Contact: Vance T. Morris, Special Assistant Secretary for Housing-Federal cost to similar projects in the area, and the Assistant, Office of Healthcare Programs, Housing Commissioner. sponsor/owner exhausted all efforts to obtain Office of Housing, Department of Housing Date Granted: July 12, 2012. additional funding from other sources. and Urban Development, 451 Seventh Street Reason Waived: The project is Contact: Catherine M. Brennan, Director, SW., Room 9172, Washington, DC 20410, economically designed and comparable in Office of Housing Assistance and Grant telephone (202) 402–2419. cost to similar projects in the area, and the Administration, Office of Housing, • Regulation: 24 CFR 232.3. sponsor/owner exhausted all efforts to obtain Department of Housing and Urban Project/Activity: Country House— additional funding from other sources. Development, 451 Seventh Street SW., Room Dickinson (Country House) is an assisted Contact: Catherine M. Brennan, Director, 6138, Washington, DC 20410, telephone (202) living facility and has a license for 30 beds Office of Housing Assistance and Grant 708–3000. in 22 units. Currently, Country House serves Administration, Office of Housing, • Regulation: 24 CFR 891.100(d). Alzheimer Care residents. The project is Department of Housing and Urban Project/Activity: Arlington II Nonprofit located in Dickinson, North Dakota. Development, 451 Seventh Street SW., Room Housing Corporation, Baltimore, MD,
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Project Number: 052–EE064/MD06–S101– Administration, Office of Housing, • Regulation: 24 CFR 891.165. 001. Department of Housing and Urban Project/Activity: Franklin Senior Housing, Nature of Requirement: Section 891.100(d) Development, 451 Seventh Street SW., Room Inc., Franklin, WI, Project Number: 075– prohibits amendment of the amount of the 6138, Washington, DC 20410, telephone (202) EE145/WI39–S091–003. approved capital advance funds prior to 708–3000. Nature of Requirement: Section 891.165 closing. • Regulation: 24 CFR 891.165. provides that the duration of the fund Granted by: Carol J. Galante, Acting Project/Activity: Coretta Scott King reservation of the capital advance is 18 Assistant Secretary for Housing-Federal Apartments, Brooklyn, NY, Project Number: months from the date of issuance with Housing Commissioner. 012–EE356/NY36–S071–002. limited exceptions up to 24 months, as Date Granted: September 17, 2012. Nature of Requirement: Section 891.165 approved by HUD on a case-by-case basis. Reason Waived: The project is provides that the duration of the fund Granted by: Carol J. Galante, Acting economically designed and comparable in reservation of the capital advance is 18 Assistant Secretary for Housing-Federal cost to similar projects in the area, and the months from the date of issuance with Housing Commissioner. sponsor/owner exhausted all efforts to obtain limited exceptions up to 24 months, as Date Granted: August 3, 2012. additional funding from other sources. approved by HUD on a case-by-case basis. Reason Waived: Additional time was Contact: Catherine M. Brennan, Director, Granted by: Carol J. Galante, Acting needed to reach initial closing. Office of Housing Assistance and Grant Assistant Secretary for Housing-Federal Contact: Catherine M. Brennan, Director, Administration, Office of Housing, Housing Commissioner. Office of Housing Assistance and Grant Department of Housing and Urban Date Granted: July 12, 2012. Administration, Office of Housing, Development, 451 Seventh Street SW., Room Reason Waived: Additional time was Department of Housing and Urban 6138, Washington, DC 20410, telephone (202) needed to process and issue the firm Development, 451 Seventh Street SW., Room 708–3000. commitment and for the project to reach an 6138, Washington, DC 20410, telephone (202) • Regulation: 24 CFR 891.100(d) and 24 initial closing. 708–3000. CFR 891.165. Contact: Catherine M. Brennan, Director, • Regulation: 24 CFR 891.165. Project/Activity: Hale Maunaloa Residence, Office of Housing Assistance and Grant Project/Activity: Broadwater Place Maunaloa, HI, Project Number: 140–HD034/ Administration, Office of Housing, Apartments, St. Petersburg, FL, Project HI10–Q091–001. Department of Housing and Urban Number: 067–HD102/FL29–Q091–005. Nature of Requirement: Section 891.100(d) Development, 451 Seventh Street SW., Room Nature of Requirement: Section 891.165 prohibits amendment of the amount of the 6138, Washington, DC 20410, telephone (202) provides that the duration of the fund approved capital advance funds prior to 708–3000. reservation of the capital advance is 18 closing. Section 891.165 provides that the • Regulation: 24 CFR 891.165. months from the date of issuance with duration of the fund reservation of the capital Project/Activity: Jubilee Station, limited exceptions up to 24 months, as advance is 18 months from the date of Charleston, WV, Project Number: 045– approved by HUD on a case-by-case basis. issuance with limited exceptions up to 24 HD045/WV15–Q091–002. Granted by: Carol J. Galante, Acting months, as approved by HUD on a case-by- Nature of Requirement: Section 891.165 Assistant Secretary for Housing-Federal case basis. provides that the duration of the fund Housing Commissioner. Granted by: Carol J. Galante, Acting reservation of the capital advance is 18 Date Granted: August 3, 2012. Assistant Secretary for Housing-Federal months from the date of issuance with Reason Waived: Additional time was Housing Commissioner. needed to issue the firm commitment and for Date Granted: September 11, 2012. limited exceptions up to 24 months, as Reason Waived: The project is approved by HUD on a case-by-case basis. the project to be initially closed. economically designed and comparable in Granted by: Carol J. Galante, Acting Contact: Catherine M. Brennan, Director, cost to similar projects in the area, and the Assistant Secretary for Housing-Federal Office of Housing Assistance and Grant sponsor/owner exhausted all efforts to obtain Housing Commissioner. Administration, Office of Housing, additional funding from other sources. Also, Date Granted: July 18, 2012. Department of Housing and Urban additional time was needed to review the Reason Waived: Additional time was Development, 451 Seventh Street SW., Room project proposal, the drawings for needed to issue the firm commitment. 6138, Washington, DC 20410, telephone (202) Contact: Catherine M. Brennan, Director, 708–3000. accessibility compliance and the contract • bidding requirements for the project to Office of Housing Assistance and Grant Regulation: 24 CFR 891.165. achieve an initial closing. Administration, Office of Housing, Project/Activity: CPNJ Livingston Contact: Catherine M. Brennan, Director, Department of Housing and Urban Residence, Livingston, NJ, Project Number: Office of Housing Assistance and Grant Development, 451 Seventh Street SW., Room 031–HD157/NJ39–Q081–003. Administration, Office of Housing, 6138, Washington, DC 20410, telephone (202) Nature of Requirement: Section 891.165 Department of Housing and Urban 708–3000. provides that the duration of the fund • Development, 451 Seventh Street SW., Room Regulation: 24 CFR 891.165. reservation of the capital advance is 18 6138, Washington, DC 20410, telephone (202) Project/Activity: Spruce Manor, months from the date of issuance with 708–3000. Huntington, WV, Project Number: 045– limited exceptions up to 24 months, as • Regulation: 24 CFR 891.165. HD044/WV15–Q091–001. approved by HUD on a case-by-case basis. Project/Activity: Roeser Haciendas Senior Nature of Requirement: Section 891.165 Granted by: Carol J. Galante, Acting Housing, Phoenix, AZ, provides that the duration of the fund Assistant Secretary for Housing-Federal Project Number: 123–EE107/AZ20–S081– reservation of the capital advance is 18 Housing Commissioner. 001. months from the date of issuance with Date Granted: August 3, 2012. Nature of Requirement: Section 891.165 limited exceptions up to 24 months, as Reason Waived: Additional time was provides that the duration of the fund approved by HUD on a case-by-case basis. needed to reach initial closing. reservation of the capital advance is 18 Granted by: Carol J. Galante, Acting Contact: Catherine M. Brennan, Director, months from the date of issuance with Assistant Secretary for Housing-Federal Office of Housing Assistance and Grant limited exceptions up to 24 months, as Housing Commissioner. Administration, Office of Housing, approved by HUD on a case-by-case basis. Date Granted: August 3, 2012. Department of Housing and Urban Granted by: Carol J. Galante, Acting Reason Waived: Additional time was Development, 451 Seventh Street SW., Room Assistant Secretary for Housing-Federal needed to reach initial closing. 6138, Washington, DC 20410, telephone (202) Housing Commissioner. Contact: Catherine M. Brennan, Director, 708–3000. Date Granted: July 12, 2012. Office of Housing Assistance and Grant • Regulation: 24 CFR 891.165. Reason Waived: Additional time was Administration, Office of Housing, Project/Activity: Beechtree Commons II, needed for the project to achieve initial Department of Housing and Urban Verona, PA, Project Number: 033–EE142/ closing. Development, 451 Seventh Street SW., Room PA28–S091–005. Contact: Catherine M. Brennan, Director, 6138, Washington, DC 20410, telephone (202) Nature of Requirement: Section 891.165 Office of Housing Assistance and Grant 708–3000. provides that the duration of the fund
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reservation of the capital advance is 18 Nature of Requirement: Section 891.165 Granted by: Carol J. Galante, Acting months from the date of issuance with provides that the duration of the fund Assistant Secretary for Housing-Federal limited exceptions up to 24 months, as reservation of the capital advance is 18 Housing Commissioner. approved by HUD on a case-by-case basis. months from the date of issuance with Date Granted: August 20, 2012. Granted by: Carol J. Galante, Acting limited exceptions up to 24 months, as Reason Waived: Additional time was Assistant Secretary for Housing-Federal approved by HUD on a case-by-case basis. needed to reach initial closing and start Housing Commissioner. Granted by: Carol J. Galante, Acting construction. Date Granted: August 3, 2012. Assistant Secretary for Housing-Federal Contact: Catherine M. Brennan, Director, Reason Waived: Additional time was Housing Commissioner. Office of Housing Assistance and Grant needed to complete the review of the initial Date Granted: August 13, 2012. Administration, Office of Housing, closing documents and for the project to Reason Waived: Additional time was Department of Housing and Urban reach an initial closing. needed to reach initial closing. Development, 451 Seventh Street SW., Room Contact: Catherine M. Brennan, Director, Contact: Catherine M. Brennan, Director, 6138, Washington, DC 20410, telephone (202) Office of Housing Assistance and Grant 708–3000. Office of Housing Assistance and Grant • Administration, Office of Housing, Administration, Office of Housing, Regulation: 24 CFR 891.165. Department of Housing and Urban Department of Housing and Urban Project/Activity: Tecumseh Road Senior Development, 451 Seventh Street SW., Room Development, 451 Seventh Street SW., Room Apartments, Dewitt, NY, Project Number: 6138, Washington, DC 20410, telephone (202) 6138, Washington, DC 20410, telephone (202) 014–EE282/NY06–S091–007. 708–3000. 708–3000. Nature of Requirement: Section 891.165 provides that the duration of the fund Regulation: 24 CFR 891.165. • Regulation: 24 CFR 891.165. reservation of the capital advance is 18 Project/Activity: Silverwood Apartments, Project/Activity: Mercy Auburn Senior Tucson, AZ, Project Number: 123–EE113/ months from the date of issuance with Apartments, Auburn, CA, Project Number: AZ20–S091–004. limited exceptions up to 24 months, as 136–EE086/CA30–S091–003. Nature of Requirement: Section 891.165 approved by HUD on a case-by-case basis. Nature of Requirement: Section 891.165 provides that the duration of the fund Granted by: Carol J. Galante, Acting provides that the duration of the fund reservation of the capital advance is 18 Assistant Secretary for Housing-Federal reservation of the capital advance is 18 months from the date of issuance with Housing Commissioner. months from the date of issuance with limited exceptions up to 24 months, as Date Granted: August 20, 2012. limited exceptions up to 24 months, as approved by HUD on a case-by-case basis. Reason Waived: Additional time was approved by HUD on a case-by-case basis. Granted by: Carol J. Galante, Acting needed to complete processing of the firm Granted by: Carol J. Galante, Acting Assistant Secretary for Housing-Federal commitment application and for the project Assistant Secretary for Housing-Federal Housing Commissioner. to be initially closed. Housing Commissioner. Date Granted: August 3, 2012. Contact: Catherine M. Brennan, Director, Reason Waived: Additional time was Date Granted: August 13, 2012. Office of Housing Assistance and Grant needed for the sponsor/owner to resolve Reason Waived: Additional time was Administration, Office of Housing, issues raised by the City of Tucson regarding needed to reach initial closing. Department of Housing and Urban final plans and specifications requirements Contact: Catherine M. Brennan, Director, Development, 451 Seventh Street SW., Room for a paved access and new easements for the Office of Housing Assistance and Grant 6138, Washington, DC 20410, telephone (202) project. Administration, Office of Housing, 708–3000. Contact: Catherine M. Brennan, Director, Department of Housing and Urban • Regulation: 24 CFR 891.165. Office of Housing Assistance and Grant Development, 451 Seventh Street SW., Room Project/Activity: Rockwood Center, Administration, Office of Housing, 6138, Washington, DC 20410, telephone (202) Henrietta, NY, Project Number: 014–EE281/ Department of Housing and Urban 708–3000. NY06–S091–006. • Development, 451 Seventh Street SW., Room Regulation: 24 CFR 891.165. Granted by: Carol J. Galante, Acting 6138, Washington, DC 20410, telephone (202) Project/Activity: Advance Housing 2009, Assistant Secretary for Housing-Federal 708–3000. Lafayette, NJ, Project Number: 031–HD162/ Housing Commissioner. • Regulation: 24 CFR 891.165. NJ39–Q091–003. Date Granted: August 23, 2012. Project/Activity: Accorn Walk (Franklin Nature of Requirement: Section 891.165 Reason Waived: Additional time was Foundation), Kettering, OH, provides that the duration of the fund needed for approval and processing Project Number: 046–EE101/OH10–S091– reservation of the capital advance is 18 requirements of the various funding sources 003. months from the date of issuance with of this mixed finance project. Nature of Requirement: Section 891.165 limited exceptions up to 24 months, as Contact: Catherine M. Brennan, Director, provides that the duration of the fund approved by HUD on a case-by-case basis. Office of Housing Assistance and Grant reservation of the capital advance is 18 Granted by: Carol J. Galante, Acting Administration, Office of Housing, months from the date of issuance with Assistant Secretary for Housing-Federal Department of Housing and Urban limited exceptions up to 24 months, as Housing Commissioner. Development, 451 Seventh Street SW., Room approved by HUD on a case-by-case basis. Date Granted: August 20, 2012. 6138, Washington, DC 20410, telephone (202) Granted by: Carol J. Galante, Acting Reason Waived: Additional time was 708–3000. Assistant Secretary for Housing-Federal needed to reach an initial closing. • Regulation: 24 CFR 891.165. Housing Commissioner. Contact: Catherine M. Brennan, Director, Project/Activity: Bella Vista Apartments, Date Granted: August 13, 2012. Office of Housing Assistance and Grant Tucson, AZ, Project Number: 123–HD045/ Reason Waived: Additional time was Administration, Office of Housing, AZ20–Q091–001. needed for the sponsor/owner to obtain the Department of Housing and Urban Nature of Requirement: Section 891.165 proper zoning and site approval from the Development, 451 Seventh Street SW., Room provides that the duration of the fund local authority. 6138, Washington, DC 20410, telephone (202) reservation of the capital advance is 18 Contact: Catherine M. Brennan, Director, 708–3000. months from the date of issuance with Office of Housing Assistance and Grant • Regulation: 24 CFR 891.165. limited exceptions up to 24 months, as Administration, Office of Housing, Project/Activity: The Village at Oasis Park approved by HUD on a case-by-case basis. Department of Housing and Urban II, Mesa, AZ, Project Number: 123–HD046/ Granted by: Carol J. Galante, Acting Development, 451 Seventh Street SW., Room AZ20–Q091–002. Assistant Secretary for Housing-Federal 6138, Washington, DC 20410, telephone (202) Nature of Requirement: Section 891.165 Housing Commissioner. 708–3000. provides that the duration of the fund Date Granted: August 23, 2012. • Regulation: 24 CFR 891.165. reservation of the capital advance is 18 Reason Waived: Additional time was Project/Activity: FSWP GL V, Leesburg, months from the date of issuance with needed to review the firm commitment PA, Project Number: 033–HD112/PA28– limited exceptions up to 24 months, as application, achieve initial closing and start Q091–002. approved by HUD on a case-by-case basis. construction.
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Contact: Catherine M. Brennan, Director, Department of Housing and Urban Development, 451 Seventh Street SW., Room Office of Housing Assistance and Grant Development, 451 Seventh Street SW., Room 6138, Washington, DC 20410, telephone (202) Administration, Office of Housing, 6138, Washington, DC 20410, telephone (202) 708–3000. Department of Housing and Urban 708–3000. • Regulation: 24 CFR 891.165. Development, 451 Seventh Street SW., Room • Regulation: 24 CFR 891.165. Project/Activity: Community Options 6138, Washington, DC 20410, telephone (202) Project/Activity: Nativity B.V.M. Place, Hopewell, Inc., Hopewell Borough, NJ, 708–3000. Philadelphia, PA, Project Number: 034– Project Number: 035–HD073/NJ39–Q091– • Regulation: 24 CFR 891.165. EE167/PA26–S091–005. 009. Project/Activity: Fairfield Commons I, Nature of Requirement: Section 891.165 Nature of Requirement: Section 891.165 Stamford, CT, Project Number: 017–HD042/ provides that the duration of the fund provides that the duration of the fund CT26–Q091–001. reservation of the capital advance is 18 reservation of the capital advance is 18 Nature of Requirement: Section 891.165 months from the date of issuance with months from the date of issuance with provides that the duration of the fund limited exceptions up to 24 months, as limited exceptions up to 24 months, as reservation of the capital advance is 18 approved by HUD on a case-by-case basis. approved by HUD on a case-by-case basis. months from the date of issuance with Granted by: Carol J. Galante, Acting Granted by: Carol J. Galante, Acting limited exceptions up to 24 months, as Assistant Secretary for Housing—Federal Assistant Secretary for Housing—Federal approved by HUD on a case-by-case basis. Housing Commissioner. Housing Commissioner. Granted by: Carol J. Galante, Acting Date Granted: September 7, 2012. Date Granted: September 11, 2012. Assistant Secretary for Housing—Federal Reason Waived: Additional time was Reason Waived: Additional time was Housing Commissioner. needed for the sponsor/owner to resolve a needed to finalize the firm commitment Date Granted: August 23, 2012. zoning appeal and for the project to reach an application and for the project to reach an Reason Waived: Additional time was initial closing. initial closing. needed for HUD to issue the firm Contact: Catherine M. Brennan, Director, Contact: Catherine M. Brennan, Director, commitment and for the project to achieve an Office of Housing Assistance and Grant Office of Housing Assistance and Grant initial closing. Administration, Office of Housing, Administration, Office of Housing, Contact: Catherine M. Brennan, Director, Department of Housing and Urban Department of Housing and Urban Office of Housing Assistance and Grant Development, 451 Seventh Street SW., Room Development, 451 Seventh Street SW., Room Administration, Office of Housing, 6138, Washington, DC 20410, telephone (202) 6138, Washington, DC 20410, telephone (202) Department of Housing and Urban 708–3000. 708–3000. Development, 451 Seventh Street SW., Room • Regulation: 24 CFR 891.165. • Regulation: 24 CFR 891.165. 6138, Washington, DC 20410, telephone (202) Project/Activity: Flagship City Apartments, Project/Activity: The Woods of Crooked 708–3000. Erie, PA, Project Number: 033–HD114/PA28– Creek Apartments, Indianapolis, IN, • Regulation: 24 CFR 891.165. Q091–004. Project Number: 073–HD087/IN36–Q091– Project/Activity: Reliable Housing Nature of Requirement: Section 891.165 001. Apartments, Beaver Falls, PA, Project provides that the duration of the fund Nature of Requirement: Section 891.165 Number: 033–HD115/PA28–Q091–005. reservation of the capital advance is 18 provides that the duration of the fund Nature of Requirement: Section 891.165 months from the date of issuance with reservation of the capital advance is 18 provides that the duration of the fund limited exceptions up to 24 months, as months from the date of issuance with reservation of the capital advance is 18 approved by HUD on a case-by-case basis. limited exceptions up to 24 months, as months from the date of issuance with Granted by: Carol J. Galante, Acting approved by HUD on a case-by-case basis. limited exceptions up to 24 months, as Assistant Secretary for Housing—Federal Granted by: Carol J. Galante, Acting approved by HUD on a case-by-case basis. Housing Commissioner. Assistant Secretary for Housing—Federal Granted by: Carol J. Galante, Acting Date Granted: September 7, 2012. Housing Commissioner. Assistant Secretary for Housing—Federal Reason Waived: Additional time was Date Granted: September 28, 2012. Housing Commissioner. needed to issue the firm commitment, review Reason Waived: Additional time was Date Granted: September 4, 2012. the initial closing documents, and for the needed for the project to reach an initial Reason Waived: Additional time was project to reach an initial closing. closing. needed to issue the firm commitment, to Contact: Catherine M. Brennan, Director, Contact: Catherine M. Brennan, Director, review the initial closing documents and for Office of Housing Assistance and Grant Office of Housing Assistance and Grant the project to reach initial closing. Administration, Office of Housing, Administration, Office of Housing, Contact: Catherine M. Brennan, Director, Department of Housing and Urban Department of Housing and Urban Office of Housing Assistance and Grant Development, 451 Seventh Street SW., Room Development, 451 Seventh Street SW., Room Administration, Office of Housing, 6138, Washington, DC 20410, telephone (202) 6138, Washington, DC 20410, telephone (202) Department of Housing and Urban 708–3000. 708–3000. Development, 451 Seventh Street SW., Room • Regulation: 24 CFR 891.165. • Regulation: 24 CFR 891.165. 6138, Washington, DC 20410, telephone (202) Project/Activity: City of Utica Section 811 Project/Activity: Walnut Housing, West 708–3000. Project, Utica, NY, Project Number: 014– Seneca, NY, Project Number: 014–EE269/ • Regulation: 24 CFR 891.165. HD132/NY06–Q081–001. NY06–S081–001. Project/Activity: Mohouli Heights Senior Nature of Requirement: Section 891.165 Nature of Requirement: Section 891.165 Neighborhood, Hilo, HI, Project Number: provides that the duration of the fund provides that the duration of the fund 140–EE042/HI10–S091–001. reservation of the capital advance is 18 reservation of the capital advance is 18 Nature of Requirement: Section 891.165 months from the date of issuance with months from the date of issuance with provides that the duration of the fund limited exceptions up to 24 months, as limited exceptions up to 24 months, as reservation of the capital advance is 18 approved by HUD on a case-by-case basis. approved by HUD on a case-by-case basis. months from the date of issuance with Granted by: Carol J. Galante, Acting Granted by: Carol J. Galante, Acting limited exceptions up to 24 months, as Assistant Secretary for Housing—Federal Assistant Secretary for Housing—Federal approved by HUD on a case-by-case basis. Housing Commissioner. Housing Commissioner. Granted by: Carol J. Galante, Acting Date Granted: September 11, 2012. Date Granted: September 28, 2012. Assistant Secretary for Housing—Federal Reason Waived: Additional time was Reason Waived: The project experienced Housing Commissioner. needed to complete the processing of the firm significant delays due to local opposition Date Granted: September 4, 2012. commitment application and for the project causing the site to be changed twice. Reason Waived: Additional time was to reach an initial closing. Contact: Catherine M. Brennan, Director, needed to reach an initial closing. Contact: Catherine M. Brennan, Director, Office of Housing Assistance and Grant Contact: Catherine M. Brennan, Director, Office of Housing Assistance and Grant Administration, Office of Housing, Office of Housing Assistance and Grant Administration, Office of Housing, Department of Housing and Urban Administration, Office of Housing, Department of Housing and Urban Development, 451 Seventh Street SW., Room
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6138, Washington, DC 20410, telephone (202) through the State Legislative Audit Division. time permitted the audit documentation to be 708–3000. The State did not complete the audit before adequately completed and entered into the • Regulation: 24 CFR 891.165. March 31, 2012, and as a result the HA did online system. The HA agreed to submit its Project/Activity: Kenyon Terrace not have adequate time to enter the data into FYE September 30, 2011, audited Apartments, South Kingstown, RI, Project REAC’s online system. The Section 8 waiver information no later than October 31, 2012. Number: 016–HD063/RI43–Q091–006. was granted and the additional time Contact: Johnson Abraham, Program Nature of Requirement: Section 891.165 permitted the audit documentation to be Manager, NASS, Real Estate Assessment provides that the duration of the fund adequately completed. The HA submitted the Center, Office of Public and Indian Housing, reservation of the capital advance is 18 FYE June 30, 2011, audited financial Department of Housing and Urban months from the date of issuance with information on the May 15, 2012, due date. Development, 550 12th Street SW., Suite 100, limited exceptions up to 24 months, as Contact: Johnson Abraham, Program Washington, DC 20410, telephone (202) 475– approved by HUD on a case-by-case basis. Manager, NASS, Real Estate Assessment 8583. Granted by: Carol J. Galante, Acting Center, Office of Public and Indian Housing, • Regulation: 24 CFR 5.801(d)(1). Assistant Secretary for Housing—Federal Department of Housing and Urban Project/Activity: District of Columbia, Housing Commissioner. Development, 550 12th Street SW., Suite 100, (DC001), Washington, DC. Date Granted: September 28, 2012. Washington, DC 20410, telephone (202) 475– Nature of Requirement: The regulation Reason Waived: Additional time was 8583. establishes certain reporting compliance needed for the firm commitment application • Regulation: 24 CFR 5.801(d)(1). dates. The audited financial statements are to be submitted and reviewed, and for the Project/Activity: Fort Wayne Housing required to be submitted to the Real Estate project to achieve an initial closing. Authority, (IN003), Fort Wayne, IN. Assessment Center (REAC) no later than nine Contact: Catherine M. Brennan, Director, Nature of Requirement: The regulation months after the housing authority’s (HA) Office of Housing Assistance and Grant establishes certain reporting compliance fiscal year end (FYE), in accordance with the Administration, Office of Housing, dates. The audited financial statements are Single Audit Act and OMB Circular A–133. Department of Housing and Urban required to be submitted to the Real Estate Granted By: Sandra B. Henriquez, Assistant Development, 451 Seventh Street SW., Room Assessment Center (REAC) no later than nine Secretary for Public and Indian Housing. 6138, Washington, DC 20410, telephone (202) months after the housing authority’s (HA) Date Granted: August 30, 2012. 708–3000. fiscal year end (FYE), in accordance with the Reason Waived: The housing authority • Regulation: 24 CFR 891.205. Single Audit Act and OMB Circular A–133. (HA) requested additional time to submit its Project/Activity: Beckley House Expansion, Granted By: Sandra B. Henriquez, Assistant audited financial requirements to allow the Canaan, CT, Project Number: 017–EE116/ Secretary for Public and Indian Housing. newly hired Deputy Assistant Director for CT26–S101–004. Date Granted: August 3, 2012. Administration to address Independent Nature of Requirement: Section 891.205 Reason Waived: The housing authority Public Audit comments. The HA contends requires Section 202 project owners to be (HA) contends that due to transitional that the additional time was needed in order single-purpose private nonprofit difficulties when changing auditors, the to complete analyses and revisions to comply organizations. audited financial statements could not be with regulatory submission deadlines and Granted by: Carol J. Galante, Acting submitted by the deadline of March 31, 2012. Asset Management guidelines for Moving To Assistant Secretary for Housing—Federal The HA’s original Independent Public Work agencies. The waiver was granted and Housing Commissioner. Accountant (IPA) was replaced, with Board the additional time permitted the HA, in Date Granted: August 13, 2012. approval, and the newly hired IPA conjunction with the auditor, to complete the Reason Waived: To allow the owner of engagement letter was dated November 17, audit for the FYE September 30, 2011. The another Section 202 project to also own this 2011. The waiver was granted and the HA agreed to submit its FYE September 30, project. The projects are to be on the same additional time permitted the audit 2011, audited financial information to the site and time and cost savings are anticipated documentation for FYE June 30, 2011, to be REAC no later than July 31, 2012. However, from not having to create a separate owner adequately completed and entered into the PHAS audited submission due date entity. REAC’s online system. The new dew date waiver is not applicable to Circular A–133 Contact: Catherine M. Brennan, Director, was set at June 24, 2012. The PHAS audited submissions to the Federal Audit Office of Housing Assistance and Grant submission due date waiver is not applicable Clearinghouse. Administration, Office of Housing, to Circular A–133 submissions to the Federal Contact: Johnson Abraham, Program Department of Housing and Urban Audit Clearinghouse. Manager, NASS, Real Estate Assessment Development, 451 Seventh Street SW., Room Contact: Johnson Abraham, Program Center, Office of Public and Indian Housing, 6138, Washington, DC 20410, telephone (202) Manager, NASS, Real Estate Assessment Department of Housing and Urban 708–3000. Center, Office of Public and Indian Housing, Development, 550 12th Street SW., Suite 100, Department of Housing and Urban Washington, DC 20410, telephone (202) 475– III. Regulatory Waivers Granted by the Development, 550 12th Street SW., Suite 100, 8583. Office of Public and Indian Housing Washington, DC 20410, telephone (202) 475– • Regulation: 24 CFR 85.36(c). For further information about the following 8583. Project/Activity: Housing Authority of the regulatory waivers, please see the name of • Regulation: 24 CFR 5.801(d)(1). City of Shreveport, LA (HACS) the contact person that immediately follows Project/Activity: Madisonville Housing Nature of Requirement: HUD’s regulation the description of the waiver granted. Authority, (TX245), Madisonville, TX. at 25 CFR 85.36(c) requires that procurement • Regulation: 24 CFR 5.801(d)(1). Nature of Requirement: The regulation transactions will be conducted in a manner Project/Activity: Montana Department of establishes certain reporting compliance providing full and open competition Commerce, (MT901), Helena, MT. dates. The audited financial statements are consistent with the standards of Sec. 85.36. Nature of Requirement: The regulation required to be submitted to the Real Estate Granted by: Sandra B. Henriquez, Assistant establishes certain reporting compliance Assessment Center (REAC) no later than nine Secretary for Public and Indian Housing. dates. The audited financial statements are months after the housing authority’s (HA) Date Granted: September 12, 2012. required to be submitted to the Real Estate fiscal year end (FYE), in accordance with the Reason Waived: Good cause was found to Assessment Center (REAC) no later than nine Single Audit Act and OMB Circular A–133. grant an exception for HACS’ processing of months after the housing authority’s (HA) Granted By: Sandra B. Henriquez, Assistant the Phase I contract. HACS sought to use its fiscal year end (FYE), in accordance with Secretary for Public and Indian Housing. grant under the American Reinvestment and HUD’s Uniform Financial Reporting Rule. Date Granted: August 9, 2012. Recovery Act of 2009 (Recovery Act) to Granted By: Sandra B. Henriquez, Assistant Reason Waived: The housing authority expeditiously to ensure the health and safety Secretary for Public and Indian Housing. (HA) contends that because their financial of its residents at Wilkinson Terrace. The Date Granted: September 12, 2012. records were seized as a result of an ongoing housing authority explained its rationale for Reason Waived: The housing authority HUD OIG investigation, the audit cannot be amending its Phase I contract in light of the (HA) contends that the audit was delayed completed by their independent auditors. exigency related to the funding and need for because the HA’s audited is completed The waiver was granted and the additional mold and mildew remediation at Wilkinson
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Terrace. There had been no merging or Room 4216, Washington, DC 20410, HUD will only approve an exception supplanting of Recovery Act funds. The telephone (202) 708–0477. payment standard amount after six months housing authority intended to award the • Regulation: 24 CFR 982.503(c)(3). from the date of HUD approval of an Phase I contract under § 85.36 (c), but failed Project/Activity: Dallas Housing Authority exception payment standard amount above to complete the procurement in accordance (DHA), Dallas TX. 110 percent to 120 percent of the published with the Recovery Act procurement Nature of Requirement: HUD’s regulation fair market rent (FMR). HUD’s regulation 24 procedures and § 85.36. HACS agreed to at 24 CFR 982.503(c)(3) states that at the CFR 982.503(c)(5) states that the total ensure that the noncompetitive proposals request of the public housing agency, an population of a HUD-approved exception process followed is captured clearly in its exception payment standard above 120 areas in an FMR area may not include more amended Capital Fund Stimulus Grant percent of the fair market rent (FMR) may be than 50 percent of the population of the FMR Procurement Policy. HACS also agreed to approved if, among other items, such area. update its file to document why the contract approval is supported by statistically Granted By: Sandra B. Henriquez, Assistant was awarded noncompetitively, and make representative rental housing survey data to Secretary for Public and Indian Housing. such documentation available upon request. justify approval in accordance with the Date Granted: September 12, 2012. Contact: Dominique Blom, Deputy methodology described in 24 CFR 888.113. Reason Waived: These waivers were Assistant Secretary for the Office of Public Granted By: Sandra B. Henriquez, Assistant granted because of a shock to the rental Housing Investments, Office of Public and Secretary for Public and Indian Housing. housing market in the FCHA FMR area Indian Housing, Department of Housing and Date Granted: August 20, 2012. caused by increased economic activity due to Urban Development, 451 Seventh Street SW., Reason Waived: This waiver was granted natural resource exploration. Room 4130, Washington, DC 20140, based on proposed changes to the Contact: Laure Rawson, Director, Housing telephone (202) 402–4181. methodology for determining small area Voucher Management and Operations • Regulation: 24 CFR 982.202(b)(1). FMRs and the ZIP code level data used to Division, Office of Public Housing and Project/Activity: New York City Housing support those calculations. Voucher Programs, Office of Public and Authority (NYCHA), New York, NY. Contact: Laure Rawson, Director, Housing Indian Housing, Department of Housing and Nature of Requirement: HUD’s regulation Voucher Management and Operations Urban Development, 451 Seventh Street SW., 24 CFR 982.202(b)(1) states that admission to Division, Office of Public Housing and Room 4216, Washington, DC 20410, the program may not be based on where the Voucher Programs, Office of Public and telephone (202) 708–0477. family lives before admission to the program Indian Housing, Department of Housing and • Regulation: 24 CFR 982.503(c), Granted By: Sandra B. Henriquez, Assistant Urban Development, 451 Seventh Street SW., 982.503(c)(4)(ii) and 982.503(c)(5). Secretary for Public and Indian Housing. Room 4216, Washington, DC 20410, Project/Activity: Stutsman County Housing Date Granted: September 21, 2012. telephone (202) 708–0477. Authority (SCHA), Stutsman County, ND. Reason Waived: The preference for families • Regulation: 24 CFR 982.503(c), Nature of Requirement: HUD’s regulation discharged from New York City Health and 982.503(c)(4)(ii) and 982.503(c)(5). at 24 CFR 982.503(c) establishes the Hospitals Corporation (HHC) facilities Project/Activity: Mountrail County methodology for establishing exception addresses local housing needs and Housing Authority (MCHA), Mountrail payment standards for an area. HUD’s priorities—specifically the housing needs of County, ND. regulation at 24 CFR 503(c)(4)(ii) states that these HHC residents who are in need of Nature of Requirement: HUD’s 24 CFR HUD will only approve an exception supportive services and in danger of 982.503(c) establishes the methodology for payment standard amount after six months becoming homeless without supportive establishing exception payment standards for from the date of HUD approval of an services. an area. HUD’s regulation at 24 CFR exception payment standard amount above Contact: Laure Rawson, Director, Housing 503(c)(4)(ii) states that HUD will only 110 percent to 120 percent of the published Voucher Management and Operations approve an exception payment standard fair market rent (FMR). HUD’s regulation at Division, Office of Public Housing and amount after six months from the date of 24 CFR 982.503(c)(5) states that the total Voucher Programs, Office of Public and HUD approval of an exception payment population of a HUD-approved exception Indian Housing, Department of Housing and standard amount above 110 percent to 120 areas in an FMR area may not include more Urban Development, 451 Seventh Street SW., percent of the published fair market rent than 50 percent of the population of the FMR Room 4216, Washington, DC 20410, (FMR). HUD’s regulation at 24 CFR area. telephone (202) 708–0477. 982.503(c)(5) states that the total population Granted By: Sandra B. Henriquez, Assistant • Regulation: 24 CFR 982.503(b)(1). of a HUD-approved exception areas in an Secretary for Public and Indian Housing. Project/Activity: Virgin Islands Housing FMR area may not include more than 50 Date Granted: September 12, 2012. Authority (VIHA). percent of the population of the FMR area. Reason Waived: These waivers were Nature of Requirement: HUD’s regulation Granted By: Sandra B. Henriquez, Assistant granted because of a shock to the rental at 24 CFR 982.503(b)(1) states that the public Secretary for Public and Indian Housing. housing market in the SCHA FMR area housing agency may establish the payment Date Granted: September 10, 2012. caused by increased economic activity due to standard amount for a unit size at any level Reason Waived: These waivers were natural resource exploration. between 90 percent and 110 percent of the granted because of a shock to the rental Contact: Laure Rawson, Director, Housing published fair market rent (FMR) for that unit housing market in the MCHA FMR area Voucher Management and Operations size. caused by increased economic activity due to Division, Office of Public Housing and Granted By: Sandra B. Henriquez, Assistant natural resource exploration. Voucher Programs, Office of Public and Secretary for Public and Indian Housing. Contact: Laure Rawson, Director, Housing Indian Housing, Department of Housing and Date Granted: September 7, 2012. Voucher Management and Operations Urban Development, 451 Seventh Street SW., Reason Waived: This waiver was granted Division, Office of Public Housing and Room 4216, Washington, DC 20410, because VIHA had been applying payment Voucher Programs, Office of Public and telephone (202) 708–0477. standards that were above previously Indian Housing, Department of Housing and • Regulation: 24 CFR 982.503(c), approved exception payment standard Urban Development, 451 Seventh Street SW., 982.503(c)(4)(ii) and 982.503(c)(5). amounts. To avoid the impact that a drastic Room 4216, Washington, DC 20410, Project/Activity: Susquehanna County cut in subsidy would have on assisted telephone (202) 708–0477. Housing Authority (SCHA), Susquehanna families, VIHA was given a limited time to • Regulation: 24 CFR 982.503(c), County, PA. approve payment standards above the basic 982.503(c)(4)(ii) and 982.503(c)(5). Nature of Requirement: HUD’s regulation range. Project/Activity: Foster County Housing at 24 CFR 982.503(c) establishes the Contact: Laure Rawson, Director, Housing Authority (FCHA), Foster County, ND. methodology for establishing exception Voucher Management and Operations Nature of Requirement: HUD’s regulation payment standards for an area. HUD’s Division, Office of Public Housing and at 24 CFR 982.503(c) establishes the regulation at 24 CFR 503(c)(4)(ii) states that Voucher Programs, Office of Public and methodology for establishing exception HUD will only approve an exception Indian Housing, Department of Housing and payment standards for an area. HUD’s payment standard amount after six months Urban Development, 451 Seventh Street SW., regulation at 24 CFR 503(c)(4)(ii) states that from the date of HUD approval of an
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exception payment standard amount above Date Granted: July 2, 2012. • Regulation: 24 CFR 982.505(c)(3). 110 percent to 120 percent of the published Reason Waived: This waiver was granted Project/Activity: Madison County Housing fair market rent (FMR). HUD’s regulation at because this cost-saving measure would Authority (MCHA), Madison County, NC. 24 CFR 982.503(c)(5) states that the total enable the SCSHC to manage its Housing Nature of Requirement: HUD’s regulation population of a HUD-approved exception Choice Voucher program within allocated at 24 CFR 982.505(c)(3) states that, if the areas in an FMR area may not include more budget authority and avoid the termination of amount on the payment standard schedule is than 50 percent of the population of the FMR HAP contracts due to insufficient funding. decreased during the term of the housing area. Contact: Laure Rawson, Director, Housing assistance payments (HAP) contract, the Granted By: Sandra B. Henriquez, Assistant Voucher Management and Operations lower payment standard amount generally Secretary for Public and Indian Housing. Division, Office of Public Housing and must be used to calculate the monthly HAP Date Granted: September 15, 2012. Voucher Programs, Office of Public and for the family beginning on the effective date Reason Waived: These waivers were Indian Housing, Department of Housing and of the family’s second regular reexamination granted because of a shock to the rental Urban Development, 451 Seventh Street SW., following the effective date of the decrease. housing market in the SCHA FMR area Room 4216, Washington, DC 20410, Granted By: Sandra B. Henriquez, Assistant caused by increased economic activity due to telephone (202) 708–0477. Secretary for Public and Indian Housing. natural resource exploration. • Regulation: 24 CFR 982.505(c)(3). Date Granted: July 16, 2012. Contact: Laure Rawson, Director, Housing Project/Activity: Town of Portsmouth Reason Waived: This waiver was granted Voucher Management and Operations Housing Commission (TPHC), Portsmouth, because this cost-saving measure would Division, Office of Public Housing and RI. enable the MCHA to manage its Housing Voucher Programs, Office of Public and Nature of Requirement: HUD’s regulation Choice Voucher program within allocated Indian Housing, Department of Housing and at 24 CFR 982.505(c)(3) states that, if the budget authority and avoid the termination of Urban Development, 451 Seventh Street SW., amount on the payment standard schedule is HAP contracts due to insufficient funding. Room 4216, Washington, DC 20410, decreased during the term of the housing Contact: Laure Rawson, Director, Housing telephone (202) 708–0477. assistance payments (HAP) contract, the Voucher Management and Operations • Regulation: 24 CFR 982.503(c), lower payment standard amount generally Division, Office of Public Housing and 982.503(c)(4)(ii) and 982.503(c)(5). must be used to calculate the monthly HAP Voucher Programs, Office of Public and Project/Activity: McHenry/Pierce County for the family beginning on the effective date Indian Housing, Department of Housing and Housing Authority (MPCHA), Pierce County, of the family’s second regular reexamination Urban Development, 451 Seventh Street SW., ND. ND. following the effective date of the decrease. Room 4216, Washington, DC 20410, Nature of Requirement: HUD’s regulation Granted By: Sandra B. Henriquez, Assistant telephone (202) 708–0477. at 24 CFR 982.503(c) establishes the Secretary for Public and Indian Housing. • Regulation: 24 CFR 982.505(c)(3). Date Granted: July 2, 2012. methodology for establishing exception Project/Activity: Marshall County Housing Reason Waived: This waiver was granted payment standards for an area. HUD’s Authority (MCHA), Marshall County, IN. because this cost-saving measure would regulation at 24 CFR 503(c)(4)(ii) states that Nature of Requirement: HUD’s regulation enable the TPHC to manage its Housing HUD will only approve an exception at 24 CFR 982.505(c)(3) states that, if the Choice Voucher program within allocated amount on the payment standard schedule is payment standard amount after six months budget authority and avoid the termination of decreased during the term of the housing from the date of HUD approval of an HAP contracts due to insufficient funding. assistance payments (HAP) contract, the exception payment standard amount above Contact: Laure Rawson, Director, Housing 110 percent to 120 percent of the published Voucher Management and Operations lower payment standard amount generally fair market rent (FMR). HUD’s regulation at Division, Office of Public Housing and must be used to calculate the monthly HAP 24 CFR 982.503(c)(5) states that the total Voucher Programs, Office of Public and for the family beginning on the effective date population of a HUD-approved exception Indian Housing, Department of Housing and of the family’s second regular reexamination areas in an FMR area may not include more Urban Development, 451 Seventh Street SW., following the effective date of the decrease. than 50 percent of the population of the FMR Room 4216, Washington, DC 20410, Granted By: Sandra B. Henriquez, Assistant area. telephone (202) 708–0477. Secretary for Public and Indian Housing. Granted By: Sandra B. Henriquez, Assistant • Regulation: 24 CFR 982.505(c)(3). Date Granted: July 16, 2012. Secretary for Public and Indian Housing. Project/Activity: Housing Authority of Reason Waived: This waiver was granted Date Granted: September 28, 2012. Douglas County (HADC), Douglas County, because this cost-saving measure would Reason Waived: These waivers were OR. enable the MCHA to manage its Housing granted because of a shock to the rental Nature of Requirement: HUD’s regulation Choice Voucher program within allocated housing market caused by increased at 24 CFR 982.505(c)(3) states that, if the budget authority and avoid the termination of economic activity in the MPCHA FMR area amount on the payment standard schedule is HAP contracts due to insufficient funding. due to natural resource exploration. decreased during the term of the housing Contact: Laure Rawson, Director, Housing Contact: Laure Rawson, Director, Housing assistance payments (HAP) contract, the Voucher Management and Operations Voucher Management and Operations lower payment standard amount generally Division, Office of Public Housing and Division, Office of Public Housing and must be used to calculate the monthly HAP Voucher Programs, Office of Public and Voucher Programs, Office of Public and for the family beginning on the effective date Indian Housing, Department of Housing and Indian Housing, Department of Housing and of the family’s second regular reexamination Urban Development, 451 Seventh Street SW., Urban Development, 451 Seventh Street SW., following the effective date of the decrease. Room 4216, Washington, DC 20410, Room 4216, Washington, DC 20410, Granted By: Sandra B. Henriquez, Assistant telephone (202) 708–0477. telephone (202) 708–0477. Secretary for Public and Indian Housing. • Regulation: 24 CFR 982.505(c)(3). • Regulation: 24 CFR 982.505(c)(3). Date Granted: July 5, 2012. Project/Activity: Smithfield Housing Project/Activity: St. Clair Shores Housing Reason Waived: This waiver was granted Authority (SHA), Smithfield, RI. Commission (SCSHC), St. Clair Shores, MI. because this cost-saving measure would Nature of Requirement: HUD’s regulation Nature of Requirement: HUD’s regulation enable the HADC to manage its Housing at 24 CFR 982.505(c)(3) states that, if the at 24 CFR 982.505(c)(3) states that, if the Choice Voucher program within allocated amount on the payment standard schedule is amount on the payment standard schedule is budget authority and avoid the termination of decreased during the term of the housing decreased during the term of the housing HAP contracts due to insufficient funding. assistance payments (HAP) contract, the assistance payments (HAP) contract, the Contact: Laure Rawson, Director, Housing lower payment standard amount generally lower payment standard amount generally Voucher Management and Operations must be used to calculate the monthly HAP must be used to calculate the monthly HAP Division, Office of Public Housing and for the family beginning on the effective date for the family beginning on the effective date Voucher Programs, Office of Public and of the family’s second regular reexamination of the family’s second regular reexamination Indian Housing, Department of Housing and following the effective date of the decrease. following the effective date of the decrease. Urban Development, 451 Seventh Street SW., Granted By: Sandra B. Henriquez, Assistant Granted By: Sandra B. Henriquez, Assistant Room 4216, Washington, DC 20410, Secretary for Public and Indian Housing. Secretary for Public and Indian Housing. telephone (202) 708–0477. Date Granted: July 16, 2012.
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Reason Waived: This waiver was granted Nature of Requirement: HUD’s regulation Choice Voucher program within allocated because this cost-saving measure would at 24 CFR 982.505(c)(3) states that, if the budget authority and avoid the termination of enable the SHA to manage its Housing amount on the payment standard schedule is HAP contracts due to insufficient funding. Choice Voucher program within allocated decreased during the term of the housing Contact: Laure Rawson, Director, Housing budget authority and avoid the termination of assistance payments (HAP) contract, the Voucher Management and Operations HAP contracts due to insufficient funding. lower payment standard amount generally Division, Office of Public Housing and Contact: Laure Rawson, Director, Housing must be used to calculate the monthly HAP Voucher Programs, Office of Public and Voucher Management and Operations for the family beginning on the effective date Indian Housing, Department of Housing and Division, Office of Public Housing and of the family’s second regular reexamination Urban Development, 451 Seventh Street SW., Voucher Programs, Office of Public and following the effective date of the decrease. Room 4216, Washington, DC 20410, Indian Housing, Department of Housing and Granted By: Sandra B. Henriquez, Assistant telephone (202) 708–0477. Urban Development, 451 Seventh Street SW., Secretary for Public and Indian Housing. • Regulation: 24 CFR 982.505(c)(3). Room 4216, Washington, DC 20410, Date Granted: July 30, 2012. Project/Activity: Jackson County Housing telephone (202) 708–0477. Reason Waived: This waiver was granted Authority (JCHA), Jackson County, IL. • Regulation: 24 CFR 982.505(c)(3). because this cost-saving measure would Nature of Requirement: HUD’s regulation Project/Activity: Monroe County Housing enable the HACB to manage its Housing at 24 CFR 982.505(c)(3) states that, if the Authority (MCHA), Monroe County, WI. Choice Voucher program within allocated amount on the payment standard schedule is Nature of Requirement: HUD’s regulation budget authority and avoid the termination of decreased during the term of the housing at 24 CFR 982.505(c)(3) states that, if the HAP contracts due to insufficient funding. assistance payments (HAP) contract, the amount on the payment standard schedule is Contact: Laure Rawson, Director, Housing lower payment standard amount generally decreased during the term of the housing Voucher Management and Operations must be used to calculate the monthly HAP assistance payments (HAP) contract, the Division, Office of Public Housing and for the family beginning on the effective date lower payment standard amount generally Voucher Programs, Office of Public and of the family’s second regular reexamination must be used to calculate the monthly HAP Indian Housing, Department of Housing and following the effective date of the decrease. for the family beginning on the effective date Urban Development, 451 Seventh Street SW., Granted By: Sandra B. Henriquez, Assistant of the family’s second regular reexamination Room 4216, Washington, DC 20410, Secretary for Public and Indian Housing. following the effective date of the decrease. telephone (202) 708–0477. Date Granted: September 7, 2012. Granted By: Sandra B. Henriquez, Assistant • Regulation: 24 CFR 982.505(c)(3). Reason Waived: This waiver was granted Secretary for Public and Indian Housing. Project/Activity: Norfolk Redevelopment because this cost-saving measure would Date Granted: July 17, 2012. and Housing Authority (NRHA), Norfolk, VA. enable the JCHA to manage its Housing Reason Waived: This waiver was granted Nature of Requirement: HUD’s regulation Choice Voucher program within allocated because this cost-saving measure would at 24 CFR 982.505(c)(3) states that, if the budget authority and avoid the termination of enable the MCHA to manage its Housing amount on the payment standard schedule is HAP contracts due to insufficient funding. Choice Voucher program within allocated decreased during the term of the housing Contact: Laure Rawson, Director, Housing budget authority and avoid the termination of assistance payments (HAP) contract, the Voucher Management and Operations HAP contracts due to insufficient funding. lower payment standard amount generally Division, Office of Public Housing and Contact: Laure Rawson, Director, Housing must be used to calculate the monthly HAP Voucher Programs, Office of Public and Voucher Management and Operations for the family beginning on the effective date Indian Housing, Department of Housing and Division, Office of Public Housing and Urban Development, 451 Seventh Street SW., Voucher Programs, Office of Public and of the family’s second regular reexamination Indian Housing, Department of Housing and following the effective date of the decrease. Room 4216, Washington, DC 20410, Granted By: Sandra B. Henriquez, Assistant telephone (202) 708–0477. Urban Development, 451 Seventh Street SW., • Room 4216, Washington, DC 20410, Secretary for Public and Indian Housing. Regulation: 24 CFR 982.505(c)(3). telephone (202) 708–0477. Date Granted: August 14, 2012. Project/Activity: Williamston Housing • Regulation: 24 CFR 982.505(c)(3). Reason Waived: This waiver was granted Authority (WHA), Williamston, NC. Project/Activity: Delaware County Housing because this cost-saving measure would Nature of Requirement: HUD’s regulation Authority (DCHA), Delaware County, IN. enable the NRHA to manage its Housing at 24 CFR 982.505(c)(3) states that, if the Nature of Requirement: HUD’s regulation Choice Voucher program within allocated amount on the payment standard schedule is at 24 CFR 982.505(c)(3) states that, if the budget authority and avoid the termination of decreased during the term of the housing amount on the payment standard schedule is HAP contracts due to insufficient funding. assistance payments (HAP) contract, the decreased during the term of the housing Contact: Laure Rawson, Director, Housing lower payment standard amount generally assistance payments (HAP) contract, the Voucher Management and Operations must be used to calculate the monthly HAP lower payment standard amount generally Division, Office of Public Housing and for the family beginning on the effective date must be used to calculate the monthly HAP Voucher Programs, Office of Public and of the family’s second regular reexamination for the family beginning on the effective date Indian Housing, Department of Housing and following the effective date of the decrease. of the family’s second regular reexamination Urban Development, 451 Seventh Street SW., Granted By: Sandra B. Henriquez, Assistant following the effective date of the decrease. Room 4216, Washington, DC 20410, Secretary for Public and Indian Housing. Granted By: Sandra B. Henriquez, Assistant telephone (202) 708–0477. Date Granted: September 26, 2012. Secretary for Public and Indian Housing. • Regulation: 24 CFR 982.505(c)(3). Reason Waived: This waiver was granted Date Granted: July 26, 2012. Project/Activity: Brownsville Housing because this cost-saving measure would Reason Waived: This waiver was granted Authority (BHA), Brownsville, TN. enable the WHA to manage its Housing because this cost-saving measure would Nature of Requirement: HUD’s regulation Choice Voucher program within allocated enable the DCHA to manage its Housing at 24 CFR 982.505(c)(3) states that, if the budget authority and avoid the termination of Choice Voucher program within allocated amount on the payment standard schedule is HAP contracts due to insufficient funding. budget authority and avoid the termination of decreased during the term of the housing Contact: Laure Rawson, Director, Housing HAP contracts due to insufficient funding. assistance payments (HAP) contract, the Voucher Management and Operations Contact: Laure Rawson, Director, Housing lower payment standard amount generally Division, Office of Public Housing and Voucher Management and Operations must be used to calculate the monthly HAP Voucher Programs, Office of Public and Division, Office of Public Housing and for the family beginning on the effective date Indian Housing, Department of Housing and Voucher Programs, Office of Public and of the family’s second regular reexamination Urban Development, 451 Seventh Street SW., Indian Housing, Department of Housing and following the effective date of the decrease. Room 4216, Washington, DC 20410, Urban Development, 451 Seventh Street SW., Granted By: Sandra B. Henriquez, Assistant telephone (202) 708–0477. Room 4216, Washington, DC 20410, Secretary for Public and Indian Housing. • Regulation: 24 CFR 982.505(d). telephone (202) 708–0477. Date Granted: August 30, 2012. Project/Activity: Willimantic Housing • Regulation: 24 CFR 982.505(c)(3). Reason Waived: This waiver was granted Authority (WHA), Willimantic, CT. Project/Activity: Housing Authority of the because this cost-saving measure would Nature of Requirement: HUD’s regulation City of Baird (HACB), Baird, TX. enable the BHA to manage its Housing at 24 CFR 982.505(d) states that a public
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housing agency may only approve a higher HUD’s regulation at 24 CFR 982.517(d) Indian Housing, Department of Housing and payment standard for a family as a reasonable requires a public housing agency (PHA) to Urban Development, 451 Seventh Street SW., accommodation if the higher payment use the appropriate utility allowance for the Room 4216, Washington, DC 20410, standard is within the basic range of 90 to size of the dwelling unit actually leased by telephone (202) 708–0477. 110 percent of the fair market rent (FMR) for the family rather than the family unit size as • Regulation: 24 CFR 982.637(a)(2). the unit size. determined by the PHA subsidy standards Project/Activity: Chicago Housing Granted By: Sandra B. Henriquez, Assistant and specified on the voucher. Authority (CHA), Chicago, IL. Secretary for Public and Indian Housing. Granted By: Sandra B. Henriquez, Assistant Nature of Requirement: 24 CFR Date Granted: August 3, 2012. Secretary for Public and Indian Housing. 982.637(a)(2) states that a public housing Reason Waived: The participant, who is Date Granted: August 3, 2012. agency may not commence tenant-based disabled, required an exception payment Reason Waived: These waivers were rental assistance for occupancy of a new unit standard to move to a wheelchair-accessible granted because these cost-saving measures so long as any family member owns any title unit. To provide this reasonable would enable the SHC to manage its Housing or other interest in the prior home. accommodation so the client could move to Choice Voucher program within allocated Granted By: Sandra B. Henriquez, Assistant an accessible unit and pay no more than 40 budget authority and avoid the termination of Secretary for Public and Indian Housing. percent of her adjusted income toward the HAP contracts due to insufficient funding. Date Granted: August 14, 2012. family share, the WHA was allowed to Contact: Laure Rawson, Director, Housing Reason Waived: This waiver was granted approve an exception payment standard that Voucher Management and Operations due to safety concerns under the Violence exceeded the basic range of 90 to 110 percent Division, Office of Public Housing and Against Women Act and to allow the family of the FMR. Voucher Programs, Office of Public and to remain assisted. Contact: Laure Rawson, Director, Housing Indian Housing, Department of Housing and Contact: Laure Rawson, Director, Housing Voucher Management and Operations Urban Development, 451 Seventh Street SW., Voucher Management and Operations Division, Office of Public Housing and Room 4216, Washington, DC 20410, Division, Office of Public Housing and Voucher Programs, Office of Public and telephone (202) 708–0477. Voucher Programs, Office of Public and Indian Housing, Department of Housing and • Regulation: 24 CFR 982.517(b). Indian Housing, Department of Housing and Urban Development, 451 Seventh Street SW., Project/Activity: New York City Urban Development, 451 Seventh Street SW., Room 4216, Washington, DC 20410, Department of Housing Preservation and Room 4210, Washington, DC 20410, telephone (202) 708–0477. Development (NYCDHPD), New York, NY. telephone (202) 708–0477. • Regulation: 24 CFR 982.505(d). Nature of Requirement: HUD’s regulation • Regulation: 24 CFR 983.253(b). Project/Activity: Little Rock Housing at 24 CFR 982.517(b) requires that utility Project/Activity: Louisiana Housing Authority (LRHA), Little Rock, AR. allowance schedules must be determined Authority (LHA), Baton Rouge, LA. Nature of Requirement: HUD’s regulation based on the typical costs of utilities and Nature of Requirement: HUD’s regulation at 24 CFR 982.505(d) states that a public services paid by energy conservative at 24 CFR 983.253(b) states that the project- housing agency may only approve a higher households using normal patterns of based voucher (PBV) contract unit leased to payment standard for a family as a reasonable consumption for the community as a whole. each family must be appropriate for the size accommodation if the higher payment Granted By: Sandra B. Henriquez, Assistant of the family under the public housing standard is within the basic range of 90 to Secretary for Public and Indian Housing. agency’s subsidy standards. 110 percent of the fair market rent (FMR) for Date Granted: July 26, 2012. Granted By: Sandra B. Henriquez, Assistant the unit size. Reason Waived: This waiver was granted to Secretary for Public and Indian Housing. Granted By: Sandra B. Henriquez, Assistant allow NYCDHPD to establish project specific Date Granted: September 5, 2012. Secretary for Public and Indian Housing. utility allowances at a sub-metered building Reason Waived: This waiver was extended Date Granted: August 20, 2012. to ensure the accuracy of typical cost and to allow one-bedroom eligible families to Reason Waived: The spouse of the head of consumption data of utilities in determining lease two-bedroom units based on the household is disabled and the family the gross rent. continued need to house severely disabled required an exception payment standard to Contact: Laure Rawson, Director, Housing households under the LHA’s PBV permanent move to a new unit that met her health Voucher Management and Operations supportive housing program. needs. To provide this reasonable Division, Office of Public Housing and Contact: Laure Rawson, Director, Housing accommodation so the client could be Voucher Programs, Office of Public and Voucher Management and Operations assisted in a new unit and pay no more than Indian Housing, Department of Housing and Division, Office of Public Housing and 40 percent of its adjusted income toward the Urban Development, 451 Seventh Street SW., Voucher Programs, Office of Public and family share, the LRHA was allowed to Room 4216, Washington, DC 20410, Indian Housing, Department of Housing and approve an exception payment standard that telephone (202) 708–0477. Urban Development, 451 Seventh Street SW., exceeded the basic range of 90 to 110 percent • Regulation: 24 CFR 982.517(d). Room 4210, Washington, DC 20410, of the FMR. Project/Activity: Evanston Housing telephone (202) 708–0477. Contact: Laure Rawson, Director, Housing Authority (EHA), Evanston, WY. • Regulation: 24 CFR 984.303(d). Voucher Management and Operations Nature of Requirement: HUD’s regulation Project/Activity: Vermont State Housing Division, Office of Public Housing and at 24 CFR 982.517(d) requires a public Authority (VSHA), Montpelier, VT. Voucher Programs, Office of Public and housing agency (PHA) to use the appropriate Nature of Requirement: HUD’s regulation Indian Housing, Department of Housing and utility allowance for the size of the dwelling at 24 CFR 984.303(d) limits the extension of Urban Development, 451 Seventh Street SW., unit actually leased by the family rather than a family self-sufficiency (FSS) contract by a Room 4216, Washington, DC 20410, the family unit size as determined by the public housing agency to two years beyond telephone (202) 708–0477. PHA subsidy standards and specified on the the initial five-year term of a new unit so • Regulation: 24 CFR 982.505(c)(3) and voucher. long as any family member owns any title or 982.517(d). Granted By: Sandra B. Henriquez, Assistant other interest in the prior home. Project/Activity: Saginaw Housing Secretary for Public and Indian Housing. Granted By: Sandra B. Henriquez, Assistant Commission (SHC), Saginaw, MI. Date Granted: September 10, 2012. Secretary for Public and Indian Housing. Nature of Requirement: HUD’s regulation Reason Waived: This waiver was granted Date Granted: July 26, 2012. at 24 CFR 982.505(c)(3) states that, if the because this cost-saving measure would Reason Waived: This waiver was granted amount on the payment standard schedule is enable the EHA to manage its Housing due to allow the FSS participant to complete decreased during the term of the housing Choice Voucher program within allocated her education and employment goals. An assistance payments (HAP) contract, the budget authority and avoid the termination of additional two years was granted. lower payment standard amount generally HAP contracts due to insufficient funding. Contact: Laure Rawson, Director, Housing must be used to calculate the monthly HAP Contact: Laure Rawson, Director, Housing Voucher Management and Operations for the family beginning on the effective date Voucher Management and Operations Division, Office of Public Housing and of the family’s second regular reexamination Division, Office of Public Housing and Voucher Programs, Office of Public and following the effective date of the decrease. Voucher Programs, Office of Public and Indian Housing, Department of Housing and
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Urban Development, 451 Seventh Street SW., Federal Information Relay Service ADDRESSES: A copy of the decision may Room 4210, Washington, DC 20410, (FIRS) at 1–800–877–8339 to contact the be obtained from: Bureau of Land telephone (202) 708–0477. BLM during normal business hours. In Management, Alaska State Office, 222 [FR Doc. 2012–29128 Filed 12–4–12; 8:45 am] addition, the FIRS is available 24 hours West Seventh Avenue, #13, Anchorage, BILLING CODE 4210–67–P a day, 7 days a week, to leave a message Alaska 99513–7504. or question with the BLM. The BLM FOR FURTHER INFORMATION CONTACT: The will reply during normal business BLM by phone at 907–271–5960 or by DEPARTMENT OF THE INTERIOR hours. email at [email protected]. Dina L. Torres, Persons who use a Telecommunications Bureau of Land Management Device for the Deaf (TDD) may call the Land Transfer Resolution Specialist, Branch [AA–9660, AA–9662; LLAK–944000– of Alaska Land Transfer. Federal Information Relay Service (FIRS) at 1–800–877–8339 to contact the L14100000–HY0000–P] [FR Doc. 2012–29383 Filed 12–4–12; 8:45 a.m.] BLM during normal business hours. In Alaska Native Claims Selection BILLING CODE 4310–JA–P addition, the FIRS is available 24 hours a day, 7 days a week, to leave a message AGENCY: Bureau of Land Management, or question with the BLM. The BLM Interior. DEPARTMENT OF THE INTERIOR will reply during normal business ACTION: Notice of decision approving Bureau of Land Management hours. lands for conveyance. [AA–10282, AA–10291, AA–10292, AA– Dina L. Torres, SUMMARY: As required by 43 CFR 10369; LLAK–944000–L14100000–HY0000– Land Transfer Resolution Specialist, Branch 2650.7(d), notice is hereby given that P] of Alaska Land Transfer. the Bureau of Land Management (BLM) [FR Doc. 2012–29379 Filed 12–4–12; 8:45 a.m.] Alaska Native Claims Selection will issue an appealable decision to BILLING CODE 4310–JA–P Calista Corporation. The decision will AGENCY: Bureau of Land Management, approve conveyance of only the surface Interior. estate in certain lands pursuant to the DEPARTMENT OF THE INTERIOR Alaska Native Claims Settlement Act (43 ACTION: Notice of decision approving U.S.C. 1601, et seq). The lands are lands for conveyance. Bureau of Land Management located west of Newtok, Alaska, and SUMMARY: As required by 43 CFR [F–14933–A, F–14933–A2; LLAK965000– contain 0.16 acres. Notice of the 2650.7(d), notice is hereby given that L14100000–KC0000–P] decision will also be published four the Bureau of Land Management (BLM) times in the Anchorage Daily News. will issue an appealable decision to Alaska Native Claims Selection DATES: Any party claiming a property Calista Corporation. The decision will AGENCY: Bureau of Land Management, interest in the lands affected by the approve conveyance of the surface and Interior. decision may appeal the decision within subsurface estates in certain lands ACTION: Notice of Decision Approving the following time limits: pursuant to the Alaska Native Claims Lands for Conveyance. 1. Unknown parties, parties unable to Settlement Act (43 U.S.C. 1601, et seq). be located after reasonable efforts have The lands are located south of SUMMARY: As required by 43 CFR been expended to locate, parties who Napaskiak, Alaska, and contain 6.71 2650.7(d), notice is hereby given that fail or refuse to sign their return receipt, acres. Notice of the decision will also be the Bureau of Land Management (BLM) and parties who receive a copy of the published four times in the Anchorage will issue an appealable decision to decision by regular mail which is not Daily News. Swan Lake Corporation. The decision certified, return receipt requested, shall DATES: Any party claiming a property approves the surface estate in the lands have until January 4, 2013 to file an interest in the lands affected by the described below for conveyance appeal. decision may appeal the decision within pursuant to the Alaska Native Claims 2. Parties receiving service of the the following time limits: Settlement Act (43 U.S.C. 1601, et seq). decision by certified mail shall have 30 1. Unknown parties, parties unable to The subsurface estate in these lands will days from the date of receipt to file an be located after reasonable efforts have be conveyed to Calista Corporation appeal. been expended to locate, parties who when the surface estate is conveyed to 3. Notices of appeal transmitted by fail or refuse to sign their return receipt, Swan Lake Corporation. The lands are electronic means, such as facsimile or and parties who receive a copy of the in the vicinity of Sheldon Point, Alaska, email, will not be accepted as timely decision by regular mail which is not and are located in: filed. certified, return receipt requested, shall Lot 4, U.S. Survey No. 10505, Alaska. Parties who do not file an appeal in have until January 4, 2013 to file an Containing 21.70 acres. accordance with the requirements of 43 appeal. CFR part 4, subpart E, shall be deemed 2. Parties receiving service of the Seward Meridian, Alaska to have waived their rights. decision by certified mail shall have 30 T. 26 N., R. 84 W., ADDRESSES: A copy of the decision may days from the date of receipt to file an Secs. 22 and 23. be obtained from: Bureau of Land appeal. Containing approximately 75 acres. Management, Alaska State Office, 222 3. Notices of appeal transmitted by T. 27 N., R. 84 W., West Seventh Avenue, #13, Anchorage, electronic means, such as facsimile or Secs. 5 to 8, inclusive; Alaska 99513–7504. email, will not be accepted as timely Secs. 17 and 18. FOR FURTHER INFORMATION CONTACT: The filed. Containing 3,092.42 acres. BLM by phone at 907–271–5960 or by Parties who do not file an appeal in T. 26 N., R. 85 W., email at [email protected]. accordance with the requirements of 43 Secs. 2 to 10, inclusive. Persons who use a Telecommunications CFR part 4, subpart E, shall be deemed Containing 4,969.01 acres. Device for the Deaf (TDD) may call the to have waived their rights. T. 28 N., R. 85 W.,
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Secs. 8, 17 and 18. INTERNATIONAL TRADE of the Secretary and at the Containing 898.04 acres. COMMISSION Commission’s Web site. T. 27 N., R. 86 W., Participation in the reviews and Sec. 35. [Investigation Nos. 731–TA–1105–1106 public service list.—Persons, including (Review)] industrial users of the subject Containing approximately 304.98 acres. merchandise and, if the merchandise is Aggregating approximately 9,361 acres. Lemon Juice From Argentina and sold at the retail level, representative Notice of the decision will also be Mexico; Scheduling of Full Five-Year consumer organizations, wishing to published four times in the Anchorage Reviews Concerning the Suspended participate in these reviews as parties Daily News. Investigations on Lemon Juice From must file an entry of appearance with Argentina and Mexico. the Secretary to the Commission, as DATES: Any party claiming a property provided in section 201.11 of the interest in the lands affected by the AGENCY: International Trade Commission’s rules, by 45 days after decision may appeal the decision within Commission. publication of this notice. A party that the following time limits: ACTION: Notice. filed a notice of appearance following publication of the Commission’s notice 1. Unknown parties, parties unable to SUMMARY: The Commission hereby gives be located after reasonable efforts have of institution of the reviews need not notice of the scheduling of full reviews file an additional notice of appearance. been expended to locate, parties who pursuant to section 751(c)(5) of the The Secretary will maintain a public fail or refuse to sign their return receipt, Tariff Act of 1930 (19 U.S.C. 1675(c)(5)) service list containing the names and and parties who receive a copy of the (the Act) to determine whether addresses of all persons, or their decision by regular mail which is not termination of the suspended representatives, who are parties to the certified, return receipt requested, shall investigations on lemon juice from reviews. have until January 4, 2013 to file an Argentina and Mexico would be likely Limited disclosure of business appeal. to lead to continuation or recurrence of proprietary information (BPI) under an 2. Parties receiving service of the material injury within a reasonably administrative protective order (APO) decision by certified mail shall have 30 foreseeable time. For further and BPI service list.—Pursuant to information concerning the conduct of days from the date of receipt to file an section 207.7(a) of the Commission’s these reviews and rules of general appeal. rules, the Secretary will make BPI application, consult the Commission’s gathered in these reviews available to 3. Notices of appeal transmitted by Rules of Practice and Procedure, part authorized applicants under the APO electronic means, such as facsimile or 201, subparts A through E (19 CFR part issued in the reviews, provided that the email will not be accepted as timely 201), and part 207, subparts A, D, E, and application is made by 45 days after filed. F (19 CFR part 207). publication of this notice. Authorized Parties who do not file an appeal in DATES: Effective Date: November 28, applicants must represent interested accordance with the requirements of 43 2012. parties, as defined by 19 U.S.C. 1677(9), who are parties to the reviews. A party CFR part 4, subpart E, shall be deemed FOR FURTHER INFORMATION CONTACT: granted access to BPI following to have waived their rights. Amy Sherman (202–205–3289), Office publication of the Commission’s notice of Investigations, U.S. International ADDRESSES: A copy of the decision may of institution of the reviews need not Trade Commission, 500 E Street SW., be obtained from: Bureau of Land reapply for such access. A separate Management, Alaska State Office, 222 Washington, DC 20436. Hearing- service list will be maintained by the West Seventh Avenue, #13, Anchorage, impaired persons can obtain Secretary for those parties authorized to information on this matter by contacting AK 99513–7504. receive BPI under the APO. the Commission’s TDD terminal on 202– Staff report.—The prehearing staff FOR FURTHER INFORMATION CONTACT: The 205–1810. Persons with mobility report in the reviews will be placed in BLM by phone at 907–271–5960 or by impairments who will need special the nonpublic record on April 26, 2013, email at [email protected]. assistance in gaining access to the and a public version will be issued Persons who use a Telecommunications Commission should contact the Office thereafter, pursuant to section 207.64 of Device for the Deaf (TDD) may call the of the Secretary at 202–205–2000. the Commission’s rules. Federal Information Relay Service General information concerning the Hearing.—The Commission will hold (FIRS) at 1–800–877–8339 to contact the Commission may also be obtained by a hearing in connection with the BLM during normal business hours. In accessing its internet server (http:// reviews beginning at 9:30 a.m. on May addition, the FIRS is available 24 hours www.usitc.gov). The public record for 16, 2013, at the U.S. International Trade a day, 7 days a week, to leave a message these reviews may be viewed on the Commission Building. Requests to or question with the BLM. The BLM Commission’s electronic docket (EDIS) appear at the hearing should be filed in will reply during normal business at http://edis.usitc.gov. writing with the Secretary to the hours. SUPPLEMENTARY INFORMATION: Commission on or before May 10, 2013. Background.—On November 5, 2012, A nonparty who has testimony that may Judy A. Kelley, the Commission determined that aid the Commission’s deliberations may Land Law Examiner, Land Transfer responses to its notice of institution of request permission to present a short Adjudication 965 Branch. the subject five-year reviews were such statement at the hearing. All parties and [FR Doc. 2012–29380 Filed 12–4–12; 8:45 am] that full reviews pursuant to section nonparties desiring to appear at the BILLING CODE 4310–JA–P 751(c)(5) of the Act should proceed (77 hearing and make oral presentations FR 67833, November 14, 2012). A record should attend a prehearing conference of the Commissioners’ votes, the to be held at 9:30 a.m. on May 14, 2013, Commission’s statement on adequacy, at the U.S. International Trade and any individual Commissioner’s Commission Building. Oral testimony statements are available from the Office and written materials to be submitted at
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the public hearing are governed by either the public or BPI service list), and INTERNATIONAL TRADE sections 201.6(b)(2), 201.13(f), 207.24, a certificate of service must be timely COMMISSION and 207.66 of the Commission’s rules. filed. The Secretary will not accept a [Investigation No. 337–TA–790] Parties must submit any request to document for filing without a certificate present a portion of their hearing of service. Certain Coenzyme Q10 Products and testimony in camera no later than 7 Authority: These reviews are being Methods of Making Same; Commission business days prior to the date of the Determination (1) To Review and hearing. conducted under authority of title VII of the Tariff Act of 1930; this notice is published Affirm With Respect To Two Issues, (2) Written submissions.—Each party to To Review and Vacate With Respect To the reviews may submit a prehearing pursuant to section 207.62 of the One Issue, and (3) Not To Review the brief to the Commission. Prehearing Commission’s rules. Remainder of the Final Initial briefs must conform with the provisions By order of the Commission. Determination of the Administrative of section 207.65 of the Commission’s Issued: November 29, 2012. Law Judge; Termination of the rules; the deadline for filing is May 7, Lisa R. Barton, Investigation 2013. Parties may also file written Acting Secretary to the Commission. testimony in connection with their AGENCY: U.S. International Trade presentation at the hearing, as provided [FR Doc. 2012–29263 Filed 12–4–12; 8:45 am] Commission. BILLING CODE 7020–02–P in section 207.24 of the Commission’s ACTION: Notice. rules, and posthearing briefs, which must conform with the provisions of SUMMARY: Notice is hereby given that section 207.67 of the Commission’s INTERNATIONAL TRADE the U.S. International Trade rules. The deadline for filing COMMISSION Commission has determined the posthearing briefs is May 28, 2013; following: (1) To review and affirm (a) witness testimony must be filed no later [Investigation No. 731–TA–893 (Second the finding that Mitsubishi Gas than three days before the hearing. In Review)] Chemical Co., Inc. (‘‘MGC’’) does not addition, any person who has not satisfy the 70 mole % limitation, and (b) entered an appearance as a party to the Honey From China; Determination the claim construction of ‘‘inert gas reviews may submit a written statement atmosphere’’ with respect to the of information pertinent to the subject of On the basis of the record 1 developed asserted claims of U.S. Patent No. the reviews on or before May 28, 2013. in the subject five-year review, the 7,910,340 (‘‘the ‘340 patent’’); (2) to On June 28, 2013, the Commission will United States International Trade review and vacate the finding that make available to parties all information Commission (Commission) determines, certain asserted claims of the ‘340 on which they have not had an pursuant to section 751(c) of the Tariff patent are not invalid under the new opportunity to comment. Parties may Act of 1930 (19 U.S.C. 1675(c)), that matter prohibition of 35 U.S.C. 132; and submit final comments on this revocation of the antidumping duty (3) not to review the remainder of the information on or before July 2, 2013, order on honey from China would be final initial determination of the but such final comments must not likely to lead to continuation or administrative law judge (‘‘ALJ’’) in the contain new factual information and recurrence of material injury to an above-captioned investigation. This must otherwise comply with section industry in the United States within a action terminates the investigation. 207.68 of the Commission’s rules. All reasonably foreseeable time. FOR FURTHER INFORMATION CONTACT: written submissions must conform with James A. Worth, Office of the General the provisions of section 201.8 of the Background Counsel, U.S. International Trade Commission’s rules; any submissions Commission, 500 E Street SW., that contain BPI must also conform with The Commission instituted this Washington, DC 20436, telephone (202) the requirements of sections 201.6, review on July 2, 2012 (77 FR 39257) 205–3065. Copies of non-confidential 207.3, and 207.7 of the Commission’s and determined on October 5, 2012 that documents filed in connection with this rules. Please be aware that the it would conduct an expedited review investigation are or will be available for Commission’s rules with respect to (77 FR 65204, October 25, 2012). inspection during official business electronic filing have been amended. The Commission transmitted its The amendments took effect on hours (8:45 a.m. to 5:15 p.m.) in the determination in this review to the November 7, 2011. See 76 FR 61937 Office of the Secretary, U.S. Secretary of Commerce on November (Oct. 6, 2011) and the newly revised International Trade Commission, 500 E Commission’s Handbook on E-Filing, 29, 2012. The views of the Commission Street SW., Washington, DC 20436, available on the Commission’s Web site are contained in USITC Publication telephone (202) 205–2000. General at http://edis.usitc.gov. 4364 (November 2012), entitled Honey information concerning the Commission Additional written submissions to the from China: Investigation No. 731–TA– may also be obtained by accessing its Commission, including requests 893 (Second Review). Internet server (http://www.usitc.gov). The public record for this investigation pursuant to section 201.12 of the By order of the Commission. may be viewed on the Commission’s Commission’s rules, shall not be Issued: November 29, 2012. electronic docket (EDIS) at http:// accepted unless good cause is shown for Lisa R. Barton, accepting such submissions, or unless edis.usitc.gov. Hearing-impaired the submission is pursuant to a specific Acting Secretary to the Commission. persons are advised that information on request by a Commissioner or [FR Doc. 2012–29290 Filed 12–4–12; 8:45 am] this matter can be obtained by Commission staff. BILLING CODE 7020–02–P contacting the Commission’s TDD In accordance with sections 201.16(c) terminal on (202) 205–1810. and 207.3 of the Commission’s rules, SUPPLEMENTARY INFORMATION: The each document filed by a party to the 1 The record is defined in sec. 207.2(f) of the Commission instituted this investigation reviews must be served on all other Commission’s Rules of Practice and Procedure (19 on July 19, 2011, based on a complaint parties to the reviews (as identified by CFR 207.2(f)). filed on June 17, 2011, by Kaneka Corp.
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of Osaka, Japan (‘‘Kaneka’’), and not invalid under the new matter possession of the PCC facility into a supplemented on June 24 and 27, 2011. prohibition of 35 U.S.C. § 132; and (3) trust to resolve the United States’ 76 FR 42729 (July 19, 2011). The not to review the remainder of the final CERCLA Claim. The Stipulated complaint alleged violations of Section initial determination of the ALJ, Judgment and Permanent Injunction 337 of the Tariff Act of 1930, as including the ALJ’s finding that certain provide for a $100,000 civil penalty to amended, 19 U.S.C. 1337, in the sale for asserted claims of ‘340 patent are not be adjudged against PCC, and the entry importation, importation, or sale after invalid under 35 U.S.C. 112. This action of a permanent injunction against PCC importation into the United States of terminates the investigation. to resolve the United States’ RCRA certain coenzyme Q10 products by This action is taken under the Claims. reason of infringement of certain claims authority of section 337 of the Tariff Act of the ‘340 patent. The Commission’s of 1930, as amended (19 U.S.C. 1337), The publication of this notice opens notice of investigation named as and of section 210.42(h) of the a period for public comment on the respondents Zhejiang Medicine Co., Ltd. Commission’s Rules of Practice and proposed Consent Decree and of Zhejiang, China; ZMC–USA, LLC of Procedure (19 CFR 210.42(h)). Stipulated Judgment and Permanent The Woodlands, Texas; Xiamen Injunction. Comments should be By order of the Commission. Kingdomway Group Co. of Xiamen, Issued: November 29, 2012. addressed to the Assistant Attorney China; Pacific Rainbow International Lisa R. Barton, General, Environment and Natural Inc. of City of Industry, California; MGC Resources Division, and should refer to Acting Secretary to the Commission. of Tokyo, Japan; Maypro Industries, Inc. United States versus Parish Chemical of Purchase, New York (‘‘Maypro Inc.’’); [FR Doc. 2012–29311 Filed 12–4–12; 8:45 am] Company and Uintah Pharmaceutical and Shenzhou Biology & Technology BILLING CODE 7020–02–P Corporation, Civil Action No. 09–804., Co., Ltd. of Beijing, China. D.J. Ref. No. 90–11–2–1215/1. All On January 12, 2012, the Commission comments must be submitted no later issued notice of its determination not to DEPARTMENT OF JUSTICE than thirty (30) days after the review an ID granting a motion to publication date of this notice. amend the complaint and notice of Notice of Lodging of Proposed investigation to add a new respondent, Consent Decree under the Comments may be submitted either by Mitsubishi Gas Chemical America, Inc. Comprehensive Environmental email or by mail: of New York, New York and to replace Response, Compensation and Liability Act and Proposed Stipulated To submit respondent Maypro Inc. with Maypro comments: Send them to: Industries, LLC of Purchase, New York. Judgment and Permanent Injunction An evidentiary hearing was held from Under the Resource Conservation and By e-mail .... pubcomment- July 9–13, 2012. Recovery Act [email protected]. On September 27, 2012, the presiding By mail ...... Assistant Attorney General, ALJ (Judge Rogers) issued a final initial On November 28, 2012, the U.S. DOJ—ENRD, P.O. Box determination (‘‘final ID’’ or ‘‘ID’’) Department of Justice lodged a proposed 7611, Washington, DC finding no violation of section 337. The Consent Decree and Stipulated 20044–7611. ALJ also issued a recommended Judgment and Permanent Injunction with the United States District Court for determination on remedy and bonding. During the public comment period, Specifically, the ALJ found that the the District of Utah in the lawsuit entitled United States v. Parish the proposed Consent Decree and imported products were not shown to be Stipulated Judgment and Permanent manufactured by processes covered by Chemical Company and Uintah Injunction may be examined and the asserted claims. The ALJ found that Pharmaceutical Corporation, Civil downloaded at this Justice Department Kaneka satisfied the economic prong of Action No. 09–804. This action involves the claim of the Web site: http://www.usdoj.gov/enrd/ the domestic industry requirement but _ failed to satisfy the technical prong of United States under Section 107(a) of Consent Decrees.html. We will provide the domestic industry requirement. The the Comprehensive Environmental a paper copy of the proposed Consent ALJ found that the asserted claims were Response, Compensation and Liability Decree and Stipulated Judgment and not shown to be invalid. Act (‘‘CERCLA’’), 42 U.S.C. 9607(a), for Permanent Injunction upon written On October 10, 2012, Kaneka filed a reimbursement of its unreimbursed request and payment of reproduction petition for review of the final ID. The response costs (‘‘CERCLA Claim’’) costs. Please mail your request and Respondents and the Commission incurred in response to releases and/or payment to: threatened releases of hazardous investigative attorney (‘‘IA’’) filed Consent Decree Library, U.S. DOJ— contingent petitions for review. On substances at the Parish Chemical ENRD, P.O. Box 7611, Washington, October 18, 2012, each party filed a Company (‘‘PCC’’) chemical DC 20044–7611. response (with Kaneka filing separate manufacturing facility located at 145 N. responses to the Respondents and the Geneva Road, Vineyard Utah (‘‘PCC Please enclose a check or money order IA). Facility’’). This action also involves for $13.75 (25 cents per page Having reviewed the final ID, the multiple claims of the United States reproduction cost) payable to the United petitions for review, and the record in under the Resource Conservation and States Treasury. this investigation, the Commission has Recovery Act, as amended, 42 U.S.C. determined the following: (1) To review 6901 et seq. (‘‘RCRA’’), to obtain Robert Brook, and affirm (a) the finding that MGC does injunctive relief and civil penalties Assistant Section Chief, Environmental not satisfy the 70 mole % limitation, (‘‘RCRA Claims’’) for multiple violations Enforcement Section, Environment and and (b) the claim construction of ‘‘inert of RCRA at the PCC Facility. The Natural Resources Division. gas atmosphere’’ with respect to the Consent Decree provides for the entry of [FR Doc. 2012–29265 Filed 12–4–12; 8:45 am] asserted claims of the ‘340 patent; (2) to a judgment in the amount of BILLING CODE 4410–15–P review and vacate the finding that the $908,348.57 against the Defendants, and asserted claims of the ‘340 patent are obligates the Defendants to transfer
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DEPARTMENT OF JUSTICE maintained.’’ 21 CFR 1301.12(b)(3) situation that would be more confusing (emphasis added). to a respondent than to sit in a Drug Enforcement Administration Respondent does not dispute that ‘‘he courtroom and hear testimony of the [Docket No. 11–73] dispensed controlled substances at his Government’s expert advocating the unregistered Avon office,’’ Resp. Exc. at very position for which [his] registration Jeffery J. Becker, D.D.S., and Jeffery J. 11, and he admitted in his testimony is in jeopardy.’’ Id. at 13–14. Thus, Becker, D.D.S., Affordable Care that he had continued to do so up until Respondent argues that the ALJ’s Decision and Order the date of the hearing. Tr. 764–65. findings that he ‘‘flagrantly’’ violated Respondent maintains, however, that the law and that he has failed to On December 22, 2011, Chief upon being informed during the acknowledge wrongdoing and establish Administrative Law Judge John J. December 2009 DEA inspection that he his future compliance are unsupported Mulrooney, II, (hereinafter, ALJ), issued could not store controlled substances at by the record and that the recommended the attached Recommended Decision.1 the Avon office, he discontinued storing sanction of revocation is unwarranted. Respondent filed Exceptions to the controlled substances there. Resp. Exc. Id. at 14. ALJ’s Decision, and the Government at 11. As for why he did not cease The argument is not persuasive filed a Response to Respondent’s administering controlled substances at because the determination of the Exceptions. his Avon office, Respondent contends meaning of the CSA and Agency Having reviewed the record in its that he ‘‘believed that the critical issue regulations is not within the proper role entirety, including Respondent’s was where the controlled substances of expert witnesses. Rather, it is a Exceptions, I have decided to adopt the were ‘stored’ as opposed to function vested in the Agency and the ALJ’s recommended rulings, factual ‘administered.’ ’’ Id. (quoting Tr. 764– Federal Courts. See Chevron v. NRDC, findings, legal conclusions and decision 65). 467 U.S. 837 (1984). Most importantly, except as discussed below. A discussion To buttress the latter contention, Respondent cannot credibly claim to of Respondent’s Exceptions follows. Respondent cites the testimony of the have been confused as to the requirement that he obtain a separate Respondent’s Exceptions Government’s Expert witness, a D.D.S., whose practice is limited to providing registration for his Avon practice as In his Exceptions, Respondent raises intravenous (IV) sedation services for both the Act itself and its implementing five main contentions. Having the patients of other dentists regulations provide clear notice as to considered his Exceptions, and finding ‘‘throughout the Dayton-Cincinnati what is required. See United States v. one of them to be of merit, I nonetheless area,’’ as well as at a local hospital. GX Clinical Leasing Serv., Inc., 925 F.2d conclude that the record supports the 14; Tr. 23–24. In particular, Respondent 120, 123 (5th Cir. 1991) (‘‘A physician ALJ’s recommended order of revocation. notes that the Government’s Expert of ordinary means and intelligence would understand that the federal Exception 1—Respondent’s Violation of testified that he has only one registration provisions apply to each the Separate Registration Requirement registration, and that he does not obtain important or consequential place of Does Not Support the Revocation of His registrations for the numerous offices of business where the physician distribute Registration other dentists at which he provides anesthesia to patients. Tr. 103. Citing controlled substances. It is sufficiently The evidence shows that Respondent the Government’s Expert testimony that clear that the application of the maintains a dental practice at two he is an expert on the state and federal provisions is not limited to a single offices, which are located in Norwalk regulations pertaining to controlled important or consequential place of and Avon, Ohio, each of which is open substances, as well as that he also business where controlled substances two days a week. However, Respondent teaches IV sedation and the standards of are distributed.’’). As set forth above, the CSA’s holds a registration only for the Norwalk the dental profession to other dental registration provision states in relevant office, even though the evidence shows practitioners in Ohio, Respondent part that ‘‘[a] separate registration shall that he routinely performs procedures, asserts that revoking his registration be required at each principal place of which require that he administer cannot be reconciled with the Expert’s business or professional practice where controlled substances to his patients, at testimony that a registration is only the applicant manufactures, distributes, both offices. necessary ‘‘where you order your drugs, or dispenses controlled substances.’’ 21 Under 21 U.S.C. 822(e), ‘‘[a] separate store your drugs and keep the records of U.S.C. 822(e) (emphasis added). registration shall be required at each disposal and usage.’’ Tr. 103; Resp. Exc. Likewise, the CSA defines the term principal place of business or at 13. dispense to ‘‘mean[] to deliver a professional practice where the While Respondent now concedes that controlled substances to an ultimate applicant manufactures, distributes, or both his belief and that of the Expert user * * * by * * * a practitioner, dispenses controlled substances or list I were mistaken, he contends that the including the * * * administering of a chemicals.’’ See also 21 CFR 1301.12(a). Expert’s testimony ‘‘support[s] the controlled substance.’’ Id. § 802(10). While, by regulation, DEA has exempted reasonableness of [his] mistake in fact several categories of locations from the Thus, the statute provides clear notice relating to the regulatory that it is the activity of dispensing, registration requirement, with respect to requirements.’’ 2 Resp. Exc. at 13. practitioners, the exemption is limited which includes the administration of According to Respondent, his violations controlled substances, itself, which to ‘‘[a]n office used by a practitioner of the CSA were the ‘‘result of his * * * where controlled substances are triggers the requirement, in the case of confusion and apparent a practitioner, of obtaining a separate prescribed but neither administered nor misunderstanding of the law.’’ Id. otherwise dispensed as a regular part of registration for a principal place of However, Respondent then contends professional practice. See 21 U.S.C. the professional practice of the that ‘‘it is difficult to comprehend a practitioner at such office, and where no 822(e). And to similar effect, the text of 21 CFR 1301.12(b)(3), which uses the supplies of controlled substances are 2 Of course, this is not a mistake of fact at all as Respondent then states that his violations were conjunction ‘‘and,’’ makes clear that the 1 All citations to the ALJ’s Recommended caused in part by his ‘‘apparent misunderstanding exemption from registration for a Decision are to the slip opinion as originally issued. of the law.’’ Resp. Exc. 13. practitioner’s office obtains only when
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two conditions are met: (1) That the 1192 (2010) (quoting 12 Oxford English Inspector. Resp. Exc. at 17. However, practitioner only engages in the Dictionary 495 (2d ed. 1989)), by while the ALJ found that Respondent prescribing of controlled substances and inserting the word ‘‘each’’ into the violated 21 CFR 1301.75(b) by leaving ‘‘neither administer[s] nor otherwise statutory text, Congress clearly was controlled substances (unattended) in dispense[s]’’ at the office, and (2) that aware that practitioners frequently open storage bins in the sterilization the practitioner does not maintain any maintain multiple places of professional room at the Avon office (rather than supplies of controlled substances at the practice and manifested its intent that keeping them in a securely-locked and office. such an office be registered if the substantially-constructed cabinet), there To the extent Respondent suggests practitioner administers controlled is also credible evidence that that the Expert’s testimony establishes substances at the location. Any other Respondent had changed his storage that there is widespread confusion interpretation would undermine practices at the time of the December among practitioners as to the scope of Congress’ purpose of requiring 2009 DEA inspection and that he was the registration requirements, the registration to ensure that those then in compliance with the above argument is unavailing. The clarity of locations at which controlled substance regulation. See Tr. 595. The ALJ did not, the Act and the Agency’s regulations is activities take place have adequate however, discuss this evidence in his not determined by whether there are security and procedures in place to decision. Had Respondent’s violations even a substantial number of members prevent the diversion of drugs from of 21 CFR 1301.75 been the only of the dental profession in Ohio who are their legitimate use. allegations sustained on the record, they confused as to the scope of the Nor is there any merit to Respondent’s would not support the sanction registration requirements. Rather, it is contention that the ALJ erred in finding recommended by the ALJ. However, as determined by assessing whether the that he ‘‘flagrantly’’ violated the explained above, they are not the only text of the Act and regulations provide registration provision. Resp. Exc. at 14. violations proved. fair notice such that a person of Even if at the time of the December 2009 ordinary intelligence can understand inspection, the Agency’s Investigator Exception 3—The Provisions of 21 CFR when a separate registration is required. told him only that he could not store 1307.21(a) Are Not Mandatory, Are Void See FCC v. Fox Television Stations, Inc., controlled substances at his Avon office for Vagueness, and Are Inapplicable in 132 S.Ct. 2307, 2310 (2012) (quoting and did not mention that he was also Light of State Regulation United States v. Williams, 553 U.S. 285, prohibited from administering drugs at As noted above, the record shows that 304 (2008)). The Act and regulations this location because it was not pass this test with flying colors. registered, subsequently, the Show Respondent administered controlled There is likewise no merit to Cause Order specifically cited 21 CFR substances intravenously to patients and Respondent’s contention that the 1301.12, the provision which makes that he disposed of the excess drug by Government’s position is plain that he was required to hold a squirting it down the sink. Respondent ‘‘irreconcilable’’ with the Expert’s registration at this Office. ALJ Ex. 1, at did not, however, notify the Agency of acknowledgement that he does not hold 2. Moreover, in its Pre-Hearing this practice and did not complete DEA 3 registrations at each of the numerous Statement, the Government provided Form 41 for these disposals. The offices where he administers controlled notice that it intended to establish that Government thus alleges that substances. Resp. Exc. at 12–13. The Respondent’s Avon office ‘‘is not Respondent violated 21 CFR 1307.21(a), CSA’s registration requirement applies registered with DEA to handle because he ‘‘did not provide prior only to ‘‘each principal place of * * * controlled substances[,]’’ and that ‘‘DEA notification to DEA of such disposal as professional practice * * * where learned that Respondent administered required by’’ this regulation. ALJ Ex. 1, controlled substances are * * * controlled substances to patients from at 2. dispensed by a person.’’ 21 CFR his Avon dental practice.’’ ALJ Ex. 5, at 1301.12(a) (emphasis added). While the 7. Yet even after being provided with 3 Other evidence of record relevant to the issue record establishes that the Government’s notice that the Government was alleging includes an affidavit of Dr. Joel Weaver, a dentist anesthesiologist and Professor Emeritus at The Ohio Expert travels to numerous offices of that he was in violation of the State University Medical Center, who has practiced other dentists to provide anesthesia registration provision, Respondent for thirty-five years. RX J, at 1. In his affidavit, Dr. services for their patients, he does so on acknowledged that he had administered Weaver stated that ‘‘[t]he standard practice among an apparently as-needed and random controlled substances at his Avon office dentists in Ohio and most likely in most states is for the dentist to log the dose of the drug taken from basis, and there is no evidence that he as recently as the week before the his inventory, record the dose given to the patient maintains a place of professional hearing. Tr. 764–65. This is more than in the patient sedation/anesthesia record and record practice, let alone a principal one, at enough to establish that Respondent any ‘wasted’ dose in either the drug log, the any of these locations. Nor is there any flagrantly violated the statute, and in the patient’s record or both as soon as the case is concluded.’’ Id. at 2. He also explained that ‘‘[t]he evidence as to whether the dentists who absence of mitigating evidence, it is ‘wasted’ drug is typically squirted into the sink call on him to provide anesthesia to sufficiently egregious to support the * * *, into the trash or sharps container, or into the their patients themselves have DEA revocation of his registration. soil of potted plants as a source of nitrogen- registrations. See 21 CFR 1301.22(b). containing fertilizer.’’ Id. By contrast, the evidence shows that Exception 2—Respondent’s Violation of According to Dr. Weaver, in titrating the dose of Respondent maintains two offices, at 21 CFR 1301.75(b) Does Not Support the sedation for each patient, ‘‘there is often some Revocation of His Registration amount of drug remaining in syringes since the which he regularly both sees and dose is individualized for each patient and [the] administers controlled substances in the Respondent also argues that the length of the operation[,] and cannot be predicted.’’ course of treating patients. evidence pertaining to the storage of Id. He then explained that ‘‘[t]he safest and most convenient method of disposing of these drugs is Notwithstanding that the word controlled substances at his Avon immediate disposal and then placing the ‘‘principal’’ ordinarily means the ‘‘most location in violation of 21 CFR 1301.75 contaminated syringes in a sharps container.’’ Id. important, consequential, or does not ‘‘reflect an intentional Dr. Weaver further stated that in Ohio alone, there influential,’’ Webster’s Third New disregard for security,’’ and that the ALJ are approximately 500 dentists who are licensed to perform intravenous sedation and that each of these International Dictionary 1802 (1993), or ignored evidence of steps he took to physicians could perform twenty sedation the ‘‘main, prominent’’ or ‘‘leading,’’ see comply when the adequacy of security procedures each day for a total of 10,000 procedures Hertz Corp. v. Friend, 130 S.Ct. 1181, was questioned by a State Board each day. Id.
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While Respondent admits that he Electric Co. v. EPA, 53 F.3d 1324, 1328– The ALJ rejected Respondent’s disposed of controlled substances in 29 (D.C. Cir. 1995); Diamond Roofing contention that the regulation does not this manner, he argues that the Co. v. OSHRC, 528 F.2d 645, 649 (5th impose a mandatory requirement of regulation does not set forth mandatory Cir. 1976) Nor is there any no doubt that notification, reasoning that its language procedures for disposing of controlled the Government’s obligation to provide ‘‘[n]ecessarily * * * implies that a substances. Resp. Exc. at 18–19. ‘‘fair notice’’ of what conduct is person who does not request assistance Alternatively, he argues that the prohibited applies to licensing to dispose of a controlled substance regulation ‘‘is void for vagueness,’’ id. at proceedings as well. Indeed, this has does not have authority to dispose of 19, and that the regulation, when been the law for more than forty years. such substance. This is a classic coupled with the instructions provided See Trinity Broadcasting of Florida, Inc., example of permissive language which on DEA Form 41, create ‘‘an alarming v. FCC, 211 F.3d 618, 628 (D.C. Cir. ‘plainly carr[ies] a restrictive morass of confusion’’ as to what it 2000); Radio Athens, Inc., v. FCC, 401 meaning.’ ’’ Order Regarding requires. Id. at 21. As support for his F.2d 398, 404 (D.C. Cir. 1968). Thus, in Respondent’s Multiple Motions For contention, Respondent points to the Trinity Broadcasting, the D.C. Circuit Appropriate Relief (ALJ Ex. 25), at 10 testimony of the Government’s Expert recognized that the denial of an (quoting Forest Grove School Dist. v. that, he too, disposes of a drug, in application to renew a license is ‘‘a T.A., 557 U.S. 230, 254 n.1 (2009) excess of what he administered to a severe penalty,’’ and ‘‘held that ‘in the (Souter, J., dissenting)). The ALJ further patient, by squirting it down the sink, absence of notice—for example, where reasoned that ‘‘[u]nder a plain reading and does so without obtaining the regulation is not sufficiently clear to of the regulation, a registrant is not permission from the Agency. Id. at 22– warn a party about what is expected of required to dispose of controlled 23. Respondent further points to the it—an agency may not deprive a party substances, but once he or she elects to testimony of an Agency Investigator that of property by imposing civil or do so, such disposal may not be made ‘‘a large portion’’ of the practices he has criminal liability.’ ’’ Id. (quoting G.E. v. without authorization from the specified inspected dispose of excess drugs by EPA, 53 F.3d at 1328–29). Accordingly, DEA official.’’ Id. at 11. squirting them into either the sink or if the regulation (or other I conclude, however, that the toilet.4 Id. at 24 (quoting Tr. 631). pronouncements interpreting it) do not regulation’s text does not provide Responding to Respondent’s provide ‘‘fair notice’’ of what is sufficient clarity to conclude that it contention that the regulation does not required, Respondent cannot be deemed provides a mandatory procedure which provide fair notice, the Government to have violated it. must be followed in all instances in argues that the various cases he relies on The starting point for resolving these which a person seeks to dispose of a ‘‘are applicable to criminal or civil contentions is, of course, the language of controlled substance rather than simply proceeding[s], but inapplicable to the regulation. The regulation, which a mechanism by which a person who regulated persons subject to the was one of the original regulations requires assistance to dispose of a licensing requirement set forth by an promulgated by DEA’s predecessor, the controlled substance can obtain such administrative agency or provision of Bureau of Narcotics and Dangerous assistance. Moreover, while the ALJ’s the Administrative Procedures [sic] Drugs, see 36 FR 7802 (1971) (then interpretation might be permissible, it Act.’’ Gov. Resp. to Exceptions, at 6–7. codified at 21 CFR 307.21), provides, in rests on the unsupported premise that However, contrary to the Government’s relevant part, that: authority must always be obtained to understanding, just last term the (a) Any person in possession of any lawfully dispose of a controlled Supreme Court invalidated an FCC substance. However, neither the order finding various broadcasters liable controlled substance and desiring or required to dispose of such substance may request Government, nor the ALJ, undertook to for violating that Agency’s indecency assistance from the Special Agent in Charge analyze the CSA and explain why this policy, because the FCC failed to of the Administration in the area in which conclusion is required. provide fair notice that their conduct the person is located for authority and Significantly, unlike most (if not all) would be deemed a violation. FCC v. instructions to dispose of such substance. other DEA regulations which are Fox Television Stations, Inc., 132 S.Ct. The request should be made as follows: indisputably mandatory, the relevant 2307 (2012). In FCC v. Fox, the Court (1) If the person is a registrant, he/she shall list the controlled substance or substances text uses the word ‘‘may’’ rather than reiterated that the ‘‘requirement of ‘‘shall’’ to modify the words ‘‘request clarity in regulation is essential to the which he/she desires to dispose of on DEA Form 41, and submit three copies of that assistance.’’ As the Supreme Court has protections provided by the Due Process form to the Special Agent in Charge in his/ explained, ‘‘[t]he word ‘may’ Clause,’’ and that a ‘‘punishment fails to her area[.] customarily connotes discretion,’’ and comply with due process if the statute 21 CFR 1307.21(a) (emphasis added).5 this is particularly true where, as here, or regulation under which it is obtained an enactment also uses the word ‘fails to provide a person of ordinary 5 The regulation also provides that: ‘‘shall.’’ Jama v. ICE, 543 U.S. 335, 346 intelligence fair notice of what is (b) The Special Agent in Charge shall authorize (2005). Likewise, the phrase’s use of the prohibited, or is so standardless that it and instruct the applicant to dispose of the words ‘‘request assistance’’ rather than authorizes or encourages seriously controlled substance in one of the following ‘‘request authority,’’ notwithstanding discriminatory enforcement.’ ’’ Id. manners: (1) By transfer to person registered under the Act that obtaining authority may well be the (quoting United States v. Williams, 553 ultimate purpose of the procedure U.S. 285, 304 (2008)). and authorized to possess the substance; (2) By delivery to an agent of the Administration provided in the regulation (at least in While FCC v. Fox involved the or to the nearest office of the Administration; imposition of a monetary penalty, it (3) By destruction in the presence of an agent of Special Agent in Charge may authorize the hardly broke new ground. See General the Administration or other authorized person; or registrant to dispose of such substances, in (4) By such other means as the Special Agent in accordance with paragraph (b) of this section, 4 Respondent also contends that the regulation ‘‘is Charge may determine to assure that the substance without prior approval of the Administration in inapplicable in light of’’ an Ohio Board of Pharmacy does not become available to unauthorized persons. each instance, on the condition that the registrant regulation governing the disposal of controlled 21 CFR 1307.21(b). In addition, subsection c of keep records of such disposals and file periodic substances. Id. at 24–25. In light of my disposition the regulation provides that: reports with the Special Agent In Charge of this Exception, I conclude that it is not necessary [i]n the event that a registrant is regularly summarizing the disposals made by the registrant. to address this contention. required to dispose of controlled substances, the Id. § 1307.21(c).
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some cases), is hardly the language of a more than forty years, the Government Individuals seeking to reduce the amount mandatory requirement or command. points to no case in which a person, of unwanted controlled substances in their Thus, while on its face, section whether a practitioner or ultimate user, household consequently have few disposal 1307.21(a) is broad in scope as it applies has been either criminally or options beyond discarding or flushing the to all persons (and not only registrants) administratively prosecuted for substances which may not be appropriate means of disposing of such substances. Drug as well as all means of disposal, it is far destroying a controlled substance, take-back programs are also a convenient and from clear why a person, like without notifying the Agency, which effective means for individuals in various Respondent, who disposes of a he/she lawfully possessed and retained communities to reduce the introduction of controlled substance by squirting or possession of during the destruction some potentially harmful substances into the flushing it down the drain, would process.7 Nor does the Government cite environment, particularly into water. necessarily need any assistance to do so. to either an interpretive rule or guidance Id. § 2(4)(C). Of significance, while Nor, even assuming that there are document it has issued explaining that Congress noted the lack of legal circumstances in which a person is this regulation requires all persons, authority for take-back programs to required to obtain authority from DEA including practitioners, to first obtain accept controlled substances without to dispose of a controlled substance (i.e., authority from the Agency before they Agency permission, it made no similar because the person lacks authority to destroy a controlled substance of which observation that those individuals who 8 distribute the drug to another), is it clear they retain possession. Finally, even in dispose of their controlled substances why a person, who disposes of a this litigation, the Government does not by discarding or flushing them also lack controlled substance in the manner explain why a person, who destroys legal authority to do so.9 Respondent did, requires authority from controlled substances which they To be sure, because of their role in the DEA to do so. Thus, while it is clearly lawfully possess and which they do not closed system of distribution, the CSA reasonable to construe the regulation as distribute to another, nonetheless imposes requirements on registrants providing a mandatory procedure for requires either ‘‘assistance’’ or which are not imposed on ultimate disposing of controlled substances ‘‘authority’’ to do so. users, and the Act generally limits the where a person must distribute the Notably, the CSA itself contains no authorized activities of practitioners to controlled substances to another provision explicitly prohibiting or the dispensing of controlled substances person—because other provisions of the regulating (other than through and prohibits them from distributing a CSA make clear that a person cannot recordkeeping) the destruction of controlled substance. Yet the lawfully distribute a controlled controlled substances. Moreover, in Government offers no argument that substance without the required enacting the Secure and Responsible squirting the small amount of excess registration—that does not mean that Drug Disposal Act of 2010, which medication, which has been drawn into the regulation provides fair notice that amended the CSA, Congress found that a syringe but not administered to a it is mandatory when applied to other ‘‘take-back programs often cannot patient, into a sink or toilet and flushing circumstances. dispose of the * * * controlled Indeed, the regulation’s use of the substance medications * * * because it, constitutes a distribution within the word ‘‘may’’ rather than ‘‘shall’’ itself Federal law does not permit take-back 9 Consistent with this understanding, in several suggests that there are circumstances in programs to accept controlled other pronouncements, including guidelines which authority from DEA is not substances unless they get specific developed by the FDA in conjunction with the required to dispose of a controlled permission from [DEA] and arrange for Office of National Drug Control Policy (ONDCP), substance.6 So too, that the regulation full-time law enforcement officers to which discuss the proper method of disposing of ‘‘shall not be construed as affecting or prescription drugs including controlled substances, receive the controlled substances not once has the Federal Government explained altering in any way the disposal of directly from the member of the public that a person must first obtain permission from DEA controlled substances through who seeks to dispose of them.’’ Secure to dispose of a controlled substance if he destroys procedures provided in laws and and Responsible Drug Disposal Act of it himself. See ONDCP, Epidemic: Responding to regulations adopted by any State,’’ 21 2010, Public Law 111–273, § 2(4)(B), America’s Prescription Drug Abuse Crisis 7–8 (2011). Moreover, while the Guidelines instruct that CFR 1307.21(d), raises the question of 124 Stat. 2858, 2859 (2010). Yet drugs should be flushed ‘‘down the toilet only if the whether its procedures are still Congress further found that: accompanying patient information specifically mandatory if one disposes of controlled instructs it is safe to do so,’’ ONDCP, Press Release, substance in compliance with state law 7 The only case cited by the Government involved Federal Government Issues New Guidelines For (and thus has authority) without an entity, which was ‘‘in the business of receiving Proper Disposal of Prescription Drugs (Feb. 20, salvage or undeliverable merchandise from 2007), the FDA has determined, with respect to a engaging in a distribution. common carriers,’’ and which sought a DEA number of controlled substances, that flushing them In its pleadings, the Government registration as a distributor. Associated down the toilet or sink is appropriate and that ‘‘any acknowledges that ‘‘the administrative Pharmaceutical Group, Inc., 58 FR 58181 (1993). potential risk to people and the environment from case law is relatively silent on the Notably, the entity was unregistered and could not flushing [these drugs] is outweighed by the real possibility of life-threatening risks from accidental requirements of a registrant under 21 lawfully possess controlled substances. Id. at 58183. The Order’s brief discussion of 21 CFR 1307.21 ingestion of these medicines.’’ U.S. Food and Drug CFR 1307.21.’’ Gov. Resp. to simply recounted the advice given the entity by a Administration, Disposal of Unused Medicines: Respondent’s Motion to Exclude DEA Investigator that the regulation ‘‘requires that What You Should Know 1 (Jan. 2012). See also U.S. Paragraph 7 of the Order to Show Cause it seek DEA authorization for disposal or Food and Drug Administration, How to Dispose of Unused Medicines 2 (April 2011) (noting that the (ALJ Ex. 17), at 2. Indeed, while this destruction of controlled substances that it was retaining in its possession,’’ id. at 58181, as well as disposal instructions on some drugs may contain regulation has been in existence for in a letter which advised it ‘‘that all unclaimed ‘‘instructions to flush down the toilet, * * * controlled substances in [its] possession would because FDA * * * has determined this method to 6 The regulation’s use of the permissive word have to be disposed of according to 21 CFR be the most appropriate route of disposal that ‘‘may’’ cannot be reasonably attributed to the fact 1307.21.’’ Id. at 58182. presents the least risk to safety’’ and that ‘‘[d]rugs that the regulation provides a procedure that 8 At the time of the regulation’s promulgation, such as powerful narcotic pain relievers and other applies whether a person is merely ‘‘desiring *** DEA did not recognize reverse distributors as a controlled substances carry instruction for flushing to dispose of a controlled substance,’’ or is category of registrant and the regulations only to reduce the danger of unintentional use or ‘‘required to dispose of a controlled substance.’’ 21 authorized a person to distribute (without being overdose and illegal abuse’’). CFR 1307.21(a) (emphasis added). Surely, no one registered to distribute) ‘‘that substance to the To make clear, whether flushing the drugs which ‘‘desiring * * * to dispose of a controlled person from whom he obtained it or to the Respondent used in the procedures he performed substance’’ would object if the regulation stated that manufacturer of the substance.’’ 21 CFR 307.12 creates environmental harms is an issue for other he ‘‘shall request assistance’’ to do so. Id. (1971). agencies.
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meaning of the CSA, or is otherwise Exception 4—The ALJ’s Recommended requirement even after being told by the prohibited by the Act.10 Indeed, Decision Is Arbitrary and Capricious DI that he was in violation and even disposing of the excess amount of a and Unsupported By Law after being served with the Show Cause controlled substance, pursuant to the Respondent also takes exception to Order. Accordingly, I agree with the administration of the drug to a patient the ALJ’s factual findings, legal ALJ’s conclusion that Respondent has in the course of professional practice conclusions, and recommended not rebutted the Government’s prima and in this manner, would seem to be sanction, contending that they are facie case and will order that a necessary incident of administering ‘‘arbitrary, capricious and unsupported Respondent’s registration be revoked the drug and within the scope of a by law.’’ Resp. Exc. at 27. However, and that any pending applications be 13 practitioner’s authorized activities. with the exception of the ALJ’s legal denied. I therefore conclude that the use of conclusions pertaining to the alleged Order the phrase ‘‘may request assistance’’ in violations of 21 CFR 1307.21, I find that Pursuant to the authority vested in me the relevant language of the regulation the ALJ’s findings of fact and legal by 21 U.S.C. 823(f) and 824(a), as well creates an ambiguity as to whether it is conclusions are supported by as 28 CFR 0.100(b), I order that DEA permissive or mandatory in all instances substantial evidence. Based on the ALJ’s Certificates of Registration Numbers in which a person disposes of a findings that: (1) Respondent violated FB2238865 and BB0569775, issued to controlled substance. Because the the separate registration requirement by Jeffery J. Becker, D.D.S., be, and they Government points to no provision of failing to register his Avon practice, hereby are, revoked. I further order that the CSA which prohibits this method of notwithstanding that he regularly any pending application of Jeffery J. disposal or otherwise requires that a administered controlled substances at Becker, D.D.S., to renew or modify any practitioner obtain authority to dispose this office, see ALJ at 37; (2) even after of the above registrations, be, and it of controlled substances in all he was on notice that he was in hereby is, denied. This Order is effective circumstances, and because violation of this provision, he continued January 4, 2013. notwithstanding that the regulation has to violate the Act and was still doing so been in existence for more than forty the week before the hearing, see id. Dated: November 16, 2012. years, the Government has not (citing Tr. 660 & 764); (3) Respondent Michele M. Leonhart, published any administrative failed to maintain proper records in that Administrator. interpretation holding that disposal in he was missing purchase records as well Robert Walker, Esq., for the Government this manner violates the Act or requires as order forms (DEA 222) for the Frank Recker, Esq., & Todd Newkirk, authority from the Agency, I hold that schedule II controlled substances he Esq., for the Respondent the Government has not provided fair purchased, see id. at 39–40; and (4) Recommended Rulings, Findings of notice that Respondent’s conduct was Respondent failed to properly secure the 11 Fact, Conclusions of Law, and Decision prohibited. Accordingly, this conduct controlled substance he took to his cannot be used as a basis for finding a of the Administrative Law Judge 12 Avon office, see id. at 38–39; I conclude violation of the CSA. that the ALJ’s finding that Respondent Chief Administrative Law Judge John has committed acts which render his J. Mulrooney, II. On July 28, 2011, the 10 To further demonstrate the lack of clear notice Deputy Assistant Administrator of the provided by the Government’s proposed reading of registration inconsistent with the public the regulations, apparently even if a registrant interest is supported by substantial Drug Enforcement Administration (DEA wants to distribute a controlled substance to a evidence and that the Government has or Government), issued an Order to reverse distributor, it must request authority to do satisfied its prima facie burden. See id. Show Cause (OSC) seeking the so under 21 CFR 1307.21(a). Yet under a separate revocation of DEA Certificates of regulation, a practitioner is authorized to While I acknowledge that Respondent ‘‘distribute (without being registered to distribute)’’ produced evidence that he has changed a controlled substance to ‘‘[a] reverse distributor his storage practices at his Avon office, 13 I have considered Respondent’s contention that who is registered to receive such controlled he has offered no evidence that he has the recommended sanction ‘‘is a significant substances.’’ 21 CFR 1307.11(a). Thus, this departure from prior agency decisions and * * * is provision would seem to grant authority to a applied for a registration for the Avon without justification in fact.’’ Resp. Exc. at 29. practitioner to dispose of his excess controlled office, nor provided any evidence to However, as the ALJ explained, in Daniel Koller, 71 substances by shipping them to a reverse distributor support a finding that he has addressed FR 66975 (2006), I revoked the registration of a who destroys them. However, no guidance from the practitioner who engaged in similar misconduct. Agency explains whether a practitioner who the serious recordkeeping violations ALJ at 44. In his Exceptions, Respondent totally disposes of his controlled substances in this manner proven on this record. Moreover, even ignores Koller. Accordingly, I reject Respondent’s (and who seemingly has been granted authority by to this day, Respondent does not accept Exception. this regulation to do so) is nonetheless required to responsibility for his violations of the Respondent also contends that because an comply with section 1307.21. registration requirement; instead, he Agency Investigator approved his application for a 11 My holding that the regulation is ambiguous as Milwaukee registration when she knew that another applied to practitioners engaged in this manner of argues—notwithstanding that the Agency Investigator had requested the issuance of disposal does not preclude the Agency from issuing Agency’s regulation is clear on its face— an Order to Show Cause, the Agency has an interpretative rule clearly explaining the scope that because others violate the same ‘‘voluntarily and intentionally’’ waived its right to of the regulation and attempting to provide a revoke his Milwaukee registration. Resp. Exc., at reasoned basis for applying the regulation to this regulation, his violations should be 25–26. Respondent, however, produced no conduct. excused. Exacerbating this violation, evidence that he entered into an agreement with the 12 The ALJ also noted that even after Respondent Respondent continued to administer Agency pursuant to which the Agency agreed that was advised by the Agency’s Investigator that he controlled substance at his Avon office it would not seek to revoke this registration. In was in violation of 21 CFR 1307.21, he continued in violation of the registration addition, even if the Investigator’s decision to to engage in the same conduct. While this conduct approve his registration was deemed to constitute is disturbing, I do not rely on it given the absence a voluntary and intentional act of waiver (itself a of any published order, interpretive rule, or The Government also argues that Respondent’s dubious conclusion), DEA has not delegated the guidance document holding or explaining that the contention that the regulation does not provide fair authority to waive prosecution to field Agency deems such conduct to be a violation. In notice should be rejected because he did not seek investigators. See 28 CFR 0.104. Rather, that any event, given the evidence that Respondent ‘‘agency guidance regarding the issue.’’ Gov. Resp. authority remains vested in the Deputy Assistant continued to violate the registration requirement to Exceptions at 7. Contrary to the Government’s Administrator of the Office of Diversion Control. I and did so even after being served with the Show understanding, the Due Process Clause places the thus reject the contention. It is further noted that Cause Order, this conduct is, by itself, sufficiently burden on the Government to provide fair notice of Respondent does not claim that the Government is egregious to support the revocation of his what its regulation requires and not on Respondent estopped from proceeding against his Milwaukee registration. to seek clarification of the regulation’s ambiguity. registration.
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Registration (COR), Number ‘‘handling of fentanyl, diazepam and The Evidence 1 2 BB0569775, and Number FB2238865, midazolam * * * revealed shortages of The Government presented the of Jeffrey J. Becker, D.D.S. (Respondent), fentanyl and midazolam and an overage testimony of Diversion Investigator (DI) as a practitioner, pursuant to 21 U.S.C. of diazepam;’’ and (6) the Respondent Scott Brinks. Tr 428. DI Brinks testified 824(a) (2006 & Supp. III 2010), and disposed of controlled substances but that he has been employed as a DI in the denial of a pending application for ‘‘did not provide prior notification to Cleveland, Ohio, field office for just renewal of Respondent’s DEA COR, DEA of such disposal as required by 21 over ten years, Tr. 429, and that, during Number BB0569775, pursuant to 21 CFR § 1307.21(a).’’ ALJ Ex. 1 at 1–2. this time, he has been a part of at least U.S.C. 823(f) (2006). The OSC alleges The Stipulations of Fact a hundred investigations relating to that the Respondent’s continued practitioners. Tr. 431. enjoyment of the privileges vested in his The Government and the Respondent, DI Brinks testified that, sometime COR registrations is inconsistent with through counsel, have entered into prior to December of 2009, he was the public interest, as that term is used stipulations regarding the following contacted by Investigator Flugge of the in 21 U.S.C. 823(f). On August 25, 2011, matters: Ohio Dental Board (Board), who the Respondent, through counsel, timely (1) The Respondent is registered with informed DI Brinks that ‘‘he had some requested a hearing, which was DEA as a practitioner in Schedules II– drug related problems with conducted in Arlington, Virginia on V under DEA registration number [Respondent].’’ Tr. 433. After the November 8–9, 2011. BB0569775 at 282 Benedict Avenue, conversation with Investigator Flugge, The issue ultimately to be adjudicated Suite C, Box 22, Norwalk, Ohio 44857. DI Brinks ran a query on the Respondent by the Administrator, with the While this registration reflects an in the ARCOS 6 and RICS 7 databases. assistance of this recommended expiration date of July 31, 2011, the Tr. 433–436. Although Brinks decision, is whether the record as a Respondent timely submitted an ascertained from the Internet that the whole establishes, by substantial application for renewal of registration Respondent maintained a practice in evidence, that the Respondent’s CORs on June 3, 2011. Avon, Ohio, the RICS database query should be revoked 3 as inconsistent with (2) The Respondent is also registered did not indicate that the Respondent the public interest, as that term is used with DEA as a practitioner in Schedules had a COR for the Avon location. Tr. in 21 U.S.C. 823(f) and 824(a). II–V under DEA registration number 435–36. After carefully considering the FB2238865 at Affordable Care, 6015 On the morning of December 21, testimony elicited at the hearing, the West Forest Home Avenue, Milwaukee, 2009, DI Brinks met Investigator Flugge admitted exhibits, the arguments of Wisconsin 53220. This registration at a McDonalds across the street from counsel, and the record as a whole, I expires by its terms on July 31, 2013.5 the Respondent’s practice in Norwalk, have set forth my recommended (3) Fentanyl is a Schedule II Ohio. Tr. 432. At this meeting, findings of fact and conclusions of law controlled substance pursuant to 21 CFR Investigator Flugge gave DI Brinks the below. 1308.12(c)(9) (2011). Board’s investigative file on the (4) Diazepam is a Schedule IV Respondent, including ‘‘an anonymous The Allegations controlled substance pursuant to 21 CFR complaint [and] a complaint by Rebecca The OSC issued by the Government 1308.14(c)(14) (2011). Crockett.’’ Tr. 433. Investigator Flugge contends that revocation of the (5) Lorazepam is a Schedule IV also ‘‘gave * * * a brief overview of the Respondent’s CORs is appropriate controlled substance pursuant to 21 CFR [the Board’s] investigation and why he because: (1) The Respondent has 1308.14(c)(28) (2011). was referring [the matter].’’ Tr. 433. practiced dentistry from a location in (6) Versed is a brand name for a However, ‘‘Investigator Flugge said he Avon, Ohio without obtaining a DEA product containing midazolam, a did not want to come along because of COR to handle controlled substances at Schedule IV controlled substance [the Respondent’s] relationship with the that location; 4 (2) the Respondent pursuant to 21 CFR 1308.14(c)(35) [B]oard.’’ Tr. 438. When asked to clarify ‘‘maintained * * * controlled (2011). this remark, DI Brinks explained substances at an unregistered [location] Investigator Flugge’s reluctance to join in violation [of] 21 U.S.C. 822(e);’’ (3) 5 The Respondent makes much of the granting of the investigation ‘‘had to do with some the Respondent ‘‘maintained controlled the Milwaukee registration, arguing that ‘‘[i]f the hearing that [the] Respondent had went DEA felt that the Respondent’s continued 8 substances in an unsecured area in registration was inconsistent with the public to.’’ Tr. 438–40. violation of 21 CFR § 1301.75(b);’’ (4) interest, they could have * * * at least denied the After meeting with Investigator ‘‘sometime in 2009 [the Respondent] Respondent’s application for his Wisconsin Flugge, DI Brinks and a second DI drove distributed controlled substances * * * registration.’’ Resp’t Posth’g Brf., at 18. It is unclear across the street to the Respondent’s on what legal authority this contention rests, but to an unregistered location in violation the DEA has considered the application of waiver office. Tr. 438. Upon entering the office, of 21 CFR § 1307.11;’’ (5) an in situations where, as here, the agency granted and the DIs identified themselves, and accountability audit of the Respondent’s then sought to revoke a license based on presented the Respondent with a DEA information available at the time the license was Form 82, Notice of Inspection of granted. James Dell Potter, M.D., 49 FR 9970, 9971 1 Controlled Premises, which the The registered address under this registration is (1984). In Potter, the DEA granted a license to the in Norwalk, Ohio. Gov’t Ex. 1. Respondent, notwithstanding information on the 2 The registered address under this registration is application referencing a felony conviction. 6 The Automation of Reports and Consolidated in Milwaukee, Wisconsin. Gov’t Ex. 2. Sometime later, the Agency rejected the Orders System (ARCOS) database tracks the course 3 The Respondent has timely submitted an respondent’s argument that the granting of the of distributions of controlled substances ‘‘from the application for renewal of COR #BB0569775 application waived the Agency’s right to seek manufacturer down to the final seller.’’ Tr. 434. (Norwalk) which was scheduled to expire under its revocation, holding that the doctrine of waiver 7 DI Brinks explained the RICS system maintains own terms on July 31, 2011. Thus, by operation of requires a ‘‘voluntary and intentional abandonment a wide variety of information on DEA registrants. law, this COR has been extended and remains in of known right.’’ Thus, where the granting of a Tr. 436. full force and effect until a final Agency order is license is ‘‘inadvertent and * * * unintentional[,]’’ 8 DI Brinks reasonably explained that the issued in this case. 5 U.S.C. 558(c); 21 CFR there can be no waiver. Here, as in Potter, there is motivation for the referral by Investigator Flugge 1301.36(i). no evidence that would support an election by the did not matter to him because he ‘‘ha[d] an 4 This allegation does not aver that controlled Agency to voluntarily and intentionally abandon a allegation of a controlled-substance-related substances are maintained, administered or known right. Accordingly, application of waiver is problem, so [he was] required to investigate that.’’ dispensed at the Avon office. See 21 CFR 1301.12. unwarranted. Tr. 439.
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Respondent reviewed and signed.9 Tr. and three-fourths of a bottle of unregistered location.’’ Tr. 597–598. 438; Gov’t Ex. 7. DI Brinks also fentanyl.13 Tr. 452. Brinks characterized the Respondent as requested that the Respondent provide During the inspection of the ‘‘cooperative’’ during the investigation. ‘‘all DEA Form 222s for the purchases Respondent’s dispensing logs, DI Brinks Tr. 603, 637. of Schedule II controlled Substances, ‘‘observed * * * that [Respondent] had Brinks also discovered evidence that his purchase records for Schedule III–V provided large quantities of unused controlled substances that were [controlled substances, and] his midazolam.’’ Tr. 455.14 DI Brinks left over in hypodermic needles at the dispensing records for Schedules II–V testified that he became concerned ‘‘as conclusion of dental procedures [controlled substances.]’’ Tr. 442. DI soon as I started seeing 70 and * * * conducted at the Respondent’s practice Brinks also requested ‘‘any DEA form 100 [miligrams administered].’’ 15 Tr. were being disposed of by squirting 41s * * * Destruction of Controlled 457. DI Brinks asked Peg Herner, a them down the sink. Brinks explained Substances, and any DEA Form 106, the dental assistant at Respondent’s office, that practitioners are not routinely Theft and Losses of Controlled about doses of the medication that the provided with written guidance by the Substances, and then [Respondent’s DI divined were excessive, and was told local DEA office on the issue of waste biennial] inventory.’’ Tr. 443. DI Brinks that ‘‘I just write down what [the procedures authorized by the testified that, during their Respondent] tells me to write down.’’ regulations,17 and although there are conversations,10 he found the Tr. 456. After consulting with Ms. options for compliance (utilization of Respondent to be ‘‘very nervous and his Herner, DI Brinks asked the Respondent DEA-registered reverse distributors, hands were shaking.’’ 11 Tr. 442, 624. about the midazolam prescribing, and Ohio Pharmacy Board assistance, and The Respondent was able to produce the Respondent told him that the providing medications directly to only three controlled substance order patients ‘‘build up a tolerance.’’ Tr. 457– DEA),18 ‘‘a large portion’’ of the forms (DEA Form 222) that related to a 58. At some point during this practitioners he has inspected over the two-year period of practice, but even conversation, DI Brinks questioned the course of his career dispose of residual that modest number had one that did Respondent about whether he was controlled substance medication from not contain all the information required. abusing controlled substances, and the hypodermic needles by squirting it Tr. 444, 446–48, 639–40. When he Respondent twice volunteered to show ‘‘either down the sink or the toilet.’’ Tr. realized he was unable to supply more the DIs his arms. Tr. 460, 621. When the 631. than three Form 222s, the Respondent Respondent pulled up the sleeves of his During his testimony, DI Brinks contacted his controlled substance lab coat, DI Brinks observed three or attempted to explain the results of his supplier and had company purchase four small ‘‘poke marks’’ on the left arm, drug audit. Apart from individual doses records faxed to his office for Brinks to but no bruising or scarring. Tr. 460–62. of medications reflected in the review. Tr. 444, 638. The Respondent Respondent said that the marks were medication logs which, based on his did provide his dispensing logs, Tr. 563, caused by dental students he allowed to experience, he concluded were high, but no controlled substance destruction practice IV techniques in a sedation Brinks’ testimony regarding his audit forms (DEA Form 41) or controlled class he taught at Case Western Reserve was confusing, inconsistent, and substance theft/loss reports (DEA Form School of Dentistry on Fridays. Tr. 462. unreliable. Brinks was unable to explain 106).12 Tr. 443, 448–49. The following day, the DIs went to Case the data that he had collected and After using the forms provided to Western Reserve. Tr. 596. During their compiled. Brinks had processed his conduct an audit that Brinks visit the DIs encountered the findings into a multicolor chart which characterized as ‘‘extremely short on Respondent and, at the request of he designed to compare the * * * midazolam and * * * fentanyl,’’ officials at the university,16 he invoked Respondent’s levels of midazolam the DIs asked the Respondent if he had his right to an attorney. Tr. 596. dispensing at his private practices with a way of justifying the shortages. Tr. As a result of his visit to the levels he dispensed at Case Western 451. The Respondent responded that he Respondent’s practice, DI Brinks University School of Dentistry and the had records and controlled substances concluded that Respondent violated the U.S. Food and Drug Administration at an office in Avon. Tr. 451. After DEA’s regulations by failing to have a (FDA) recommended maximum dosages. completing their inspection of the registration for his Avon Office. Tr. 640. Tr. 464–77. When the numbers on his Norwalk Office, the DIs traveled to the DI Brinks also concluded that proposed chart could not be reconciled Respondent’s (unregistered) office at Respondent had violated DEA with the raw data he claimed to have Avon, where they found additional files regulations by failing to maintain based it on, the witness acknowledged purchase records, and by failing to that he really had no idea what the chart 9 Inexplicably, despite the details he provided maintain accurate dispensing records. (he created) signified.19 Tr. 475. The about his visit to the Respondent’s office, when data in Brink’s audit computation chart asked about his recollection of the event, DI Brinks Tr. 639–40. It was Brinks’ recollection stated that he could ‘‘vaguely recall walking in that he informed the Respondent of suffered from like blunders and was there * * *.’’ Tr. 590. ‘‘some of the record keeping issues [and] similarly excluded. Gov’t Ex. 8 (ID); Tr. 10 DI Brinks indicated that no recording devices the storing controlled substances at an 478–90. An overnight break in the were employed during the inspection. Tr. 442, 594. proceedings afforded the DI the The Respondent testified that he believed that his 13 conversation with Brinks was recorded. Tr. 781–82. Brinks testified that the Avon practice is not a opportunity to make revisions on his 20 11 On cross-examination DI Brinks conceded that, location that is registered as a COR address that initial, ill-fated computation chart, but while other practitioners have appeared nervous would be subject to an inspection, and accordingly, there were issues with the revised during his investigations, he had ‘‘not seen the DIs remained in the Respondent’s waiting area, version as well. Gov’t Ex. 16; Tr. 583– somebody shake like that in my experience.’’ Tr. and were presented with the fentanyl and records 624–25. by the Respondent after he went into the practice portion of the office by himself. Tr. 452–53. 17 Tr. 630. 12 The Government’s theory on noting the absence 14 18 of theft/loss forms was rooted in its concept that its DI Brinks clarified that ‘‘I know from Tr. 630–33. audit demonstrated losses that should have been experience * * * what midazolam should be, what 19 Inasmuch as a sufficient foundation for noted by such documentation. As discussed in should be given before surgery.’’ Tr. 455. admission could not be established, the proposed some detail, infra, the quality of the audit results 15 In his experience, DI Brinks had never ‘‘seen exhibit was excluded from the record upon a presented by the Government in these proceedings anything close to 70 milligrams [administered] in timely, cogent and correct objection. Gov’t Ex. 9 renders the presence or absence of theft/loss forms one visit in one patient.’’ Tr. 456–57. (ID). largely irrelevant here. 16 Tr. 707. 20 Tr. 488–90.
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89, 610, 612–17. The DI’s initial office that investigates 500 to 1,000 report upon which she so heavily computation chart was ultimately complaints per year against the state’s depended (and which was her constant received into evidence at the behest of 7,000 dentists. Id. Furthermore, Reitz companion on the stand) was admitted the Respondent. Resp’t Ex. M. Given the discussed her agency’s practice of and considered without her confusing nature of the Government’s sharing information with other law appearance.26 presentation and the surprise nature of enforcement and regulatory authorities, The Government also presented its revised audit results (generated including DEA. Tr. 390–91. affidavits and testimony from three during the proceedings) the revised Regarding the Respondent, Ms. Reitz individuals who were employed at the document, Gov’t Ex. 16, was not testified to the results of the Ohio Dental Respondent’s dental practice during the considered to establish its purported Board’s investigation into Respondent’s events that form the basis of its current results in these proceedings. practice that commenced upon the revocation actions. The first of these DI Brinks presented testimony that receipt of an anonymous complaint former employees was Rebecca was detailed, plausible, and generally alleging that the Respondent was using Crockett.27 Ms. Crockett testified that at credible. Ironically, the candor with controlled substances from his practice the outset of her employment at the which this witness addressed some at home.23 Tr. 397–399. As a result of Respondent’s practice she was charged profound preparation errors actually the complaint, the Ohio Dental Board with the responsibility of maintaining enhanced his credibility, even to the sent two of its investigators to the drug logs completed on patients during extent that it compromised his Respondent’s practice to conduct an procedures, and with alerting the testimony’s effectiveness. The errata infection control evaluation.24 Tr. 400. Respondent when sedation medication that marred the Government’s evidence The Respondent was not at the Norwalk stocks were dwindling to a level where regarding the audit of the Respondent’s office, so the Board investigators met more needed to be ordered. Tr. 154, 182, practice, although certainly the product him at his Avon location. Tr. 401. The 196; see also Gov’t Ex. 12 at 2. Crockett of self-inflicted wounds, did not bear report of the Board’s investigators recalled no occasion during her tenure the indicia of any form of intentional (which Reitz read from with no as the drug-log custodian when malice toward the Respondent. apparent knowledge beyond the four controlled substances were missing or Interestingly however, they were clearly corners of the document) indicated, unaccounted for,28 but did recall that also not the result of a rush to justice. inter alia, that they found an unsecured Rebecca Tetzloff, an employee who DI Brinks testified that, after completing plastic bin in the Respondent’s office subsequently assumed responsibility for his investigation sometime in March containing medications, including the drug log, approached her with 2010, the investigation (and the fentanyl and Valium. Tr. 401–03. concerns about missing medication. Id. collected data) lay dormant for sixteen According to Ms. Reitz, a complaint was Crockett testified that the Respondent (16) months until approximately July of subsequently filed by Ms. Crockett that maintained two Ohio offices; one at 2011, when this matter was initiated.21 strongly resembled the anonymous Norwalk and another at Avon, and that Tr. 599. During this time of investigative complaint previously received regarding she worked at both locations (which inaction, the Respondent applied for, the Respondent’s alleged drug use. Tr. were each open two days per week) and and on September 14, 2010 received, the 405–06. Based on the information they observed the Respondent transport COR for his dental office in Milwaukee, had at the time, the investigators controlled substances to and from both Wisconsin. Tr. 601; Gov’t Exs. 2,3. That interviewed Ms. Crockett, and the practice locations. Tr. 154–58. The registration is also the subject of these matter remains under investigation. Tr. controlled substances (lorazepam, proceedings. ALJ Ex. 1. 408–12. diazepam, and fentanyl) were The Government also presented the Ms. Reitz’s testimony was sufficiently transported on a cart that was loaded at testimony of Lili C. Reitz, the Executive detailed, consistent, and plausible to be the Norwalk office and driven to the Director of the Ohio State Dental Board, afforded credibility,25 but the weight of Avon office. Tr. 157, 186–88, 197. the agency who referred this matter to her testimony regarding the Board’s According to Crockett, controlled DEA. Ms. Reitz holds a law degree from investigation of the Respondent is substances were routinely stored in both the Cleveland Marshall College of Law diminished by the reality that she was the Norwalk and the Avon offices. Tr. and formerly worked as an Assistant doing no more than relating the results 156–57, 186–88, 197–98. Crockett stated Attorney General with the Ohio of a report prepared by her that because the daily preparations in Attorney General’s Office.22 During her subordinates, and admitted that she the Avon office were frequently done in testimony, Ms. Reitz explained the knew nothing more than (and could a hurry, controlled substances were permitting requirements for conscious provide no insight beyond) the words routinely left unsecured on top of a sedation versus general anesthesia for on the page of her investigators’ report. sterilization room counter. Tr. 158. The dentists in Ohio, and testified that a Tr. 401–03. Thus, it would be sterilization room at the Avon office records check she conducted informed unreasonable to afford her testimony in although not locked, was located in an that the Respondent possesses the this regard greater weight than if the inner, treatment area of the practice, to former permit, but not the latter. Tr. the rear of front reception desk, and was 374–83, 421. 23 There was also testimony that in November of separated from the patient waiting room Ms. Reitz also provided some 2008 the Board and the Respondent entered into a background regarding the manner in consent agreement related to an issue that has no 26 Although the Respondent, through counsel, logical nexus to any issue germane to these noticed his intention to call the Ohio Dental Board’s which the Ohio Dental Board executes proceedings. Tr. 391–92, 394–96. case investigator as a witness (ALJ Exs. 10, 12), the its mandate to investigate complaints of 24 Reitz testified that an infection control unrefuted testimony of record establishes that he wrongdoing related to its licensed evaluation examines issues related to sterilization, refused to tender the required witness fee to the dentists. Tr. 384–85, 388. Ms. Reitz infection control, and licensing. Tr. 400. investigator. Tr. 417–21; 21 U.S.C. 876; Fed. R. Civ. 25 P. 45; 28 CFR 76.25. Thus, the decision by the testified that she supervises a 15-person The Respondent’s theory that the Board’s investigation was the result of bad blood that had Respondent’s counsel to forego the opportunity to its genesis in Reitz’s disagreement in the cross-examine the investigator bears the hallmarks 21 Brinks testified that he was working on another Respondent’s support for state legislation regarding of a tactical election. investigation. Tr. 633–35. the conduct of Board proceedings and a potential 27 Ms. Crockett’s affidavit was received into 22 Ms. Reitz’s resume was received into evidence. lawsuit was not sufficiently developed on this evidence. Gov’t Ex. 12. Gov’t Ex. 5. record to affect Ms. Reitz credibility. Tr. 414–17. 28 Gov’t Ex. 12 at 2.
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by some form of controlled-access to fabricate evidence against the Western Reserve University and asked door.29 Tr. 158–60, 210. Respondent has been offered into, or is him about a particular controlled Crockett testified that she and other supported by, the current record. substance deficit, he informed her that employees noticed marks on the The Government also presented the he had taken the medication with him. Respondent’s upper extremities that testimony and affidavit 32 of former Tr. 237–38; Gov’t Ex. 10 at 2–3. On they feared may have indicated IV drug employee Rebecca Tetzloff, who worked another occasion, upon her arrival at the use on his part, and observed behavior on the Respondent’s staff from March Norwalk office one morning, Tetzloff on the part of the Respondent that they 2008 through October 2009. Gov’t Ex. 10 discovered a vial of diazepam sitting communally deemed to be overly at 1. Like Ms. Crockett, Ms. Tetzloff unsecured on top of the office safe. Tr. erratic, moody, and emotional. Tr, 164– testified that she worked at both the 241. When queried on the issue of why 67. After discussing these observations Norwalk and Avon offices of the a controlled substance was left out in amongst themselves, they met with him Respondent’s practice, transported the open in that fashion, the as a group (in what some of their controlled substances to the Avon Respondent’s answer was merely to number termed an ‘‘intervention’’) and office, and that the Respondent acknowledge what Tetzloff perceived received his assurance that he was routinely administered and stored with her own eyes, without any attempt ‘‘getting help’’ for what ailed him. Tr. controlled substances at the Avon office. at explanation. Tr. 241–42. When 164–67, 181, 202–03; Gov’t Ex. 12 at 2– Tr. 221, 223–27; Gov’t Ex. 10 at 2. In Tetzloff’s suspicions grew, and she 3. The Respondent did not share with fact, Ms. Tetzloff testified that she became increasingly concerned that the group what help he was getting or actually maintained a log recording medications were not being effectively what it was for. Id. Crockett related a controlled substances stored at Avon. locked up in the Norwalk office, she 2009 incident where she believed that Tr. 225–26. According to Tetzloff, before sought the advice of an attorney, who the Respondent appeared to be the Ohio Dental Board insisted on the assisted her in drafting a letter raising intoxicated and/or disoriented at the installation of a safe, controlled her concerns to the Respondent and outset of a procedure 30 and raised the substances were routinely kept at Avon seeking discharge from her duties issue with the office manager, Christina in an intermittently-locked filing related to the accounting of office Painley. Tr. 172–73, 202. cabinet in an arrangement that controlled subsances. Tr. 238, 243–47, Ms. Crockett testified that she frequently yielded ready access to the 296–97. Tetzloff credibly testified that voluntarily elected not to return to her keys that could lock (or unlock) it. Tr. she presented the letter 33 to the position at the Respondent’s practice at 227–32. Respondent and a member of his staff. the conclusion of a period of maternity Consistent with Crockett’s testimony, Tr. 247–48; Gov’t Ex. 10 at 3–4. leave,31 due to her concerns regarding Tetzloff recollected that when Tetzloff also related her recollection her safety brought about by the controlled substances were unpacked at of marks on the Respondent’s upper Respondent’s animated, angry outbursts, the Avon office, they were left extremities which she felt were as well as concerns she had for the unsecured in the ‘‘rush, rush, rush’’ of suspiciously reminiscent of track Respondent’s patients, based on her setting up equipment at the outset of the marks,34 as well as bouts of animated suspicion that the Respondent was day. Tr. 233. According to Tetzloff, the anger bursts, ‘‘irritability,’’ 35 and abusing sedation controlled substances controlled substances (midazolam, essentially eratic behavior 36 during the maintained in the office. Gov’t Ex. 12 at diazepam, and fentanyl) would be work day on the Respondent’s part,37 all 3; Tr. 167–69, 174, 190. Crockett related transported to Avon in a bin on a cart of which culminated in a staff meeting that subsequent to her departure from and left on a counter in the sterilization on a Friday when no patient the Respondent’s employment she filed room. Tr. 233–36. appointments were scheduled (‘‘the At some point during her employment for unemployment benefits and sent a intervention’’), wherein the Respondent at the Respondent’s practice, Tetzloff letter to the Ohio Dental Board outlining was charged with the responsibility of her suspicions regarding the 33 Gov’t Ex. 11. accounting for the controlled substances 34 Ms. Tetzloff did not deem the Respondent’s Respondent’s drug abuse. Tr. 177, 206– used and on-hand in the practice. Gov’t 07. Ms. Crockett testified that her letter explanation that his large dogs caused the marks by Ex. 10 at 2. In the discharge of these scratching his arms to be particularly credible. Tr. to the Dental Board was motivated by duties, Ms. Tetzloff became concerned 253–55. her concern for the safety of both the about an apparent spike in the level at 35 Tr. 276–77. Respondent and his patients. Tr. 177– 36 Tetzloff also related an incident wherein, on which office supplies were requiring some date that she was unable to recall, she 79. replacement, and began having trouble Ms. Crockett’s testimony was observed an uncapped hypodermic needle on the reconciling the quantities of floor of the van used by the Respondent and other sufficiently detailed, internally medications on hand. Tr. 237; Gov’t Ex. employees to transport medications and supplies consistent, and plausible to be relied 10 at 2. Ms. Tetzloff tacitly between the Norwalk and Avon offices. Tr. 268– 272, 308–10. The evidence of record indicates that upon as credible in this recommended acknowledged that this was a rather decision. No persuasive reason for her the van routinely carried practice supplies, unscientific process where, by the mere including hypodermic needles, and also supports act of counting vials of medication, she the proposition that there were routinely multiple 29 Notwithstanding some initial confusion on this would somehow divine whether too operators of the van. Tr. 269, 795–99. Accordingly, issue, Tr. 160, 199, the witness ultimately and the evidence does not impact upon any issue that credibly testified that the patients waiting to be many vials had been used based on her must be decided in these proceedings and was not seen were maintained on the other side of a door expectation of how many vials should considered in this recommended decision. The that led to the waiting room. Tr. 200–01, 208–09. have been present, with no appreciable same can be said of an alleged episode of what 30 Of particular concern to Crockett during this expertise to appraise how many vials Tetzloff perceived as erratic driving on the episode was the Respondent’s action in removing Respondent’s part. Tr. 272–74, 625–26, 799–801. a hypodermic needle cap with his mouth. Tr. 173, were used on the procedures performed. These incidents, at least to the extent they have 201–02. Tr. 282–84, 291, 295, 307, 314–15. been developed in the current record, simply have 31 Although the witness’s affidavit fixes her Tetzloff recalled that on one occasion no bearing on any issues properly before this resignation in June 2009, Gov’t Ex. 12 at 3, Crockett when she called the Respondent while tribunal. credibly testified that her decision in this regard 37 Ms. Tetzloff acknowledged that although the was made in September 2009, while still out on he was at his teaching position at Case Respondent was ‘‘a demanding employer,’’ that he maternity leave following the birth of her son. Tr. is not the only dentist she knows of who possesses 191, 194–95. 32 Gov’t Ex. 10. that trait. Tr. 288.
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assured all present that he was seeking Friday 41 morning where Dr. Toth is not a person who is willing to provide (unspecified) help that was related, observed Respondent enter the Norwalk candid and truthful testimony under Tetzloff thought, to a depression dental office, appearing ‘‘[d]isheveled, oath, and in those instances where his condition. Tr. 223, 249–32, 255–60, 263, out of sorts, [and] wobbly,’’ 42 in account conflicts with other credible 285, 298; Gov’t Ex. 10 at 4. According ‘‘pajamas and flip flops,’’ and walk in evidence of record it cannot be believed. to Tetzloff, the Respondent took a week- the general direction of the office drug Thus, his testimony cannot be afforded long vacation immediately after the safe stating that he needed antibiotics weight in supporting a substantial- meeting. Tr. 252. for a cold.43 Gov’t Ex. 13, at ¶¶ 3–4; Tr. evidence finding by this recommended On the issue of disposal, Tetzloff 327–28. Toth, like other witnesses, decision and ultimately, by the Agency. recalled routinely squirting controlled testified that the Respondent was prone Furthermore, inasmuch as he was substances remaining in hypodermic to ‘‘drastic mood swings’’ and ‘‘erratic unable to supply virtually any temporal needles at the conclusion of procedures behavior.’’ Tr. 332. details of the factual events he into the sink. Tr. 305. Toth’s affidavit also described a post- described, and his purported Ms. Tetzloff, like Ms. Crockett, DEA inspection restaurant interaction observation of a ‘‘disheveled’’ and testified that she cared about the wherein the Respondent purportedly ‘‘wobbly’’ Respondent standing in his Respondent, describing him as ‘‘a good confessed to Toth that he was taking own office, on some unspecified date, surgeon’’ and ‘‘a very good boss.’’ Tr. Valium 44 as a sleep aid, and headed in the general direction in his 278. Ms. Tetzloff’s testimony was subsequently told him that adjustments office where controlled substances were sufficiently detailed, internally were being made to office controlled stored, would (even if deemed credible) consistent, and plausible to be relied substance records to shield the losses shed no light on anything that must be upon as credible in this recommended from DEA scrutiny. Gov’t Ex. 13 at 3. decided in this case, the absence of his decision. No persuasive reason for her When pressed on the issue, however, testimony here will be of no moment. to fabricate evidence against the Dr. Toth was not at all clear on whether The Government also presented the Respondent has been offered into, or is the incident happened before or after testimony and written report,47 of supported by, the current record. DEA’s involvement in the case. Tr. 353– Daniel Becker, D.D.S. Dr. Becker,48 The final former employee presented 56. currently serves as an Associate Director by the Government in its case-in-chief Dr. Toth testified that he is a of Education in the General Dental 38 was Dr. Brian Toth, D.D.S. Like the recovering alcoholic and cocaine addict, Practice Department at Miami Valley Respondent, Dr Toth, is a DEA registrant and that he has been ‘‘clean and sober’’ Hospital, in Dayton, Ohio, is an and a licensed Ohio dentist in good since 2006. Tr. 322–23. Notwithstanding Associate Editor of Anesthesia Progress standing. Gov’t Exs. 4, 13; Tr. 320–21, the witness’s unambiguous assurance of for the American Dental Society of 337, 344. Although Dr. Toth’s affidavit his uninterrupted recovery and sobriety, Anesthesiology, and also serves as an states that he ‘‘worked at [Respondent’s] when confronted with documentation Adjunct Professor of Life and Health Norwalk and Avon dental offices from concerning his April 2011 convictions Sciences at Sinclair Community College January 2009 through January 2010,’’ for disorderly conduct/intoxication and 45 in Dayton, Ohio. Gov’t Ex. 14. Gov’t Ex. 13, at ¶ 2, during his marijuana possession, Dr. Toth Additionally, Dr. Becker is the testimony he agreed that the period of conceded that he had been arrested and Chairman of the Human Patient his employment could have been from pled guilty to those offenses. Tr. 337–44, Simulation Training Subcommittee at April 2009 through February 2010. Tr. 346. the American Dental Society of The issue of Dr. Toth’s success at his 336. Anesthesiology. Id. Dr. Becker also substance abuse recovery efforts (at least Also in his affidavit, Dr. Toth asserts testified that he teaches intravenous on the present record) is, without that, ‘‘[f]rom my observations, I believe sedation techniques to dental residents, that [Respondent] has injected himself question, a collateral issue. However, when Dr. Toth volunteered, under oath, and is actively engaged in the practice with fentanyl and Versed (midazolam). of IV sedation to patients at numerous I base my belief on my training as well that he had been clean and sober since 2006, and then grudgingly dental practices in Ohio. Tr. 32. Dr. as my observations of [Respondent’s] Becker was received without objection erratic and aggressive behavior, red acknowledged marijuana and alcohol- related convictions seven months prior as an expert in the practice of general eyes, mood swings, anger, frustration, dentistry in regards to pharmacology, and lack of care while treating patients.’’ to the commencement of the hearing, he deprived his own testimony of any sedation, and anesthesia. Tr. 29–30. Gov’t Ex. 13, at ¶ 2. The affidavit also In his testimony, Dr. Becker (like Ms. measure of credibility in these identifies the following as alleged Reitz) explained that in Ohio there are proceedings.46 Simply stated, Dr. Toth indices of drug abuse: (1) Respondent’s two varieties of dental sedation that are physical assault of Christina Painley; (2) sanctioned by state law, with separate track marks on Respondent’s arms; 39 (3) in this area beyond spending time at a rehabilitation clinic related to other substances, Tr. 326–27, this practitioner permits specified for each ‘‘meth bugs,’’ described as ‘‘scratching, testimony has been afforded no weight in this type. A ‘‘conscious sedation permit,’’ is and sores about the wrists, arms, and recommended decision. required to sedate a patient to a depth 40 head;’’ (4) an incident on a undated 41 Though Dr. Toth’s identified the incident as where the patient is capable of being occurring on a Saturday morning, during the aroused, that is capable of responding to 38 An affidavit executed by Dr. Toth was received administrative hearing he clarified that the incident into evidence. Gov’t Ex. 13. occurred on a Friday. Tr. 327, 361–62. verbal commands. Tr. 41, 71. A ‘‘deep 42 39 In his testimony, Dr. Toth opined that the Tr. 330. marks on the Respondent’s arm bore the appearance 43 Dr. Toth found this explanation implausible denied having such a page during the relevant of IV drug abuse, not the marks of a teacher because ‘‘antibiotics are not used to treat colds,’’ period, and then conceded that he did. Tr. 347–50. allowing students to practice IV insertion and because ‘‘the Norwalk office did not store In this manner, Toth once again managed to morph techniques. Tr. 326. In view of the absence of any antibiotics in the drug safe.’’ Gov’t Ex. 13, at ¶ 4. irrelevant matter (the arguably unsavory comments foundation for Dr. Toth’s expertise in this area, this 44 Valium is a brand of diazepam tablets. See 6– he posted on his Facebook page) into a relevant testimony has been afforded no weight in this V Attorneys’ Dictionary of Medicine V–121686. issue (his disinclination to provide accurate recommended decision. 45 Resp’t Exs. K, L. testimony under oath). 40 Dr. Toth testified that he has never tried 46 In like fashion, when cross-examined about 47 Gov’t Ex. 15. methamphetamine. Tr. 347–48. In view of the (mostly irrelevant) statements he purportedly 48 This Dr. Becker is not related to the absence of any foundation for Dr. Toth’s expertise placed on a Facebook page, Dr. Toth initially Respondent.
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sedation/general anesthesia permit,’’ in Dr. Becker further testified that a 89. Becker’s view is that sedation to contrast, is required to sedate a patient patient’s resistance to midazolam could unconsciousness was not an intent to unconsciousness. Tr. 42. A conscious alter the amount of drug necessary to supported by the records he reviewed, sedation permit may be obtained by a achieve the desired sedation. For as evidenced by the lack of additional dentist after the completion of a course example, Dr. Becker opined that for a professional monitoring staff, and on the subject, while a deep sedation/ ‘‘fairly resistant’’ patient, twenty to would have required the deep sedation/ general anesthesia permit requires the thirty milligrams of midazolam might be general anesthesia permit that the successful completion of a year-long necessary for a 3–4 hour procedure, and Respondent does not possess. Tr. 85–86; residency. Tr. 41–42, 44–45. Becker that there are some patients who are Gov’t Ex. 15 at 1. testified that where general anesthesia is simply not sedatable with this Dr. Becker testified that, absent some 49 utilized, additional personnel and medication.52 In Becker’s opinion, type of resistance to midazolam, the monitoring equipment normally will be however, those cases that require the doses identified in his expert report required. Gov’t Ex. 15 at 1; Tr. 62–64, higher doses and demonstrate resistance would ‘‘predictably’’ produce 85–86. are rare. Tr. 60–61. Midazolam, unconsciousness.’’ Tr. 84. However, Dr. At the Government’s request, Dr. according to Dr. Becker, is administered Becker noted that such resistance, while Becker reviewed forty-three records of in one-to-two milligram increments to 50 possible, is ‘‘rare,’’ and that over thirty IV sedation that had been achieve the desired level of sedation. Tr. years of practice he had not seen as administered by the Respondent and 62. A five-miligram increment would many resistant patients as Respondent’s found all but one of the records were cause a patient to lose consciousness, patient records appeared to contain below ‘‘the standard of practice’’ which in turn risks throat obstruction during a relatively brief period. Gov’t because they did not reflect current vital and breathing impairment. Tr. 62. Ex. 15 at Tr. 84–85. Assuming that not signs or actual time at the time the Becker explained that it is for these all the patients in the charts analyzed medications were administered. Gov’t reasons that procedures where general were resistant, Dr. Becker testified that Ex. 15 at 1. Dr. Becker’s report further anesthesia is employed require the sedation records reflected a identified 17 patient charts which he additional staffing (of at least one treatment regime below the standard of found to be ‘‘egregious.’’ Id. The report additional person) during the care for moderate sedation. Becker also sets forth Becker’s expert opinion procedures to monitor the patient opined that there were simply too many that the doses recorded in the charts he 53 breathing and EKG via precordial patients receiving deep-sedation levels reviewed were sufficiently high that, at stethoscope or capnography. Gov’t Ex. of medication during the time he least in his view, monitoring, staff, 15 at 1; Tr. 62–64, 85–86. equipment, and general anesthesia analyzed Respondent’s records to Dr. Becker identified seventeen attribute that number to medication training beyond what was apparent in records of Respondent’s sedation the reviewed documents would have resistance. Tr. 84–85. Although Becker dispensing that he characterized as identified four occasions where been required. Id. Becker noted that egregiously below the expected standard despite what he characterized as medication reversal drugs were of care. Gov’t Ex. 15 at 1. Among these administered by the Respondent, the ‘‘staggering doses,’’ the records he seventeen records are instances where: evaluated reflected only four occasions records shed no light on whether that (1) A patient was administered 55 mgs was done pursuant to persistent where reversal drugs were administered, of midazolam and 200 micrograms of and that the records reflected none of somnolence or some other complication. Fentanyl over a span of 15 minutes; (2) Tr. 112–13. Finally, Dr. Becker provided the complications such as hypotension a patient was administered 40 mgs of or respiratory arrest that he would have his conclusion that based on the midazolam, 40 mgs of Diazepam and likelihood of widespread expected to encounter with doses at 100 mcgs of fentanyl over a span of those levels. Id. At 2. In Becker’s unconsciousness among the patients, approximately 15 minutes; (3) a patient the Respondent’s lack of training and opinion, ‘‘[t]his raises a question as to was administered 30 mgs of midazolam, whether these doses were actually certification in general anesthesia, the 10 mgs of diazepam and 100 mcgs of lack of complications documented in administered [because] [f]ollowing these fentanyl over a span of approximately a dosages, serious complications would the record regarding breathing minute; and (3) a patient was obstruction, he entertains serious most surely have been encountered.’’ Id. administered 100 mgs of midazolam, 70 According to Dr. Becker, in most cases questions as to whether the amounts of mgs of diazepam and 200 mcgs of where midazolam is used for conscious controlled substances documented in fentanyl over a time span of sedation, the required level of sedation the sedation reports were actually approximately 90 minutes. Id. In his could be obtained by 10 mgs or less, but administered to the enumerated report and his testimony, Becker affirms that more midazolam might be needed patients. Tr. 90–92. In Becker’s view, that the medications in these doses for a longer appointment.51 Tr. 58–60. since these high levels of medications would have rendered the patients were unlikely to have been unconscious. Id. at 1; Tr. 79, 84–85, 87– 49 Dr. Becker testified that sedation in excess of administered to this number of patients conscious sedation is generally utilized in cases without evidence of adverse effect, involving special needs, such as physically or Gov’t Ex. 15 at 1, does not provide any insight on either the sedation records he reviewed mentally handicapped patients. Tr. 76. the issue of diversion risk or whether the 50 Dr. Becker testified that it was common Respondent’s continued DEA registration is were simply erroneous, or the practice among dentists to have these records inconsistent with the public interest, and has medications listed in those records were completed by staff members during dental played no part in this recommended decision. See not administered as documented and procedures. Tr. 146–47. This is consonant with the Gonzales v. Oregon, 546 U.S. 243, 274 (2006). something else became of them. Tr. 93. testimony of Ms. Crockett that office staff merely 52 Dr. Becker testified that the sedation logs reflect acted as a scrivener with regard the document, medication given, but ordinarily do not reflect any Dr. Becker testified that the ‘‘staggering’’ entering the numbers dictated by the Respondent. rationale for higher-than-normal doses of sedation doses of controlled substances reflected Tr. 183–85. medication or sufficient data from which that as administered in the sedation records 51 Dr. Becker’s difference of professional opinion decision could be extrapolated. Tr. 66–67, 74, 76– he reviewed support his conclusion that with the Respondent’s practice regarding the 77. relative merits of combining midazolam and 53 During his testimony, the Respondent stated the Respondent’s handling of controlled diazepam versus increasing the doses of those that his patients were routinely monitored by EKG substances was ‘‘below the standard of respective medications, Tr. 77–78, 731–32, 735; and pulse oximeter. Tr. 736. practice.’’ Tr. 94–95.
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At one point during his testimony, Dr. violated the regulations by squirting previously certified as a pharmacist in Becker conceded that on one occasion controlled substances remaining in the Ohio.57 Resp’t Ex. G. medication was drawn for a patient 54 hypodermic needles after procedures In his affidavit, Dr. Weaver described who did not appear for treatment, and into the sink, Becker (the Government’s what he characterized as a ‘‘concern the medication was disposed of. Tr. own expert) testified that this is his * * * as to the proper procedure to 115–17. In an unfortunate choice of practice as well. Tr. 55–58, 100–01. dispose of injectable drugs remaining words employed during his re- Furthermore, Dr. Becker expressed when perhaps 5 [milliliters’ (ML)] is evaluation of whether the record agreement with the Respondent’s expert drawn into a syringe but only 4 ML is relating to the drawn and discarded that the DEA regulations on disposal are actually injected into the patient’s medication was comparable to the other unclear. Tr. 105. [intravenous (IV)].’’ Resp’t Ex. J at ¶ 2. records he characterized as ‘‘egregious,’’ On the issue of whether the Although Dr. Weaver’s report did not Dr. Becker stated that although he still observations of the Respondent’s address a practitioner’s obligation to found the practice of drawing sedation moodiness, grouchiness, and erratic comply with regulatory requirements medication prior to patient arrival behavior support the concerns of his under 21 CFR 1307.21,58 after providing ‘‘strange,’’ ‘‘odd,’’ and ‘‘funny,’’ he former employees that he was abusing some anecdotal evidence relative to believed that he ‘‘should be punished’’ the controlled substances acquired for logistical concerns attendant upon for his initial characterization. Tr. 117– procedures in his practice, Dr. Becker disposal issues, his affidavit set forth his 23. Nonetheless, Dr. Becker stated that testified that an individual under the view that: the practice of drawing medication prior influence of midazolam would likely [t]he standard practice among dentists in to the arrival of a patient did not impact exhibit symptoms of lethargy or Ohio * * * is for the dentist to log the dose on documentation obligations, and did calming. Tr. 69, 71. Thus, none of the of the drug taken from his inventory, record not fall below an acceptable level of characteristics highlighted by the the dose given to the patient in the patient practice. Tr. 145, 123. sedation/anesthesia record and record any Respondent’s former employees in their ‘‘wasted’’ doses in either the drug log, the On the issue of the ‘‘track marks’’ that testimony or during the ‘‘intervention’’ were purportedly seen on the patient’s anesthesia record or both as soon as conducted in his office support an the case is concluded. The ‘‘wasted’’ drug is Respondent’s arms by his staff, Dr. inference that the Respondent was typically squirted into the sink (no longer Becker acknowledged that, as part of his abusing the controlled-substance politically correct because of community teaching responsibilities, he instructs medications he employed to sedate his water trace contamination), into the trash or students on establishing IV access. Tr. patients. sharps container, or into the soil of potted 33. Consistent with the position taken Dr. Becker was by no means an ideal plants as a source of nitrogen-containing by the Respondent, Dr. Becker testified expert witness. He was vague about the 57 Although initially noticed as an expert witness that he does allow patients to practice method that his ‘‘most egregious’’ list of IV insertion on himself, including on by the Respondent, Dr. Weaver was never called as cases were selected, and retreated from a witness at the hearing. the Respondent’s counsel, the backs of his hands. Tr. 33–34, 135. his designation of one case as egregious citing a logistical issue, represented that Dr. Weaver Becker conceded that some days the by the flip remark that he ‘‘should be was unavailable, and that this information only became available to counsel on the eve of the practice attempts by his students have punished’’ 56 for his initial opinion in him resembling a ‘‘pin cushion,’’ 55 but commencement of the hearing. Tr. 9. Accepting this regard. Still, his testimony was counsel’s representation of late notice of Dr. he described the needle punctures sufficiently authoritative, consistent, Weaver’s availability, it is not insignificant that no routinely made on arms by the relatively continuance request or other accommodation (such and reasonable that it will be credited as video teleconferencing) was requested by the small needles handled by students in and afforded significant weight in this his class, which in his view, ‘‘generally Respondent to facilitate the witness’s testimony. A recommended decision. perhaps unintended consequence of what may well [does not] leave much of a mark.’’ Tr. The Respondent’s case-in-chief have been a tactical decision on the part of the 34. Dr. Becker also explained that a Respondent and his counsel, is that Dr. Weaver was consisted of his own testimony and an never offered or accepted as an expert in anything ‘‘difficult attempt’’ by a less skilled affidavit from Dr. Joel Weaver, D.D.S., individual can result in a hematoma, or during the proceedings. Confounding the issue Ph.D., an individual he previously further, the Government’s expert, Dr. Becker, bruise. Tr. 34–35. Dr. Becker testified noticed as an expert witness. The conceded that Dr. Weaver is ‘‘well more experienced’’ than he is in terms of both training that the scars generally referred to as affidavit executed by Dr. Weaver was ‘‘track marks’’ are the product of and experience. Tr. 106. DEA’s regulations comport admitted on motion and without with the generally reasonable notion that repeated attempts into the same veins Government objection during the information received through affidavit must be by habitual drug abusers. Tr. 37–38. hearing. Resp’t Ex. J. weighted consistent with the opposing party’s lack According to Dr. Becker, those of cross examination ability. 21 CFR 1316.58 According to his curriculum vitae, Dr. experienced teachers who allow their (‘‘Affidavits admitted into evidence shall be Weaver served from 1981–2006, as a considered in light of the lack of opportunity for students to practice venipuncture on professor in the Department of cross-examination in determining the weight to be them in class minimize the risk of Anesthesiology at the Ohio State attached to the statements made therein.’’) scarring by requiring their students to Accordingly, as the record now stands, the University. Resp’t Ex. G, at 1. He holds avoid repeated attempts at the same Government’s expert testified that Dr. Weaver is a a Bachelors of Science from Ohio superior expert, but no one has offered him to the location. Tr. 37–38. It is Dr. Becker’s Northern University and a D.D.S., from tribunal as such, and the Government, by surprise opinion that poorly-done clinical the Ohio State University College of at the outset of the hearing, has not been afforded attempts at IV insertions by students are any manner of cross-examination. Still, the Dentistry. Resp’t Ex. G, at 1. more likely than drug use to produce Government consented to the admission of Dr. Additionally, Dr. Weaver has completed Weaver’s affidavit, and did not make any attempts bruising. Tr. 39. A bruise left by an residencies at the Ohio State University to compel his appearance by process. improper IV insertion could last for 58 in both Anesthesiology and in The obligation to interpret the law and ‘‘several’’ days. Tr. 40. regulations falls squarely within the purview of this Ambulatory General Anesthesia and Notwithstanding the Government’s tribunal initially, and then secondarily with the Sedation. Id. Dr. Weaver also holds a posture that the Respondent has Agency. Dr. Weaver’s purported legal analysis of Ph.D. in pharmacology from the Ohio the regulations and DEA’s interpretation of the State University, and has been applicable requirements has been accepted into 54 The Respondent testified that this patient did evidence without objection as part of the affidavit not appear for her appointment. Tr. 784–85. he prepared, but cannot control the legal analysis 55 Tr. 135. 56 Tr. 117–23. employed by this recommended decision.
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fertilizer. Some practitioners have a witness The Respondent testified on his own allegedly sedation-resistant patients initial the record of ‘‘wasted drug.’’ behalf at the hearing. According to the than he had encountered in his thirty Resp’t Ex. J, at ¶ 5. Respondent, he holds a Bachelor of Arts years of practice, the Respondent stated Dr. Weaver also provided his opinion from the University of Toledo and a that Becker’s opinion was borne of the regarding what he characterized as D.D.S. from the Ohio State University.59 fact he is a ‘‘general dentist,’’ and not a ‘‘mobile sedation and anesthesia The Respondent also holds a certificate specialist, such as the Respondent. Tr. practitioners.’’ Resp’t Ex. J, at ¶ 9. In in periodontics from the Case Western 748–49. The problem here is that Dr. essence, the practice of mobile sedation Reserve University School of Dentistry, Becker (whom the Respondent and anesthesia is where a practitioner a certificate in Zygoma Implant acknowledges knowing on a has ‘‘one permanent office address placement from the Northwestern professional basis even before the 61 where they do business and that is School of Dentistry and a IV proceedings began), testified that his where they are registered for their DEA certification from the University of entire practice is focused on the license. They order, receive, and Southern California School of Dentistry, administration of conscious sedation to securely store controlled substances at and from 1996 through the present he patients for other practitioners. Tr. 23. that single address and maintain all has maintained a private practice in Again, the Respondent seeks to confuse 60 drugs logs and patient records at that Norwalk and Avon, Ohio. Id. the difference between the one office location.’’ Resp’t Ex. J, at ¶ Respondent testified that he limits his specialization required to perform 10. The practitioner will then dental practice to the field of periodontic dental work with some administer the drugs at various dental periodontics, ‘‘which involves bone special expertise in hard-to-sedate 62 and medical offices where anesthesia or grafting, dental implants [and] gum and patients. When queried on the issue of whether sedation might be required. Id. In any bone surgery.’’ Tr. 656. The Respondent his doses were high compared to other year, a mobile anesthesiologist ‘‘may testified that because many of his practitioners, the Respondent service more than 50–100 offices.’’ Id. In patients ‘‘are very apprehensive in acknowledged that his former light of the foregoing, Dr. Weaver opines regards to that type of procedure,’’ IV instructor, and the author of the that ‘‘[i]t would be impractical if not sedation is a ‘‘critical component’’ of his textbook he uses in connection with his impossible for the anesthesiologist or practice. TR. 660. The Respondent testified that his teaching responsibilities, suggests that other healthcare worker to have a practice is ‘‘all referral-based,’’ and he the range of acceptable midazolam separate DEA license for every location receives referrals of patients who doses of 2.5 to 7.5 milligrams. Tr. 732– they service so long as the drugs and require treatment ‘‘that’s a little bit more 33. The Respondent even acknowledged records are not stored at those multiple advanced’’ and who sometimes present that one patient received 70 milligrams locations but rather at their single office ‘‘very difficult cases.’’ Tr. 657–58. When of the medication during a procedure, location.’’ Id., at ¶ 11. Inasmuch as the asked to explain what he meant by an amount that the even the Respondent Government has not alleged that the ‘‘very difficult cases’’ and ‘‘more characterized as ‘‘a large amount.’’ Tr. Respondent was required to obtain a advanced’’ treatment, the Respondent 743, 745. Another 100 milligram dosage COR to take controlled substances to clarified that he was referring to the fact was also acknowledged as ‘‘high’’ by the varying locations and return and store that there was a limited number of Respondent. Tr. 754. The Respondent them as required, Dr. Weaver’s periodontics specialists in the also agreed with the Government’s endorsement of such a procedure adds geographic area of his practice, and expert that his sedation records nothing here. The Respondent is alleged these were patients who required reflected ‘‘a high proportion of to have administered and stored treatment in that specialty. Tr. 658. The [sedation-] resistant patients.’’ Tr. 734. controlled substances at an unregistered Respondent stated that there was also a The explanation that the Respondent permanent private practice, a scenario limited number of dentists in his volunteered for this phenomenon served which Dr. Weaver, even if assumed geographic area who practiced him worse than if he had remained competent to express a view on a this conscious-sedation dentistry. Tr. 659. silent on the point. The Respondent issue of law, did not address. Thus, from the Respondent’s testimony stated: While Dr. Weaver’s qualifications are it is clear that it was not that Like I had stated earlier, I am a specialist, doubtless impressive, even setting aside periodontists were referring difficult the absence of any foundational all right. I get cases sent to me that a lot of patients to him who were difficult to other people cannot handle, and so that is predicate for the presentation of expert anesthetize, but that dentists were not unusual. I’ve got a lot of medically opinion, his affidavit provides no expert referring patients his way who simply compromised patients that do come in the opinion that sheds light on any issue needed periodontic treatment or desired door for services, because other general that must be decided by this conscious sedation within the practitioners are not comfortable handling recommended decision. However, his Respondent’s geographic area. Tr. 749. those patients. observation that his experience that Thus, the Respondent’s assertion that Tr. 734 (emphasis supplied). While it is Ohio practitioners routinely dispose of higher doses are required because he is unquestionably true (as acknowledged small amounts of residual controlled a specialist is a non sequitur. elsewhere in this recommended substance by squirting into drains all The Respondent subsequently decision) that decisions regarding over the state is consistent with the diminished his credibility even further testimony provided by the on the issue of patient resistance. When 61 Tr. 747–48. Government’s expert, its investigator, asked about Dr. Becker’s assertion that 62 Even temporarily suspending for a moment the and its lay witnesses, and will be the sedation logs from the Respondent’s undisputed reality that the Government’s expert practices exclusively in the area of conscious credited in these proceedings. Weaver’s practice that he examined had more sedation for dentists and sees all manner of opinion concerning the wisdom or patients, had the Respondent taken the view that logistical practicalities of the relevant 59 The Respondent’s CV was received into the seemingly high doses were attributable to DEA regulations regarding the evidence. Resp’t Ex. E. nothing more than a simple difference of opinion authorized manner of controlled 60 The Respondent testified that he also owns a between professionals his position would have been dental clinic at his registered location in likely more effective, and certainly less revealing on substance disposal have been afforded Milwaukee, but does not practice IV sedation at that the issue of credibility than the analytical red no weight whatsoever. location. Tr. 661–64; see also Gov’t Ex. 2. herring of widespread resistance.
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medical care which are unrelated to the anything else other than that. This patient is offered his arm for inspection, but also issue of diversion are beyond the not dead. offered to submit to a urinalysis.66 Tr. jurisdiction of DEA,63 the Respondent Tr. 742. One problematic aspect of the 676–79. Consistent with Brinks’ attempted to explain the high (by his Respondent’s explanation is that as the testimony, the Respondent recalled own admission) doses he administered custodian of his own patient charts, volunteering during the visit that he by positing that as he had explained contrary to his testimony, he is the one also was operating a practice in the earlier, because he was a specialist he person who actually could have Avon, Ohio 67 where controlled utilized higher levels of medication on authoritatively and conclusively substances were stored and dispensed. his patients, which tended present more divined all these factors about these Tr. 677–78. difficult cases. Id. Even a cursory review patients, but chose not to do so. Tr. 746, The Respondent provided additional of what he had ‘‘stated earlier’’ in his 749–51, 807. Another possible insights into potential distractors that testimony reveals that he gets explanation offered by the Respondent existed at the time of the DEA periodontic referrals because there are is that some of his patients were well- inspection, such as his heavy patient not many periodontists near him, not to-do, elective surgery veterans who traffic on the day of the visit and his that he gets unsedatable patients who may have had sedation for other elective high level of other professional must routinely be sedated with copious surgeries in the past. Tr. 750–51. Yet commitments during that period in his amounts of controlled substances. Tr. another possible explanation offered by career. Tr. 664–67, 676. Of even greater 749. His testimony in this regard was the Respondent is that some of his import, was the Respondent’s account of misleading. The Respondent was patients may have had histories of drug his treatment for a mental health issue attempting to blur the line of his abuse that they were reluctant to during this time. The Respondent specialization in periodontics and share.64 Tr. 758. The Respondent’s initially sought treatment from his conscious sedation with a hypothetical election to spin all manner of physician, progressed through a expert practitioner who is routinely hypothetical contingency to provide therapist, and ultimately sought the aid sought by others in his field to potential explanations for the dosing of a psychiatrist. Tr. 686–88, 726–28. consciously sedate patients who had levels is a tacit acknowledgement that The Respondent recounted various been previously found difficult to his dosing levels were so high that they medications prescribed to address his sedate. This attempt to muddle the actually did require additional mental health symptoms, and how, in record did not enhance his credibility explanation; a proposition that he March-April 2009, one attempted course and has drawn attention to an issue that eventually conceded. Tr. 750. The point of prescribed Lamictal landed him in might otherwise have lived in benign, is hammered home by the Respondent’s the Cleveland Clinic to address a analytical obscurity. terse conclusory assurance that the medication-caused decompensation. Tr. The Respondent, the holder of an patient did not expire as a result of his 686–89. This setback resulted in the Ohio-issued conscious sedation permit, sedation procedures. Id. If, as it seems Respondent taking a week off from testified that he monitors his IV from the Respondent’s lengthy diatribe work. Tr. 689–90. The Respondent also sedation patients ‘‘under an EKG strip, on the subject, the only possible discussed the frustrations associated as well as a pulse oximeter,’’ and he explanation in the high dosage levels with the trials of psychiatric medication and side-effects that included unambiguously stated that among the lies in extraordinary contingencies, it concentration diminishment and mood sedation records reviewed by the would seem reasonable that these lability. Tr. 689–92. The Respondent Government’s expert, Dr. Becker, all contingencies would be at his disposal recalled the Friday morning meeting patients remained conscious during the to produce. Another problematic issue that his staff has euphemistically sedation employed in the procedures. is that the sedation logs associated with dubbed an ‘‘intervention.’’ Tr. 786. Tr. 736–37. In fact, the Respondent these high-dose patients note no current According to the Respondent, the term followed up this response with an medications in the block designated for ‘‘intervention’’ was not utilized, unsolicited, detailed explanation of the that purpose. Tr. 742, 747, 758. This is suspicions of drug abuse on his part reasons he is confident that all patients another example of the Respondent’s were conscious. Tr. 737–38. The were never discussed, and the meeting answer raising the relative importance was a vehicle to notify that staff that he Respondent declared that ‘‘if you were of an inquiry that easily could have to ask my staff, they’ll tell you nobody would be out of the office for a week, remained in the shadows. a necessity precipitated by his adverse has ever been out of consciousness in The Respondent’s account of DI reaction to Lamictal. Tr. 786–87. The my office.’’ Tr. 755. When pressed on Brinks’ May 2009 visit to his Norwalk Respondent described how his the issue of the level of medication of office was generally consistent with professional commitments caused stress one patient in particular, the Brinks’ version. Tr. 671–79. It was the that, at least in his view, contributed to Respondent replied: Respondent’s recollection that when his mental health difficulties, and that Brinks suggested his own drug use as a This patient, I can’t tell you if this person some of this was ameliorated when he was on a Fentanyl patch, which might source for shortages,65 he not only require more medications. I can’t tell you if retreated from his teaching responsibilities at Case Western in 2010. this patient has had multiple IVs at other 64 In response to a series of leading questions locations. Multiple occasions of having drugs posed by his counsel, the Respondent also Tr. 690–91. such as benzodiazepines in your body, you suggested that obesity, age, and past surgical history The Respondent commendably took develop a cellular adaption, all right. What could also be contributing factors to the high dosage the evidence of what his former staff happens is your metabolism becomes a levels that the Respondent was routinely using on members considered erratic behavior tolerance to that, and so what happens, it his patients. Tr. 805–06. The Respondent also head on, and acknowledged that he is ‘‘a takes more of the drug to get the same type mentioned diabetes and smoking. Tr. 806. Informative as this list may have been, the record of effect that you did maybe from the first 66 time that you ever used that drug. So I have— contains no evidence that so much as a single The Respondent testified that he has been patient described in the sedation logs was impacted randomly drug tested about once a year by Fisher based on not having the medical history from by any of these factors. Titus Hospital without positive results. Tr. 709, the patient’s chart here, I can’t answer 65 The Respondent also recalled that DI Brinks 730, 761–62. similarly accused his office manager of abusing 67 The Respondent testified that separate 63 See Gonzales v. Oregon, 546 U.S. 243, 274 controlled substances that were not accounted for controlled substance sedation logs were maintained (2006). in the paperwork presented. Tr. 679–80. at the Avon office. Tr. 694.
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very hard person to work for,’’ and that the word ‘‘we’’ when describing the Norwalk, but when pressed on why he has thrown surgical instruments in manner in which the amounts were there were so many duplicates among the past, and has yelled at more than recorded. Tr. 680–84. If a staff member the sedation log pages, the Respondent one employee during his career as a were the sole individual charged with stated that his office staff (specifically, dentist. Tr. 790–92. On the subject of his monitoring and entering the amounts, it ‘‘the front desk people’’) 70 prepared the late morning arrival and puncture is unlikely that the Respondent would logs and that he ‘‘rel[ied] on other wounds on the tops of his hands on a use the word ‘‘we.’’ Based on the people to help [him] me try to keep day where he was not teaching at Case Respondent’s testimony that it was his track of this.’’ Tr. 697–700. Since DEA Western, the Respondent offered no practice to maintain a contemporaneous already knew the Respondent kept two explanation, other than his assertion record of administered medication on a sets of logs, consolidating them into that he is ‘‘a picker,’’ who picks at the paper towel that was then routinely one, disorganized version would skin on his head, and that he has a discarded, and the absence of any accomplish no reasonable purpose. playful, large Newfoundland dog. Tr. conceivable motivation on the part of Puzzlingly, the Respondent’s counsel 792–94. the staff members to fabricate such a then attempted to shift responsibility for Regarding the allegations that seemingly innocuous detail (at least to the duplicates to staff at his law office. controlled substances were periodically them) of standard operating procedure, Tr. 701. It would simply make no sense unsecured at the Avon office, the coupled with what appeared to be that the clerical staff at counsel’s office Respondent testified that it was the genuine confusion (not defensiveness) would spontaneously supplement the practice of his office to transport in their demeanor when asked about the sedation logs provided by their client controlled substances to the Avon Office subject, the Respondent’s account of with multiple copies of randomly in a bin about the size of a shoe box. Tr. this process is less credible than the selected pages. Likewise, the fact that 768–69. The bin was taken into the account of his former employees. The the version brought to the hearing had sterilization room of the Avon Office by Government’s expert, Dr. Becker, entries that were not initially presented a cart, and staff members were testified that in an office setting, to DI Brinks, and those additions are not ‘‘supposed to put [the controlled auxiliaries of the practitioner routinely readily apparent from the documents,71 substances] on [the Respondent’s] desk make these entries in the sedation logs, also casts doubt on their reliability. [where] they get locked.’’ Tr. 768–69. but he did not indicate whether it was Paradoxically, the Respondent’s version Despite this policy, the Respondent did based exclusively on the word of the of who bears the responsibility of a not dispute that controlled substances practitioner or on their own personal plethora of duplicate records is the more were left on the counter, or that they observations. Tr. 146–47. The credible plausible account, although it reflects may have been left on the counter when evidence supports the testimony poorly on his credibility, his the Ohio Dental Board investigators supplied by Crockett and Tetzloff that recordkeeping, or both. In an conducted their inspection. Tr. 770, they were tasked with recording the acknowledgement of this reality, the 772–74. However, the Respondent amounts of medication dictated by the Respondent ultimately conceded that claimed that ‘‘at some point [the drugs] Respondent. the responsibility of the preparation of would have gotten to my office.’’ Tr. The sedation logs that were noticed the logs as they were provided ‘‘falls to 770. and initially provided by the [him].’’ Tr. 703. Although the Respondent Respondent was another aspect of this During his testimony, when the acknowledged that he teaches his case that did not reflect well on his Respondent was asked to provide an students to simultaneously record credibility. The Respondent testified account of what is required of a amounts of controlled substances that separate logs were generated and registrant ‘‘[b]ased on what you’ve 69 utilized during conscious sedation maintained at Norwalk and Avon, but learned’’ from DI Brinks’ testimony, he procedures on the form designed for a consolidated version was provided to replied as follows: that purpose, his own practice was to the tribunal. Resp’t Ex. A (ID). Whether I understand what [Brinks is] saying that write the administered doses on a paper the Respondent’s account of who every syringe I’ve got left over, I guess I’ve towel and transfer those numbers to the completed the sedation logs or the got to package it up and send it to either the sedation logs later. Tr. 680–84. account provided by his former Pharmacy Board or have the Pharmacy Board employees is credited, no one who come or send it to [Brinks’] office in Curiously, the Respondent’s testimony Cleveland, as I understand it now.’’ diverged from that of his testifying staff testified at the hearing suggested that members to the extent that they were multiple pages of entries were Tr. 709. Thus, by the Respondent’s unambiguous and unanimous in their simultaneously prepared or maintained, account, he has first learned of his assertion that when completing sedation yet the version of the logs initially disposal obligations as a registrant as he logs they acted as scriveners, merely provided by the Respondent was so sat at his own revocation hearing and recording the amounts of medication replete with duplication that a modified guesses that he is required to send it to version with the duplications culled out that the Respondent called out.68 The an appropriate place for disposal. See was prepared by his counsel after the Respondent, for his part, claims that the also, Tr. 776. Remarkably, although commencement of the hearing. Resp’t staff members independently divined served in August 2010 with an OSC Ex. A–1; Tr. 703–05, 713–14. the medication amounts by their own which alleges, inter alia, that he has Additionally, although the sedation log examination of the syringes while the been improperly disposing of controlled pages contained an internal capacity to procedures were in progress and entered substance without notifying DEA, the designate them as belonging to Norwalk, those values onto the sedation logs Respondent testified that his practice Avon, or another office, the pages has not altered the manner in which it without his input. Tr. 695–97, 743. But provided did not designate any location. has been disposing of residual in earlier testimony, when describing Resp’t Ex. A–1; Tr. 756–57. The controlled substances (to wit, by his paper-towel procedure, he employed Respondent testified that as a result of squirting it down the drain without DEA Brinks’ visit, he took the sedation logs approval), and did so as recently as the 68 In addition to the testimony of Tetzloff and Crockett, this version of events is consistent with and the medication from Avon to the account provided by another employee, Peg 70 Tr. 703. Herner, in her conversation with DI Brinks. Tr. 456. 69 Tr. 694. 71 Tr. 591–92.
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week before the hearing. Tr. 762–64, combination of factors may be relied production then shifts to the 777–78. More remarkable still, is the upon, and when exercising authority as Respondent to present sufficient Respondent’s testimony that, although an impartial adjudicator, the mitigating evidence to assure the he has stopped storing controlled Administrator may properly give each Administrator that he or she can be substances at Avon, he continues to factor whatever weight she deems entrusted with the responsibility administer controlled substances there, appropriate in determining whether a commensurate with such a registration despite the fact that it has never been a registration should be rejected. Morall v. and that revocation is not appropriate. registered COR location. Tr. 764–66. DEA, 412 F.3d 165, 173–74 (D.C. Cir. Steven M. Abbadessa, D.O., 74 FR When asked why he has persisted in 2005); JLB, Inc., d/b/a Boyd Drugs, 53 10077, 10078, 10081 (2009); Medicine this conduct, notwithstanding the FR 43945, 43947 (1988); David E. Shoppe-Jonesborough, 73 FR 364, 387 current charges, the Respondent Trawick, D.D.S., 53 FR 5326, 5327 (2008); Samuel S. Jackson, D.D.S., 72 FR explained that he finds proper disposal (1988); see also Joy’s Ideas, 70 FR 23848, 23853 (2007); Morall, 412 F.3d at ‘‘to be very laborious.’’ Tr. 775–76. 33195, 33197 (2005); David H. Gillis, 174; Humphreys v. DEA, 96 F.3d 658, Respondent also testified that every M.D., 58 FR 37507, 37508 (1993); Henry 661 (3d Cir. 1996); Shatz v. U.S. Dept. dentist he knows disposes of substances J. Schwarz, Jr., M.D., 54 FR 16422, of Justice, 873 F.2d 1089, 1091 (8th Cir. in a similar way and that, therefore he 16424 (1989). Moreover, the 1989); Thomas E. Johnston, 45 FR ‘‘didn’t know if that [regulation] really Administrator is ‘‘not required to make 72311, 72312 (1980). Further, ‘‘to rebut pertained to me.’’ Tr. 780–81. findings as to all of the factors * * *.’’ the Government’s prima facie case, [the The issue of the Respondent’s Hoxie v. DEA, 419 F.3d 477, 482 (6th Respondent] is required not only to credibility was a mixed bag. As Cir. 2005); see also Morall, 412 F.3d at accept responsibility for [the discussed at length, supra, the 173–74. The Administrator is not established] misconduct, but also to Respondent’s answers were required to discuss consideration of demonstrate what corrective measures intermittently inconsistent, implausible, each factor in equal detail, or even every [have been] undertaken to prevent the and periodically lacking in detail. There factor in any given level of detail. reoccurrence of similar acts.’’ Jeri were some issues, such as his Trawick v. DEA, 861 F.2d 72, 76 (4th Hassman, M.D., 75 FR at 8236. Normal background, education, and mental Cir. 1988) (the Administrator’s hardships to the practitioner and even health issues, where his testimony had obligation to explain the decision to the surrounding community that are sufficient indicia of reliability to be rationale may be satisfied even if only attendant upon the lack of registration credited, and there were other matters, minimal consideration is given to the are not relevant considerations. Linda several of which were in conflict with relevant factors and remand is required Sue Cheek, M.D., 76 FR 66972, 66973 other evidence, where his version of only when it is unclear whether the (2011); Abbadessa, 74 FR at 10078; see events must be found to be less than relevant factors were considered at all). also Gregory D. Owens, D.D.S., 74 FR completely credible. The balancing of the public interest 36751, 36757 (2009). Additional facts required for a factors ‘‘is not a contest in which score While the burden of proof at this resolution of the issues in this matter is kept; the Agency is not required to administrative hearing level is a are set forth below. mechanically count up the factors and preponderance-of-the-evidence determine how many favor the standard, see Steadman v. SEC, 450 U.S. The Analysis Government and how many favor the 91, 100–01 (1981), the Administrator’s Pursuant to 21 U.S.C. 824(a)(4) (2006), registrant. Rather, it is an inquiry which factual findings will be sustained on the Administrator 72 is permitted to focuses on protecting the public interest review to the extent they are supported revoke a COR if persuaded that the * * *.’’ Jayam Krishna-Iyer, M.D., 74 FR by ‘‘substantial evidence.’’ Hoxie, 419 registrant ‘‘has committed such acts as 459, 462 (2009). F.3d at 481. And while ‘‘the possibility would render * * * registration under In an action to revoke a registrant’s of drawing two inconsistent conclusions section 823 * * * inconsistent with the COR, the DEA has the burden of proving from the evidence’’ does not limit the public interest * * *.’’ The following that the requirements for revocation are Administrator’s ability to find facts on factors have been provided by Congress satisfied. 21 CFR 1301.44(e) (2011). The either side of the contested issues in the in determining ‘‘the public interest’’: Government may sustain its burden by case. Shatz, 873 F.2d at 1092; Trawick, (1) The recommendation of the showing that the Respondent has 861 F.2d at 77, all ‘‘important aspect[s] appropriate State licensing board or committed acts inconsistent with the of the problem,’’ such as a Respondent’s professional disciplinary authority. public interest.73 Jeri Hassman, M.D., 75 defense or explanation that runs counter (2) The [registrant’s] experience in FR 8194, 8235–36 (2010). Once DEA has to the Government’s evidence, must be dispensing, or conducting research with made its prima facie case for revocation considered. Wedgewood Vill. Pharmacy respect to controlled substances. of the registrant’s COR, the burden of v. DEA, 509 F.3d 541, 549 (D.C. Cir. (3) The [registrant’s] conviction record 2007); Humphreys, 96 F.3d at 663. The under Federal or State laws relating to 73 The Agency’s conclusion that past performance ultimate disposition of the case must be the manufacture, distribution, or is the best predictor of future performance has been in accordance with the weight of the dispensing of controlled substances. sustained on review in the courts, Alra Labs. v. evidence, not simply supported by DEA, 54 F.3d 450, 452 (7th Cir. 1995), as has the enough evidence to justify, if the trial (4) Compliance with applicable State, Agency’s consistent policy of strongly weighing Federal or local laws relating to whether a registrant who has committed acts were to a jury, a refusal to direct a controlled substances. inconsistent with the public interest has accepted verdict when the conclusion sought to (5) Such other conduct which may responsibility and demonstrated that he or she will be drawn from it is one of fact for the not engage in future misconduct. Hoxie, 419 F.3d jury. Steadman, 450 U.S. at 99 (internal threaten the public health and safety. 21 at 483; Ronald Lynch, M.D., 75 FR 78745, 78749 U.S.C. 823(f) (2006 & Supp. III 2010). (2010) (Respondent’s attempts to minimize quotation marks omitted). ‘‘[T]hese factors are considered in the misconduct held to undermine acceptance of Regarding the exercise of disjunctive.’’ Robert A. Leslie, M.D., 68 responsibility); George Mathew, M.D., 75 FR 66138, discretionary authority, the courts have 66140, 66145, 66148 (2010); East Main Street recognized that gross deviations from FR 15227, 15230 (2003). Any one or a Pharmacy, 75 FR 66149, 66165 (2010); George C. Aycock, M.D., 74 FR 17529, 17543 (2009); past agency precedent must be 72 This authority has been delegated pursuant to Abbadessa, 74 FR at 10078; Krishna-Iyer, 74 FR at adequately supported, Morall, 412 F.3d 28 CFR 0.100(b) and 0.104 (2010). 463; Medicine Shoppe, 73 FR at 387. at 183, but mere unevenness in
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application does not, standing alone, investigation by state authorities is controlled substances or their DEA COR, render a particular discretionary action pending is neither supportive of and who have not presented sufficient unwarranted. Chein v. DEA, 533 F.3d revocation nor antithetical to it. That a mitigating evidence to assure the 828, 835 (D.C. Cir. 2008) (citing Butz v. state has not acted against a registrant’s [Administrator] that they can be trusted Glover Livestock Comm. Co., 411 U.S. medical license is not dispositive in this with the responsibility carried by such 182, 188 (1973)), cert. denied, __ U.S. administrative determination as to a registration.’’ Jackson, 72 FR at 23853; __, 129 S. Ct. 1033, 1033 (2009). It is whether continuation of a registration is Leo R. Miller, M.D., 53 FR 21931, 21932 well-settled that since the consistent with the public interest. (1988). Where evidence in a particular Administrative Law Judge has had the Patrick W. Stodola, M.D., 74 FR 20727, case reflects that the Respondent has opportunity to observe the demeanor 20730 (2009); Jayam Krishna-Iyer, 74 FR acquired convictions relating to the and conduct of hearing witnesses, the at 461. It is well-established Agency manufacture, distribution, or dispensing factual findings set forth in this precedent that a ‘‘state license is a of controlled substances, those recommended decision are entitled to necessary, but not a sufficient condition convictions must be carefully examined significant deference, Universal Camera for registration.’’ Leslie, 68 FR at 15230; and weighed in the adjudication of Corp. v. NLRB, 340 U.S. 474, 496 (1951), John H. Kennedy, M.D., 71 FR 35705, whether the issuance of a registration is and that this recommended decision 35708 (2006). Even the reinstatement of in the public interest. 21 U.S.C. 823(f). constitutes an important part of the a state medical license does not affect Although the standard of proof in a record that must be considered in the the DEA’s independent responsibility to criminal case is more stringent than the Administrator’s decision, Morall, 412 determine whether a registration is in standard required at an administrative F.3d at 179. However, any the public interest. Mortimer B. Levin, proceeding, and the elements of both recommendations set forth herein D.O., 55 FR 9209, 8210 (1990). The federal and state crimes relating to regarding the exercise of discretion are ultimate responsibility to determine controlled substances are not always co- by no means binding on the whether a registration is consistent with extensive with conduct that is relevant Administrator and do not limit the the public interest has been delegated to a determination of whether exercise of that discretion. 5 U.S.C. exclusively to the DEA, not to entities registration is within the public interest, 557(b) (2006); River Forest Pharmacy, within state government. Edmund Inc. v. DEA, 501 F.2d 1202, 1206 (7th Chein, M.D., 72 FR 6580, 6590 (2007), evidence that a registrant has been Cir. 1974); Attorney General’s Manual aff’d, Chein v. DEA, 533 F.3d 828 (D.C. convicted of crimes related to controlled on the Administrative Procedure Act 8 Cir. 2008), cert. denied, __ U.S. __, 129 substances is a factor to be evaluated in (1947). S. Ct. 1033 (2009). Congress vested reaching a determination as to whether authority to enforce the CSA in the he or she should be entrusted with a Factors 1 and 3: The Recommendation DEA certificate. While Respondent of the Appropriate State Licensing Attorney General, not state officials. Stodola, 74 FR at 20375. While contends that the lack of convictions Board or Professional Disciplinary should weigh in his favor, Resp’t Authority; and Any Conviction Record Respondent contends that the lack of Posth’g Brf. at 19, the probative value of Under Federal or State Laws Relating board action weighs against revocation, an absence of any evidence of criminal to the Manufacture, Distribution, or Resp’t Brief at 15, Agency precedent prosecution, even if conceded as Dispensing of Controlled Substances establishes that, where the record contains no evidence of a relevant arguendo, is perforce In this case, it is undisputed that the recommendation by a state licensing diminished by the myriad of Respondent holds a valid and current considerations that are factored into a state license to practice medicine in board, such absence does not weigh for or against a determination as to whether decision to initiate, pursue, and dispose Ohio. Although the Government of criminal proceedings by Federal, introduced evidence that the Ohio continuation of the Respondent’s DEA certification is consistent with the State, and local prosecution authorities. Dental Board has previously placed the See Robert L. Dougherty, M.D., 76 FR Respondent’s state medical privileges public interest. See Ronie Dreszer, M.D., 76 FR 19434, 19444 (2011) (‘‘[T]he fact 16823, 16833 n.13 (2011); Dewey C. on a period of suspension that was Mackay, M.D., 75 FR 49956, 49973 completed without complication, the that the record contains no evidence of a recommendation by a state licensing (2010) (‘‘[W]hile a history of criminal matter was unrelated to the convictions for offenses involving the Respondent’s obligations as a DEA board does not weigh for or against a determination as to whether distribution or dispensing of controlled registrant and not relevant here. Tr. substances is a highly relevant 391–92, 394–96; see Judulang v. Holder, continuation of the Respondent’s DEA consideration, there are any number of 132 S.Ct. 476, 556 U.S. ll (2011) certification is consistent with the reasons why a registrant may not have (invalidating Board of Immigration public interest.’’). Accordingly, Factor been convicted of such an offense, and Appeals decision making practice where One does not weigh for or against thus, the absence of such a conviction the ‘‘rule [was] unmoored from the revocation in this matter. Id. is of considerably less consequence in purposes and concerns of the Regarding the third factor immigration laws.’’). Although Ms. (convictions relating to the manufacture, the public interest inquiry.’’) (citing Reitz, from the Ohio Dental Board, distribution, or dispensing of controlled Jayam Krishna-Iyer, M.D., 74 FR 459, testified that there is an ongoing Board substances), the record in this case does 461 (2009); Edmund Chein, M.D., 72 FR investigation into matters in common not contain evidence that the 6580, 6593 n.22 (2007), aff’d, Chein v. 74 DEA, 533 F.3d 828 (D.C. Cir. 2008), cert. with these proceedings, the record Respondent has been convicted of a __ __ contains no evidence of a crime related to the manufacture, denied, U.S. , 129 S. Ct. 1033 recommendation regarding the distribution, or dispensing of controlled (2009)); Ladapo O. Shyngle, M.D., 74 FR Respondent’s medical privileges related substances. DEA administrative 6056, 6057 n.2 (2009). to these issues by any cognizant state proceedings are non-punitive and ‘‘a Accordingly, consideration of the licensing board or professional remedial measure, based upon the evidence of record under the first and disciplinary authority. The fact that an public interest and the necessity to third factors neither supports the protect the public from those Government’s argument for revocation 74 Tr. 392–409, 412, 422–23. individuals who have misused nor militates against it.
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Factors 2 and 4: Experience in Wholesale, 69 FR69409, 69410 (2004) Fotinopoulous, 72 FR 24602, 24606 Dispensing Controlled Substances and (List I case).76 However, the Agency has (2007). Compliance With Applicable State, taken the reasonable position that this In Jayam Krishna-Iyer, 74 FR at 463, Federal, or Local Laws Relating to factor can be outweighed by acts held to DEA acknowledged the reality that even Controlled Substances be inconsistent with the public interest. a significant and sustained history of uneventful practice under a DEA In this case, the gravamen of the Jayam Krishna-Iyer, 74 FR at 463; see certificate can be offset by proof that a Government’s case relates to the also Jeri Hassman, M.D., 75 FR 8194, registrant has committed acts allegations that the Respondent: (1) 8235 (2010) (acknowledging Agency inconsistent with the public interest. Id. Failed to comply with the CSA’s precedential rejection of the concept Even, ‘‘evidence that a practitioner has registration requirements; (2) failed to that conduct which is inconsistent with treated thousands of patients does not adhere to the CSA’s recordkeeping and the public interest is rendered less so by negate a prima facie showing that the security requirements and was unable to comparing it with a respondent’s practitioner has committed acts account for both shortages and overages legitimate activities which occurred in substantially higher numbers); Paul J. inconsistent with the public interest.’’ of controlled substances; and (3) Id. The Agency, in its administrative dispensed controlled substances to Cargine, Jr., 63 FR 51592, 51560 (1998) 75 (‘‘[E]ven though the patients at issue are precedent, has further curtailed the himself for illegitimate purposes. scope of Factor 2. The Agency’s current Regarding Factor 2, in requiring an only a small portion of Respondent’s view regarding Factor 2 is that, while examination of a registrant’s experience patient population, his prescribing of controlled substances to these evidence of a registrant’s experience in dispensing controlled substances, handling controlled substances may be Congress manifested an individuals raises serious concerns regarding [his] ability to responsibly entitled to some weight in assessing acknowledgement that the qualitative whether errant practices have been manner and the quantitative volume in handle controlled substances in the future.’’). reformed, where the evidence of record which a registrant has engaged in the raises intentional or reckless actions on dispensing of controlled substances, and Experience which occurred prior or the part of the registrant, such evidence how long he or she has been in the subsequent to proven allegations of is entitled to no weight where a business of doing so, are significant malfeasance may be relevant. Evidence practitioner fails to acknowledge factors to be evaluated in reaching a that precedes proven misconduct may wrongdoing in the matters before the determination as to whether he or she add support to the contention that, even Agency. Cynthia M. Cadet, M.D., 76 FR should be entrusted with a DEA COR. In acknowledging the gravity of a 19450 n.3 (2011); Roni Dreszer, M.D., 76 some cases, viewing a registrant’s registrant’s transgressions, they are FR 19434 n.3 (2011); Michael J. Aruta, actions against a backdrop of how he sufficiently isolated and/or attenuated M.D., 76 FR 19420 n.3 (2011); Jacobo has performed activity within the scope that adverse action against his Dreszer, M.D., 76 FR 19386–87 n.3 of the certificate can provide a registration is not compelled by public (2011). This reasonable approach contextual lens to assist in a fair interest concerns. Likewise, evidence accepts the unavoidable logic that a adjudication of whether continued presented by the Government that the transgression can only be rationally registration is in the public interest. proven allegations are congruous with a styled as an aberration when it is Evidence that a practitioner may have consistent past pattern of poor behavior acknowledged by the actor as a conducted a significant level of can enhance the Government’s case. transgression for which remorse is sustained activity within the scope of In a similar vein, conduct which demonstrated. the registration for a sustained period occurs after proven allegations can shed The Respondent argues that his can be a relevant and correct light on whether a registrant has taken professional experience supports consideration, which may be accorded steps to reform and/or conform his or favorable consideration under Factor 2. due weight. The registrant’s knowledge her conduct to appropriate standards. Resp’t Posth’g Brf. at 16–19. Indeed, on and experience regarding the rules and Contrariwise, a registrant who has the present record, it is undisputed that regulations applicable to practitioners persisted in incorrect behavior, or made the Respondent has uneventfully also may be considered. See Volusia attempts to circumvent Agency practiced dentistry for over two directives, even after being put on decades, is a periodontic specialist, has 75 The present record is bereft of competent notice, can diminish the strength of its published numerous scholarly articles evidence to support this third factual allegation. in his field, and was sufficiently The Respondent’s erratic behavior was well- case. Novelty, Inc., 73 FR 52689, 52703 documented in the record, as were the IV marks on (2008), aff’d, 571 F.3d 1176 (D.C. Cir. accomplished in his profession that he his hands and arms. The Respondent’s explanation 2009); Southwood Pharm., Inc., 72 FR has served as a professor and clinical that the suspect marks were the product of some 36487, 36503 (2007); John J. director Case Western Reserve School of sort of hands-on IV experience by chronically Dental Medicine. Resp’t Ex. E; Tr. 655– untalented student dentists was more than just somewhat undermined by the blood and marks on 76 In Cynthia M. Cadet, M.D., 76 FR 19450, 19450 56. While the Respondent’s level of the backs of his hands that were observed by his n.1 (2011), the Agency declined to adopt the List professional achievement is undeniably staff on a morning where he was inexplicably late I experience analysis for practitioners charged with impressive, he has offered no for patients, and not teaching at Case Western intentional diversion. Thus far, Agency precedent affirmative evidence regarding his Reserve. That the IV marks were the product of his has left open the door to this form of evidence large Newfoundland was about as unpersuasive as where intentional diversion has not been experience dispensing controlled his ‘‘I’m a picker’’ theory. The evidence of record established. Compare 21 U.S.C. 823(h) (List I substances from peers, co-workers, or (enhanced by the Respondent’s testimony) section mandating consideration of ‘‘any past even himself. Still, his professional doubtless creates a suspicion that there was experience of the applicant in the manufacture and experience and contributions to his field something more afoot than his offered explanations, distribution of chemicals,’’) (emphasis added) with but the Agency precedent on the subject has been 21 U.S.C. 823(f) (practitioner section mandating have been considered in this commendably clear that ‘‘under the substantial consideration of ‘‘[t]he applicant’s experience in recommended decision. evidence test, the evidence must ‘do more than dispensing, or conducting research with respect to Regarding Factor 4, Sections 822(e) create a suspicion of the existence of the fact to be controlled substances.); see U.S. v. Tinklenberg, 131 and 1301.12 require that a registrant established.’ ’’ Alvin Darby, M.D., 75 FR 26993, S.Ct. 2007, 2019–20 (2011) (‘‘Identical words used 26999, n.31 (2010) (citing NLRB v. Columbian in different parts of a statute are presumed to have maintain ‘‘a separate registration * * * Enameling & Stamping Co., 306 U.S. 292, 300 the same meaning absent indication to the at each principal place of business or (1939). contrary.’’). professional practice where the
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applicant manufactures, distributes, or violation of this regulation.79 Even apart diversion.’’ While the security dispenses controlled substances or list I from the reality that the Respondent, as provisions of sections 1301.72 through chemicals.’’ This separate registration a DEA registrant is responsible for 1301.76 are used as standards to requirement has been called ‘‘an understanding his obligations under the determine compliance with section essential requirement of DEA’s clear language of the relevant 1301.71(a), the language of each of these diversion control program.’’ Preventing regulations, he has been given direct sections is phrased in mandatory terms. the Accumulation of Surplus Controlled notice that his Avon Office location See e.g., 21 CFR 1301.75(a) (‘‘Controlled Substances at Long Term Care Facilities, must be registered, by the initiation of substances listed in Schedule I shall be 70 FR 25462, 25463 (2005) (‘‘Long Term these proceedings and a full, contested stored in a securely, locked, Care’’). In its prehearing statement, the hearing on the matter; yet the substantially constructed cabinet.’’) Government alleged that Respondent Respondent doggedly refuses to bring (emphasis added); 21 CFR 1301.76(a) ‘‘administered controlled substances to himself into compliance. He has not (‘‘The registrant shall not * * *’’) patients from his Avon dental practice,’’ sought to obtain a registration for the (emphasis added). Thus, while but did not obtain a registration for the Avon Office and has not stopped compliance with the security provisions Avon location. Gov’t PHS, at 7. administering controlled substances is a consideration under 21 CFR Paragraph 5 of the OSC also alleged that there as a regular part of his professional 1301.71(a), violation of any of the Respondent ‘‘distributed controlled practice. Hence, in the face of his refusal relevant security requirements in substances including fentanyl, to obey the law, consideration of this sections 1301.72–76 will be an diazepam and midazolam * * * to an factor, even standing alone, persuasively independent consideration under Factor unregistered location in violation of 21 and conclusively balances in favor of Four. CFR § 1307.11.’’ 77 OSC, at ¶ 5. revocation. Section 1301.75(b) provides, in The evidence of record establishes In addition to the registration relevant part, that ‘‘[c]ontrolled that Respondent maintained two dental violations, the Government also alleges substances listed in Schedules II, III, IV, offices: An office in Norwalk, where that Respondent failed to secure and V shall be stored in a securely Respondent maintained his DEA controlled substances properly at the locked, substantially constructed registration; and an office in Avon, Avon Office, in violation of 21 CFR cabinet. However, pharmacies and Ohio. Tr. 155–56, 221, 451–53. It 1301.75(b). ALJ Ex. 1. With regard to institutional practitioners may disperse appears that he practiced out of the security, 21 CFR 1301.71(a) provides, in such substances throughout the stock of Avon office once or twice per week. Tr. relevant part, that ‘‘[a]ll applicants and noncontrolled substances in such a 156, 261. It is undisputed that registrants shall provide effective manner as to obstruct the theft or controlled substances were, for a period controls and procedures to guard against diversion of the controlled substances.’’ of time, stored at Avon Office and that theft and diversion of controlled The security requirements of section Respondent does not have a DEA substances. In order to determine 1301.75 are designed ‘‘to prevent the registration for the Avon location. It is whether a registrant has provided unlawful diversion of * * * drugs.’’ also undisputed that Respondent has effective controls against diversion, the Jerry Neil Rand, M.D., 61 FR 28895, regularly administered controlled Administrator shall use the security 28897 (1996). Thus, a reasonable substances for sedation at the Avon requirements set forth in §§ 1301.72– reading of the regulations would compel Office, and that he continues to do so. 1301.76 as standards for the physical a registrant entrusted with the care of controlled substances to ensure that Tr. 764, Resp’t Ex. M. Thus, it is clear security controls and operating when the controlled substances are left that Respondent has administered procedures necessary to prevent unattended, they must be placed in a controlled substances at a location that 79 container meeting the requirements of is unregistered, and has thus violated As discussed, supra, through counsel in his section 1301.75. See D-Tek Enterprises, sections 822(e) and 1301.12.78 Posthearing Brief, the Respondent acknowledges that dispensing in Avon without a valid COR was 56 FR 28926, 28926 (1991) (‘‘21 CFR Furthermore, insofar as the Respondent in violation of the law. Resp’t Posthearing Brf. at 17, 1301.75 requires that all Schedule I and continues to administer controlled 20. Interestingly though, the Respondent’s II controlled substances be kept in a substances at the Avon Office, it appears Posthearing Brief also contends that ‘‘he securely locked, substantially that Respondent remains in flagrant discontinued storing drugs at his Avon location in order to be in compliance with the regulations.’’ constructed cabinet.’’) (emphasis Resp’t Posthearing Brf. at 3. This position, added); see also Merriam-Webster 77 The CSA provides that ‘‘[t]he term ‘distribute’ consistent as it may be with the posture the means to deliver * * * a controlled substance or a Respondent took on this matter during his Dictionary (Defining ‘‘kept’’ as ‘‘to cause listed chemical.’’ 21 U.S.C. 802(a)(10). The term testimony, is unsupported in the law. Tr. 765. DEA to remain in a given place, situation or ‘‘deliver,’’ in turn, is defined as ‘‘the actual, regulations clearly establish that all professional condition.’’). constructive, or attempted transfer of a controlled practices at which controlled substances are Here, the testimony establishes that, substance or a listed chemical, whether or not there distributed must have their own DEA registration. on numerous occasions, supplies of exists an agency relationship.’’ 21 U.S.C. 802(a)(8) 21 CFR 1301.12. A narrow exception to this (emphasis added). No authority has been cited requirement applies only insofar as: (1) The controlled substances were left in gray, which would stand for the proposition that a practitioner has a valid DEA registration in the shoebox-sized bins on the counters of practitioner ‘‘distributes’’ controlled substances same state as the second location; (2) the the sterilization room in the Avon when he moves controlled substances from one of practitioner does not store controlled substances at Office. Specifically, Ms. Tetzloff and his offices to another. Rather, it seems that, under the second location; and (3) the practitioner does the CSA and its implementing regulations, not administer controlled substances as a regular Ms. Crockett testified that they would controlled substances are distributed between part of the professional practice at the second leave the gray bins in the open while persons, and not locations. See 21 CFR 1307.11–12 location. 21 CFR 1301.12(b)(3). The Respondent preparing for patients in the morning. (Regulating distribution of controlled substances testified that IV sedation is a ‘‘critical component’’ Tr. 157–58, 233–34. While true that the between parties without mention of location). of his practice, and that he conducted procedures Accordingly, the Government’s charge brought administering controlled substances up to the week sterilization room was not readily under § 1307.11—that the Respondent distributed prior to the hearing. Tr. 660, 764. Under these accessible to patients standing by in the controlled substances improperly—is without circumstances (even apart from the Respondent’s waiting room, a counter is not a locked merit. through-counsel concession on this issue), the cabinet. The regulations, which specify 78 Through counsel in his Posthearing Brief, the Respondent is clearly administering controlled Respondent acknowledges that dispensing in Avon substances is a regular part of his Avon practice, that controlled substances be stored in without a valid COR was in violation of the law. and therefore, must be separately registered under locked containers, are designed to Resp’t Posth’g Brf. at 17, 20. the regulations. provide both security and accountability
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in the maintenance of a closed and cannot be used to support a finding 546 U.S. 243, 274 (2006). The issue here regulatory system for controlled of substantial evidence of anything. is diversion, and this tribunal (and this substances. Jerry Neil Rand, M.D., 61 FR However, the record does credibly Agency) can have no reasonable view as at 28897. Where accountability is establish that the Respondent, for his to whether reasonable minds can, concerned, the system must be as part, produced no purchase records, and should, or do differ on the issue of concerned with the accountability of was able to furnish Brinks with only whether the administered doses were health professionals with access to three Form 222s over the course of a out of line with accepted medical office spaces as it is with potential two-year period, which, even based on practice. That said, the Government’s access by the patients waiting for a cursory examination of the sedation expert, Dr. Becker, provided credible, treatment. It is clear that the controlled logs,80 was a fraction of what should persuasive, and unrefuted testimony substances were not left in securely have been available. Tr. 444, 446–48, that the amounts of medication locked, substantially constructed 639–40. Of that paltry number, one was employed by the Respondent as cabinets, as required by the regulations. incomplete. Tr. 451. Notwithstanding reflected in the sedation logs he 21 CFR 1301.75. Accordingly, the Respondent’s regular practice of supplied would likely have resulted in substantial evidence supports the ‘‘wasting’’ residual medication, he was unconsciousness. The Respondent’s conclusion that Respondent violated the unable to produce any Form 41s. Tr. testimony that none of his sedated security requirement set forth in section 443, 449–50. patients were ever unconscious is 1301.75, and this factor militates in In the present record, every health likewise credible. With the poor state of favor of revocation. professional who provided evidence on the Respondent’s controlled substance To effectuate the dual goals of the topic, including the Respondent, records, it is not possible to conquering drug abuse and controlling himself, is of the opinion that the conclusively determine whether the both legitimate and illegitimate traffic in amounts of controlled-substance high levels of controlled substance controlled substances, ‘‘Congress medication administered by the medications were administered as devised a closed regulatory system Respondent to the patients depicted in noted. The results of the audit making it unlawful to manufacture, the sedation logs is high. It was the view conducted by DEA regarding the distribute, dispense, or possess any of the Government’s expert, Dr. Becker, Respondent’s recordkeeping controlled substance except in a manner that the amounts administered would demonstrated sufficient inattention to authorized by the CSA.’’ Gonzales v. have resulted in unconsciousness and maintaining required documentation Raich, 545 U.S. 1, 13 (2005). Consistent other complications, and that to the that his records were not reliable. The with the maintenance of that closed extent that the higher amounts were accountability concerns credibly regulatory system, accurate and reliable based on addressing sedation-resistant conveyed by Crockett and Tetzloff in records are an obvious bedrock patients, that this temporally-limited their testimony were borne of this same safeguard that is essential to ensure the sample contained more such resistant unreliability in the state of the records. integrity of the closed regulatory system. patients than he has encountered in a Reliable records are a key aspect of A truly closed system requires not only lifetime of practice. Interestingly, in his maintaining a closed system, and this that certain records and inventories be testimony, the Respondent did not aspect of the Respondent’s practice kept by all those registrants who either dispute that the amounts were high, but impacts negatively on consideration of generate or take custody of controlled offered that he is a specialist who deals Factor 4. substances in any phase of the in difficult cases, and that it could have Finally, it is noteworthy that distribution chain until they reach the been that the patients (even though Respondent concedes that he regularly ultimate user, but that those documents there were quite a few in a small disposed of controlled substances be subject to periodic inspection and window of time) could have been without notifying the DEA, in violation ready retrieval for that purpose. medication resistant for reasons that he of the governing regulations. See 21 CFR Registrants, such as the Respondent, hypothesized could have been present. 1307.21(a) (Registrants must notify who are authorized to dispense The Respondent’s argument that he is a regional Special Agent in Charge before controlled substances are required to specialist and gets complicated cases is disposing of controlled substances). keep such records, and to maintain unpersuasive because his specialty is in Respondent also testified that, those records in a manner that is periodontics, not sedation-resistant notwithstanding the DEA administrative ‘‘readily retrievable,’’ upon demand of patients. His argument that these proceedings pending against his COR, those DEA officials charged with he continues to follow this practice, conducting inspections. See 21 CFR patients could all have been medication resistant is undermined by any efforts essentially because he feels that other 1304.04(g) & (f)(2) (2011); see 21 CFR professionals in his field do it as well.81 1304.03 (requiring recordkeeping set on the Respondent’s part to introduce evidence to establish medication Tr. 709, 762–64, 776–78. A defense of forth in § 1304.04 for dispensing ‘‘other people are doing it too’’ is physicians). Readily retrievable is resistance based on any patient in issue, even though he is in possession of the generally no more persuasive in defined in the regulations as ‘‘records administrative enforcement proceedings kept * * * in such a manner that they patient charts. As discussed, supra, a scholarly discussion among health than it is in the defense of a traffic can be separated out from all other violation, however, this case contains records in a reasonable time * * * ’’ 21 professionals as to what choices, levels and combinations of medication(s) the arguably different wrinkle that every CFR 1300.01(b)(38). witness who presented evidence on the The Government alleged that DI achieve optimum results is a discussion for a different forum and beyond the issue from each party is in agreement Brinks conducted a regulatory that squirting or ‘‘wasting’’ residual, inspection on the Respondent’s practice proper jurisdiction of DEA and this forum to evaluate. Gonzales v. Oregon, unused amounts of controlled on December 21, 2009 and found substances into the drain is common multiple regulatory violations. ALJ Ex. 5 practice among registrants. Tr. 55–58, at 6. It need hardly be restated that the 80 As discussed at length, supra, the sedation logs that were provided to DI Brinks differed with those audit computation results as offered by provided at the hearing. Those records provided at 81 This posture is likewise assumed by the DI Brinks at the hearing were the hearing were replete with multiple duplications Respondent in his Posthearing Brief. Resp’t Post profoundly problematic to say the least, and transpositions of the quantities counted. H’ring Brf. at 10.
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100–01, 105, 631; Resp’t Ex. J. This distribution, but the language is by no which may threaten the public health forum is without jurisdiction (or means identical. 21 U.S.C. 823(d)(6), and safety, Factor Five weighs neither inclination) to question the wisdom of (h)(5). Under the language utilized by for nor against revocation. the prior-notification requirements Congress in those provisions, the Recommendation applicable to controlled substance Agency may consider ‘‘such other disposal. While the issue of a common factors as are relevant to and consistent All relevant acts alleged by the practice which may be knowingly and with the public health and safety.’’ Id. Government and established in the routinely ignored by the Agency 82 may (emphasis supplied). In Holloway record relate to the Respondent’s present an interesting legal issue in Distributors, 72 FR 42118, 42126 (2007), registered location in Norwalk and his another case where an adequate record the Agency held this catch all language unregistered office in Avon. Although on the subject has been developed, to be broader than the language directed no misconduct related to the under the circumstances presented here, at practitioners under ‘‘other conduct Respondent’s registered location in the Respondent’s unwillingness to cease which may threaten the public health Milwaukee have been alleged or proved, this disposal practice in the face of and safety’’ utilized in 21 U.S.C. these proceedings relate to whether he actual notice by the Agency militates 823(f)(5). In Holloway, the Agency ‘‘has committed such acts as would against entrusting him with a DEA stated that regarding the List I catch all: render his registration under [21 U.S.C. registration under Factor 4. 823] inconsistent with the public [T]he Government is not required to prove interest,’’ (a question answered in the Accordingly, consideration of Factors that the [r]espondent’s conduct poses a threat 2 and 4 militate in favor of the to public health and safety to obtain an affirmative here) and whether, as a revocation of the Respondent’s COR. adverse finding under factor five. See T. matter of discretion, the Respondent should continue to be entrusted by the Factor 5: Such Other Conduct Which Young, 71 [FR] at 60572 n.13. Rather, the statutory text directs the consideration of Agency with responsibilities as a DEA May Threaten the Public Health and ‘‘such other factors as are relevant to and registrant in all locations that are the Safety consistent with the public health and safety.’’ subject of the OSC. The fifth statutory public interest 21 U.S.C. § 823(h)(5). This standard thus As set forth above, Factors 1, 3 and 5 factor directs consideration of ‘‘[s]uch grants the Attorney General broader do not weigh for against revocation. other conduct which may threaten the discretion than that which applies in the case Under Factor Four, substantial evidence public health and safety.’’ 21 U.S.C. of other registrants such as practitioners. See supports a finding that Respondent: (1) 823(f)(5) (emphasis supplied). Existing id. § 823(f)(5) (directing consideration of maintained an unregistered professional ‘‘[s]uch other conduct which may threaten Agency precedent has long held that the public health and safety’’). practice, in violation of 21 U.S.C. 822(e) this factor encompasses ‘‘conduct which and 21 CFR 1301.12; (2) failed to secure 83 creates a probable or possible threat 72 FR at 42126. Thus, the Agency has controlled substances properly, in (and not only an actual [threat]) to recognized that, while the factor five violation of 21 CFR 1301.75(b); and (3) public health and safety.’’ Dreszer, 76 applicable to List I chemical failed to dispose of controlled FR at 19434 n.3; Aruta, 76 FR at 19420 distributors—21 U.S.C. 823(h)(5)— substances properly, in violation of 21 n.3; Boshers, 76 FR 19403 n.4; Dreszer, encompasses all ‘‘factors,’’ the factor CFR 1307.21(a). These acts bear some 76 FR at 19386–87 n.3. Agency five applied to practitioners—21 U.S.C. resemblance to those found in Daniel precedent has generally embraced the 823(f)(5)—considers only ‘‘conduct.’’ Koller, D.V.M., 71 FR 66975, 66982–83 principle that any conduct that is Furthermore, because section 823(f)(5) (2006). properly the subject of Factor Five must only implicates ‘‘such other conduct,’’ it In Koller, the Agency found that the have a nexus to controlled substances necessarily follows that conduct respondent had: (1) Not stored and the underlying purposes of the considered in factors one through four controlled substances in a securely CSA. Terese, Inc., d/b/a/Peach Orchard may not be considered at factor five. locked, substantially constructed Drugs, 76 FR 46843, 46848 (2011); Tony As discussed, supra, the Government cabinet, in violation of 21 CFR T. Bui, M.D., 75 FR 49979, 49989 (2010) has alleged and established that the 1301.75(b); (2) failed to maintain proper (prescribing practices related to a non- Respondent disposed of controlled DEA Form 222s, in violation of 21 CFR controlled substance such as human substances without procuring the prior 1304.22(c); (3) distributed controlled growth hormone may not provide an DEA approval required in the substances to an unregistered independent basis for concluding that a regulations. The manner of disposal practitioner, in violation of 21 CFR registrant has engaged in conduct which here, to wit, squirting the controlled 1307.11(a); and (4) maintained an may threaten public health and safety); substances into the drain, and thus, the unregistered professional practice, in but see Paul Weir Battershell, N.P., 76 sewage and water treatment system is violation of 21 U.S.C. 822(e) and 21 CFR FR 44359, 44368 n.27 (2011) (a conduct that could arguably have public 1301.12(a). 71 FR at 66982–83. The registrant’s non-compliance with the safety implications. Because the public Agency was unimpressed with Koller’s Food, Drug, and Cosmetic Act may be safety aspect of this conduct was not testimony that in his view it was ‘an considered on the narrow issue of factually developed at the hearing, it is absurdity’ to claim that he violated the assessing a respondent’s future not necessary to reach this issue, or the law by taking controlled substances compliance with the CSA). issue as to whether the ultimate [from a registered location to an Similar ‘‘catch all’’ language is destination of the ‘‘wasted’’ controlled unregistered location] because he had a employed by Congress in the CSA substances constitutes other conduct DEA registration for his San Diego related to the Agency’s authorization to separate and apart from the act of Residence [and] could ‘take those drugs regulate controlled substance disposing without prior DEA anywhere he wanted.’’’ Id. at 66982. In manufacturing and List I chemical authorization. Accordingly, there being denying Respondent’s application for no other conduct alleged (or proven) registration, the Agency held that 82 This issue was not sufficiently developed on ‘‘Respondent’s repeated violations of the the present record to support a finding that DEA has 83 In Bui, the Agency clarified that ‘‘an adverse CSA provide ample grounds to deny his made a determination to eschew enforcement of finding under [Factor Five did not require a] this provision. Indeed the charges in the present showing that the relevant conduct actually application. Moreover, Respondent’s OSC counter such a position in the strongest terms constituted a threat to public safety.’’ 75 FR 49888 attitude leaves [the Agency] with the possible. n.12. firm impression that, if given the
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opportunity, he will violate the Act the evidence presented here, is that far Diversion Control, Drug Enforcement again.’’ Koller, 71 FR at 66983. from demonstrating acceptance and Administration, issued an Order to Like the registrant in Koller, the contrition, the Respondent has violated Show Cause to Amy S. Benjamin, N.P. Respondent’s repeated and continuing the law, disagrees with the law, and has (Respondent), of Wheeler, Mississippi. violations in the face of—and even continued to violate the law even after The Show Cause Order proposed the motivated by—his disagreement with the Agency served him with an OSC. revocation of Respondent’s DEA his obligations as a registrant, Thus, in this case, the Respondent has Certificate of Registration MB1536171, undermine the confidence that can be failed to sustain his burden of showing and the denial of any pending placed in him to execute his that he can be entrusted with the applications to renew or modify the responsibilities in compliance with the responsibilities incumbent upon a DEA registration, on the ground that law. See Koller, D.V.M., 71 FR at 66983 registrant. Koller, 71 FR at 66983; Jeri Respondent lacks authority to handle (‘‘Respondent’s repeated violations of Hassman, M.D., 75 FR at 8236.85 controlled substances in Mississippi, the CSA provide ample grounds to deny Where, as here, the Government has the State in which she is registered with his application.’’). made out a prima facie case that the the Agency. Show Cause Order, at 1 Following the guidance of Koller, it is Respondent has committed acts that (citing 21 U.S.C. 824(a)(3)). Specifically, clear that the Government has sustained render registration inconsistent with the the Show Cause Order alleged that on its burden of showing that Respondent public interest, Agency precedent has June 10, 2011, the State of Mississippi committed acts inconsistent with the firmly placed acknowledgement of guilt Board of Nursing issued a final order, public interest. Accordingly, the burden and acceptance of responsibility as which suspended her nursing license, to shifts to the Respondent to show that he conditions precedent to merit the include her authority to handle can be entrusted with a DEA granting or continuation of status as a controlled substances in the State. Id. registration. As discussed above, ‘‘to registrant. Hoxie v. DEA, 419 F.3d 477, The Show Cause Order notified rebut the Government’s prima facie 483 (6th Cir. 2005); Ronald Lynch, M.D., Registrant of her right to request a case, [the Respondent] is required not 75 FR 78745, 78749 (Respondent’s hearing on the allegations, or in lieu of only to accept responsibility for [the attempts to minimize misconduct held a hearing, to submit a written statement established] misconduct, but also to to undermine acceptance of regarding the matters of fact and law demonstrate what corrective measures responsibility); George Mathew, M.D., asserted therein; the procedures for [have been] undertaken to prevent the 75 FR 66138, 66140, 66145, 66148 doing either; and the consequences for reoccurrence of similar acts.’’ Jeri (2010); George C. Aycock, M.D., 74 FR failing to do either. Id. at 2 (citing 21 Hassman, M.D., 75 FR at 8236. The 17529, 17543 (2009); Steven M. CFR 1301.43(a), (c), (d), & (e)). The present record does not present Abbadessa, D.O., 74 FR 10077, 10078 Show Cause Order was personally transgressions on a level that could not (2009); Jayam Krishna-Iyer, M.D., 74 FR served on Registrant by members of the have been overcome by a credible and 459, 463 (2009); Medicine Shoppe- DEA New Orleans Field Division- persuasive acceptance of responsibility Jonesborough, 73 FR 364, 387 (2008). As Oxford Resident Office on April 23, coupled with a cogent plan for coming explained above, Respondent has not 2012. GX 2, at 2; GX 6. Since the date into compliance and avoiding future rebutted the Government’s prima facie of service of the Show Cause Order, violations; but inasmuch as neither case to the extent that he can avoid the thirty days have now passed and neither demonstration was convincingly offered sanction of a revocation of his Registrant, nor anyone purporting to by the Respondent, under current registrations. Accordingly, the represent her, has requested a hearing or Agency precedent, he cannot prevail. Respondent’s Certificate of Registrations submitted a written statement in lieu of Here, while Respondent has should be revoked, and any pending 84 a hearing. I therefore find that Registrant nominally acknowledged that his renewal applications should be denied. has waived her right to a hearing or to conduct was wrongful, Tr. 763, 765, he Dated: December 21, 2011. submit a written statement in lieu of a has failed to outline any steps he has hearing. 21 CFR 1301.43(d). taken to prevent the reoccurrence of the John J. Mulrooney II, I further find that Registrant’s DEA infractions. Generally, actions speak Chief Administrative Law Judge. registration was due to expire on July louder than words, and the [FR Doc. 2012–29333 Filed 12–4–12; 8:45 am] 31, 2012, and that Registrant has failed Respondent’s actions speak volumes BILLING CODE 4410–09–P to submit a renewal application. See about his level of responsibility Gov. Notification of Registration acceptance. By his own admission, the Expiration, at Ex. B. Therefore, I find Respondent continues to dispose of DEPARTMENT OF JUSTICE that Registrant’s registration expired on controlled substances down his office Drug Enforcement Administration July 31, 2012. drains without DEA authorization, and It is well settled that ‘‘[i]f a registrant continues to administer drugs at his Amy S. Benjamin, N.P.; Decision and has not submitted a timely renewal unregistered Avon location. Tr. 764. The Order application prior to the expiration date, Respondent has also failed to outline then the registration expires and there is any steps which he has taken (or even On April 20, 2012, the Deputy nothing to revoke.’’ Ronald J. Riegel, 63 intends to take) that would tend to Assistant Administrator, Office of FR 67132, 67133 (1998); see also prevent controlled substances from 85 William W. Nucklos, 73 FR 34330 being left unsecured during mornings at In its Posthearing Brief the Government contends that ‘‘the agency has recently admitted (2008). Moreover, in the absence of an the unregistered Avon Office. Clear on and considered testimony with regard to application (whether timely filed or community impact [of revocation].’’ Gov’t Posth’g 84 Though the Respondent acknowledged wrong Brf. at 33. However, the Agency has recently once not), there is nothing to act upon. See doing, he also testified, in essence, that ‘‘everybody again re-affirmed its view that ‘‘community impact Donald Brooks Reece II, M.D., 77 FR does it.’’ These ministrations echo the righteous evidence is not relevant in determining whether to 35054 (2012). Because Registrant’s protests put forth in Koller; and are no more * * * revoke an existing registration under the registration has expired and there is no compelling here. Accordingly, the evidence here, as various authorities provided in 21 U.S.C. 824(a).’’ in Koller, leaves ‘‘the firm impression that, if given Cheek, M.D., 76 FR at 66972. Accordingly, pending application to act upon, I the opportunity, [Respondent] will violate the community impact has not played a role in this conclude that this case is now moot and [CSA] again.’’ Koller, 71 FR at 66983. recommended decision. Id. will be dismissed.
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Order quintuplicate, to the Drug Enforcement 952(a)(2)(B) may, in the circumstances Pursuant to the authority vested in me Administration, Office of Diversion set forth in 21 U.S.C. 958(i), file by 21 U.S.C. 823(f) and 824(a), as well Control, Federal Register Representative comments or objections to the issuance as 28 CFR 0.100(b), I order that the (ODL), 8701 Morrissette Drive, of the proposed registration and may, at Order to Show Cause issued to Amy S. Springfield, Virginia 22152; and must be the same time, file a written request for Benjamin, N.P., be, and it hereby is, filed no later than January 4, 2013. a hearing on such application pursuant dismissed. This procedure is to be conducted to 21 CFR 1301.43 and in such form as simultaneously with, and independent prescribed by 21 CFR 1316.47. Dated: November 16, 2012. of, the procedures described in 21 CFR Michele M. Leonhart, Any such written comments or 1301.34(b), (c), (d), (e), and (f). As noted objections should be addressed, in Administrator. in a previous notice published in the quintuplicate, to the Drug Enforcement [FR Doc. 2012–29302 Filed 12–4–12; 8:45 am] Federal Register on September 23, 1975, Administration, Office of Diversion BILLING CODE 4410–09–P 40 FR 43745–46, all applicants for Control, Federal Register Representative registration to import a basic classes of (ODL), 8701 Morrissette Drive, any controlled substances in schedules DEPARTMENT OF JUSTICE Springfield, Virginia 22152; and must be I or II are, and will continue to be, filed no later than January 4, 2013. required to demonstrate to the Deputy Drug Enforcement Administration This procedure is to be conducted Assistant Administrator, Office of simultaneously with, and independent Diversion Control, Drug Enforcement Importer of Controlled Substances, of, the procedures described in 21 CFR Administration, that the requirements Notice of Application, Mylan 1301.34(b), (c), (d), (e), and (f). As noted for such registration pursuant to 21 Pharmaceuticals, Inc. in a previous notice published in the U.S.C. 958(a); 21 U.S.C. 823(a); and 21 Federal Register on September 23, 1975, Pursuant to Title 21 Code of Federal CFR 1301.34(b), (c), (d), (e), and (f) are 40 FR 43745–46, all applicants for Regulations 1301.34 (a), this is notice satisfied. that on October 8, 2012, Mylan registration to import a basic class of Dated: November 27, 2012. Pharmaceuticals, Inc., 781 Chestnut any controlled substance in schedules I Ridge Road, Morgantown, West Virginia Joseph T. Rannazzisi, or II are, and will continue to be, 26505, made application by renewal to Deputy Assistant Administrator, Office of required to demonstrate to the Deputy the Drug Enforcement Administration Diversion Control, Drug Enforcement Assistant Administrator, Office of (DEA) to be registered as an importer of Administration. Diversion Control, Drug Enforcement the following basic classes of controlled [FR Doc. 2012–29410 Filed 12–4–12; 8:45 am] Administration, that the requirements substances: BILLING CODE 4410–09–P for such registration pursuant to 21 U.S.C. 958(a); 21 U.S.C. 823(a); and 21 Drug Schedule CFR 1301.34(b), (c), (d), (e), and (f) are DEPARTMENT OF JUSTICE satisfied. Amphetamine (1100) ...... II Methylphenidate (1724) ...... II Drug Enforcement Administration Dated: November 27, 2012. Oxycodone (9143) ...... II Joseph T. Rannazzisi, Hydromorphone (9150) ...... II Importer of Controlled Substances; Deputy Assistant Administrator, Office of Methadone (9250) ...... II Notice of Application; Fisher Clinical Diversion Control, Drug Enforcement Morphine (9300) ...... II Services, Inc. Administration. Fentanyl (9801) ...... II [FR Doc. 2012–29404 Filed 12–4–12; 8:45 am] Pursuant to Title 21 Code of Federal The company plans to import the Regulations 1301.34 (a), this is notice BILLING CODE 4410–09–P listed controlled substances in finished that on October 16, 2012, Fisher Clinical dosage form (FDF) from foreign sources Services, Inc., 7554 Schantz Road, DEPARTMENT OF JUSTICE for analytical testing and clinical trials Allentown, Pennsylvania 18106, made in which the foreign FDF will be application to the Drug Enforcement Drug Enforcement Administration compared to the company’s own Administration (DEA) for registration as domestically-manufactured FDF. This an importer of levorphanol (9220), a Manufacturer of Controlled analysis is required to allow the basic class of controlled substance in Substances; Notice of Application: company to export domestically- schedule II. Siemens Healthcare Diagnostics, Inc. manufactured FDF to foreign markets. The company plans to import the Any bulk manufacturer who is listed controlled substance for analytical Pursuant to § 1301.33(a) Title 21 of presently, or is applying to be, research and clinical trials. the Code of Federal Regulations (CFR), registered with DEA to manufacture The import of the above listed basic this is notice that on November 7, 2012, such basic classes of controlled class of controlled substance would be Siemens Healthcare Diagnostics, Inc., substances listed in schedule II, which granted only for analytical testing and Attn: RA, 100 GBC Drive, Mail Stop 514, falls under the authority of section clinical trials. This authorization does Newark, Delaware 19702, made 1002(a)(2)(B) of the Act (21 U.S.C. not extend to the import of a finished application by renewal to the Drug 952(a)(2)(B)) may, in the circumstances FDA approved or non-approved dosage Enforcement Administration (DEA) to set forth in 21 U.S.C. 958(i), file form for commercial distribution in the be registered as a bulk manufacturer of comments or objections to the issuance United States. the following basic classes of controlled of the proposed registration and may, at Any bulk manufacturer who is substances: the same time, file a written request for presently, or is applying to be, a hearing on such application pursuant registered with DEA to manufacture Drug Schedule to 21 CFR 1301.43 and in such form as such basic class of controlled substance prescribed by 21 CFR 1316.47. listed in schedules I or II, which fall Tetrahydrocannabinols (7370) ..... I Ecgonine (9180) ...... II Any such written comments or under the authority of section Morphine (9300) ...... II objections should be addressed, in 1002(a)(2)(B) of the Act 21 U.S.C.
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The company plans to produce the (ODL), 8701 Morrissette Drive, SUPPLEMENTARY INFORMATION: This listed controlled substances in bulk to Springfield, Virginia 22152; and must be information collection allows a State to be used in the manufacture of reagents filed no later than February 4, 2013. maintain a process for the Governor to and drug calibrator controls which are Dated: November 27, 2012. request advances and repay advances through correspondence with the DEA exempt products. Joseph T. Rannazzisi, Any other such applicant, and any Secretary of Labor. This information person who is presently registered with Deputy Assistant Administrator, Office of collection is subject to the PRA. Diversion Control, Drug Enforcement A Federal agency generally cannot DEA to manufacture such substances, Administration. may file comments or objections to the conduct or sponsor a collection of [FR Doc. 2012–29407 Filed 12–4–12; 8:45 am] issuance of the proposed registration information, and the public is generally pursuant to 21 CFR 1301.33(a). BILLING CODE 4410–09–P not required to respond to an Any such written comments or information collection, unless it is objections should be addressed, in approved by the OMB under the PRA quintuplicate, to the Drug Enforcement DEPARTMENT OF LABOR and displays a currently valid OMB Administration, Office of Diversion Control Number. In addition, Control, Federal Register Representative Office of the Secretary notwithstanding any other provisions of (ODL), 8701 Morrissette Drive, law, no person shall generally be subject Springfield, Virginia 22152; and must be Agency Information Collection to penalty for failing to comply with a filed no later than February 4, 2013. Activities; Submission for OMB collection of information if the Review; Comment Request; Dated: November 27, 2012. collection of information does not Unemployment Insurance Title XII display a valid Control Number. See 5 Joseph T. Rannazzisi, Advances and Voluntary Repayment CFR 1320.5(a) and 1320.6. The DOL Deputy Assistant Administrator, Office of Process obtains OMB approval for this Diversion Control, Drug Enforcement Administration. information collection under Control ACTION: Notice. Number 1205–0199. The current [FR Doc. 2012–29411 Filed 12–4–12; 8:45 am] approval is scheduled to expire on BILLING CODE 4410–09–P SUMMARY: On November 30, 2012, the Department of Labor (DOL) will submit November 30, 2012; however, it should the Employment and Training be noted that existing information DEPARTMENT OF JUSTICE Administration (ETA) sponsored collection requirements submitted to the information collection request (ICR) OMB receive a month-to-month Drug Enforcement Administration titled, ‘‘Unemployment Insurance Title extension while they undergo review. XII Advances and Voluntary Repayment For additional information, see the Manufacturer of Controlled Process,’’ to the Office of Management related notice published in the Federal Substances, Notice of Application, ISP and Budget (OMB) for review and Register on September 28, 2012 (77 FR Inc approval for continued use in 59669). Interested parties are encouraged to accordance with the Paperwork Pursuant to § 1301.33(a), Title 21 of send comments to the OMB, Office of Reduction Act (PRA) of 1995 (44 U.S.C. the Code of Federal Regulations (CFR), Information and Regulatory Affairs at this is notice that on October 26, 2012, 3501 et seq.). the address shown in the ADDRESSES ISP Inc., 238 South Main Street, DATES: Submit comments on or before section by December 31, 2012. In order Assonet, Massachusetts 02702, made December 31, 2012. to help ensure appropriate application by renewal to the Drug ADDRESSES: A copy of this ICR with consideration, comments should Enforcement Administration (DEA) as a applicable supporting documentation; mention OMB Control Number 1205– bulk manufacturer of the basic classes of including a description of the likely 0199. The OMB is particularly controlled substances: respondents, proposed frequency of interested in comments that: response, and estimated total burden • Evaluate whether the proposed Drug Schedule may be obtained from the RegInfo.gov collection of information is necessary 2,5-Dimethoxyamphetamine I Web site, http://www.reginfo.gov/ for the proper performance of the (7396). public/do/PRAMain, on December 1, functions of the agency, including Amphetamine (1100) ...... II 2012, or by contacting Michel Smyth by whether the information will have Phenylacetone (8501) ...... II telephone at 202–693–4129 (this is not practical utility; a toll-free number) or sending an email • Evaluate the accuracy of the The company plans to manufacture to [email protected]. agency’s estimate of the burden of the bulk API, for distribution to its Submit comments about this request proposed collection of information, customers. The bulk 2,5- to the Office of Information and including the validity of the Dimethoxyamphetamine will be used Regulatory Affairs, Attn: OMB Desk methodology and assumptions used; for conversion into non-controlled Officer for DOL–ETA, Office of • Enhance the quality, utility, and substances. Management and Budget, Room 10235, clarity of the information to be Any other such applicant, and any 725 17th Street NW., Washington, DC collected; and person who is presently registered with 20503, Fax: 202–395–6881 (this is not a • Minimize the burden of the DEA to manufacture such substances, toll-free number), email: collection of information on those who may file comments or objections to the [email protected]. are to respond, including through the issuance of the proposed registration use of appropriate automated, pursuant to 21 CFR 1301.33(a). FOR FURTHER INFORMATION CONTACT: electronic, mechanical, or other Any such written comments or Contact Michel Smyth by telephone at technological collection techniques or objections should be addressed, in 202–693–4129 (this is not a toll-free other forms of information technology, quintuplicate, to the Drug Enforcement number) or by email at _ _ e.g., permitting electronic submission of Administration, Office of Diversion DOL PRA [email protected]. responses. Control, Federal Register Representative Authority: 44 U.S.C. 3507(a)(1)(D). Agency: DOL–ETA.
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Title of Collection: Unemployment Administration, Room N–2625, 200 by employers as necessary or Insurance Title XII Advances and Constitution Avenue NW., Washington, appropriate for enforcement of the OSH Voluntary Repayment Process. DC 20210. Deliveries (hand, express Act or for developing information OMB Control Number: 1205–0199. mail, messenger, and courier service) regarding the causes and prevention of Affected Public: State, Local, or Tribal are accepted during the Department of occupational injuries, illnesses, and Governments. Labor’s and Docket Office’s normal accidents (29 U.S.C. 657). The OSH Act Total Estimated Number of business hours, 8:15 a.m. to 4:45 p.m., also requires that OSHA obtain such Respondents: 27. e.t. information with minimum burden Total Estimated Number of Instructions: All submissions must upon employers, especially those Responses: 243. include the Agency name and OSHA operating small businesses, and to Total Estimated Annual Burden docket number for this Information reduce to the maximum extent feasible Hours: 243. Collection Request (ICR) (OSHA–2012– unnecessary duplication of efforts in Total Estimated Annual Other Costs 0038). All comments, including any obtaining information (29 U.S.C. 657). Burden: $0. personal information you provide, are Subpart I specifies several paperwork Dated: November 23, 2012. placed in the public docket without requirements which are described Michel Smyth, change, and may be made available below. Hazard Assessment and Verification Departmental Clearance Officer. online at http://www.regulations.gov. For further information on submitting (§ 1915.152(b)). Section 1915.152(b) [FR Doc. 2012–29382 Filed 12–4–12; 8:45 a.m.] comments see the ‘‘Public requires the employer to assess work BILLING CODE 4510–FW–P Participation’’ heading in the section of activities to determine whether there are this notice titled SUPPLEMENTARY hazards present, or likely to be present, which necessitate the worker’s use of DEPARTMENT OF LABOR INFORMATION. Docket: To read or download PPE. If such hazards are present, or Occupational Safety and Health comments or other material in the likely to be present, the employer must: Administration docket, go to http://www.regulations.gov (1) Select the type of PPE that will or the OSHA Docket Office at the protect the affected workers from the [Docket No. OSHA–2012–0038] address above. All documents in the hazards identified in the occupational docket (including this Federal Register hazard assessment; (2) communicate The Standard on Personal Protective selection decisions to affected workers; Equipment (PPE) for Shipyard notice) are listed in the http:// www.regulations.gov index; however, (3) select PPE that properly fits each Employment; Extension of the Office affected worker; and (4) maintain of Management and Budget’s (OMB) some information (e.g., copyrighted material) is not publicly available to documentation that verifies the required Approval of Information Collection occupational hazard assessment has (Paperwork) Requirements read or download through the Web site. All submissions, including copyrighted been performed. The verification must AGENCY: Occupational Safety and Health material, are available for inspection contain the following information: Administration (OSHA), Labor. and copying at the OSHA Docket Office. occupation or trade assessed, the date(s) ACTION: Request for public comment. You may also contact Theda Kenney at of the hazard assessment, and the name the address below to obtain a copy of of the person performing the hazard SUMMARY: OSHA solicits public the ICR. assessment. comments concerning its proposal to FOR FURTHER INFORMATION CONTACT: The standards on PPE protection for extend OMB approval of the Theda Kenney or Todd Owen, the eyes and face (§ 1915.153), head information collection requirements Directorate of Standards and Guidance, (§ 1915.155), feet (§ 1915.156), hands specified in the Standard on Personal OSHA, U.S. Department of Labor, Room and body (§ 1915.157), lifesaving Protective Equipment (PPE) for N–3609, 200 Constitution Avenue NW., equipment (§ 1915.158), personal fall Shipyard Employment (29 CFR part Washington, DC 20210; telephone (202) arrest systems (§ 1915.159), and 1915, subpart I). 693–2222. positioning device systems (§ 1915.160) do not contain any separate information DATES: Comments must be submitted SUPPLEMENTARY INFORMATION: (postmarked, sent, or received) by collection requirements. February 4, 2013. I. Background Disclosure of Inspection Records. The Agency believes that some employers ADDRESSES: The Department of Labor, as part of its will be subject to an OSHA inspection Electronically: You may submit continuing effort to reduce paperwork annually and be required to disclose comments and attachments and respondent (i.e., employer) burden, hazard assessment certification records. electronically at http:// conducts a preclearance consultation www.regulations.gov, which is the program to provide the public with an II. Special Issues for Comment Federal eRulemaking Portal. Follow the opportunity to comment on proposed OSHA has a particular interest in instructions online for submitting and continuing information collection comments on the following issues: comments. requirements in accordance with the • Whether the proposed information Facsimile: If your comments, Paperwork Reduction Act of 1995 (44 collection requirements are necessary including attachments, are not longer U.S.C. 3506(c)(2)(A)). This program for the proper performance of the than 10 pages, you may fax them to the ensures that information is in the Agency’s functions, including whether OSHA Docket Office at (202) 693–1648. desired format, reporting burden (time the information is useful; Mail, hand delivery, express mail, and costs) is minimal, collection • The accuracy of OSHA’s estimate of messenger, or courier service: When instruments are clearly understood, and the burden (time and costs) of the using this method, you must submit a OSHA’s estimate of the information information collection requirements, copy of your comments and attachments collection burden is accurate. The including the validity of the to the OSHA Docket Office, Docket No. Occupational Safety and Health Act of methodology and assumptions used; OSHA–2012–0038, U.S. Department of 1970 (the OSH Act) (29 U.S.C. 651 et • The quality, utility, and clarity of Labor, Occupational Safety and Health seq.) authorizes information collection the information collected; and
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• Ways to minimize the burden on Agency can attach them to your notice informs the public of the filing, employers who must comply; for comments. invites public comment, and takes other example, by using automated or other Because of security procedures, the administrative steps. technological information collection use of regular mail may cause a DATES: Comments are due: December and transmission techniques. significant delay in the receipt of 10, 2012. comments. For information about III. Proposed Actions ADDRESSES: Submit comments security procedures concerning the electronically via the Commission’s OSHA is requesting that OMB extend delivery of materials by hand, express Filing Online system at http:// its approval of the collection of delivery, messenger, or courier service, www.prc.gov. Those who cannot submit information requirements contained in please contact the OSHA Docket Office comments electronically should contact the Standard on Personal Protective at (202) 693–2350, (TTY (877) 889– the person identified in the FOR FURTHER Equipment (PPE) for Shipyard 5627). INFORMATION CONTACT section by Employment (29 CFR part 1915, subpart Comments and submissions are I). The Agency is requesting that it telephone for advice on filing posted without change at http:// alternatives. retain its current burden hour estimate www.regulations.gov. Therefore, OSHA of 51. cautions commenters about submitting FOR FURTHER INFORMATION CONTACT: OSHA will summarize the comments personal information such as social Stephen L. Sharfman, General Counsel, submitted in response to this notice, security numbers and dates of birth. at 202–789–6820. and will include this summary in its Although all submissions are listed in SUPPLEMENTARY INFORMATION: request to OMB to extend the approval the http://www.regulations.gov index, Table of Contents of the information collection some information (e.g., copyrighted requirements contained in the Standard material) is not publically available to I. Introduction on Personal Protective Equipment (PPE) read or download through this Web site. II. Contents of Filing for Shipyard Employment (29 CFR part All submissions, including copyrighted III. Commission Action 1915, subpart I). material, are available for inspection IV. Ordering Paragraphs Type of Review: Extension of a and copying at the OSHA Docket Office. I. Introduction currently approved collection. Information on using the http:// On November 28, 2012, the Postal Title: Personal Protective Equipment www.regulations.gov Web site to submit Service filed a Notice, pursuant to 39 Standard for Shipyard Employment (29 comments and access the docket is CFR 3015.5, stating that it has entered CFR part 1915, subpart I). available through the Web site’s ‘‘User into an additional negotiated service OMB Control Number: 1218–0215. Tips’’ link. Contact the OSHA Docket agreement with foreign postal operator Affected Public: Business or other for- Office for information about materials Hongkong Post (Agreement).1 The Postal profits. not available through the Web site, and Service seeks to have the inbound Total Responses: 636. for assistance in using the Internet to Frequency: On occasion. portion of the Agreement, which locate docket submissions. Estimated Time per Response: An concerns delivery of inbound Air CP 2, estimated 5 minutes (.08 hour) for V. Authority and Signature included within Inbound Competitive employers to record the hazard David Michaels, Ph.D., MPH, Multi-Service Agreements with Foreign assessment and 5 minutes (.08 hour) to Assistant Secretary of Labor for Postal Operators 1 (MC2012–34) on the disclose the record to an OSHA Occupational Safety and Health, competitive product list. Notice at 1. compliance officer. directed the preparation of this notice. Total Burden Hours: 51. II. Notice of Filing The authority for this notice is the Estimated Cost (Operation and The Postal Service’s filing consists of Paperwork Reduction Act of 1995 (44 Maintenance): $0. the Notice, an Excel file containing U.S.C. 3506 et seq.) and Secretary of redacted financial workpapers, and four IV. Public Participation—Submission of Labor’s Order No. 1–2012 (77 FR 3912). attachments. Attachment 1 is a redacted Comments on this Notice and Internet Signed at Washington, DC, on November copy of the Agreement. Attachment 2 is Access to Comments and Submissions 28, 2012. the certified statement required by 39 You may submit comments in David Michaels, CFR 3015.5(c)(2). Attachment 3 is a response to this document as follows: Assistant Secretary of Labor for Occupational redacted copy of the Governors’ (1) Electronically at http:// Safety and Health. Decision No. 10–3. Attachment 4 is an www.regulations.gov, which is the [FR Doc. 2012–29310 Filed 12–4–12; 8:45 am] application for non-public treatment of Federal e-Rulemaking Portal; (2) by BILLING CODE 4510–26–P unredacted material. Id. at 3. The facsimile (fax); or (3) by hard copy. All Agreement’s intended effective date is comments, attachments, and other January 1, 2013. Id. at 4. The term is for material must identify the Agency name POSTAL REGULATORY COMMISSION one year after the effective date, unless and OSHA docket number for the ICR terminated sooner. Id. [Docket No. CP2013–22; Order No. 1557] (Docket No. OSHA–2012–0038). You The Postal Service reviews the may supplement electronic submissions International Mail Contract regulatory history of the Inbound by uploading document files Competitive Multi-Service Agreements electronically. If you wish to mail AGENCY: Postal Regulatory Commission. with Foreign Operators 1 product and additional materials in reference to an ACTION: Notice. identifies the TNT Agreement (approved electronic or facsimile submission, you must submit them to the OSHA Docket SUMMARY: The Commission is noticing a 1 Notice of United States Postal Service of Filing Office (see the section of this notice recent Postal Service filing concerning Functionally Equivalent Inbound Competitive titled ADDRESSES). The additional an additional inbound competitive Multi-Service Agreement with a Foreign Postal Operator, November 28, 2012 (Notice). materials must clearly identify your Multi-Service Agreements with Foreign 2 ‘‘CP’’ is an abbreviation used to identify or electronic comments by your name, Postal Operators 1 negotiated service reference international parcel post (from the French date, and the docket number so the agreement with Hongkong Post. This phrase colis postaux, ‘‘postal package’’).
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in Docket No. CP2010–95) as the SECURITIES AND EXCHANGE 0614, or Jennifer L. Sawin, Branch baseline agreement for purposes of COMMISSION Chief, at (202) 551–6821 (Division of determining the functional equivalence Investment Management, Office of of the instant Agreement.3 Id. at 3. It [Investment Company Act Release No. Investment Company Regulation). 30285; 812–13871] asserts that the instant Agreement fits SUPPLEMENTARY INFORMATION: The within applicable Mail Classification William Blair & Company, L.L.C. and following is a summary of the Schedule language and addresses William Blair Funds.; Notice of application. The complete application functional equivalency with the Application may be obtained via the Commission’s baseline agreement, including similarity Web site by searching for the file of cost characteristics. Id. at 3–7. The November 29, 2012. number, or an applicant using the Postal Service also identifies differences AGENCY: Securities and Exchange Company name box, at http:// between the two contracts, such as the Commission (‘‘Commission’’ or ‘‘SEC’’). www.sec.gov/search/search.htm or by deletion of an article, the addition of an ACTION: Notice of application for an calling (202) 551–8090. article, revisions to articles as a result of order under sections 6(c) and 17(b) of Applicants’ Representations negotiations, and the term, but asserts the Investment Company Act of 1940 that these differences do not detract (‘‘Act’’) for exemptions from section 1. The Trust, a Delaware statutory from a finding of functional 17(a) of the Act, and under section 17(d) trust, is registered under Act as an open- equivalency. Id. at 5–6. of the Act and rule 17d–1 thereunder to end management investment company. One existing series of the Trust, the III. Commission Action permit certain joint transactions. Emerging Markets Growth Fund (the 1 Notice of establishment of docket. The SUMMARY OF APPLICATION: Applicants ‘‘Initial Fund)’’ currently desires to Commission establishes Docket No. requests an order to permit certain purchase and redeem interests CP2013–22 for consideration of matters registered open-end management (‘‘Interests’’) of separately identified raised by the Notice. The Commission investment companies or series thereof series of the William Blair China A- appoints Allison J. Levy to serve as that are advised by William Blair & Share Fund, which will rely on the Public Representative in this docket. Company, L.L.C. (‘‘William Blair’’) to exemptions from registration under the Interested persons may submit invest in a private investment vehicle Act provided by section 3(c)(1) and/or comments on whether the Postal established by William Blair to invest in 3(c)(7) of the Act (the ‘‘A Share Fund,’’ Service’s filing in the captioned docket China A shares. and each separate series of the A Share is consistent with the policies of 39 Fund an ‘‘A Share Fund Series’’).2 U.S.C. 3632 and 3633 and the APPLICANTS: William Blair and William 2. William Blair is registered as an requirements of 39 CFR part 3015. Blair Funds (the ‘‘Trust’’). investment adviser under the Comments are due no later than FILING DATES: The application was filed Investment Advisers Act of 1940 December 10, 2012. The public portions on February 22, 2011, and amended on (‘‘Advisers Act’’). William Blair serves of this filing can be accessed via the August 26, 2011, June 15, 2012, and as investment adviser to the Initial Fund Commission’s Web site (http:// November 19, 2012. Applicants have pursuant to an investment advisory www.prc.gov). Information on obtaining agreed to file an amendment during the agreement between William Blair and access to sealed material appears in 39 notice period, the substance of which is the Trust, on behalf of the Initial Fund CFR part 3007. reflected in this notice. (the ‘‘Advisory Agreement’’). As the HEARING OR NOTIFICATION OF HEARING: An Initial Fund’s investment adviser, IV. Ordering Paragraphs order granting the application will be William Blair is responsible for making It is ordered: issued unless the Commission orders a investment decisions for the Initial 1. The Commission establishes Docket hearing. Interested persons may request Fund and administering the business No. CP2013–22 for consideration of a hearing by writing to the and affairs of the Initial Fund, subject to matters raised by the Postal Service’s Commission’s Secretary and serving the oversight of the Board of Trustees of November 28, 2012 Notice. applicants with a copy of the request, the Trust (‘‘Board’’), at least a majority 2. Pursuant to 39 U.S.C. 505, Allison personally or by mail. Hearing requests of whose members are not considered J. Levy is appointed to serve as an should be received by the Commission ‘‘interested persons’’ of the Initial Fund officer of the Commission (Public by 5:30 p.m. on December 20, 2012, and Representative) to represent the should be accompanied by proof of 1 The Initial Fund currently anticipates investing interests of the general public in this service on applicants, in the form of an in the A Share Fund Series, although final investment decisions will be made in light of the proceeding. affidavit or, for lawyers, a certificate of 3. Comments by interested persons in amount of quota available, account eligibility and service. Hearing requests should state then-current market conditions at the time of this proceeding are due no later than the nature of the writer’s interest, the investment. December 10, 2012. reason for the request, and the issues 2 Each entity that currently intends to rely on the 4. The Secretary shall arrange for requested relief has been named as an applicant. contested. Persons who wish to be publication of this Order in the Federal Any current or future series of the Trust and any notified of a hearing may request Register. other existing or future registered open-end notification by writing to the management investment company or series thereof By the Commission. Commission’s Secretary. for which William Blair, or any person controlling, Ruth Ann Abrams, controlled by, or under common control with ADDRESSES: Elizabeth M. Murphy, William Blair, or its or their successors (a ‘‘William Acting Secretary. Secretary, U.S. Securities and Exchange Blair Affiliate’’) acts as an investment adviser that [FR Doc. 2012–29287 Filed 12–4–12; 8:45 am] Commission, 100 F Street NE., may rely on the requested relief in the future is a ‘‘Future Fund’’ (together with the Initial Fund, the BILLING CODE 7710–FW–P Washington, DC 20549–1090. ‘‘Funds’’). For purposes of the requested order, Applicants: Richard W. Smirl, William ‘‘successor’’ is limited to an entity that results from 3 The Postal Service identifies Governors’ Blair & Company, L.L.C., 222 West reorganization into another jurisdiction or a change Decision No. 10–3 as the enabling Governors’ Adams Street, Chicago, IL 60606. in the type of business organization. Each Fund or Decision. Id. at 5. The status of the TNT Agreement other entity that may rely on the requested relief in as the baseline agreement was confirmed in Order FOR FURTHER INFORMATION CONTACT: Jaea the future will do so only in accordance with the No. 840, issued September 7, 2011. F. Hahn, Senior Counsel, at (202) 942– terms and conditions of the requested order.
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as defined in Section 2(a)(19) Applicants represent that the A Share annually by a nationally recognized and (‘‘Independent Trustees’’). Under the Fund will be the entity that invests in PCAOB-registered audit firm in terms of the Advisory Agreement, and holds China A Shares; the A Share accordance with U.S. Generally William Blair is entitled to receive Fund was named as the investing Accepted Auditing Standards monthly management fees from the vehicle in William Blair’s application to (‘‘GAAS’’).7 The A Share Fund Series Initial Fund at a specified annual rate. obtain a license to invest in China. used by the Funds will not lever William Blair also manages or will Interests in the A Share Fund will be themselves through borrowing, but A manage separate accounts, collective sold only to the Funds and the Other Share Fund Series used exclusively by investment trusts and funds registered Accounts. Other Accounts may use leverage. 5. The A Share Fund has filed a in other jurisdictions, and may organize 7. A Fund’s decision to invest in an Certificate of Formation, to be effective private pooled investment vehicles in A Share Fund Series will be made by a as of December 17, 2012, and will be the future (together, ‘‘Other Accounts’’). Fund’s portfolio manager(s). Because of organized as a Delaware limited liability These Other Accounts may have similar the repatriation restrictions, investments company, with William Blair, or a investment objectives and strategies as in China A Shares would be deemed William Blair Affiliate, as its managing the Funds, and may invest in A Share illiquid investments. Each Fund will, at member. The A Share Fund will not Fund Series along with one or more all times, limit its holdings in the A have a board of directors or trustees. Funds. Share Fund to no more than 15% of its The A Share Fund may establish one or 3. Applicants state that a significant net assets. Applicants state that access majority of publicly traded Chinese more separately identified A Share Fund Series, and a Fund or Other by the Funds and Other Accounts to the companies list their shares on one or Account may invest in some or all of the quota (i.e., to China A Shares) through more of three stock exchanges—the different A Share Fund Series.5 Each A the A Share Fund Series is a limited Shanghai, Shenzhen and Hong Kong Share Fund Series will have its own opportunity and will be allocated in Stock Exchanges. The Shanghai and portfolio manager or portfolio accordance with William Blair’s Trade Shenzhen exchanges are located in management team at William Blair who Allocation Policy. Under William Blair’s mainland China and there are two will be responsible for selecting Trade Allocation Policy, if fewer categories of stock that are listed on particular China A Shares for Interests are available than requested by these exchanges: China ‘‘A Shares’’ investment by that A Share Fund Series. the portfolio managers of the Funds and which trade in the currency of China, Each Fund or Other Account investing Other Accounts, Interests will generally the renminbi, and ‘‘B Shares’’ which in an A Share Fund Series will hold be allocated across participating trade in foreign currencies. ‘‘H Shares’’ Interests which will represent a accounts on a pro rata basis according and ‘‘red chip’’ shares are listed and proportionate share of the A Share Fund to requested order size. Similarly, if traded on the Hong Kong Stock more than one Fund or Other Account 3 Series’ net assets and a proportionate Exchange. Applicants state that far claim on the A Share Fund Series’ net seeks to repatriate proceeds at or about fewer Chinese companies have listed income. Interests in an A Share Fund the same time, and Chinese regulations their shares as H Shares or red chips. Series used by the Funds will be valued limit the aggregate amount of proceeds 4. The Initial Fund currently invests daily in accordance with the Funds’ that may be repatriated at any given in China through ‘‘H Shares’’ or ‘‘red valuation procedures and in accordance time to a level below the aggregate chip’’ stocks. Applicants state that for a with section 2(a)(41) of the Act. Each amount sought to be repatriated, the variety of reasons, China A Shares are Interest would have the same rights as requests by the applicable portfolio a more attractive means to invest in any other Interest, and the A Share manager(s) will be aggregated, if Chinese companies, than H Shares red Fund Series would not issue preferred received at or about the same time, and chip stocks or China B Shares. interests. proceeds available for repatriation will Applicants state that, while it is not 6. William Blair will not charge be allocated pro rata among requesting practical or economical for Funds or advisory fees to A Share Fund Series Funds and Other Accounts.8 William Other Accounts to invest directly in used by the Funds. William Blair will, Blair will not consider the potential China A Shares, a pooled investment however be entitled to receive impact on the A Shares quota when vehicle would allow the Funds and applicable advisory fees from the Funds making investment decisions for the Other Accounts to gain focused or Other Accounts. Expenses of the A Funds or Other Accounts.9 exposure to China A Shares.4 Share Fund Series will be charged to the A Share Fund Series as a whole and 7 Applicants state that the GAAS standards 3 H Shares are shares of companies incorporated accrue on a daily basis.6 The A Share applicable to the audit of the A Share Fund would in mainland China, listed on the Hong Kong Stock Fund’s books and those of the A Share be the same standards as those applicable to a Exchange and traded in Hong Kong dollars. ‘‘Red registered investment company. Further, applicants chip’’ shares are listed and traded on the Hong Fund Series will be accounted for under state that GAAP would apply to both the A Share Kong Stock Exchange, issued by companies based standard accounting principles and in Fund audit and a registered investment company in mainland China but incorporated outside of accordance with U.S. Generally audit. Thus, applicants assert that critical mainland China. Accepted Accounting Principles accounting policies governing security valuation, 4 Applicants state that until 2002, the Chinese (‘‘GAAP’’), and they will be audited accounting for investment transactions, recognition government restricted investment in China A of investment income and of expenses, and accrual Shares to domestic (i.e., Chinese) investors. Since of expenses, which are often the critical policies 2002, the Chinese Government has permitted each Fund or Other Account would generally not applicable to investment companies, would apply certain non-Chinese investors to invest in China A be practical or feasible. in substantially the same manner for the audit of Shares, but to do so, a foreign investor must apply 5 Applicants state that initially, one A Share Fund the A Share Fund. for, and receive a license as a Qualified Foreign Series is contemplated but in the future, additional 8 Applicants are not seeking comfort nor is the Institutional Investor or ‘‘QFII’’ and be allotted a A Share Fund Series may be established for Commission providing any opinion on whether the quota, representing the amount in renminbi of different types of investors or to invest in different Trade Allocation Policy meets the standards China A Shares that the investor may purchase. companies based generally on the particular applicable under the Act or the Advisers Act. William Blair has received a QFII license and was characteristics of those companies. 9 Applicants state that the Chinese authorities granted a quota of US$100 million so that it can 6 Expenses of the A Share Fund Series will may reduce or revoke a QFII’s quota if the QFII does invest in China A Shares on behalf of the Funds and include basic fees and expenses of service not invest the full amount of its quota over a phase- Other Accounts. As described more fully in the providers, such as the administrator, accountant, in period, or, in certain cases, if it repatriates its application, individual applications on behalf of local custodian and legal counsel. investments below the quota amount.
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8. Applicants request an order of the A Share Fund. As a result, the A by a Fund. The Funds, as holders of pursuant to sections 6(c) and 17(b) of Share Fund or A Share Fund Series may Interests of the A Share Fund, will not the Act and pursuant to section 17(d) of be deemed to be under William Blair’s be subject to any sales load, redemption the Act and rule 17d-1 under the Act control under section 2(a)(3)(C), such fee, distribution fee or service fee. solely to the extent necessary to permit: that the A Share Fund may be deemed Moreover, administrative fees will be (a) The Funds to purchase Interests of an affiliated person of an affiliated paid by the A Share Fund Series used the A Share Fund Series; (b) the A Share person of the Funds. If a Fund and the by the Funds to William Blair only upon Fund to sell Interests in its Series to the A Share Fund are deemed affiliates of the determination by each Fund’s Funds, and to redeem such shares held each other, or even second-tier affiliates, Board, including a majority of by the Funds upon the demand of the the sale of Interests of the A Share Fund Independent Trustees, that the fees are Funds; and (c) William Blair (or an to the Fund, and the redemption of such (i) for services in addition to, rather than William Blair Affiliate) to provide Interests by the Fund, would be duplicative of, services rendered to the investment management services to the prohibited under section 17(a) of the Funds directly and (ii) fair and Funds and A Share Fund. Act. reasonable in light of the usual and 3. Section 17(b) of the Act authorizes customary charges imposed by others Applicants’ Legal Analysis the Commission to grant an order for services of the same nature and 1. Section 17(a) generally provides, in permitting a transaction otherwise quality. Applicants argue that the fees part, that it is unlawful for any affiliated prohibited by section 17(a) if the terms payable to the A Share Fund’s service person of a registered investment of the proposed transaction, including providers will be for distinct services, company (‘‘first-tier affiliate’’), or any the consideration to be paid or received, and the costs of such fees will be affiliated person of such person are fair and reasonable and do not outweighed by opportunity to invest in (‘‘second tier affiliate’’), acting as involve overreaching on the part of any China A Shares. principal, to sell or purchase any person concerned, and the proposed 6. Applicants propose that the Funds security or other property to or from transaction is consistent with the be permitted to continue to engage in such investment company. Section policies of each registered investment certain purchase and sale cross 2(a)(3) of the Act defines an ‘‘affiliated company involved and with the general transactions in securities (‘‘Cross person’’ of another person to include (a) purposes of the Act. Section 6(c) of the Transactions’’) between a Fund or Other any person directly or indirectly Act permits the Commission to exempt Account seeking to implement a owning, controlling, or holding with any person or transactions from any portfolio strategy and another Fund or power to vote, 5% or more of the provisions of the Act if such exemption Account seeking to raise or invest cash. outstanding voting securities of the is necessary or appropriate in the public The Funds currently rely on rule 17a– other person; (b) any person 5% or more interest and consistent with the 7 to engage in such Cross Transactions; of whose outstanding voting securities protection of investors and the purposes however, if one or more Funds or Other are directly or indirectly owned, fairly intended by the policy and Accounts were deemed to be second-tier controlled, or held with the power to provisions of the Act. affiliates of each other by virtue of their vote by the other person; and (c) any 4. Applicants submit that the ownership or control affiliations with person directly or indirectly controlling, proposed arrangement satisfies the the A Share Fund or an A Share Fund controlled by, or under common control standards for relief under sections 17(b) Series, the Funds may not be entitled to with the other person. Section 2(a)(9) and 6(c) of the Act. For the reasons rely on rule 17a–7 because they would defines ‘‘control’’ to mean ‘‘the power to discussed below, Applicants submit that no longer be affiliated solely for the exercise a controlling influence over the the terms of the arrangement, including reasons permitted by the Rule. management or policies of a company, the consideration to be paid, are fair and 7. Applicants assert that the potential unless such power is solely the result of reasonable and do not involve affiliations created by the A Share Fund an official position with such overreaching on the part of any person Series structure do not affect the other company.’’ concerned, and that the proposed protections provided by the rule, 2. Applicants state that the Funds and transactions are consistent with the including the integrity of the pricing the A Share Fund are expected to be policy of each registered investment mechanism employed, and oversight by affiliated persons under section 2(a)(3) company concerned and with the each Fund’s Board. Applicants of the Act, because it is expected that general purposes of the Act. Applicants represent that the Funds and Other one or more Funds and Other Accounts further submit that the Funds’ Accounts will comply with the will own at least 5%, and potentially, participation in the A Share Fund Series requirements set forth in rule 17a–(7)(a) more than 25% of the Interests of the A will be necessary or appropriate in the through (g). Applicants thus believe that Share Fund or an A Share Fund Series. public interest and consistent with the Cross Transactions will be reasonable While Interests of the A Share Fund protection of investors and the purposes and fair, and will not involve (and A Share Fund Series) will be non- fairly intended by the policies and overreaching, and will be consistent voting interests, a Fund or Other provisions of the Act. with the purposes of the Act and the Account could have power to exercise a 5. Applicants state that each Fund investment policy of each Fund. controlling influence over the and Other Account will be treated 8. Section 17(d) of the Act and rule management or policies of the A Share identically as a holder of Interest in the 17d–1 under the Act generally prohibit Fund or Series and be deemed an A Share Fund Series, and each Fund joint transactions involving registered affiliated person of the A Share Fund or and Other Account will purchase and investment companies and their A Share Fund Series under section sell Interests of a China A Share Fund affiliates unless the Commission has 2(a)(3)(C). In addition, William Blair is Series on the same terms and on the approved the transaction. In considering the investment adviser to the Initial same basis as each other Fund and whether to approve a joint transaction Fund (and William Blair or a William Other Account that invests in that A under rule 17d–1, the Commission Blair Affiliate will be the investment Share Fund Series. Applicants note that considers whether the proposed adviser to any Future Funds), and neither William Blair, nor a William transaction is consistent with the William Blair or a William Blair Blair Affiliate, will receive a fee for provisions, policies, and purposes of the Affiliate will be the managing member advising any A Share Fund Series used Act, and the extent to which the
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participation of the investment 3. Administrative fees will be paid by connection with the review required by companies is on a basis different from the A Share Fund Series used by the condition 5 above, William Blair will or less advantageous than that of the Funds to William Blair or a William provide annually to each Fund’s Board other participants. Applicant states that Blair Affiliate only upon a a written report about William Blair’s the Funds and the Other Accounts (by determination by each Fund’s Board, and the A Share Fund’s compliance purchasing Interests of the A Share including a majority of its Independent with this condition. All books and Funds), William Blair (by managing the Trustees, that the fees are (i) for services records required to be made pursuant to portfolio securities of the A Share Fund in addition to, rather than duplicative this condition will be maintained and and the Funds at the same time that the of, services rendered to the Funds preserved for a period of not less than Funds are invested in Interests of the A directly, and (ii) fair and reasonable in six years from the end of the fiscal year Share Fund), and the A Share Fund (by light of the usual and customary charges in which any transaction occurred, the selling its Interests to, and redeeming its imposed by others for services of the first two years in an easily accessible Interests from, the Funds), could be same nature and quality. If such place, and will be subject to deemed to be participants in a joint determination is not made by a Fund’s examination by the SEC and its staff. enterprise or arrangement within the Board, William Blair will reimburse to 8. To engage in Cross Transactions, meaning of section 17(d) and rule 17d– that Fund the amount of any the Funds will comply with rule 17a– 1. administrative fee borne by that Fund as 7 under the Act in all respects other 9. Applicants request an order an investor in the A Share Fund. than the requirement that the parties to pursuant to section 17(d) and rule 17d– 4. Each Fund will, at all times, limit the transaction be affiliated persons (or 1 to permit the proposed transactions its holdings in the A Share Fund to no affiliated persons of affiliated persons) with the A Share Fund. Applicants more than 15% of its assets. of each other solely by reason of having submit that the investment by the Funds 5. Each Fund’s Board, including a a common investment adviser or in the A Share Fund on the basis majority of the Independent Trustees, investment advisers which are affiliated proposed is consistent with the will determine initially and no less persons of each other, common officers, provisions, policies and purposes of the frequently than annually that the Fund’s and/or common directors, solely Act, and that each Fund will invest in investments in the A Share Fund are, because a Fund and Other Account Interests of the A Share Fund on the and continue to be, in the best interests might become affiliated persons within same basis as any other shareholder (i.e., of the Fund and the Fund’s the meaning of section 2(a)(3)(A), (B) or the other Funds and Other Accounts). shareholders. (C) of the Act because of their Applicants further state that William 6. William Blair will make the investments in the A Share Fund. Blair will take reasonable steps to make accounts, books and other records of the sure that allocations among the Funds A Share Fund available for inspection For the Commission, by the Division of and Other Accounts are fair and by the Commission staff and, if Investment Management, under delegated authority. equitable. Allocations of China A Shares requested, to furnish copies of those to different A Share Fund Series, and records to the Commission staff. Kevin M. O’Neill, allocations of opportunities to invest in 7. The A Share Fund will comply Deputy Secretary. the A Share Fund Series, by Funds and with the requirements of the following [FR Doc. 2012–29318 Filed 12–4–12; 8:45 am] Other Accounts, will be subject to sections of the Act, except as noted BILLING CODE 8011–01–P William Blair’s Trade Allocation Policy, below: Sections 9, 12, 13, 17(a) (except under the supervision of William Blair’s insofar as relief is provided by the and the Funds’ CCO, and compliance Order), 17(d) (except insofar as relief is SECURITIES AND EXCHANGE with William Blair’s Trade Allocation provided by the Order), 17(e), 17(f), COMMISSION Policy will be overseen by the Funds’ 17(h), 18, 21 and 36–53 of the Act and [Investment Company Act Release No. Board. rule 22c–1 under the Act as if the A 30284; 812–14023] Share Fund were an open-end Applicants’ Conditions management investment company Foreside Advisor Services, LLC, et al.; Applicants agree that any order registered under the Act. In addition, Notice of Application granting the requested relief shall be the A Share Fund will comply with the subject to the following conditions: requirements of the rules under section November 29, 2012. 1. The Funds’ investment in Interests 17(f) and 17(g) of the Act. This AGENCY: Securities and Exchange of the A Share Fund will be undertaken condition 7 will apply only to A Share Commission (‘‘Commission’’). only in accordance with the Funds’ Fund Series in which a Fund has ACTION: Notice of an application for an stated investment restrictions and will invested; this condition 7 will not apply order under section 6(c) of the be consistent with their stated to A Share Fund Series invested in Investment Company Act of 1940 investment policies. exclusively by Other Accounts except (‘‘Act’’) for an exemption from sections 2. William Blair and its affiliated insofar as necessary for the A Share 2(a)(32), 5(a)(1), 22(d) and 22(e) of the persons will receive no advisory fee Fund Series invested in by a Fund to Act and rule 22c–1 under the Act, and from the A Share Fund in connection comply with this condition. William under sections 6(c) and 17(b) of the Act with the Funds’ investment in the A Blair will adopt procedures designed to for an exemption from sections 17(a)(1) Share Fund. William Blair and its ensure that the A Share Fund complies and (2) of the Act, and under section affiliated persons will receive no with the aforementioned sections of the 12(d)(1)(J) for an exemption from commissions, fees, or other Act and rules under the Act. William sections 12(d)(1)(A) and (B) of the Act. compensation from a Fund or the A Blair will periodically review and Share Fund in connection with the periodically update as appropriate such APPLICANTS: Foreside Advisor Services, purchase or redemption by the Funds of procedures and will maintain books and LLC (‘‘FAS’’), Foreside ETF Trust (the shares in the A Share Fund. Interests of records describing such procedures, and ‘‘Trust’’) and Foreside Fund Services, the A Share Fund will not be subject to maintain the records required by rules LLC (‘‘Distributor’’). a sales load, redemption fee, 31a–1(b)(1), 31a–1(b)(2)(ii) and 31a– SUMMARY OF APPLICATION: Applicants distribution fee or service fee. 1(b)(9) under the Act. In addition, in request an order that permits: (a) Certain
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open-end management investment company. Applicants request that the promoter, the Adviser, a Subadviser, or companies or series thereof to issue order apply to the initial series of the a Distributor. shares (‘‘Shares’’) redeemable in large Trust, The ETF 50, described in Exhibit 4. The investment objective of each aggregations only (‘‘Creation Units’’); (b) A to the application (‘‘Initial Fund’’), Fund will be to provide investment secondary market transactions in Shares and future series of the Trust and future returns that closely correspond, before to occur at negotiated market prices; (c) open-end management investment fees and expenses, to the price and yield certain series to pay redemption companies and series thereof advised by performance of its Underlying Index.2 proceeds, under certain circumstances, FAS or an entity controlling, controlled Each Fund will sell and redeem more than seven days from the tender of by or under common control with FAS Creation Units on a ‘‘Business Day,’’ Shares for redemption; (d) certain (the ‘‘Adviser’’) that comply with the which is defined to include any day that affiliated persons of the series to deposit terms and conditions of the application the Trust is open for business as securities into, and receive securities (each such company or series, a ‘‘Future required by section 22(e) of the Act. The from, the series in connection with the Fund,’’ and collectively with the Initial Adviser and/or Subadviser may utilize a purchase and redemption of Creation Fund, the ‘‘Funds’’).1 The Initial Fund replication or a representative sampling Units; and (e) certain registered and the Future Funds will each track strategy to track its Underlying Index. A management investment companies and the performance of a specified equity or Fund using a replication strategy will unit investment trusts outside of the fixed income securities index invest in substantially all of the same group of investment companies as (‘‘Underlying Index’’). Future Funds Component Securities in its Underlying the series to acquire Shares. may be based on Underlying Indexes Index in the same approximate FILING DATES: The application was filed that include only foreign equity or fixed proportions as in the Underlying Index. on April 2, 2012, and amended on income securities (‘‘International A Fund using a representative sampling November 29, 2012. Funds’’). Other Future Funds may be strategy generally will hold a significant HEARING OR NOTIFICATION OF HEARING: An based on Underlying Indexes that number, but not necessarily all, of the order granting the requested relief will include foreign and domestic equity or Component Securities of its Underlying be issued unless the Commission orders fixed income securities (‘‘Global Index. Applicants state that if a hearing. Interested persons may Funds’’). representative sampling is used, a Fund request a hearing by writing to the 2. FAS or another Adviser will serve will not be expected to track its Commission’s Secretary and serving as the investment adviser to the Funds. Underlying Index with the same degree applicants with a copy of the request, FAS and each other Adviser will be of accuracy as a Fund employing the personally or by mail. Hearing requests registered as an investment adviser replication strategy. Applicants expect should be received by the Commission under the Investment Advisers Act of that each Fund will have a tracking by 5:30 p.m. December 26, 2012, and 1940 (‘‘Advisers Act’’). The Adviser may error relative to the performance of its should be accompanied by proof of enter into subadvisory agreements with Underlying Index of no more than five service on applicants, in the form of an investment advisers to act as percent. 5. Applicants anticipate that the price affidavit or, for lawyers, a certificate of subadvisers with respect to any Fund of a Share will range from $15 to $25, service. Hearing requests should state (each, a ‘‘Subadviser’’). Any Subadviser and that Creation Units will consist of the nature of the writer’s interest, the to a Fund will be registered under the at least 25,000 Shares. All orders to reason for the request, and the issues Advisers Act. The Distributor, a broker- purchase and redeem Creation Units contested. Persons who wish to be dealer registered under the Securities must be placed with the Distributor by notified of a hearing may request Exchange Act of 1934 (‘‘Broker’’) and an or through an ‘‘Authorized Participant,’’ notification by writing to the affiliate of the Adviser, will act as the which is either: (a) A ‘‘participating Commission’s Secretary. distributor and principal underwriter of party,’’ i.e., a Broker or other participant ADDRESSES: Elizabeth M. Murphy, Creation Units of Shares. In the future, in the Continuous Net Settlement Secretary, U.S. Securities and Exchange another Broker may act as distributor System of the National Securities Commission, 100 F Street NE., and principal underwriter. No Clearing Corporation (‘‘NSCC’’), a Washington, DC 20549–1090. Distributor will be affiliated with any clearing agency registered with the Applicants, Three Canal Plaza, Suite Exchange (as defined below) or any Commission and affiliated with the 100, Portland, ME 04101. Index Provider (as defined below). Depository Trust Company (‘‘DTC’’), or FOR FURTHER INFORMATION CONTACT: 3. Each Fund will consist of a (b) a participant in the DTC (‘‘DTC Deepak T. Pai, Senior Counsel, at (202) portfolio of securities and other Participant’’), which in any case, has 551–6876 or Mary Kay Frech, Branch instruments (‘‘Portfolio Instruments’’) executed an agreement with the Chief, at (202) 551–6821 (Division of selected to correspond generally to the Distributor. The Distributor will Investment Management, Office of price and yield performance of an transmit all purchase orders to the Investment Company Regulation). Underlying Index. No entity that relevant Fund. SUPPLEMENTARY INFORMATION: The creates, compiles, sponsors or maintains 6. The Shares will be purchased and following is a summary of the an Underlying Index (‘‘Index Provider’’) redeemed in Creation Units and application. The complete application is or will be an affiliated person, as may be obtained via the Commission’s defined in section 2(a)(3) of the Act, or 2 Applicants represent that at least 80% of each Web site by searching for the file an affiliated person of an affiliated Fund’s total assets will be invested in the number, or an applicant using the person of the Trust or a Fund, a constituent securities of its respective Underlying Index (‘‘Component Securities’’), TBA Transactions Company name box, at http:// (as defined below) representing Component www.sec.gov/search/search.htm or by 1 All existing entities that intend to rely on the Securities, and Depositary Receipts (as defined calling (202) 551–8090. requested order have been named as applicants. below) representing Component Securities. Each Any other existing or future entity that Fund also may invest the remaining 20% of its total Applicants’ Representations subsequently relies on the order will comply with assets in a broad variety of other instruments, the terms and conditions of the application. An including securities not included in its Underlying 1. The Trust, a Delaware statutory Acquiring Fund (as defined below) may rely on the Index, which the Adviser or Subadviser believes trust, will be registered under the Act as order only to invest in a Fund and not in any other will assist the Fund in tracking the performance of an open-end management investment registered investment company. its Underlying Index.
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generally on an in-kind basis. Except Fund’s portfolio; 9 or (e) for temporary applicable) cash in lieu of some or all where the purchase or redemption will periods, to effect changes in the Fund’s of the Deposit Instruments or include cash under the limited portfolio as a result of the rebalancing Redemption Instruments, respectively, circumstances specified below, of its Underlying Index (any such solely because: (i) Such instruments are, purchasers will be required to purchase change, a ‘‘Rebalancing’’). If there is a in the case of the purchase of a Creation Creation Units by making an in-kind difference between the net asset value Unit, not available in sufficient deposit of specified instruments (‘‘NAV’’) attributable to a Creation Unit quantity; (ii) such instruments are not (‘‘Deposit Instruments’’), and and the aggregate market value of the eligible for trading by an Authorized shareholders redeeming their Shares Deposit Instruments or Redemption Participant or the investor on whose will receive an in-kind transfer of Instruments exchanged for the Creation behalf the Authorized Participant is specified instruments (‘‘Redemption Unit, the party conveying instruments acting; or (iii) a holder of Shares of a Instruments’’).3 On any given Business with the lower value will also pay to the Global Fund or International Fund would be subject to unfavorable income Day the names and quantities of the other an amount in cash equal to that tax treatment if the holder receives instruments that constitute the Deposit difference (the ‘‘Cash Amount’’). 7. Purchases and redemptions of redemption proceeds in kind.11 Instruments and the names and 8. Each Business Day, before the open quantities of the instruments that Creation Units may be made in whole or in part on a cash basis, rather than in of trading on a national securities constitute the Redemption Instruments kind, solely under the following exchange, as defined in section 2(a)(26) will be identical, unless the Fund is circumstances: (a) To the extent there is of the Act (‘‘Exchange’’) on which Rebalancing (as defined below). In a Cash Amount, as described above; (b) Shares are listed (‘‘Primary Listing addition, the Deposit Instruments and if, on a given Business Day, a Fund Exchange’’), each Fund will cause to be the Redemption Instruments will each announces before the open of trading published through the NSCC the names correspond pro rata to the positions in that all purchases, all redemptions or all and quantities of the instruments a Fund’s portfolio (including cash purchases and redemptions on that day comprising the Deposit Instruments and 4 positions), except: (a) In the case of will be made entirely in cash; (c) if, the Redemption Instruments, as well as bonds, for minor differences when it is upon receiving a purchase or the estimated Cash Amount (if any), for impossible to break up bonds beyond redemption order from an Authorized that day. The list of Deposit Instruments certain minimum sizes needed for Participant, a Fund determines to and Redemption Instruments will apply transfer and settlement; (b) for minor require the purchase or redemption, as until a new list is announced on the differences when rounding is necessary applicable, to be made entirely in following Business Day, and there will to eliminate fractional shares or lots that cash; 10 (d) if, on a given Business Day, be no intra-day changes to the list are not tradeable round lots; 5 (c) ‘‘to be a Fund requires all Authorized except to correct errors in the published announced’’ transactions (‘‘TBA Participants purchasing or redeeming list. The intra-day indicative value of Transactions’’),6 derivatives and other Shares on that day to deposit or receive Shares, which will represent on a per positions that cannot be transferred in (as applicable) cash in lieu of some or Share basis the sum of the current value kind 7 will be excluded from the Deposit all of the Deposit Instruments or of the Portfolio Instruments, will be Instruments and the Redemption Redemption Instruments, respectively, published on the Consolidated Tape Instruments; 8 (d) to the extent the Fund solely because: (i) Such instruments are every 15 seconds throughout the regular determines, on a given Business Day, to not eligible for transfer through either trading hours of the Primary Listing use a representative sampling of the the NSCC or DTC; or (ii) in the case of Exchange. 9. Each Fund may recoup settlement Global Funds and International Funds, costs charged by NSCC and DTC by 3 such instruments are not eligible for The Funds must comply with the federal imposing a transaction fee on investors securities laws in accepting Deposit Instruments trading due to local trading restrictions, purchasing or redeeming Creation Units and satisfying redemptions with Redemption local restrictions on securities transfers Instruments, including that the Deposit Instruments (‘‘Transaction Fee’’). The Transaction or other similar circumstances; or (e) if and Redemption Instruments are sold in Fee will be borne only by purchasers a Fund permits an Authorized transactions that would be exempt from registration and redeemers of Creation Units and under the Securities Act of 1933 (‘‘Securities Act’’). Participant to deposit or receive (as In accepting Deposit Instruments and satisfying will be limited to amounts that have redemptions with Redemption Instruments that are 9 A Fund may only use sampling for this purpose been determined appropriate by the restricted securities eligible for resale pursuant to if the sample: (i) Is designed to generate Adviser to defray the transaction Rule 144A under the Securities Act, the Funds will performance that is highly correlated to the comply with the conditions of Rule 144A. expenses that will be incurred by a performance of the Fund’s portfolio; (ii) consists 4 The portfolio used for this purpose will be the Fund when an investor purchases or entirely of instruments that are already included in 12 same portfolio used to calculate the Fund’s NAV for the Fund’s portfolio; and (iii) is the same for all redeems Creation Units. All orders to that Business Day. Authorized Participants on a given Business Day. purchase Creation Units will be placed 5 A tradeable round lot for a security will be the 10 In determining whether a particular Fund will with the Distributor by or through an standard unit of trading in that particular type of sell or redeem Creation Units entirely on a cash or Authorized Participant, and the security in its primary market. in kind basis (whether for a given day or a given 6 Distributor will transmit all purchase A TBA Transaction is a method of trading order), the key consideration will be the benefit that mortgage-backed securities. In a TBA Transaction, would accrue to the Fund and its investors. For the buyer and seller agree on general trade instance, in bond transactions, the Adviser may be 11 A ‘‘custom order’’ is any purchase or parameters such as agency, settlement date, par able to obtain better execution than Share redemption of Shares made in whole or in part on amount and price. The actual pools delivered purchasers because of the Adviser’s size, experience a cash basis in reliance on clause (e)(i) or (e)(ii). generally are determined two days prior to the and potentially stronger relationships in the fixed 12 Where a Fund permits an in-kind purchaser to settlement date. income markets. Purchases of Creation Units either substitute cash-in-lieu of depositing one or more 7 This includes instruments that can be on an all cash basis or in kind are expected to be Deposit Instruments, the purchaser may be assessed transferred in kind only with the consent of the neutral to the Funds from a tax perspective. In a higher Transaction Fee to cover the cost of original counterparty to the extent the Fund does contrast, cash redemptions typically require selling purchasing those particular Deposit Instruments. In not intend to seek such consents. portfolio holdings, which may result in adverse tax all cases, the Transaction Fee will be limited in 8 Because these instruments will be excluded consequences for the remaining Fund shareholders accordance with the requirements of the from the Deposit Instruments and the Redemption that would not occur with an in kind redemption. Commission applicable to open-end management Instruments, their value will be reflected in the As a result, tax considerations may warrant in kind investment companies offering redeemable determination of the Cash Amount (defined below). redemptions. securities.
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orders to the relevant Fund. The Shares from the Fund or tender such Creation Units only. Applicants state Distributor will furnish a prospectus Shares for redemption to the Fund only that Creation Units will always be and a confirmation to Authorized in Creation Units. Copies of annual and redeemable in accordance with the Participants placing purchase orders semi-annual shareholder reports will provisions of the Act. Applicants further and will maintain a record of the also be provided to the DTC Participants state that because the market price of instructions given to a Fund to for distribution to beneficial owners of Shares will be disciplined by arbitrage implement delivery of its Shares. Shares. opportunities, investors should be able 10. Shares of each Fund will be listed to sell Shares in the secondary market Applicants’ Legal Analysis on an Exchange. The principal at prices that do not vary materially secondary market for the Shares will be 1. Applicants request an order under from their NAV per Share. the Primary Listing Exchange. It is section 6(c) of the Act granting an expected that one or more member firms exemption from sections 2(a)(32), Section 22(d) of the Act and Rule 22c– of the Primary Listing Exchange will be 5(a)(1), 22(d) and 22(e) of the Act and 1 Under the Act designated to act as a specialist or rule 22c–1 under the Act, under 4. Section 22(d) of the Act, among market maker and maintain a market for sections 6(c) and 17(b) of the Act other things, prohibits a dealer from the Shares trading on the Primary granting an exemption from sections selling a redeemable security that is Listing Exchange. The price of Shares 17(a)(1) and (2) of the Act, and under currently being offered to the public by will be based on a current bid/offer in section 12(d)(1)(J) for an exemption or through an underwriter, except at a the secondary market. Transactions from sections 12(d)(1)(A) and (B) of the current public offering price described involving the purchases or sales of Act. in the prospectus. Rule 22c–1 under the Shares on an Exchange will be subject 2. Section 6(c) of the Act provides that Act generally requires that a dealer to customary brokerage fees and the Commission may exempt any selling, redeeming, or repurchasing a charges. person, security or transaction, or any redeemable security do so only at a 11. Applicants expect that purchasers class of persons, securities or price based on its NAV. Applicants state of Creation Units will include transactions, from any provision of the that the purchase and sale of Shares of institutional investors and arbitrageurs. Act, if and to the extent that such a Fund will not be accomplished at an Authorized Participants also may exemption is necessary or appropriate offering price described in the Fund’s purchase or redeem Creation Units in in the public interest and consistent prospectus, as required by section 22(d), connection with their market making with the protection of investors and the nor will sales and repurchases be made activities. Applicants expect that purposes fairly intended by the policy at a price based on the current NAV secondary market purchasers of Shares and provisions of the Act. Section 17(b) next computed after receipt of an order, will include both institutional and retail of the Act authorizes the Commission to as required by rule 22c–1. Applicants investors.13 The price at which Shares exempt a proposed transaction from request an exemption under section 6(c) trade will be disciplined by arbitrage section 17(a) of the Act if evidence from these provisions. opportunities created by the ability to establishes that the terms of the 5. Applicants believe that the purchase or redeem Creation Units at transaction, including the consideration concerns sought to be addressed by NAV, which applicants believe should to be paid or received, are reasonable section 22(d) of the Act and rule 22c– ensure that Shares similarly do not trade and fair and do not involve 1 under the Act with respect to pricing at a material premium or discount in overreaching on the part of any person are equally satisfied by the proposed relation to NAV. concerned, and the proposed method of pricing Shares. Applicants 12. Shares will not be individually transaction is consistent with the maintain that, while there is little redeemable and owners of Shares may policies of the registered investment legislative history regarding section acquire those Shares from a Fund or company and the general provisions of 22(d), its provisions, as well as those of tender such shares for redemption to the the Act. Section 12(d)(1)(J) of the Act rule 22c–1, appear to have been Fund, in Creation Units only. To provides that the Commission may intended to (a) prevent dilution caused redeem, an investor must accumulate exempt any person, security, or by certain riskless-trading schemes by enough Shares to constitute a Creation transaction, or any class or classes of principal underwriters and contract Unit. Redemption requests must be persons, securities or transactions, from dealers, (b) prevent unjust placed by or through an Authorized any provision of section 12(d)(1) if the discrimination or preferential treatment Participant. exemption is consistent with the public among buyers, and (c) ensure an orderly 13. Neither the Trust nor any Fund interest and the protection of investors. distribution system of shares by contract will be marketed or otherwise held out dealers by eliminating price competition as a traditional open-end investment Sections 5(a)(1) and 2(a)(32) of the Act from non-contract dealers who could company or a ‘‘mutual fund’’. Instead, 3. Section 5(a)(1) of the Act defines an offer investors shares at less than the each Fund will be marketed as an ‘‘open-end company’’ as a management published sales price and who could ‘‘exchange-traded fund.’’ All marketing investment company that is offering for pay investors a little more than the materials that describe the features or sale or has outstanding any redeemable published redemption price. method of obtaining, buying or selling security of which it is the issuer. 6. Applicants believe that none of Creation Units, or Shares being listed Section 2(a)(32) of the Act defines a these purposes will be thwarted by and traded on an Exchange, or refer to redeemable security as any security, permitting Shares to trade in the redeemability, will prominently other than short-term paper, under the secondary market at negotiated prices. disclose that Shares are not individually terms of which the holder, upon its Applicants state that secondary market redeemable shares and will disclose that presentation to the issuer, is entitled to transactions in Shares would not cause the owners of Shares may acquire those receive approximately a proportionate dilution for owners of such Shares, share of the issuer’s current net assets, because such transactions do not 13 Shares will be registered in book-entry form or the cash equivalent. Because Shares directly involve Fund assets. Similarly, only. DTC or its nominee will be the record or will not be individually redeemable, secondary market trading in Shares registered owner of all outstanding Shares. Beneficial ownership of Shares will be shown on applicants request an order that would should not create unjust discrimination the records of DTC or DTC Participants. permit the Trust to issue Shares in or preferential treatment among buyers
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to the extent different prices exist Applicants state that the SAI will 13. Applicants submit that the during a given trading day, or from day disclose those local holidays (over the proposed conditions to the requested to day. Applicants state that such period of at least one year following the relief adequately address the concerns variances occur as a result of third-party date thereof), if any, that are expected to underlying the limits in section market forces, such as supply and prevent the delivery of redemption 12(d)(1)(A) and (B), which include demand, but do not occur as a result of proceeds in seven calendar days and the concerns about undue influence by a unjust or discriminatory manipulation. maximum number of days (up to 14 fund of funds over underlying funds, Finally, applicants contend that the calendar days) needed to deliver the excessive layering of fees and overly proposed distribution system will be proceeds for each affected Global Fund complex fund structures. Applicants orderly because arbitrage activity will and International Fund. believe that the requested exemption is ensure that the Shares do not trade at a 9. Applicants are not seeking relief consistent with the public interest and material discount or premium in from section 22(e) for Global or the protection of investors. relation to their NAV. International Funds that do not effect redemptions of Creation Units in-kind. 14. Applicants believe that neither an Section 22(e) of the Act Acquiring Fund nor an Acquiring Fund 7. Section 22(e) of the Act generally Section 12(d)(1) of the Act Affiliate would be able to exert undue prohibits a registered investment 10. Section 12(d)(1)(A) of the Act influence over a Fund.15 Condition 5 company from suspending the right of prohibits a registered investment limits the ability of an Acquiring Fund’s redemption or postponing the date of company from acquiring shares of an Advisory Group 16 or an Acquiring payment of redemption proceeds for investment company if the securities Fund’s Subadvisory Group 17 to control more than seven days after the tender of represent more than 3% of the total a Fund within the meaning of section a security for redemption. Applicants outstanding voting stock of the acquired 2(a)(9) of the Act. Applicants propose observe that the settlement of company, more than 5% of the total other conditions to limit the potential redemptions of Creation Units of the assets of the acquiring company, or, for undue influence over the Funds, Global and International Funds is together with the securities of any other including that no Acquiring Fund or contingent not only on the settlement investment companies, more than 10% Acquiring Fund Affiliate will cause a cycle of the U.S. securities markets but of the total assets of the acquiring Fund to purchase a security in an also on the delivery cycles present in company. Section 12(d)(1)(B) of the Act offering of securities during the foreign markets in which those Funds prohibits a registered open-end existence of an underwriting or selling invest. Applicants have been advised investment company, its principal syndicate of which a principal that, under certain circumstances, the underwriter, or any other broker or underwriter is an Underwriting Affiliate delivery cycles for transferring Portfolio dealer from selling the investment (‘‘Affiliated Underwriting’’).18 Instruments to redeeming investors, company’s shares to another investment coupled with local market holiday company if the sale would cause the 15 An ‘‘Acquiring Fund Affiliate’’ is defined as the schedules, will require a delivery acquiring company to own more than Acquiring Fund Adviser, Acquiring Fund process of up to fourteen (14) calendar 3% of the acquired company’s voting Subadviser(s), any Sponsor, promoter or principal underwriter of an Acquiring Fund and any person days. Applicants request relief under stock, or if the sale would cause more controlling, controlled by or under common control section 6(c) of the Act from section 22(e) than 10% of the acquired company’s with any of these entities. A ‘‘Fund Affiliate’’ is to allow Global and International Funds voting stock to be owned by investment defined as the Adviser, Subadviser(s), promoter or to pay redemption proceeds up to 14 companies generally. principal underwriter of a Fund and any person 11. Applicants request an exemption controlling, controlled by or under common control calendar days after the tender of the with any of these entities. Creation Units. With respect to Future to permit management investment 16 An ‘‘Acquiring Fund’s Advisory Group’’ is Funds based on a global or an companies (‘‘Acquiring Management defined as the Acquiring Fund Adviser, Sponsor, international Underlying Index, Companies’’) and unit investment trusts any person controlling, controlled by or under applicants seek the same relief from (‘‘Acquiring Trusts’’) registered under common control with the Acquiring Fund Adviser or Sponsor, and any investment company or issuer section 22(e) only to the extent that the Act that are not advised or that would be an investment company but for similar circumstances exist. Except as sponsored by the Adviser and are not section 3(c)(l) or 3(c)(7) of the Act, that is advised disclosed in the relevant Global Fund’s part of the same ‘‘group of investment or sponsored by the Acquiring Fund Adviser, or International Fund’s SAI, applicants companies,’’ as defined in section Sponsor or any person controlling, controlled by or under common control with the Acquiring Fund expect that the Global Funds and 12(d)(1)(G)(ii) of the Act, as the Funds Adviser or Sponsor. International Funds will be able to (collectively, ‘‘Acquiring Funds’’) to 17 An ‘‘Acquiring Fund’s Subadvisory Group’’ is deliver redemption proceeds within acquire Shares beyond the limits of defined as any Acquiring Fund Subadviser, any seven days.14 section 12(d)(1)(A). In addition, person controlling, controlled by, or under common 8. Applicants submit that Congress applicants seek relief to permit each control with the Acquiring Fund Subadviser, and any investment company or issuer that would be an adopted section 22(e) to prevent Fund, the Distributor and/or a Broker to investment company but for section 3(c)(l) or 3(c)(7) unreasonable, undisclosed and sell Shares to Acquiring Funds in excess of the Act (or portion of such investment company unforeseen delays in the actual payment of the limits of section 12(d)(1)(B). or issuer) advised or sponsored by the Acquiring of redemption proceeds. Applicants 12. Each investment adviser to an Fund Subadviser or any person controlling, controlled by or under common control with the state that allowing redemption Acquiring Management Company Acquiring Fund Subadviser. payments for Creation Units of a Fund within the meaning of section 18 An ‘‘Underwriting Affiliate’’ is defined as a to be made within 14 calendar days 2(a)(20)(A) of the Act (‘‘Acquiring Fund principal underwriter in any underwriting or would not be inconsistent with the Adviser’’) will be registered as an selling syndicate that is an officer, director, member of an advisory board, Acquiring Fund Adviser, spirit and intent of section 22(e). investment adviser under the Advisers Acquiring Fund Subadviser, Sponsor, or employee Act. An ‘‘Acquiring Fund Subadviser’’ of the Acquiring Fund, or a person of which any 14 Applicants acknowledge that no relief obtained is any investment advisor within the such officer, director, member of an advisory board, from the requirements of section 22(e) will affect meaning of section 2(a)(20)(B) of the Act Acquiring Fund Adviser, Acquiring Fund any obligations that applicants may otherwise have Subadviser, Sponsor, or employee is an affiliated under rule 15c6–1 under the Exchange Act. Rule to an Acquiring Management Company. person, except any person whose relationship to the 15c6–1 requires that most securities transactions be Each Acquiring Trust’s sponsor is the Fund is covered by section 10(f) of the Act is not settled within three business days of the trade date. ‘‘Sponsor.’’ an Underwriting Affiliate.
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15. Applicants do not believe that the 17. Applicants note that a Fund may Shares of one or more Affiliated Funds, proposed arrangement will involve choose to reject any direct purchase of to effectuate purchases and redemptions excessive layering of fees. With respect Creation Units by an Acquiring Fund. A in-kind. Applicants also request an to Acquiring Management Companies, Fund would also retain its right to reject exemption in order to permit a Fund to applicants note that the board of any initial investment by an Acquiring sell Shares to, and purchase Shares directors or trustees, including a Fund in excess of the limits in section from, and to engage in any majority of the independent directors or 12(d)(l)(A) of the Act by declining to accompanying in-kind transactions trustees within the meaning of section execute an Acquiring Fund Agreement with, an Acquiring Fund of which the 2(a)(19) of the Act, of any Acquiring with an Acquiring Fund. Fund is an affiliated person or a second- tier affiliate.20 Fund, will find that any fees charged Section 17 of the Act under the Acquiring Management 20. Applicants assert that no useful Company’s advisory contract(s) are 18. Section 17(a) of the Act generally purpose would be served by prohibiting based on services provided that will be prohibits an affiliated person of a such affiliated persons from making in- in addition to, rather than duplicative registered investment company, or an kind purchases or in-kind redemptions affiliated person of such a person of, services provided under the advisory of Shares of a Fund in Creation Units. (‘‘second-tier affiliate’’), from selling any contract(s) of any Fund in which the Deposit Instruments and Redemption security to or purchasing any security Acquiring Management Company may Instruments will be valued in the same from the company. Section 2(a)(3) of the invest. Under condition 13, the manner as those Portfolio Instruments Act defines ‘‘affiliated person’’ of Acquiring Fund Adviser, or trustee of currently held by the relevant Funds, another person to include any person any Acquiring Trust (‘‘Trustee’’), or and the valuation of the Deposit directly or indirectly owning, Instruments and Redemption Sponsor, will waive fees otherwise controlling, or holding with power to payable to it by the Acquiring Fund in Instruments will be made in the same vote 5% or more of the outstanding manner and on the same terms for all, an amount at least equal to any voting securities of the other person and compensation (including fees received regardless of the identity of the any person directly or indirectly purchaser or redeemer. Deposit pursuant to any plan adopted under rule controlling, controlled by, or under 12b–1 under the Act) received from a Instruments, Redemption Instruments, common control with, the other person. and the balancing Cash Amounts, Fund by the Acquiring Fund Adviser, Section 2(a)(9) of the Act defines except for any permitted cash-in-lieu Trustee or Sponsor, or an affiliated ‘‘control’’ as the power to exercise a amounts consistent with the terms of person of the Acquiring Fund Adviser, controlling influence over the the application, will be the same Trustee or Sponsor, in connection with management or policies of a company, regardless of the identity of the the investment by the Acquiring Fund and provides that a control relationship purchaser or redeemer. Therefore, in the Fund. Applicants also state that will be presumed where one person applicants state that in-kind purchases any sales charges or service fees charged owns more than 25% of a company’s and redemptions create no opportunity with respect to shares of an Acquiring voting securities. The Funds may be for affiliated persons or applicants to Fund will not exceed the limits deemed to be controlled by the Adviser effect a transaction detrimental to the applicable to a fund of funds as set forth and hence affiliated persons of each 19 other holders of Shares of that Fund. in NASD Conduct Rule 2830. other. In addition, the Funds may be Applicants also believe that in-kind 16. Applicants submit that the deemed to be under common control purchases and redemptions will not proposed arrangement will not create an with any other registered investment result in abusive self-dealing or overly complex fund structure. company (or series thereof) advised by overreaching of the Fund. Applicants Applicants note that no Fund will the Adviser (an ‘‘Affiliated Fund’’). believe that an exemption is appropriate acquire securities of any investment Applicants believe there exists a under sections 17(b) and 6(c) because company or company relying on section possibility that, with respect to one or the proposed arrangement meets the 3(c)(l) or 3(c)(7) of the Act in excess of more Funds and the Trust, a large standards for relief in those sections. the limits contained in section institutional investor could own more Applicants note that any consideration 12(d)(l)(A) of the Act, except to the than 5% of a Fund or the Trust, or in paid for the purchase or redemption of extent permitted by exemptive relief excess of 25% of the outstanding Shares Shares directly from a Fund will be from the Commission permitting the of a Fund or the Trust, making that based on the NAV of the Fund in investor a first-tier affiliate of each Fund Fund to purchase shares of other accordance with policies and under section 2(a)(3)(A) or section investment companies for short-term procedures set forth in the Fund’s 2(a)(3)(C) of the Act. In addition, a large cash management purposes. To ensure registration statement.21 Applicants also that the Acquiring Funds understand institutional investor could own 5% or more of, or in excess of 25% of the and will comply with the terms and 20 To the extent that purchases and sales of Shares conditions of the requested order, any outstanding shares of one or more of a Fund occur in the secondary market and not Affiliated Funds, making that investor a through principal transactions directly between an Acquiring Fund will be required to Acquiring Fund and a Fund, relief from section enter into a written agreement with the second-tier affiliate of a Fund. 19. Applicants request an exemption 17(a) would not be necessary. However, the Fund (the ‘‘Acquiring Fund requested relief would apply to direct sales of under sections 6(c) and 17(b) of the Act Agreement’’). The Acquiring Fund Shares in Creation Units by a Fund to an Acquiring from sections 17(a)(1) and 17(a)(2) of the Agreement will include an Fund and redemptions of those Shares. Applicants Act in order to permit persons that are are not seeking relief from section 17(a) for, and the acknowledgment from the Acquiring affiliated persons or second-tier requested relief will not apply to, transactions Fund that it may rely on the order only where a Fund could be deemed an affiliated person affiliates of the Funds solely by virtue to invest in a Fund and not in any other or a second-tier affiliate of an Acquiring Fund of (a) holding 5% or more, or in excess investment company. because the Adviser provides investment advisory of 25% of the outstanding Shares of one services to that Acquiring Fund. or more Funds; (b) having an affiliation 21 Applicants acknowledge that the receipt of 19 Any references to NASD Conduct Rule 2830 compensation by (a) an affiliated person of an include any successor or replacement rule that may with a person with an ownership Acquiring Fund, or a second-tier affiliate, for the be adopted by the Financial Industry Regulatory interest described in (a); or (c) holding purchase by the Acquiring Fund of Shares or (b) an Authority. 5% or more, or more than 25% of the Continued
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state that the proposed transactions are vote of all other holders of the Shares. once an investment by an Acquiring consistent with the general purposes of This condition does not apply to an Fund in the securities of the Fund the Act and appropriate in the public Acquiring Fund Subadvisory Group exceeds the limit of section interest. with respect to a Fund for which the 12(d)(1)(A)(i) of the Act, including any Acquiring Fund Subadviser or a person purchases made directly from an Applicants’ Conditions controlling, controlled by, or under Underwriting Affiliate. The Board will Applicants agree that any order of the common control with the Acquiring review these purchases periodically, but Commission granting the requested Fund Subadviser acts as the investment no less frequently than annually, to relief will be subject to the following adviser within the meaning of section determine whether the purchases were conditions: 2(a)(20)(A) of the Act. influenced by the investment by the ETF Relief 6. No Acquiring Fund or Acquiring Acquiring Fund in the Fund. The Board Fund Affiliate will cause any existing or will consider, among other things: (i) 1. As long as a Fund operates in potential investment by the Acquiring Whether the purchases were consistent reliance on the requested relief to Fund in a Fund to influence the terms with the investment objectives and permit ETF operations, its Shares will of any services or transactions between policies of the Fund; (ii) how the be listed on an Exchange. the Acquiring Fund or an Acquiring performance of securities purchased in 2. Neither the Trust nor any Fund will Fund Affiliate and the Fund or a Fund an Affiliated Underwriting compares to be advertised or marketed as an open- Affiliate. the performance of comparable end investment company or a mutual 7. The board of directors or trustees of securities purchased during a fund. Any advertising material that an Acquiring Management Company, comparable period of time in describes the purchase or sale of including a majority of the disinterested underwritings other than Affiliated Creation Units or refers to redeemability directors or trustees, will adopt Underwritings or to a benchmark such will prominently disclose that Shares procedures reasonably designed to as a comparable market index; and (iii) are not individually redeemable and ensure that the Acquiring Fund Adviser whether the amount of securities that owners of Shares may acquire those and any Acquiring Fund Subadviser are purchased by the Fund in Affiliated Shares from a Fund and tender those conducting the investment program of Underwritings and the amount Shares for redemption to a Fund in the Acquiring Management Company purchased directly from an Creation Units only. without taking into account any Underwriting Affiliate have changed 3. The Web site for the Funds, which consideration received by the Acquiring significantly from prior years. The is and will be publicly accessible at no Management Company or an Acquiring Board will take any appropriate actions charge, will contain, on a per Share Fund Affiliate from a Fund or a Fund based on its review, including, if basis for each Fund, the prior Business Affiliate in connection with any services appropriate, the institution of Day’s NAV and the market closing price or transactions. procedures designed to assure that or the midpoint of the bid/ask spread at 8. Once an investment by an purchases of securities in Affiliated the time of the calculation of such NAV Acquiring Fund in Shares exceeds the Underwritings are in the best interest of (‘‘Bid/Ask Price’’), and a calculation of limits in section 12(d)(1)(A)(i) of the shareholders of the Fund. the premium or discount of the market Act, the board of trustees of the Trust 11. Each Fund will maintain and closing price or Bid/Ask Price against (‘‘Board’’), including a majority of the preserve permanently in an easily such NAV. disinterested directors/trustees, will accessible place a written copy of the 4. The requested relief to permit ETF determine that any consideration paid procedures described in the preceding operations will expire on the effective by the Fund to an Acquiring Fund or an condition, and any modifications to date, of any Commission rule under the Acquiring Fund Affiliate in connection such procedures, and will maintain and Act that provides relief permitting the with any services or transactions: (i) Is preserve for a period of not less than six operation of index-based exchange- fair and reasonable in relation to the years from the end of the fiscal year in traded funds. nature and quality of the services and which any purchase in an Affiliated 12(d)(1) Relief benefits received by the Fund; (ii) is Underwriting occurred, the first two within the range of consideration that years in an easily accessible place, a 5. The members of the Acquiring the Fund would be required to pay to written record of each purchase of Fund’s Advisory Group will not control another unaffiliated entity in connection securities in Affiliated Underwritings, (individually or in the aggregate) a Fund with the same services or transactions; once an investment by an Acquiring within the meaning of section 2(a)(9) of and (iii) does not involve overreaching Fund in the securities of the Fund the Act. The members of an Acquiring on the part of any person concerned. exceeds the limit of section Fund’s Subadvisory Group will not This condition does not apply with 12(d)(1)(A)(i) of the Act, setting forth control (individually or in the aggregate) respect to any services or transactions from whom the securities were a Fund within the meaning of section between a Fund and its investment acquired, the identity of the 2(a)(9) of the Act. If, as a result of a adviser(s), or any person controlling, underwriting syndicate’s members, the decrease in the outstanding voting controlled by or under common control terms of the purchase, and the securities of a Fund, the Acquiring with such investment adviser(s). information or materials upon which Fund’s Advisory Group or the Acquiring 9. No Acquiring Fund or Acquiring the determinations of the Board were Fund’s Subadvisory Group, each in the Fund Affiliate (except to the extent it is made. aggregate, becomes a holder of more acting in its capacity as an investment 12. Before investing in Shares in than 25 percent of the outstanding adviser to a Fund) will cause the Fund excess of the limits in section voting securities of a Fund, it will vote to purchase a security in any Affiliated 12(d)(1)(A), each Acquiring Fund and its Shares in the same proportion as the Underwriting. the Fund will execute an Acquiring 10. The Board, including a majority of Fund Agreement stating, without affiliated person of a Fund, or a second-tier affiliate, the independent trustees, will adopt limitation, that their boards of directors for the sale by the Fund of its Shares to an Acquiring Fund, may be prohibited by section 17(e) procedures reasonably designed to or trustees and their investment of the Act. The Acquiring Fund Agreement also will monitor any purchases of securities by adviser(s), or their Sponsors or Trustee, include this acknowledgment. the Fund in an Affiliated Underwriting, as applicable, understand the terms and
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conditions of the order, and agree to permitting the Fund to purchase shares www.nsx.com, at the principal office of fulfill their responsibilities under the of other investment companies for short- the Exchange, and at the Commission’s order. At the time of its investment in term cash management purposes. Public Reference Room. Shares in excess of the limit in section 16. Before approving any advisory II. Self-Regulatory Organization’s 12(d)(1)(A)(i), an Acquiring Fund will contract under section 15 of the Act, the Statement of the Purpose of, and notify the Fund of the investment. At board of directors or trustees of each such time, the Acquiring Fund will also Acquiring Management Company, Statutory Basis for, the Proposed Rule transmit to the Fund a list of the names including a majority of the disinterested Change of each Acquiring Fund Affiliate and directors or trustees, will find that the In its filing with the Commission, the Underwriting Affiliate. The Acquiring advisory fees charged under such Exchange included statements Fund will notify the Fund of any advisory contract are based on services concerning the purpose of and basis for changes to the list of the names as soon provided that will be in addition to, the proposed rule change and discussed as reasonably practicable after a change rather than duplicative of, the services any comments it received on the occurs. The Fund and the Acquiring provided under the advisory contract(s) proposed rule change. The text of these Fund will maintain and preserve a copy of any Fund in which the Acquiring statements may be examined at the of the order, the Acquiring Fund Management Company may invest. places specified in Item IV below. The Agreement, and the list with any These findings and their basis will be Exchange has prepared summaries, set updated information for the duration of recorded fully in the minute books of forth in sections A, B, and C below, of the investment and for a period of not the appropriate Acquiring Management the most significant parts of such less than six years thereafter, the first Company. statements. two years in an easily accessible place. For the Commission, by the Division of 13. The Acquiring Fund Adviser, A. Self-Regulatory Organization’s Investment Management, under delegated Statement of the Purpose of, and Trustee or Sponsor, as applicable, will authority. waive fees otherwise payable to it by the Statutory Basis for, the Proposed Rule Kevin M. O’Neill, Change Acquiring Fund in an amount at least Deputy Secretary. equal to any compensation (including [FR Doc. 2012–29317 Filed 12–4–12; 8:45 am] 1. Purpose fees received pursuant to any plan BILLING CODE 8011–01–P The Exchange is proposing to amend adopted under rule 12b-1 under the Act) NSX Rule 11.11(c) entitled ‘‘Order and received from the Fund by the Modifiers’’ to provide a new order type, Acquiring Fund Adviser, Trustee or SECURITIES AND EXCHANGE a Double Play Order. The proposed Sponsor, or an affiliated person of the COMMISSION Double Play Order is a market or limit Acquiring Fund Adviser, Trustee or order that instructs the System 3 Sponsor, other than any advisory fees [Release No. 34–68317; File No. SR–NSX– to route 2012–22] the order to a specified away Trading paid to the Acquiring Fund Adviser, 4 Trustee, or Sponsor, or its affiliated Center(s) as approved by the Exchange Self-Regulatory Organizations; 5 person by the Fund, in connection with from time to time. Such Trading National Stock Exchange, Inc.; Notice Centers may include execution venues the investment by the Acquiring Fund of Filing and Immediate Effectiveness in the Fund. Any Acquiring Fund known as ‘‘dark pools.’’ The order will of Proposed Rule Change To Adopt a 6 Subadviser will waive fees otherwise not be exposed to the NSX Book before New Order Type Called the Double being routed to a specified destination payable to the Acquiring Fund Play Order Subadviser, directly or indirectly, by the or destinations. An order that is not Acquiring Management Company in an November 29, 2012. executed in full after routing away amount at least equal to any Pursuant to Section 19(b)(1) of the would return to the Exchange, receive a compensation received from a Fund by Securities Exchange Act of 1934 new timestamp, and be processed in the the Acquiring Fund Subadviser, or an (‘‘Act’’),1 and Rule 19b–4 thereunder,2 manner described in NSX Rule affiliated person of the Acquiring Fund notice is hereby given that on November 11.14.(a). The Exchange will route the Double Subadviser, other than any advisory fees 14, 2012, National Stock Exchange, Inc. Play Order through NSX Securities, Inc., paid to the Acquiring Fund Subadviser (‘‘NSX’’ or the ‘‘Exchange’’) filed with an affiliate and facility of the Exchange or its affiliated person by the Fund, in the Securities and Exchange (‘‘Outbound Router’’).7 connection with any investment by the Commission (‘‘Commission’’) the The Outbound Acquiring Management Company in the proposed rule change as described in 3 Under Exchange Rule 1.5, the term ‘‘System’’ is Fund made at the direction of the Items I and II below, which Items have defined as ‘‘the electronic communications and Acquiring Fund Subadviser. In the been prepared by the Exchange. The trading facility * * * through which orders of [ETP event that the Acquiring Fund Commission is publishing this notice to Holders] are consolidated for ranking and Subadviser waives fees, the benefit of solicit comments on the proposed rule execution.’’ 4 the waiver will be passed through to the change from interested persons. NSX Rule 2.11. A Trading Center is defined as Acquiring Management Company. ‘‘other securities exchanges, facilities of securities I. Self-Regulatory Organization’s exchanges, automated trading systems, electronic 14. Any sales charges and/or service communication networks or other brokers or fees charged with respect to shares of an Statement of the Terms of Substance of dealers.’’ Acquiring Fund will not exceed the the Proposed Rule Change 5 The Exchange will not directly route orders to limits applicable to a fund of funds as The Exchange is proposing to amend the Chicago Stock Exchange, Inc. until approved as an inbound routing facility of the Chicago Board set forth in NASD Conduct Rule 2830. NSX Rule 11.11(c), entitled ‘‘Order and Options Exchange, Inc. 15. No Fund will acquire securities of Modifiers’’ to provide a new order type, 6 Under Exchange Rule 1.5, the term ‘‘NSX Book’’ any other investment company or a Double Play Order. The text of the is defined as ‘‘the System’s electronic file of company relying on section 3(c)(1) or proposed rule change is available on the orders.’’ 3(c)(7) of the Act in excess of the limits Exchange’s Web site at http:// 7 The Outbound Router is regulated as a facility of the Exchange (as defined in Section 3(a)(2) of the contained in section 12(d)(1)(A) of the Securities Exchange Act of 1934, as amended Act, except to the extent permitted by 1 15 U.S.C. 78s(b)(1). (‘‘Exchange Act’’ or ‘‘Act’’)), 15 U.S.C. 78c(a)(2), exemptive relief from the Commission 2 17 CFR 240.19b–4. Continued
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Router will be subject to the B. Self-Regulatory Organization’s exchanges that offer a similar order requirements set forth in NSX Rule 2.11. Statement on Burden on Competition type. The Exchange believes that the Accordingly, the Exchange believes that The Exchange does not believe that proposed rule change is consistent with routing of Double Play Orders is the proposed rule change will impose the protection of investors and the consistent with the previously approved any burden on competition that is not public interest because it would give functions of the Outbound Router, and necessary or appropriate in furtherance ETP Holders enhanced order execution the Exchange does not believe these of the purposes of the Act. opportunities for market participants by functions are expanded through the allowing such participants to access, at addition of this order type. C. Self-Regulatory Organization’s a potentially reduced fee, pools of The Exchange notes that both the Statement on Comments on the liquidity in addition to orders resting on BATS Exchange, Inc.8 (‘‘BATS’’) and Proposed Rule Change Received From the Exchange. The Commission believes The Nasdaq Stock Market LLC Members, Participants, or Others waiving the 30-day operative delay is (‘‘Nasdaq’’) 9 have similar order types. Written comments on the proposed consistent with the protection of Both BATS and Nasdaq members are rule change were neither solicited nor investors and the public interest given the option of entering an order received. because such waiver would allow the Exchange to offer an order type that instructs the exchange to route the III. Date of Effectiveness of the order to a specified away trading center immediately to market participants that Proposed Rule Change and Timing for is similar to an order type that has been or centers. There is no material Commission Action difference between the BATS Modified offered by other exchanges. In addition, Destination Specific Order and the The Exchange has filed the proposed as the proposed rule change is similar NSX’s Double Play Order. Both orders rule change pursuant to Section to order types offered by other national 13 are similar in that: (1) Orders that are 19(b)(3)(A)(iii) of the Act and Rule securities exchanges, the Commission 14 not executed in full are returned to the 19b–4(f)(6) thereunder. Because the does not believe that the proposed rule exchange; and (2) each receives new proposed rule change does not: (i) change raises any novel regulatory timestamps upon return to the exchange Significantly affect the protection of issues. Therefore, the Commission and a new time price priority as investors or the public interest; (ii) designates the proposed rule change as appropriate.10 impose any significant burden on operative upon filing with the competition; and (iii) become operative Commission.18 2. Statutory Basis prior to 30 days from the date on which At any time within sixty (60) days of it was filed, or such shorter time as the the filing of such proposed rule change, The Exchange believes the proposed Commission may designate, if the Commission summarily may rule change is consistent with Section 6 consistent with the protection of temporarily suspend such rule change if of the Exchange Act,11 and the rules and investors and the public interest, the it appears to the Commission that such regulations thereunder and, in proposed rule change has become action is necessary or appropriate in the particular, the requirements of Section 12 effective pursuant to Section 19(b)(3)(A) public interest, for the protection of 6(b) of the Exchange Act. Specifically, of the Act and Rule 19b–4(f)(6)(iii) investors, or otherwise in furtherance of the Exchange believes the Double Play thereunder.15 the purposes of the Act. Order furthers the objective of Section A proposed rule change filed under IV. Solicitation of Comments 6(b)(5) of the Exchange Act because it Rule 19b–4(f)(6) normally does not will enable ETP Holders to access pools become operative for 30 days after the Interested persons are invited to of liquidity that may offer a faster date of filing.16 However, Rule 19b– submit written data, views, and response time and a lower fee which 4(f)(6)(iii) permits the Commission to arguments concerning the foregoing, promotes just and equitable principles designate a shorter time if such action including whether the proposed rule of trade and perfects the mechanism of is consistent with the protection of change is consistent with the Act. a free and open market and a national investors and the public interest. The Comments may be submitted by any of market system. Further, the Double Play Exchange requested that the the following methods: Order is designed to allow ETP Holders Commission waive the 30-day operative Electronic Comments to obtain response times that are delay, as specified in Rule 19b– • generally consistent with those of other 4(f)(6)(iii),17 which would make the rule Use the Commission’s Internet market centers that offer order handling change effective and operative upon comment form (http://www.sec.gov/ and routing options that are designed to filing. rules/sro.shtml); or facilitate access to two or more markets The Exchange represented that the • Send an email to rule- with comparable access fees. In so proposed rule is similar to and based on [email protected]. Please include File doing, the proposed rule filing promotes rules of other exchanges and that the Number SR–NSX–2012–22 on the the protection of investors and the waiver of the 30-day operative delay subject line. protection of the public interest. would allow the Exchange to Paper Comments immediately compete with other • subject to Section 6 of the Exchange Act. 15 U.S.C. Send paper comments in triplicate 78f. 13 15 U.S.C. 78s(b)(3)(A)(iii). to Elizabeth M. Murphy, Secretary, 8 See BATS Rule 11.9(c)(13). See also Exchange 14 17 CFR 240.19b–4(f)(6). Securities and Exchange Commission, Act Release No. 58546 (September 15, 2008) 73 FR 15 17 CFR 240.19b–4(f)(6). 100 F Street NE., Washington, DC 54440 (September 19, 2008) (SR–BATS–2008–003). 16 17 CFR 240.19b–4(f)(6)(iii). In addition, Rule 20549–1090. 9 See Nasdaq Rule 4751(f)(9). See also Exchange 19b–4(f)(6)(iii) requires the Exchange to give the All submissions should refer to File Act Release No. 55405 (March 6, 2007) 72 FR 11069 Commission written notice of the Exchange’s intent Number SR–NSX–2012–22. This file (March 12, 2007) (SR–Nasdaq–2007–020). to file the proposed rule change, along with a brief 10 Unlike the BATS Modified Destination Specific description and text of the proposed rule change, number should be included on the Order and NSX’s proposed Double Play Order, the at least five business days prior to the date of filing Nasdaq Directed Orders that are not executed in full of the proposed rule change, or such shorter time 18 For purposes only of waiving the 30-day are returned to the customer and not Nasdaq. as designated by the Commission. The Exchange operative delay, the Commission has considered the 11 15 U.S.C. 78f. has satisfied this requirement. proposed rule’s impact on efficiency, competition, 12 15 U.S.C. 78f(b). 17 17 CFR 240.19b–4(f)(6)(iii). and capital formation. See 15 U.S.C. 78c(f).
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subject line if email is used. To help the (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) filed Order’’ is an agency order that originates Commission process and review your with the Securities and Exchange from a natural person and is submitted comments more efficiently, please use Commission (the ‘‘Commission’’) the to the Exchange by an ETP Holder, only one method. The Commission will proposed rule change as described in provided that no change is made to the post all comments on the Commission’s Items I, II, and III below, which Items terms of the order with respect to price Internet Web site (http://www.sec.gov/ have been prepared by the self- or side of market and the order does not rules/sro.shtml). Copies of the regulatory organization. The originate from a trading algorithm or submission, all subsequent Commission is publishing this notice to any other computerized methodology. amendments, all written statements solicit comments on the proposed rule As part of qualifying for the Retail with respect to the proposed rule change from interested persons. Order Tier, an ETP Holder is required to change that are filed with the designate certain of its order entry ports I. Self-Regulatory Organization’s Commission, and all written at the Exchange as ‘‘Retail Order Ports’’ Statement of the Terms of the Substance communications relating to the and attest, in a form and/or manner of the Proposed Rule Change proposed rule change between the prescribed by the Exchange, that all Commission and any person, other than The Exchange proposes to permit ETP orders submitted to the Exchange via those that may be withheld from the Holders to designate orders as Retail such Retail Order Ports are Retail public in accordance with the Orders for the purpose of qualifying for Orders. provisions of 5 U.S.C. 552, will be the Retail Order Tier by means of a tag The Exchange proposes to provide an available for Web site viewing and in the order entry message. The text of additional method for ETP Holders to printing in the Commission’s Public the proposed rule change is available on designate orders as Retail Orders. Reference Room, 100 F Street NE., the Exchange’s Web site at Specifically, the Exchange proposes to Washington, DC 20549, on official www.nyse.com, at the principal office of allow ETP Holders to designate orders business days between the hours of the Exchange, and at the Commission’s as Retail Orders by using a tag in the 10:00 a.m. and 3:00 p.m. Copies of the Public Reference Room. order entry message. ETP Holders filing also will be available for II. Self-Regulatory Organization’s would still be able to use Retail Order inspection and copying at the principal Statement of the Purpose of, and Ports to designate orders as Retail office of the Exchange. All comments Statutory Basis for, the Proposed Rule Orders. received will be posted without change; Change As currently required with the use of the Commission does not edit personal Retail Order Ports to designate orders as identifying information from In its filing with the Commission, the Retail Orders, an ETP Holder submissions. You should submit only self-regulatory organization included designating orders as Retail Orders by information that you wish to make statements concerning the purpose of, using a tag in the order entry message available publicly. All submissions and basis for, the proposed rule change will be required to have written policies should refer to File Number SR–NSX– and discussed any comments it received and procedures reasonably designed to 2012–22 and should be submitted on or on the proposed rule change. The text assure that it will only designate orders before December 26, 2012. of those statements may be examined at as Retail Orders if all requirements of a the places specified in Item IV below. For the Commission, by the Division of Retail Order are met. The written Trading and Markets, pursuant to delegated The Exchange has prepared summaries, policies and procedures must require authority.19 set forth in sections A, B, and C below, the ETP Holder to (i) exercise due Kevin M. O’Neill, of the most significant parts of such diligence before entering a Retail Order Deputy Secretary. statements. to assure that entry as a Retail Order is [FR Doc. 2012–29281 Filed 12–4–12; 8:45 am] A. Self-Regulatory Organization’s in compliance with the requirements BILLING CODE 8011–01–P Statement of the Purpose of, and specified by the Exchange, and (ii) Statutory Basis for, the Proposed Rule monitor whether orders entered as Change Retail Orders meet the applicable SECURITIES AND EXCHANGE requirements. If the ETP Holder COMMISSION 1. Purpose represents Retail Orders from another The Exchange is proposing to permit broker-dealer customer, the ETP [Release No. 34–68322; File No. SR– Holder’s supervisory procedures must NYSEARCA–2012–129] ETP Holders to designate orders as Retail Orders for the purpose of be reasonably designed to assure that Self-Regulatory Organizations; NYSE qualifying for the Retail Order Tier by the orders it receives from such broker- Arca, Inc.; Notice of Filing and means of a tag in the order entry dealer customer that it designates as Immediate Effectiveness of Proposed message. The Exchange proposes to Retail Orders meet the definition of a Rule Change To Permit ETP Holders to implement the change effective Retail Order. The ETP Holder must (i) Designate Orders as Retail Orders By December 1, 2012. obtain an annual written representation, Using a Tag in the Order Entry On August 1, 2012, the Exchange in a form acceptable to the Exchange, Message introduced the ‘‘Retail Order Tier,’’ a from each broker-dealer customer that new tier and corresponding credit in the sends it orders to be designated as Retail November 29, 2012. Fee Schedule for ETP Holders, Orders that entry of such orders as Pursuant to Section 19(b)(1) 1 of the including Market Makers, that execute Retail Orders will be in compliance Securities Exchange Act of 1934 (the an average daily volume (‘‘ADV’’) of with the requirements specified by the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 Retail Orders during the particular Exchange, and (ii) monitor whether its notice is hereby given that, on month that is 0.40% or more of the U.S. broker-dealer customer’s Retail Order November 16, 2012, NYSE Arca, Inc. Consolidated ADV.4 For purposes of the flow continues to meet the applicable Retail Order Tier and credit, a ‘‘Retail requirements.5 19 17 CFR 200.30–3(a)(12). 1 15 U.S.C.78s(b)(1). 4 Exchange Act Release No. 34–67540 (July 30, 5 The Financial Industry Regulatory Authority, 2 15 U.S.C. 78a. 2012), 77 FR 46539 (August 3, 2012) (SR– Inc. (‘‘FINRA’’), on behalf of the Exchange, will 3 17 CFR 240.19b–4. NYSEArca–2012–77). Continued
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The proposed change is not otherwise the reasons described above, the This file number should be included on intended to address any other matter, Exchange believes that the proposed the subject line if email is used. To help and the Exchange is not aware of any rule change reflects this competitive the Commission process and review significant problem that ETP Holders environment. your comments more efficiently, please use only one method. The Commission would have in complying with the B. Self-Regulatory Organization’s will post all comments on the proposed change. Statement on Burden on Competition Commission’s Internet Web site (http:// 2. Statutory Basis The Exchange does not believe that www.sec.gov/rules/sro.shtml). Copies of The Exchange believes that the the proposed rule change will impose the submission, all subsequent proposed rule change is consistent with any burden on competition that is not amendments, all written statements Section 6(b) of the Securities Exchange necessary or appropriate in furtherance with respect to the proposed rule Act of 1934 (the ‘‘Act’’),6 in general, and of the purposes of the Act. change that are filed with the furthers the objectives of Section 6(b)(4) C. Self-Regulatory Organization’s Commission, and all written of the Act,7 in particular, because it Statement on Comments on the communications relating to the provides for the equitable allocation of Proposed Rule Change Received From proposed rule change between the reasonable dues, fees, and other charges Members, Participants, or Others Commission and any person, other than among its members and issuers and those that may be withheld from the other persons using its facilities and No written comments were solicited public in accordance with the does not unfairly discriminate between or received with respect to the proposed provisions of 5 U.S.C. 552, will be customers, issuers, brokers, or dealers. rule change. available for Web site viewing and The Exchange believes that the III. Date of Effectiveness of the printing in the Commission’s Public proposed rule change is reasonable Proposed Rule Change and Timing for Reference Room, 100 F Street NE., since permitting ETP Holders to use Commission Action Washington, DC 20549, on official business days between the hours of alternative methods to designate orders The foregoing rule change is effective 10:00 a.m. and 3:00 p.m. Copies of such as Retail Orders will encourage the upon filing pursuant to Section filing also will be available for development of the Exchange’s liquidity 19(b)(3)(A) 8 of the Act and inspection and copying at the principal pool, and thus support the quality of subparagraph (f)(2) of Rule 19b–4 9 office of the Exchange. All comments price discovery, promote market thereunder, because it establishes a due, received will be posted without change; transparency, and improve investor fee, or other charge imposed by the the Commission does not edit personal protection. The Exchange believes the NYSE Arca. proposed change is reasonable because At any time within 60 days of the identifying information from it will provide ETP Holders alternative filing of such proposed rule change, the submissions. You should submit only ways to designate orders as Retail Commission summarily may information that you wish to make Orders while ensuring that ETP Holders temporarily suspend such rule change if available publicly. All submissions are required to have written policies and it appears to the Commission that such should refer to File Number SR– procedures designed to assure that they action is necessary or appropriate in the NYSEARCA–2012–129 and should be will only designate orders as Retail public interest, for the protection of submitted on or before December 26, Orders if all requirements of a Retail investors, or otherwise in furtherance of 2012. Order are met. the purposes of the Act. For the Commission, by the Division of The Exchange believes that the Trading and Markets, pursuant to delegated proposed rule change is equitable and IV. Solicitation of Comments authority.10 not unfairly discriminatory because it Interested persons are invited to Kevin M. O’Neill, provides a second method for Retail submit written data, views and Deputy Secretary. Order designation and allows each ETP arguments concerning the foregoing, [FR Doc. 2012–29316 Filed 12–4–12; 8:45 am] Holder to choose the designation including whether the proposed rule BILLING CODE 8011–01–P method most convenient to it, change is consistent with the Act. recognizing that individual firms have Comments may be submitted by any of different internal system configurations. the following methods: SECURITIES AND EXCHANGE COMMISSION By providing alternative avenues for Electronic Comments ETP Holders to designate orders as • Use the Commission’s Internet [Release No. 34–68318; File No. SR–ISE– Retail Orders, the Exchange believes 2012–90] that ETP Holders will choose the comment form (http://www.sec.gov/ rules/sro.shtml); or designation method that is most • Self-Regulatory Organizations; operationally efficient, potentially Send an email to rule- International Securities Exchange, reducing transaction costs. [email protected]. Please include File LLC; Notice of Filing and Immediate Finally, the Exchange notes that it Number SR–NYSEARCA–2012–129 on Effectiveness of Proposed Rule the subject line. operates in a highly competitive market Change Regarding the Short Term in which market participants can Paper Comments Option Series Program readily favor competing venues. In such • Send paper comments in triplicate November 29, 2012. an environment, the Exchange must to Elizabeth M. Murphy, Secretary, continually review, and consider Pursuant to Section 19(b)(1) of the Securities and Exchange Commission, Securities Exchange Act of 1934 adjusting, its fees and credits to remain 100 F Street NE., Washington, DC 1 2 competitive with other exchanges. For (‘‘Act’’) and Rule 19b–4 thereunder, 20549. notice is hereby given that, on All submissions should refer to File review an ETP Holder’s compliance with these November 21, 2012, the International requirements through an exam-based review of the Number SR–NYSEARCA–2012–129. ETP Holder’s internal controls. 10 17 CFR 200.30–3(a)(12). 6 15 U.S.C. 78f(b). 8 15 U.S.C. 78s(b)(3)(A). 1 15 U.S.C. 78s(b)(1). 7 15 U.S.C. 78f(b)(5). 9 17 CFR 240.19b–4(f)(2). 2 17 CFR 240.19b–4.
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Securities Exchange, LLC (the This filing is based on filings provide market participants with the ‘‘Exchange’’ or ‘‘ISE’’) filed with the previously submitted by NYSE Arca, ability to hedge in a greater number of Securities and Exchange Commission Inc. (‘‘Arca’’) and NYSE MKT LLC option classes and series. (‘‘Commission’’) the proposed rule (‘‘MKT’’), which the Commission With regard to the impact of this change as described in Items I and II recently approved.4 proposal on system capacity, the below, which Items have been prepared Currently, the Exchange may select up Exchange has analyzed its capacity and by the Exchange. The Commission is to 30 currently listed option classes on represents that it and the Options Price publishing this notice to solicit which STOS options may be opened in Reporting Authority have the necessary comments on the proposed rule change the STOS Program and the Exchange systems capacity to handle the potential from interested persons. may also match any option classes that additional traffic associated with trading are selected by other securities of an expanded number of expirations I. Self-Regulatory Organization’s exchanges that employ a similar that participate in the STOS Program. Statement of the Terms of Substance of program under their respective rules.5 In addition, the Exchange is the Proposed Rule Change For each option class eligible for proposing to add new language to The Exchange proposes to amend its participation in the STOS Program, the Supplementary Material .02 to ISE Rule rules to expand the number of Exchange may open up to 30 Short 504 and Supplementary Material .01 to expirations available under the Short Term Option Series for each expiration ISE Rule 2009 to allow the Exchange, in Term Option Series Program (‘‘STOS date in that class.6 Under the current the event that the underlying security Program’’), to allow for the Exchange to rule, STOS options expire the following has moved such that there are no series delist certain series in the STOS that do week. that are at least 10% above or below the not have open interest and to expand This proposal seeks to allow the current price of the underlying security, the number of series in STOS under Exchange to open STOS option series to delist series with no open interest in limited circumstances. The text of the for up to five consecutive week both the call and the put series having proposed rule change is available on the expirations. The Exchange intends to a: (i) strike higher than the highest strike Exchange’s Web site www.ise.com, at add a maximum of five consecutive price with open interest in the put and/ the principal office of the Exchange, and week expirations under the STOS or call series for a given expiration at the Commission’s Public Reference Program, however it will not add a month; and (ii) strike lower than the Room. STOS expiration in the same week that lowest strike price with open interest in a monthly options series expires or, in the put and/or the call series for a given II. Self-Regulatory Organization’s the case of Quarterly Option Series, on expiration month, so as to list series that Statement of the Purpose of, and an expiration that coincides with an are at least 10% but not more than 30% Statutory Basis for, the Proposed Rule expiration of Quarterly Option Series on above or below the current price of the Change the same class. In other words, the total underlying security. Further, in the In its filing with the Commission, the number of consecutive expirations will event that all existing series have open Exchange included statements be five, including any existing monthly interest and there are no series at least concerning the purpose of, and basis for, or quarterly expirations.7 The Exchange 10% above or below the current price of the proposed rule change and discussed notes that the STOS Program has been the underlying security, the Exchange any comments it received on the well-received by market participants, in may list additional series, in excess of proposed rule change. The text of these particular by retail investors.8 The the 30 allowed currently under current statements may be examined at the Exchange believes that the current ISE Rules 504 and 2009, that are at least places specified in Item IV below. The proposed revision to the STOS Program 10% and not more than 30% above or self-regulatory organization has will permit the Exchange to meet below the current price of the prepared summaries, set forth in increased customer demand and underlying security. This change is Sections A, B and C below, of the most being proposed notwithstanding the significant aspects of such statements. FR 41246 (July 19, 2005) (SR–ISE–2005–17). The current cap of 30 series per class under STOS Program was made permanent on July 1, A. Self-Regulatory Organization’s 2010. See Securities Exchange Act Release No. the STOS Program. Statement of the Purpose of, and 62444 (July 2, 2010), 75 FR 39595 (July 9, 2010) The Exchange believes that it is Statutory Basis for, the Proposed Rule (SR–ISE–2010–72). important to allow investors to roll 4 Change See Securities Exchange Act Release Nos. 68190 existing option positions and ensuring (November 8, 2012) that there are always series at least 10% 1. Purpose (SR–NYSEArca–2012–95); 68191 (November 8, 2012) (SR–NYSEMKT–2012–42). but not more than 30% above or below The purpose of the proposal is to 5 See ISE Rule 504, Supplementary Material the current price of the underlying amend ISE rules to provide for the .02(a). security will allow investors the ability to open up to five consecutive 6 See ISE Rule 504, Supplementary Material .02(c) flexibility they need to roll existing expirations under the Short Term and (d). positions. 7 For example, if quarterly options expire week 1 Option Series Program (‘‘STOS and monthly options expire week 3 from 2. Statutory Basis Program’’) for trading on the Exchange, now, the proposal would allow the following to allow for the Exchange to delist expirations: week 1 quarterly, week 2 STOS, week The Exchange believes the proposed certain series in the STOS that do not 3 monthly, week 4 STOS, and week 5 STOS. If rule change is consistent with Section 9 have open interest and to expand the quarterly options expire week 3 and monthly 6(b) of the Act in general, and furthers options expire week 5, the following expirations the objectives of Section 6(b)(5),10 in number of series in STOS under limited would be allowed: week 1 STOS, week 2 STOS, circumstances when there are no series week 3 quarterly, week 4 STOS, and week 5 particular, in that it is designed to at least 10% but not more than 30% monthly. promote just and equitable principles of away from the current price of the 8 Since the STOS Program has been adopted, it trade, remove impediments to and has seen rapid acceptance among industry underlying security.3 perfect the mechanisms of a free and participants as evidenced by the expansion of the open market and a national market number of classes eligible for the STOS Program. 3 On July 12, 2005, the Commission approved the See Securities Exchange Act Release No. 66432 STOS Program on a pilot basis. See Securities (February 21, 2012), 77 FR 11614 (February 27, 9 15 U.S.C. 78f (b). Exchange Act Release No. 52012 (July 12, 2005), 70 2012 (SR–ISE–2012–08). 10 15 U.S.C. 78f(b)(5).
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system and, in general, to protect days from the date on which it was Paper Comments investors and the public interest. filed, or such shorter time as the • The Exchange believes that expanding Commission may designate, it has Send paper comments in triplicate the STOS Program will result in a become effective pursuant to Section to Elizabeth M. Murphy, Secretary, continuing benefit to investors by giving 19(b)(3)(A) of the Act 11 and Rule 19b– Securities and Exchange Commission, them more flexibility to closely tailor 4(f)(6) thereunder.12 100 F Street NE., Washington, DC their investment decisions and hedging 20549–1090. The Exchange has requested that the decisions in a greater number of Commission waive the 30-day operative All submissions should refer to File securities. The Exchange also believes delay. The Commission believes that that expanding the STOS Program will Number SR–ISE–2012–90. This file waiver of the operative delay is provide the investing public and other number should be included on the consistent with the protection of market participants with additional subject line if email is used. To help the investors and the public interest opportunities to hedge their investment Commission process and review your because the proposal is substantially thus allowing these investors to better comments more efficiently, please use similar to those of other exchanges that manage their risk exposure. While the only one method. The Commission will have been approved by the Commission expansion of the STOS Program will post all comments on the Commission’s and permit such exchanges to open up generate additional quote traffic, the Internet Web site (http://www.sec.gov/ to five consecutive expirations under Exchange does not believe that this rules/sro.shtml). Copies of the their respective STOS Programs as well increased traffic will become submission, all subsequent as allow for the exchanges to delist any unmanageable since the proposal amendments, all written statements series in the STOS Programs that do not remains limited to a fixed number of with respect to the proposed rule have open interest and expand the expirations. number of series per class permitted in change that are filed with the The Exchange believes that the ability Commission, and all written to delist certain series with no open the STOS Programs under limited circumstances.13 Therefore, the communications relating to the interest in both the call and the put proposed rule change between the series will benefit investors by devoting Commission designates the proposal operative upon filing.14 Commission and any person, other than the current cap in the number of series those that may be withheld from the At any time within 60 days of the to those series that are more closely public in accordance with the filing of the proposed rule change, the tailored to the investment decisions and provisions of 5 U.S.C. 552, will be hedging decisions of investors. Commission summarily may temporarily suspend such rule change if available for Web site viewing and B. Self-Regulatory Organization’s it appears to the Commission that such printing in the Commission’s Public Statement on Burden on Competition action is necessary or appropriate in the Reference Room, 100 F Street NE., ISE does not believe that this public interest, for the protection of Washington, DC 20549, on official proposed rule change will impose any investors, or otherwise in furtherance of business days between the hours of burden on competition that is not the purposes of the Act. 10:00 a.m. and 3:00 p.m. Copies of the necessary or appropriate in furtherance filing also will be available for of the purposes of the Exchange Act. In IV. Solicitation of Comments inspection and copying at the principal this regard and as indicated above, the Interested persons are invited to office of the Exchange. All comments Exchange notes that the rule change is submit written data, views, and received will be posted without change; being proposed as a competitive arguments concerning the foregoing, the Commission does not edit personal response to filings recently submitted by including whether the proposed rule identifying information from Arca and MKT and approved by the change is consistent with the Act. submissions. You should submit only Commission. ISE believes this proposed Comments may be submitted by any of information that you wish to make rule change is necessary to permit fair the following methods: available publicly. All submissions competition among the options should refer to File Number SR–ISE– exchanges and to establish uniform Electronic Comments 2012–90 and should be submitted on or rules regarding the STOS Program. • Use the Commission’s Internet before December 26, 2012. C. Self-Regulatory Organization’s comment form (http://www.sec.gov/ For the Commission, by the Division of Statement on Comments on the rules/sro.shtml); or Trading and Markets, pursuant to delegated Proposed Rule Change Received From 15 • Send an email to rule- authority. Members, Participants, or Others [email protected]. Please include File Kevin M. O’Neill, The Exchange has not solicited, and Number SR–ISE–2012–90 on the subject Deputy Secretary. does not intend to solicit, comments on line. [FR Doc. 2012–29313 Filed 12–4–12; 8:45 am] this proposed rule change. The BILLING CODE 8011–01–P Exchange has not received any 11 15 U.S.C. 78s(b)(3)(A). unsolicited written comments from 12 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– members or other interested parties. 4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s intent III. Date of Effectiveness of the to file the proposed rule change, along with a brief Proposed Rule Change and Timing for description and text of the proposed rule change, Commission Action at least five business days prior to the date of filing of the proposed rule change, or such shorter time Because the foregoing proposed rule as designated by the Commission. The Exchange change does not significantly affect the has satisfied this requirement. protection of investors or the public 13 See supra note 4. 14 For purposes only of waiving the 30-day interest, does not impose any significant operative delay, the Commission has considered the burden on competition, and, by its proposed rule’s impact on efficiency, competition, terms, does not become operative for 30 and capital formation. See 15 U.S.C. 78c(f). 15 17 CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE governs the listing and trading of proposed rule change, disapprove the COMMISSION Investment Company Units. proposed rule change, or institute Accordingly, the Commission, proceedings to determine whether the 5 [Release No. 34–68320; File No. SR– pursuant to Section 19(b)(2) of the Act, proposed rule change should be NYSEArca–2012–108] designates January 16, 2013, as the date disapproved. The 45th day for this filing by which the Commission should either is December 2, 2012. The Commission is Self-Regulatory Organizations; NYSE approve or disapprove or institute extending this 45-day time period. Arca, Inc.; Notice of Designation of proceedings to determine whether to The Commission finds that it is Longer Period for Commission Action disapprove the proposed rule change appropriate to designate a longer period on Proposed Rule Change, as Modified (File Number SR–NYSEArca–2012– within which to take action on the by Amendment No. 1 Thereto, Relating 108). proposed rule change so that it has to the Listing and Trading of Shares of For the Commission, by the Division of sufficient time to consider the proposed the NYSE Arca U.S. Equity Synthetic Trading and Markets, pursuant to delegated rule change. The proposed rule change Reverse Convertible Index Fund Under authority.6 would allow the Exchange to list and NYSE Arca Equities Rule 5.2(j)(3) Kevin M. O’Neill, trade Shares of the Fund under NYSE Arca Equities Rule 5.2(j)(3), which November 29, 2012. Deputy Secretary. [FR Doc. 2012–29315 Filed 12–4–12; 8:45 am] governs the listing and trading of On September 27, 2012, NYSE Arca, Investment Company Units. BILLING CODE 8011–01–P Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed Accordingly, the Commission, with the Securities and Exchange pursuant to Section 19(b)(2) of the Act,5 Commission (‘‘Commission’’), pursuant SECURITIES AND EXCHANGE designates January 16, 2013, as the date to Section 19(b)(1) of the Securities by which the Commission should either 1 COMMISSION Exchange Act of 1934 (‘‘Act’’) and Rule approve or disapprove or institute 2 19b–4 thereunder, a proposed rule [Release No. 34–68319; File No. SR– proceedings to determine whether to change to list and trade shares NYSEArca–2012–109] disapprove the proposed rule change (‘‘Shares’’) of the NYSE Arca U.S. Equity Self-Regulatory Organizations; NYSE (File Number SR–NYSEArca–2012– Synthetic Reverse Convertible Index 109). Fund (‘‘Fund’’) under NYSE Arca Arca, Inc.; Notice of Designation of Equities Rule 5.2(j)(3). On October 2, Longer Period for Commission Action For the Commission, by the Division of on Proposed Rule Change Relating to Trading and Markets, pursuant to delegated 2012, the Exchange submitted authority.6 Amendment No. 1 to the proposed rule the Listing and Trading of Shares of Kevin M. O’Neill, change. The proposed rule change, as the U.S. Equity High Volatility Put Write modified by Amendment No. 1, was Index Fund Under NYSE Arca Equities Deputy Secretary. published in the Federal Register on Rule 5.2(j)(3) [FR Doc. 2012–29314 Filed 12–4–12; 8:45 am] 3 BILLING CODE 8011–01–P October 18, 2012. The Commission November 29, 2012. received no comment letters on the On September 27, 2012, NYSE Arca, proposal. Inc. (‘‘Exchange’’ or ‘‘NYSE Arca’’) filed 4 SMALL BUSINESS ADMINISTRATION Section 19(b)(2) of the Act provides with the Securities and Exchange that, within 45 days of the publication Commission (‘‘Commission’’), pursuant [Disaster Declaration # 13380 and # 13381] of notice of the filing of a proposed rule to Section 19(b)(1) of the Securities change, or within such longer period up Exchange Act of 1934 (‘‘Act’’) 1 and Rule New Jersey Disaster Number NJ–00034 to 90 days as the Commission may 19b–4 thereunder,2 a proposed rule designate if it finds such longer period AGENCY: U.S. Small Business change to list and trade shares Administration. to be appropriate and publishes its (‘‘Shares’’) of the U.S. Equity High ACTION: Amendment 1. reasons for so finding or as to which the Volatility Put Write Index Fund self-regulatory organization consents, (‘‘Fund’’) under NYSE Arca Equities SUMMARY: the Commission shall either approve the This is an amendment of the Rule 5.2(j)(3). The proposed rule change Presidential declaration of a major proposed rule change, disapprove the was published in the Federal Register proposed rule change, or institute disaster for Public Assistance Only for on October 18, 2012.3 The Commission the State of New Jersey (FEMA—4086— proceedings to determine whether the received no comment letters on the proposed rule change should be DR), dated 11/05/2012. proposal. Incident: Hurricane Sandy. disapproved. The 45th day for this filing Section 19(b)(2) of the Act 4 provides Incident Period: 10/26/2012 through is December 2, 2012. The Commission is that, within 45 days of the publication 11/08/2012. extending this 45-day time period. of notice of the filing of a proposed rule Effective Date: 11/23/2012. The Commission finds that it is change, or within such longer period up Physical Loan Application Deadline appropriate to designate a longer period to 90 days as the Commission may Date: 01/04/2013. within which to take action on the designate if it finds such longer period Economic Injury (EIDL) Loan proposed rule change so that it has to be appropriate and publishes its Application Deadline Date: 08/05/2013. sufficient time to consider the proposed reasons for so finding or as to which the ADDRESSES: rule change. The proposed rule change Submit completed loan self-regulatory organization consents, applications to: U.S. Small Business would allow the Exchange to list and the Commission shall either approve the trade Shares of the Fund under NYSE Administration, Processing and Disbursement Center, 14925 Kingsport Arca Equities Rule 5.2(j)(3), which 5 15 U.S.C. 78s(b)(2). Road, Fort Worth, TX 76155. 6 17 CFR 200.30–3(a)(31). FOR FURTHER INFORMATION CONTACT 1 15 U.S.C. 78s(b)(1). 1 15 U.S.C. 78s(b)(1). : A. 2 17 CFR 240.19b–4. 2 17 CFR 240.19b–4. Escobar, Office of Disaster Assistance, 3 See Securities Exchange Act Release No. 68043 3 See Securities Exchange Act Release No. 68044 (October 12, 2012), 77 FR 64153 (‘‘Notice’’). (October 12, 2012), 77 FR 64160 (‘‘Notice’’). 5 15 U.S.C. 78s(b)(2). 4 15 U.S.C. 78s(b)(2). 4 15 U.S.C. 78s(b)(2). 6 17 CFR 200.30–3(a)(31).
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U.S. Small Business Administration, Third Street SW., Washington, DC acquisition of Dome Petroleum LLC 409 3rd Street SW, Suite 6050, 20416. (formerly known as Dome Petroleum Washington, DC 20416. Dated: November 28, 2012 Corp.) by Plains LPG’s affiliate, Plains SUPPLEMENTARY INFORMATION: The notice Sean J. Greene, Midstream Canada ULC (Plains of the President’s major disaster Associate Administrator for Investment. Midstream). Specifically, Plains Midstream acquired BP Canada Energy declaration for Private Non-Profit [FR Doc. 2012–29359 Filed 12–4–12; 8:45 am] organizations in the State of New Jersey, Corporation, which owned Dome BILLING CODE P dated 11/05/2012, is hereby amended to Petroleum LLC. Immediately following establish the incident period for this the acquisition by Plains Midstream, disaster as beginning 10/26/2012 and DEPARTMENT OF STATE Dome Petroleum LLC became Plains continuing through 11/08/2012. Midstream Superior LLC, which All other information in the original [Public Notice 8102] subsequently merged with Plains LPG. declaration remains unchanged. That acquisition and merger resulted in Application for a Presidential Permit (Catalog of Federal Domestic Assistance the allocation and transfer of the St. Numbers 59002 and 59008) To Operate and Maintain Pipeline Facilities on the Border of the United Clair Pipeline border facilities to Plains Joseph P. Loddo, States and Canada LPG. Acting Associate Administrator for Disaster Under E.O. 13337 the Secretary of Assistance. AGENCY: Department of State. State is designated and empowered to [FR Doc. 2012–29141 Filed 12–4–12; 8:45 am] ACTION: Notice of Receipt of Application receive all applications for Presidential for a Presidential Permit to Operate and BILLING CODE 8025–01–P Permits for the construction, Maintain Pipeline Facilities on the connection, operation, or maintenance Border of the United States and Canada. at the borders of the United States, of SMALL BUSINESS ADMINISTRATION SUMMARY: Notice is hereby given that facilities for the exportation or importation of liquid petroleum, [License No. 04/04–0315] the Department of State (DOS) received an application from Plains LPG petroleum products, or other non- Salem Investment Partners III, L.P.; Services, L.P. (Plains LPG) to operate gaseous fuels to or from a foreign Notice Seeking Exemption Under and maintain facilities it has acquired country. The Department of State is Section 312 of the Small Business pertaining to six pipelines at the U.S.- circulating this application to concerned Investment Act, Conflicts of Interest Canada border (St. Clair Pipeline border federal agencies for comment. The facilities). The pipeline facilities were Department of State has the Notice is hereby given that Salem previously owned by Dome Petroleum, responsibility to determine whether Investment Partners III, L.P., 1348 which operated and maintained them issuance of a new Presidential Permit Westgate Center Drive, Suite 100, pursuant to earlier Presidential Permits. reflecting the change in ownership or Winston-Salem, NC 27114, a Federal Plains LPG requests issuance of a new control of the St. Clair Pipeline border Licensee under the Small Business permit reflecting sole ownership of the facilities would be in the U.S. national Investment Act of 1958, as amended St. Clair Pipeline border facilities and interest. (‘‘the Act’’), in connection with the allowing Plains LPG to operate and financing of a small concern, has sought maintain those facilities for use in DATES: Interested parties are invited to an exemption under Section 312 of the transporting liquefied hydrocarbons, submit comments not later than 30 days Act and Section 107.730, Financings consistent with the terms of the after the publication date of this notice which Constitute Conflicts of Interest of currently applicable permits. The Plains by email to the Small Business Administration application will supersede an [email protected] with (‘‘SBA’’) Rules and Regulations (13 CFR application made by Dome on May 14, regard to whether issuing a new 107.730). Salem Investment Partners III, 2010 as it relates to the St. Clair Pipeline Presidential Permit reflecting the L.P. proposes to provide debt security border facilities. corporate succession and authorizing financing to Industrial Services Group, The St. Clair pipelines cross the Plains LPG to operate and maintain the Inc., 318 Neeley Street, Sumter, SC Canada- United States border from St. Clair Pipeline border facilities would 29150 (‘‘Universal Blastco’’). Sarnia, Canada into the United States, be in the national interest. The The financing is brought within the underneath the St. Clair River, application is available at http:// purview of § 107.730(a)(4) of the terminating in Marysville, Michigan. www.state.gov/e/enr/c52945.htm. Regulations because Universal Blastco The first two of the St Clair Pipelines owes a debt obligation to Salem Capital were constructed and a permit issued in FOR FURTHER INFORMATION CONTACT: Partners, L.P. and Salem Halifax Capital 1918. The remaining four of the St Clair Office of Energy Diplomacy, Energy Partners, L.P., all Associates of Salem Pipelines were constructed and a permit Resources Bureau (ENR/EDP/EWA) Investment Partners III, L.P., and a part issued in 1973. Department of State 2201 C St. NW Ste of the financing will be used to Plains LPG is a Texas limited 4843 Washington DC 20520 Attn: discharge the obligation. Therefore this partnership with its principle place of Michael Brennan Tel: 202–647–7553. transaction is considered a financing business at 333 Clay Street, Suite 1600, Email: brennanmf @state.gov. constituting a conflict of interest Houston Texas, 77002. Plains LPG is a requiring prior SBA approval. subsidiary of Plains All American Dated: November 20, 2012. Notice is hereby given that any Pipeline, L.P. (‘‘Plains’’), a publicly Douglas R. Kramer, interested person may submit written traded master limited partnership Acting Director, Office of Europe, Western comments on the transaction, within organized under the laws of the State of Hemisphere & Africa, Bureau of Energy fifteen days of the date of this Delaware and headquartered in Resources, U.S. Department of State. publication, to the Associate Houston, Texas. [FR Doc. 2012–29377 Filed 12–4–12; 8:45 am] Administrator for Investment, U.S. Plains LPG acquired the St. Clair BILLING CODE 4710–09–P Small Business Administration, 409 Pipelines following the indirect
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DEPARTMENT OF STATE resulted in the allocation and transfer of Number 153 (Wednesday August 8, the EDS Pipeline border facilities to 2012) pages 47490–47491]. This notice [Public Notice 8101] Plains LPG. updates the physical address at which Application for a Presidential Permit Under E.O. 13337 the Secretary of the meetings will be conducted. The To Operate and Maintain Pipeline State is designated and empowered to primary purpose of the meetings is to Facilities on the Border of the United receive all applications for Presidential prepare for the seventeenth Session of States and Canada Permits for the construction, the International Maritime connection, operation, or maintenance Organization’s (IMO) Sub-Committee on AGENCY: Department of State. at the borders of the United States, of Radiocommunications Search and ACTION: Notice of Receipt of Application facilities for the exportation or Rescue to be held at the IMO for a Presidential Permit to Operate and importation of liquid petroleum, Headquarters, United Kingdom, January Maintain Pipeline Facilities on the petroleum products, or other non- 21–25, 2013. Border of the United States and Canada. gaseous fuels to or from a foreign The agenda items to be considered country. The Department of State is include: SUMMARY: Notice is hereby given that circulating this application to concerned the Department of State (DOS) has —Adoption of the agenda federal agencies for comment. The —Decisions of other IMO bodies received an application from Plains LPG Department of State has the —Global Maritime Distress and Safety Services, L.P. (‘‘Plains LPG’’) to operate responsibility to determine whether System (GMDSS): and maintain pipeline facilities it has issuance of a new Presidential Permit —Review and modernization of the acquired at the U.S.-Canada border (the reflecting the change in ownership or GMDSS EDS Pipeline border facilities). The EDS control of the EDS Pipeline border pipeline, a single 10 inch diameter pipe, facilities would be in the U.S. national —Further development of the GMDSS crosses the United States- Canada interest. master plan on shore-based border underneath the Detroit River, facilities DATES: Interested parties are invited to between Detroit Michigan in the United —Consideration of operational and submit comments not later than 30 days States and the city of Windsor, in technical coordination provisions of after the publication date of this notice Ontario, Canada. The EDS pipeline was maritime safety information (MSI) by email to one of two parallel pipelines and an services, including the development [email protected] with electric cable that were constructed by and review of the related regard to whether issuing a new American Brine, Inc., and operated, and documents Presidential Permit reflecting the maintained most recently by Dome —ITU maritime radiocommunication Petroleum pursuant to earlier corporate succession and authorizing Plains LPG to operate and maintain the matters: Presidential Permits. Plains LPG —Consideration of requests issuance of a new permit EDS Pipeline border facilities would be in the national interest. The application radiocommunication ITU–R Study reflecting its acquisition and sole Group matters ownership of the EDS Pipeline border is available at http://www.state.gov/e/ enr/c52945.htm. —Consideration of ITU World facilities and allowing Plains LPG to Radiocommunication Conference FOR FURTHER INFORMATION CONTACT: operate and maintain those facilities for matters use in transporting liquefied Office of Energy Diplomacy, Energy Resources Bureau (ENR/EDP/EWA) —Consideration of developments in hydrocarbons. The Plains application Inmarsat and Cospas-Sarsat will supersede a joint application made Department of State 2201 C St. NW Ste 4843 Washington DC 20520 Attn: —Search and Rescue (SAR): by Dome Petroleum Corporation and —Development of guidelines on Kinder Morgan Cochin, LLC on June 7, Michael Brennan Tel: 202–647–7553. Email: brennanmf @state.gov. harmonized aeronautical and 2010 as it relates to the EDS Pipeline maritime search and rescue border facilities. Dated: November 20, 2012. procedures, including SAR training Plains LPG is a Texas limited Douglas R. Kramer, matters partnership with its principle place of Acting Director, Office of Europe, Western business at 333 Clay Street, Suite 1600, —Further development of the Global Hemisphere & Africa, Bureau of Energy SAR Plan for the provision of Houston Texas, 77002. Plains LPG is a Resources, U.S. Department of State. subsidiary of Plains All American maritime [FR Doc. 2012–29376 Filed 12–4–12; 8:45 am] —SAR services, including procedures Pipeline, L.P. (‘‘Plains’’), a publicly BILLING CODE 4710–09–P traded master limited partnership for routeing distress information in organized under the laws of the State of the GMDSS —Developments in maritime Delaware and headquartered in DEPARTMENT OF STATE Houston, Texas. radiocommunication systems and Plains LPG acquired the EDS Pipeline [Public Notice 8103] technology following the indirect acquisition of —Development of amendments to the Shipping Coordinating Committee; IAMSAR Manual Dome Petroleum LLC (formerly known Notice of Committee Meeting as Dome Petroleum Corp.) by Plains —Development of measures to avoid LPG’s affiliate, Plains Midstream The Shipping Coordinating false distress alerts Canada ULC (Plains Midstream). Committee (SHC) will conduct an open —Development of measures to protect Specifically, Plains Midstream acquired meeting at 9:30 a.m. on Thursday the safety of persons rescued at sea BP Canada Energy Corporation, which December 20, 2012, and Thursday —Development of an e-navigation owned Dome Petroleum LLC. January 10, 2013, at the Radio Technical strategy implementation plan Immediately following the acquisition Commission for Maritime Services —Consideration of LRIT-related matters by Plains Midstream, Dome Petroleum (RTCM) in suite 605, 1611 N. Kent St., —Development of a mandatory Code for LLC became Plains Midstream Superior Arlington VA 22209. These meetings ships operating in polar waters LLC, which subsequently merged with were previously noticed in Public —Biennial agenda and provisional Plains LPG. That acquisition and merger Notice Number 7973 [FR Vol, 77, agenda for COMSAR 18
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—Election of Chairman and Vice- FOR FURTHER INFORMATION CONTACT: personal information you provide. Chairman for 2014 Barbara Snoden, Air Carrier Fitness Using the search function of our docket —Any other business Division (X–56, Room W86–471), U.S. Web site, anyone can find and read the —Report to the Maritime Safety Department of Transportation, 1200 comments received into any of our Committee New Jersey Avenue SE., Washington, dockets, including the name of the Members of the public may attend DC 20590, (202) 366–4834. individual sending the comment (or this meeting up to the seating capacity Dated: November 29, 2012. signing the comment for an association, of the room. To facilitate the building business, labor union, etc.). You may Robert Letteney, security process, and to request review DOT’s complete Privacy Act reasonable accommodation, those who Deputy Assistant Secretary, For Aviation and Statement in the Federal Register International Affairs. plan to attend should contact the published on April 11, 2000 (65 FR meeting coordinator, Russell Levin, by [FR Doc. 2012–29372 Filed 12–4–12; 8:45 am] 19477–78). email at [email protected], by BILLING CODE 4910–9X–P Docket: To read background phone at (202) 475–3555, by fax at (202) documents or comments received, go to 475–3927, or in writing at Commandant http://www.regulations.gov at any time (CG–6PS), U.S. Coast Guard, 2100 2nd DEPARTMENT OF TRANSPORTATION or to the Docket Management Facility in Street SW., Stop 7101, Washington, DC Federal Aviation Administration Room W12–140 of the West Building 20593–7101 not later than 7 days prior Ground Floor at 1200 New Jersey to the meeting. Requests made after that [Summary Notice No. PE–2012–37] Avenue SE., Washington, DC, between 9 date might not be able to be a.m. and 5 p.m., Monday through accommodated. The RTCM building is Petition for Exemption; Summary of Friday, except Federal holidays. accessible by taxi and privately owned Petition Received FOR FURTHER INFORMATION CONTACT: conveyance (public transportation is not AGENCY: Federal Aviation Keira Jones (202) 267–4024, and Tyneka generally available). However, parking Administration (FAA), DOT. Thomas (202) 267—7626, Office of in the vicinity of the building is Rulemaking, Federal Aviation ACTION: Notice of petition for exemption extremely limited. Additional received. Administration, 800 Independence information regarding this and other Avenue SW., Washington, DC 20591. IMO SHC public meetings may be found SUMMARY: This notice contains a This notice is published pursuant to at: www.uscg.mil/imo. summary of a petition seeking relief 14 CFR 11.85. Dated: November 30, 2012. from specified requirements of 14 CFR. Issued in Washington, DC, on November Brian Robinson, The purpose of this notice is to improve 30, 2012. Executive Secretary, Shipping Coordinating the public’s awareness of, and Lirio Liu, Committee, Department of State. participation in, this aspect of FAA’s Acting Director, Office of Rulemaking. [FR Doc. 2012–29378 Filed 12–4–12; 8:45 am] regulatory activities. Neither publication of this notice nor the inclusion or Petition for Exemption BILLING CODE 4710–09–P omission of information in the summary Docket No.: FAA–2012–0964. is intended to affect the legal status of Petitioner: Ameriflight, LLC. the petition or its final disposition. Section of 14 CFR Affected: 14 CFR DEPARTMENT OF TRANSPORTATION 135.243(c)(2) DATE: Comments on this petition must Description of Relief Sought: identify the petition docket number and Office of the Secretary Ameriflight requests relief to allow its must be received on or before December pilots to serve as pilot in command [Docket DOT–OST–2012–0108] 26, 2012. (PIC) of an aircraft in part 135 cargo Application of Boutique Air, Inc. for ADDRESSES: You may send comments operations under instrument flight rules Commuter Air Carrier Authority identified by Docket Number FAA– (IFR) without meeting the minimum 2012–0964 using any of the following flight time requirements. AGENCY: Department of Transportation. methods: [FR Doc. 2012–29415 Filed 12–4–12; 8:45 am] ACTION • : Notice of Order to Show Cause Government-wide rulemaking web BILLING CODE 4910–13–P (Order 2012–11–32). site: Go to http://www.regulations.gov and follow the instructions for sending SUMMARY: The Department of your comments electronically. DEPARTMENT OF TRANSPORTATION Transportation is directing all interested • Mail: Send comments to the Docket persons to show cause why it should Management Facility; U.S. Department Federal Highway Administration not issue an order finding Boutique Air, of Transportation, 1200 New Jersey Inc., fit, willing, and able, and awarding Avenue SE., West Building Ground Buy America Waiver Notification it commuter air carrier authority to Floor, Room W12–140, Washington, DC AGENCY: conduct scheduled commuter service. Federal Highway 20590. Administration (FHWA), DOT. DATES: Persons wishing to file • Fax: Fax comments to the Docket ACTION: Notice. objections should do so no later than Management Facility at 202–493–2251. December 19, 2012. • Hand Delivery: Bring comments to SUMMARY: This notice provides ADDRESSES: Objections and answers to the Docket Management Facility in information regarding the FHWA’s objections should be filed in Docket Room W12–140 of the West Building finding that a Buy America waiver is DOT–OST–2012–0108 and addressed to Ground Floor at 1200 New Jersey appropriate for the use of non-domestic Docket Operations, (M–30, Room W12– Avenue SE., Washington, DC, between 9 Amacan K800—400/358XG–S 140), U.S. Department of a.m. and 5 p.m., Monday through submersible pumps (4 each), and Transportation, 1200 New Jersey Friday, except Federal holidays. Amacan K800—401/506XG–S Avenue SE., Washington, DC 20590, and Privacy: We will post all comments submersible pumps (2 each) for should be served upon the parties listed we receive, without change, to http:// rehabilitation of two pump stations in in Attachment A to the order. www.regulations.gov, including any the State of Michigan.
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DATES: The effective date of the waiver Supply and provided specifications for appropriate for the use of non-domestic is December 6, 2012. the pumps. Miami Pump and Supply Main Submersible pumps (3 @ 3,000 FOR FURTHER INFORMATION CONTACT: For determined that they were unable to gallons/minute), (1 Low Flow questions about this notice, please meet the pump specifications. Three Submersible pump @ 1,000 gallons/ contact Mr. Gerald Yakowenko, FHWA other commenters indicated that the minute), (1 Low Flow Sump Pump @ 20 Office of Program Administration, (202) specifications for the pumps should be gallons/minute) for rehabilitation of a 366–1562, or via email at changed to accommodate American pump station in the State of Illinois. [email protected]. For legal made pumps. However, MDOT is DATES: The effective date of the waiver questions, please contact Mr. Michael unable to utilize other types of pumps is December 6, 2012. Harkins, FHWA Office of the Chief due to the unique circumstances FOR FURTHER INFORMATION CONTACT: For Counsel, (202) 366–4928, or via email at involved with this project. questions about this notice, please [email protected]. Office hours During the 15-day comment period, contact Mr. Gerald Yakowenko, FHWA for the FHWA are from 8:00 a.m. to 4:30 the FHWA conducted additional Office of Program Administration, (202) p.m., e.t., Monday through Friday, nationwide review to locate potential 366–1562, or via email at except Federal holidays. domestic manufacturers of Amacan [email protected]. For legal K800—400/358XG–S submersible SUPPLEMENTARY INFORMATION: questions, please contact Mr. Michael pumps (4 each), and Amacan K800— Harkins, FHWA Office of the Chief Electronic Access 401/506XG–S submersible pumps (2 Counsel, (202) 366–4928, or via email at An electronic copy of this document each) for rehabilitation of two pump [email protected]. Office hours may be downloaded from the Federal stations in the State of Michigan. The for the FHWA are from 8:00 a.m. to 4:30 Register’s home page at: http:// National Institute of Standards and p.m., e.t., Monday through Friday, www.archives.gov and the Government Technology—Manufacturing Extension except Federal holidays. Partnership also conducted supplier Printing Office’s database at: http:// SUPPLEMENTARY INFORMATION: www.access.gpo.gov/nara. scouting on submersible pumps and reported that there were no domestic Electronic Access Background matching items for the pumps. Based on An electronic copy of this document The FHWA’s Buy America policy in all the information available to the may be downloaded from the Federal 23 CFR 635.410 requires a domestic agency, the FHWA concludes that there Register’s home page at: http:// manufacturing process for any steel or are no domestic manufacturers of www.archives.gov and the Government iron products (including protective Amacan K800—400/358XG–S Printing Office’s database at: http:// coatings) that are permanently submersible pumps (4 each), and www.access.gpo.gov/nara. incorporated in a Federal-aid Amacan K800—401/506XG–S construction project. The regulation also submersible pumps (2 each). Background provides for a waiver of the Buy In accordance with the provisions of The FHWA’s Buy America policy in America requirements when the section 117 of the SAFETEA–LU 23 CFR 635.410 requires a domestic application would be inconsistent with Technical Corrections Act of 2008 (Pub. manufacturing process for any steel or the public interest or when satisfactory L. 110–244, 122 Stat. 1572), the FHWA iron products (including protective quality domestic steel and iron products is providing this notice as its finding coatings) that are permanently are not sufficiently available. This that a waiver of Buy America incorporated in a Federal-aid notice provides information regarding requirements is appropriate. The FHWA construction project. The regulation also the FHWA’s finding that a Buy America invites public comment on this finding provides for a waiver of the Buy waiver is appropriate to use non- for an additional 15 days following the America requirements when the domestic Amacan K800—400/358XG–S effective date of the finding. Comments application would be inconsistent with submersible pumps (4 each), and may be submitted to the FHWA’s Web the public interest or when satisfactory Amacan K800—401/506XG–S site via the link provided to Michigan quality domestic steel and iron products submersible pumps (2 each) for waiver page noted above. are not sufficiently available. This rehabilitation of two pump stations in notice provides information regarding the State of Michigan. Authority: 23 U.S.C. 313; Pub. L. 110–161, the FHWA’s finding that a Buy America In accordance with Title I, Division C, 23 CFR 635.410). waiver is appropriate to use non- section 122 of the ‘‘Consolidated and Issued on: November 28, 2012. domestic Main Submersible pumps (3 @ Further Continuing Appropriations Act, Victor M. Mendez, 3,000 gallons/minute), (1 Low Flow 2012’’ (Pub. L. 112–55), the FHWA Administrator. Submersible pump @ 1,000 gallons/ published a notice of intent to issue a [FR Doc. 2012–29328 Filed 12–4–12; 8:45 am] minute), (1 Low Flow Sump Pump @ 20 waiver on its Web site for Amacan BILLING CODE 4910–22–P gallons/minute) for rehabilitation of a K800—400/358XG–S submersible pump station in the State of Illinois. pumps (4 each), and Amacan K800— In accordance with Title I, Division C, 401/506XG–S submersible pumps (2 DEPARTMENT OF TRANSPORTATION section 122 of the ‘‘Consolidated and each) (http://www.fhwa.dot.gov/ Further Continuing Appropriations Act, construction/contracts/waivers.cfm? Federal Highway Administration 2012’’ (Pub. L. 112–55), the FHWA id=75) on May 16th. The FHWA published a notice of intent to issue a received five comments in response to Buy America Waiver Notification waiver on its Web site for Main the publication. One commenter AGENCY: Federal Highway Submersible pumps (3 @ 3,000 gallons/ supports the waiver if there is no Administration (FHWA), DOT. minute), (1 Low Flow Submersible American made pump. Miami Pump ACTION: Notice. pump @ 1,000 gallons/minute), (1 Low and Supply Company requested that the Flow Sump Pump @ 20 gallons/minute) Michigan DOT (MDOT) should contact SUMMARY: This notice provides (http://www.fhwa.dot.gov/construction/ them for specifications of the pump. information regarding the FHWA’s contracts/waivers.cfm?id=74) on May The MDOT contacted Miami Pump and finding that a Buy America waiver is 3rd. The FHWA received six comments
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in response to the publication. Three Bridge project, Federal-aid project Technology—Manufacturing Extension commenters indicated that the waiver #STP–0158(51), in the State of North Partnership also conducted supplier will only help other countries and, Carolina. scouting on motor and machinery therefore, opposed the waiver. Three DATES: The effective date of the waiver system and reported that there are some others are in support only when the is December 6, 2012. domestic manufacturers of product is not available domestically. subcomponents to the motor and FOR FURTHER INFORMATION CONTACT: For None of the commenters provided machinery brake system. However, the questions about this notice, please information on possible domestic subcomponents are not compatible with contact Mr. Gerald Yakowenko, FHWA manufacturers. During the 15-day the specified motor and machinery Office of Program Administration, (202) comment period, the FHWA conducted brakes. Based on all the information 366–1562, or via email at additional nationwide review to locate available to the agency, the FHWA [email protected]. For legal potential domestic manufacturers of concludes that there are no domestic questions, please contact Mr. Michael Main Submersible pumps (3 @ 3,000 manufacturers of Motor and Machinery Harkins, FHWA Office of the Chief gallons/minute), (1 Low Flow brakes; 16″ Drum brake, Thruster disk, Counsel, (202) 366–4928, or via email at Submersible pump @ 1,000 gallons/ and 2-Right angle gear reducers for the [email protected]. Office hours minute), (1 Low Flow Sump Pump @ 20 Pasquotnak River Bridge project in the for the FHWA are from 8:00 a.m. to 4:30 gallons/minute). The National Institute State of North Carolina. p.m., e.t., Monday through Friday, of Standards and Technology— In accordance with the provisions of except Federal holidays. Manufacturing Extension Partnership section 117 of the SAFETEA–LU also conducted supplier scouting on SUPPLEMENTARY INFORMATION: Technical Corrections Act of 2008 (Pub. submersible pumps and reported that Electronic Access L. 110–244, 122 Stat. 1572), the FHWA there were no domestic matching items is providing this notice as its finding An electronic copy of this document for the pumps. Based on all the that a waiver of Buy America may be downloaded from the Federal information available to the agency, the requirements is appropriate. The FHWA Register’s home page at: http:// FHWA concludes that there are no invites public comment on this finding www.archives.gov and the Government domestic manufacturers of Main for an additional 15 days following the Printing Office’s database at: http:// Submersible pumps (3 @ 3,000 gallons/ effective date of the finding. Comments www.access.gpo.gov/nara. minute), (1 Low Flow Submersible may be submitted to the FHWA’s Web pump @ 1,000 gallons/minute), (1 Low Background site via the link provided to the North Flow Sump Pump @ 20 gallons/minute). The FHWA’s Buy America policy in Carolina waiver page noted above. In accordance with the provisions of 23 CFR 635.410 requires a domestic Authority: 23 U.S.C. 313; Pub. L. 110–161, section 117 of the SAFETEA–LU manufacturing process for any steel or 23 CFR 635.410). Technical Corrections Act of 2008 (Pub. iron products (including protective L. 110–244, 122 Stat. 1572), the FHWA Issued on: November 29, 2012. coatings) that are permanently is providing this notice as its finding Victor M. Mendez, incorporated in a Federal-aid that a waiver of Buy America Administrator. construction project. The regulation also requirements is appropriate. The FHWA [FR Doc. 2012–29330 Filed 12–4–12; 8:45 am] provides for a waiver of the Buy invites public comment on this finding BILLING CODE 4910–22–P America requirements when the for an additional 15 days following the application would be inconsistent with effective date of the finding. Comments the public interest or when satisfactory may be submitted to the FHWA’s Web DEPARTMENT OF TRANSPORTATION quality domestic steel and iron products site via the link provided to Illinois are not sufficiently available. This waiver page noted above. Federal Highway Administration notice provides information regarding Authority: 23 U.S.C. 313; Pub. L. 110–161, the FHWA’s finding that a Buy America Buy America Waiver Notification 23 CFR 635.410. waiver is appropriate to use non- AGENCY: Issued on: November 26, 2012. domestic Motor and Machinery brakes; Federal Highway Administration (FHWA), DOT. Victor M. Mendez, 16″ Drum brake, Thruster disk, and 2- ACTION: Federal Highway Administrator. Right angle gear reducers. Notice. In accordance with Title I, Division C, [FR Doc. 2012–29326 Filed 12–4–12; 8:45 am] SUMMARY: This notice provides section 122 of the ‘‘Consolidated and BILLING CODE 4910–22–P information regarding the FHWA’s Further Continuing Appropriations Act, finding that a Buy America waiver is 2012’’ (Pub. L. 112–55), the FHWA appropriate for the use of non-domestic published a notice of intent to issue a DEPARTMENT OF TRANSPORTATION Motor and Machinery Brakes; 16″- waiver on its Web site for Motor and Diameter Motor Brakes, weight 340 lb, Federal Highway Administration Machinery brakes; 16″ Drum brake, and 13″-Diameter Machinery Brakes, Thruster disk, and 2-Right angle gear weight 250 lb, for rehabilitation of Buy America Waiver Notification reducers (http://www.fhwa.dot.gov/ Murray Morgan Bridge, project #STP– construction/contracts/ AGENCY: Federal Highway STPUL–3268(003), and South Park waivers.cfm?id=63) on November 14, Administration (FHWA), DOT. Bridge Replacement, project #TIGERII– 2011. The FHWA received no comment ACTION: Notice. BRM–STPL–1491(002), in the State of in response to the publication. During Washington. SUMMARY: This notice provides the 15-day comment period, the FHWA information regarding the FHWA’s conducted additional nationwide DATES: The effective date of the waiver finding that a Buy America waiver is review to locate potential domestic is December 6, 2012. appropriate for the use of non-domestic manufacturers of Motor and Machinery FOR FURTHER INFORMATION CONTACT: For Motor and Machinery brakes; 16″ Drum brakes; 16″ Drum brake, Thruster disk, questions about this notice, please brake, Thruster disk, and 2-Right angle and 2-Right angle gear reducers. The contact Mr. Gerald Yakowenko, FHWA gear reducers for Pasquotnak River National Institute of Standards and Office of Program Administration, (202)
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366–1562, or via email at system and reported that there are some 5124 or by email at [email protected]. For legal domestic manufacturers of [email protected]. All materials in questions, please contact Mr. Michael subcomponents to the motor and this docket may be accessed Harkins, FHWA Office of the Chief machinery brake system. However, the electronically at http:// Counsel, (202) 366–4928, or via email at subcomponents are not compatible with www.regulations.gov. General [email protected]. Office hours the specified motor and machinery information about the PHMSA Office of for the FHWA are from 8:00 a.m. to 4:30 brakes. Based on all the information Pipeline Safety (OPS) can be obtained p.m., e.t., Monday through Friday, available to the agency, the FHWA by accessing OPS’s Internet home page except Federal holidays. concludes that there are no domestic at http://www.phmsa.dot.gov/pipeline. SUPPLEMENTARY INFORMATION: manufacturers of Motor and Machinery SUPPLEMENTARY INFORMATION: Brakes; 16″-Diameter Motor Brakes, Electronic Access weight 340 lb and 13″-Diameter I. Background An electronic copy of this document Machinery Brakes, weight 250 lb for PHMSA’s integrity management may be downloaded from the Federal rehabilitation of Murray Morgan Bridge regulations require operators to Register’s home page at: http:// project #STP–STPUL–3268(003) and establish processes to evaluate the www.archives.gov and the Government South Park Bridge Replacement project effectiveness of their integrity Printing Office’s database at: http:// #TIGERII–BRM–STPL–1491(002) in management programs. Program www.access.gpo.gov/nara. Washington State. evaluation is one of the key required Background In accordance with the provisions of program elements as established in the section 117 of the SAFETEA–LU integrity management rules. For The FHWA’s Buy America policy in Technical Corrections Act of 2008 (Pub. 23 CFR 635.410 requires a domestic hazardous liquid pipelines, L. 110–244, 122 Stat. 1572), the FHWA §§ 195.452(f)(7) and 195.452(k) require manufacturing process for any steel or is providing this notice as its finding iron products (including protective methods to measure program that a waiver of Buy America effectiveness: coatings) that are permanently requirements is appropriate. The FHWA incorporated in a Federal-aid § 195.452(f) What are the elements invites public comment on this finding of an integrity management program? construction project. The regulation also for an additional 15 days following the provides for a waiver of the Buy An integrity management program effective date of the finding. Comments begins with the initial framework. An America requirements when the may be submitted to the FHWA’s Web application would be inconsistent with operator must continually change the site via the link provided to the program to reflect operating experience, the public interest or when satisfactory Washington State waiver page noted quality domestic steel and iron products conclusions drawn from results of the above. are not sufficiently available. This integrity assessments, other notice provides information regarding Authority: 23 U.S.C. 313; Pub. L. 110–161, maintenance and surveillance data, and the FHWA’s finding that a Buy America 23 CFR 635.410). evaluation of consequences of a failure waiver is appropriate to use non- Issued on: November 26, 2012. on the high consequence area. An domestic Motor and Machinery Brakes; Victor M. Mendez, operator must include, at minimum, ″ each of the following elements in its 16 -Diameter Motor Brakes, weight 340 Administrator. ″ written integrity management program: lb, and 13 -Diameter Machinery Brakes, [FR Doc. 2012–29329 Filed 12–4–12; 8:45 am] weight 250 lb, for rehabilitation of * * * * * BILLING CODE 4910–22–P Murray Morgan Bridge, project #STP– (7) Methods to measure the program’s STPUL–3268(003), and South Park effectiveness (see paragraph (k) of this Bridge Replacement, project #TIGERII– DEPARTMENT OF TRANSPORTATION section); BRM–STPL–1491(002), in the State of § 195.452(k) What methods to Washington. Pipeline and Hazardous Materials measure program effectiveness must be In accordance with Title I, Division C, Safety Administration used? An operator’s program must section 122 of the ‘‘Consolidated and include methods to measure whether Further Continuing Appropriations Act, [Docket No. PHMSA–2012–0279] the program is effective in assessing and 2012’’ (Pub. L. 112–55), the FHWA Pipeline Safety: Using Meaningful evaluating the integrity of each pipeline published a notice of intent to issue a Metrics in Conducting Integrity segment and in protecting the high waiver on its Web site for Motor and Management Program Evaluations consequence areas. (See Appendix C of Machinery Brakes; 16″-Diameter Motor this part for guidance on methods that Brakes, weight 340 lb and 13″-Diameter AGENCY: Pipeline and Hazardous can be used to evaluate a program’s Machinery Brakes, weight 250 lb (http:// Materials Safety Administration effectiveness.) www.fhwa.dot.gov/construction/ (PHMSA), DOT. Appendix C provides more specific contracts/waivers.cfm?id=64) on ACTION: Notice; Issuance of Advisory guidance on establishing performance November 14, 2011. The FHWA Bulletin. measures, including the need to select received no comment in response to the measures based on the understanding publication. During the 15-day comment SUMMARY: PHMSA is issuing an and analysis of integrity threats to each period, the FHWA conducted additional Advisory Bulletin to remind operators pipeline segment. Appendix C also nationwide review to locate potential of gas transmission and hazardous describes three general types of metrics domestic manufacturers of Motor and liquid pipeline facilities of their that an integrity management program Machinery Brakes; 16″-Diameter Motor responsibilities, under Federal integrity should have: Brakes, weight 340 lb and 13″-Diameter management regulations, to perform • Activity Measures that monitor the Machinery Brakes, weight 250 lb. The evaluations of their integrity surveillance and preventive activities National Institute of Standards and management programs using meaningful that are in place to control risk. These Technology—Manufacturing Extension performance metrics. measures indicate how well an operator Partnership also conducted supplier FOR FURTHER INFORMATION CONTACT: is implementing the elements of its scouting on motor and machinery Alan Mayberry by phone at 202–366– integrity management program.
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• Deterioration Measures that annual report required by § 191.17 of (22) methods used to measure the monitor operational and maintenance this subchapter. program’s effectiveness. trends to indicate if the program is (b) External Corrosion Direct The comparable gas transmission successful or weakening, or if the Assessment (ECDA). In addition to the integrity management program desired outcome is being achieved or general requirements for performance requirements are: not, despite the risk control activities in measures in paragraph (a) of this place. section, an operator using direct § 192.947 What records must be kept? • Failure Measures that reflect assessment to assess an external An operator must maintain, for the whether the program is effective in corrosion threat must define and useful life of the pipeline, records that achieving the objective of improving monitor measures to determine the demonstrate compliance with the integrity. These are typically lagging effectiveness of the ECDA process. requirements of this subpart. At indicators that measure the number of These measures must meet the minimum, an operator must maintain releases, the volume spilled, percent requirements of § 192.925. the following records for review during recovered, etc. The gas transmission requirements an inspection. Section 13 ‘‘Program Evaluation’’ of invoke ASME B31.8S–2004, Managing * * * * * API Standard 1160, Managing Integrity System Integrity of Gas Pipelines. (d) Documents to support any for Hazardous Liquid Pipelines also Section 9 of this standard provides decision, analysis, and process provides additional guidance on the guidance on the selection of developed and used to implement and program evaluation process in which performance measures. It describes evaluate each element of the baseline these measures are used to improve three categories of measures that are assessment plan and integrity performance. directly analogous to those noted above management program. Documents For gas transmission pipelines, in Appendix C of Part 195. These are: • include those developed and used in §§ 192.911(i) and 192.945 define the Process or Activity Measures used support of any identification, requirements for establishing to evaluate preventive and mitigation calculation, amendment, modification, activities. These determine how well an performance metrics and evaluating justification, deviation and operator is implementing the various integrity management program determination made, and any action elements of its integrity management performance. taken, to implement and evaluate any of program. § 192.911 What are the elements of an • Operational Measures, which the program elements; integrity management program? include operational and maintenance PHMSA’s inspection protocols An operator’s initial integrity trends that measure how well the currently address the need to examine management program begins with a system is responding to the integrity operator compliance with these framework (see § 192.907) and evolves management program. requirements. into a more detailed and comprehensive • Direct Integrity Measures, which In its report on the September 9, 2010, integrity management program as include leaks, ruptures, injuries, and gas pipeline accident in San Bruno, information is gained and incorporated fatalities. California, the National Transportation into the program. An operator must Furthermore, the hazardous liquid Safety Board (NTSB) identified concerns make continual improvements to its and gas transmission integrity with Pacific Gas and Electric Company’s program. The initial program framework management rules also require that (PG&E) self-assessments of its integrity and subsequent program must, at operators retain adequate records to management program. NTSB concluded minimum, contain the following support integrity management program that the company’s self-assessments elements. (When indicated, refer to decisions and activities. These include were ‘‘superficial and resulted in no ASME/ANSI B31.8S incorporated by the information that supports the improvements to the integrity reference, see § 192.7) for more detailed selection of performance metrics, the management program.’’ As a result, information on the listed element.) performance metric data and trends, and NTSB recommended that PG&E: Assess every aspect of your integrity * * * * * the decisions that are based in whole or in part on these metrics. Specifically, management program, paying particular (i) A performance plan as outlined in attention to the areas identified in this ASME/ANSI B31.8S, section 9 that the hazardous liquid integrity management program requirements are: investigation, and implement a revised includes performance measures meeting program that includes, at a minimum, the requirements of § 192.945. § 195.452(l) What records must be kept? (1) An operator must maintain for * * * * * § 192.945 What methods must an operator review during an inspection: (4) an improved self-assessment that use to measure program effectiveness? * * * * * adequately measures whether the (a) General. An operator must include (ii) Documents to support the program is effectively assessing and in its integrity management program decisions and analyses, including any evaluating the integrity of each covered methods to measure whether the modifications, justifications, variances, pipeline segment. (Recommendation P– program is effective in assessing and deviations and determinations made, 11–29) evaluating the integrity of each covered and actions taken, to implement and In this same investigation, NTSB pipeline segment and in protecting the evaluate each element of the integrity raised some concerns with PHMSA’s high consequence areas. These measures management program listed in oversight of performance-based safety must include the four overall paragraph (f) of this section. programs such as integrity management. performance measures specified in (2) See Appendix C of this part for NTSB concluded that greater focus is ASME/ANSI B31.8S (incorporated by examples of records an operator would needed on how performance-based reference, see § 192.7 of this part), be required to keep. safety systems are implemented, section 9.4, and the specific measures Appendix C further states: executed and evaluated, and whether for each identified threat specified in § 195.452 Appendix C. VI. Examples problem areas are being detected and ASME/ANSI B31.8S, Appendix A. An of types of records an operator must corrected. Critical to this overall process operator must submit the four overall maintain. is the selection of meaningful metrics by performance measures as part of the * * * * * operators that allow them to quantify,
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understand, and improve their own for gas transmission and hazardous • The use of periodic self- performance. liquid pipelines, respectively. PHMSA assessments, internal or external audits, Following its investigation, NTSB will evaluate specific metrics operators management reviews, performance issued two related recommendations for use to assess program effectiveness and metrics analysis, benchmarking against enhancing PHMSA’s oversight of how those metrics are used in a process other operators, or other self-critical operator programs to assess the of continuous improvement. PHMSA evaluations to assess program effectiveness of PHMSA’s programs will also confirm that operators are effectiveness. using performance metrics. These maintaining adequate records of their • Clear performance goals and recommendations are: program effectiveness evaluations and objectives to measure the effectiveness Revise your integrity management their performance metrics data, as well of key integrity activities. inspection protocol to: as the activities and decisions • Clear assignment of responsibility (1) incorporate a review of meaningful associated with all required integrity for implementing required actions. metrics; management program elements. Our • Review and follow-up of program (2) require auditors to verify that the inspectors will check to confirm that evaluation results, findings, and operator has a procedure in place for information and data gaps are recommendations, etc., by appropriate ensuring the completeness and accuracy aggressively being addressed and that company managers. of underlying information; assumptions are appropriately based on Operators are also advised that a clear (3) require auditors to review all location-specific data. and meaningful set of performance integrity management performance metrics is essential to program measures reported to the Pipeline and II. Advisory Bulletin (ADB–20l2–10) effectiveness. An effective program for Hazardous Materials Safety To: Owners and Operators of measuring integrity management Administration and compare the leak, Hazardous Liquid and Gas Transmission program effectiveness should have the failure, and incident measures to the Pipeline Systems following characteristics: operator’s risk model; and Subject: Using Meaningful Metrics in • A description of the type of (4) require setting performance goals Conducting Integrity Management performance measures to be used, along for pipeline operators at each audit and Program Evaluations with the data sources, data validation follow up on those goals at subsequent Advisory: To further enhance and quality assurance activities, the audits. (Recommendation P–11–18) PHMSA’s safety efforts and as an initial frequency of data collection, and any (1) Develop and implement standards step in addressing NTSB normalization factors. for integrity management and other Recommendations P–11–18 and P–11– • A means to update the performance performance-based safety programs that 19, PHMSA is issuing this Advisory measures (if needed) to assure they are require operators of all types of pipeline Bulletin concerning operator integrity providing useful information about the systems to regularly assess the management program evaluation using effectiveness of integrity management effectiveness of their programs using meaningful metrics. program activities. clear and meaningful metrics and to A critical program element of an • The use of performance metrics identify and then correct deficiencies; operator’s integrity management data to check and calibrate the and (2) make those metrics available in program is the systematic, rigorous operator’s risk analysis tools to assure a centralized database. evaluation of the program’s these best represent the performance of (Recommendation P–11–19) effectiveness using clear and meaningful the operator’s specific assets. These recommendations reinforce the metrics. When executed diligently, this The performance metrics that are importance of a rigorous evaluation of a self-evaluation process will lead to more required to be reported to PHMSA company’s integrity management robust and effective integrity annually, such as the number of miles program in improving performance. management programs and improve of pipeline assessed, number of Through this Advisory Bulletin, overall safety performance. This process anomalies found requiring repair or PHMSA is reminding operators of the is critical to achieving a mature integrity mitigation, etc., are a small subset of the importance of these regulation-required management program and a culture of overall suite of metrics used by an program elements. Operators should continuous improvement. Program operator to evaluate its program. A review their current programs for evaluation is a required integrity much larger set of operator-specific evaluating integrity management management program element as metrics to be used internally is needed program effectiveness and the established in §§ 192.911(i) and to effectively evaluate an integrity performance metrics used in these 195.452(k) for gas transmission and management program performance. programs to be sure they provide a hazardous liquid pipelines, Metrics should be developed for each of current and accurate representation of respectively. In light of NTSB’s findings the following: integrity management program following the San Bruno gas • Overall program effectiveness performance. Further, operators should transmission incident, PHMSA is indicated by the number of releases, ensure that program improvements and reminding operators about the number of injuries or fatalities, volume corrective actions identified by these importance of these requirements. released, etc. evaluations are implemented in a timely Operators are advised to critically • Specific threats that include both manner. review their processes and methods for leading and lagging indicators for the As a result of NTSB’s evaluating integrity management important integrity threats on an recommendations, PHMSA is initiating program performance and take action to operator’s systems. These include: efforts to strengthen its protocols and strengthen these processes where Æ Activity Measures that monitor the oversight of these key integrity warranted. An effective operator surveillance and preventive activities management program elements. performance evaluation process is that are in place to control risk. Beginning immediately, PHMSA’s expected to have the following Æ Deterioration Measures that inspections will emphasize reviewing characteristics: monitor operational and maintenance operator methods for integrity • A well-defined description of the trends to indicate if the program is management program evaluation as scope, objectives, and frequency of successful or weakening despite the risk required by § 192.945 and § 195.452(k) program evaluations. control activities in place. (Also
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identified as Operational Measures in information and data gaps throughout The session will be open to the public ASME B31.8S.) their entire integrity management for approximately 30 minutes at the Æ Failure Measures that reflect program. start of the meeting for the discussion of whether the program is effective in Issued in Washington, DC, on November administrative matters and the general achieving the objective of improving 29, 2012. status of the program. The remaining integrity. (Also identified as Direct Jeffrey D. Wiese, portion of the meeting will be closed to Integrity Measures in ASME B31.8S) the public for the Committee’s review, • Metrics that measure and provide Associate Administrator for Pipeline Safety. [FR Doc. 2012–29362 Filed 12–4–12; 8:45 am] discussion, and evaluation of research insights into how well an operator’s and development applications. processes associated with the various BILLING CODE 4910–60–P integrity management program elements During the closed portion of the are performing. Examples of such meeting, discussions and processes would include integrity DEPARTMENT OF VETERANS recommendations will deal with assessment, risk analysis, the AFFAIRS qualifications of personnel conducting identification of preventive and the studies, staff and consultant mitigative measures, etc. Clinical Science Research and critiques of research proposals and While operator-level rollups of Development Service Cooperative similar documents, and the medical metrics are useful for small operators, a Studies Scientific Evaluation records of patients who are study robust program for large operators Committee; Notice of Meeting subjects, the disclosure of which would should also include metrics at a more constitute a clearly unwarranted granular level. The metrics should The Department of Veterans Affairs invasion of personal privacy. As enable operators to drill down to gives notice under the Federal Advisory provided by section 10(d) of Public Law understand the performance of specific Committee Act, 5 U.S.C. App. 2, that the 92–463, as amended, closing portions of systems or segments within systems. Clinical Science Research and this meeting is in accordance with 5 This is particularly important for the Development Service Cooperative U.S.C. 552b(c)(6) and (c)(9)(B). threat-specific metrics mentioned Studies Scientific Evaluation Committee Those who plan to attend should previously. will hold a meeting on December 13, Finally, as required by §§ 195.452(l) 2012, at the Hamilton Crowne Plaza, contact Dr. Grant Huang, Deputy and 192.947, operators must keep 1001 14th Street NW., Washington, DC. Director, Cooperative Studies Program records supporting the decisions, The meeting is scheduled to begin at (10P9CS), Department of Veterans analyses, and processes developed and 8:30 a.m. and end at 4 p.m. Affairs, 810 Vermont Avenue NW., used in their evaluation of integrity The Committee advises the Chief Washington, DC 20420, at (202) 443– management program effectiveness. Research and Development Officer 5700 or by email at [email protected]. These records should include those through the Director of the Clinical By Direction of the Secretary. justifying the selection of performance Science Research and Development Dated: November 29, 2012. metrics, the performance metric data Service on the relevance and feasibility and trends, and how these metrics are of proposed projects and the scientific Vivian Drake, used to improve the integrity validity and propriety of technical Committee Management Officer. management program. Operators should details, including protection of human [FR Doc. 2012–29285 Filed 12–4–12; 8:45 am] also be diligently working to eliminate subjects. BILLING CODE 8320–01–P
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Part II
Department of the Interior
Bureau of Indian Affairs 25 CFR Part 162 Residential, Business, and Wind and Solar Resource Leases on Indian Land; Final Rule
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DEPARTMENT OF THE INTERIOR 162.020 (PR 162.017)—Unitized Leases rule establishing the procedures for 162.021 (PR 162.018)—BIA obtaining Secretarial approval of leases Bureau of Indian Affairs Responsibilities in Approving Leases and administration and enforcement of 162.022 (PR 162.019)—BIA surface leases is at 25 CFR part 162, 25 CFR Part 162 Responsibilities in Enforcing Leases 162.023 (PR 162.020)—Trespass Leases and Permits. Currently, part 162 contains a subpart addressing all non- [Docket ID BIA–2011–0001] 162.024 (PR 162.021)—Emergency Action 162.025 (PR 162.022)—Appeals agricultural leases. This rule replaces RIN 1076–AE73 162.026 (PR 162.023)—Contact for that general subpart with subparts Questions specifically addressing the following Residential, Business, and Wind and 162.027 (PR 162.024)—NEPA & Records categories of leasing on Indian land: Solar Resource Leases on Indian Land 162.028 (PR N/A)—Obtaining Information residential, business, and wind resource on Leased Land (New Section) evaluation and wind and solar resource AGENCY: Bureau of Indian Affairs, D. Residential Leases development. Specifically, this rule: Interior. E. Business Leases • F. WEELs Revises Subpart A, General ACTION: Final rule. G. WSR Leases Provisions; • Creates a new Subpart C, SUMMARY: The Bureau of Indian Affairs H. Cross-Cutting Comments 1. Lease Term Residential Leases; (BIA) is revising its regulations 2. Option To Renew • Creates a new Subpart D, Business addressing non-agricultural surface 3. Mandatory Lease Provisions Leases; leasing of Indian land. This rule adds 4. Improvements • Creates a new Subpart E, Wind new regulations to address residential 5. Due Diligence Energy Evaluation Leases (WEELs) and leases, business leases, wind energy 6. Legal Description—Surveys Wind and Solar Resource (WSR) Leases; evaluation leases, and wind and solar 7. Compatible Uses • 8. Rental/Payment Requirements—Tribal Deletes Subpart F, Non-agricultural development leases on Indian land, and Leases (because that subpart was removes the existing regulations for Land 9. Rental/Payment Requirements— intended to address residential and non-agricultural leases. Individually Owned Indian Land business leasing, which this rule DATES: This rule is effective on January 10. Rental/Payment Requirements— addresses specifically in subparts C and 4, 2013. Valuations D, respectively); FOR FURTHER INFORMATION CONTACT: 11. Rental/Payment Requirements—When • Moves the current Subpart E, Elizabeth Appel, Acting Director, Office Payment Is Due Special Requirements for Certain Indian 12. Rental/Payment Requirements—Direct of Regulatory Affairs & Collaborative Reservations, to Subpart F; and Pay • Action, (202) 273–4680; elizabeth.appel 13. Rental/Payment Requirements— Creates a new Subpart G, Records. @bia.gov. Payment Methods The rule does not affect Subpart B, SUPPLEMENTARY INFORMATION: 14. Rental/Payment Requirements—Types Agricultural Leases. Subpart B may be I. Executive Summary of Compensation revised at a later time. In addition, to II. Summary of Substantive Revisions 15. Rental/Payment Reviews & ensure that changes to the General III. Responses to Comments on the Proposed Adjustments Provisions do not affect agricultural Rule 16. Bonding & Insurance lease regulations, the current General A. Overview 17. Approvals—Documents Required Provisions section is being moved to B. Format of Regulations 18. Approval Process & Timeline Subpart B, where they apply only to C. General Provisions 19. How BIA Decides To Approve Lease Documents agricultural leases. Minor edits were 162.002—How the Part Is Subdivided made to the General Provision section to 162.003—Definitions 20. Effective Date of Leases 162.004 (PR 162.006)—Applicability to 21. Recording delete redundancies and clarify that Indian Land and Life Estates 22. Appeal Bonds they now apply only to agricultural 162.005 (PR 162.008)—When a Lease Is 23. Amendments leases. Needed 24. Assignments This rule contains new provisions on 162.006 (PR 162.007)—Land Use 25. Subleases residential, business, and wind and Agreements Subject to This Part 26. Leasehold Mortgages solar resource leasing that: 162.007 (PR 162.004)—Permits 27. Appeals From Inaction • Clarify the procedures for obtaining 162.008 (PR 162.005)—Applicability to 28. Compliance and Enforcement BIA approval of residential, business, 29. Miscellaneous Documents Submitted Before Effective and wind and solar resource lease Date IV. Procedural Requirements A. Regulatory Planning and Review (E.O. documents; 162.009 (PR N/A)—Approval of • Establish deadlines for BIA to issue Subleasehold Mortgages (New Section) 12866 and E.O. 13563) 162.010 (PR 162.009)—How To Obtain a B. Regulatory Flexibility Act decision on complete residential, Lease C. Small Business Regulatory Enforcement business, and wind and solar resource 162.011 (PR 162.010)—Identifying and Fairness Act lease applications; Contacting Indian Landowners D. Unfunded Mandates Reform Act • Define what information and 162.013 (PR 162.012)—Consent E. Takings (E.O. 12630) documents are necessary for a complete 162.014 (PR 162.013)—What Laws Apply F. Federalism (E.O. 13132) application; and to Leases G. Civil Justice Reform (E.O. 12988) • Provide greater deference to tribes H. Consultation With Indian Tribes (E.O. 162.015 (PR N/A) —Tribal Employment for tribal land leasing decisions. Preference Laws (New Section) 13175) 162.016 (PR 162.014)—BIA Compliance I. Paperwork Reduction Act II. Summary of Substantive Revisions J. National Environmental Policy Act With Tribal Laws This rule makes the procedures for 162.017 (PR N/A)—What Taxes Apply K. Effects on the Energy Supply (E.O. (New Section) 13211) obtaining BIA approval of residential, business, and wind and solar resource 162.018 (PR 162.015)—Tribal I. Executive Summary Administration of Part 162 lease documents (leases, amendments, 162.019 (PR 162.016)—Access to Leased Federal statutes require the Secretary assignments, subleases, and leasehold Premises to approve leases of Indian land. The mortgages) as explicit and transparent as
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possible. The current regulations the short-term lease, which would • Allowing for BIA waiver of provide for the approval of these evaluate only the impacts of the valuation for leases where the lessee or instruments, but do not specify the evaluation equipment, not the full tribe will provide infrastructure approval procedures, leading to possible development of the wind project, may improvements to the leased premises inconsistencies nationwide, to the be incorporated by reference, as and BIA determines it is in the best detriment of Indian landowners, lessees appropriate, into environmental reviews interest of the landowners and lenders. conducted for a lease for full • Allowing short-term leases for wind This rule continues to require Indian development of the wind project. This resource evaluation purposes at the landowner consent for leases, consistent two-part process is not necessary for value negotiated by the Indian with the Indian Long Term Leasing Act solar resource development because landowners (whether tribal or and the Indian Land Consolidation Act solar resource evaluation does not individual Indians) of 2000 (ILCA), as amended by the require possession of the land. The • Providing that BIA will defer to the American Indian Probate Reform Act regulations provide for a 20-day time tribe’s determination that allowing (AIPRA). Because ILCA does not apply frame within which BIA must issue a alternative forms of rental (other than to tribes in Alaska, the consent decision on a complete WEEL and a 60- monetary) compensation for tribal land requirements for Alaska remain the day time frame within which BIA must is in its best interest same as in the previous regulations issue a decision on a complete WSR • Allowing alternative forms of rental governing leasing. The regulations also lease application. (other than monetary) compensation for establish the standard for rental rates, Some of the more notable cross- individually owned Indian land if the if providing that leases on tribal land may cutting substantive changes include the BIA determines it is in the best interest be approved for the compensation following. of the Indian landowners negotiated by the tribe and leases for General Provisions • Allowing market analysis, less than fair market rental may be competitive bidding, and other approved on individually owned Indian • Clarifying when BIA approval of a appropriate types of valuation, in land under certain circumstances. lease is required • Clarifying what taxes apply in the addition to appraisals Subpart C, Residential Leases, • addresses leasing for single-family context of leasing Indian land For tribal land, requiring BIA to • homes and housing for public purposes Clarifying the applicability of the defer to the tribe’s determination that on Indian land. The regulations provide regulations rental reviews and adjustments are not • Clarifying that leases may include a necessary for a 30-day time frame within which • BIA must issue a decision on a complete provision giving a preference to For individually owned land, residential lease application. The final qualified tribal members, based on their allowing for automatic rental rule eliminates the requirement for political affiliation with the tribe adjustments and restricting the need for reviews of the lease compensation (to bonds and insurance for residential BIA Approval Process leases. Subpart C also includes determine if an adjustment is needed) to • Eliminating the requirement for BIA provisions for enforcement of lease certain circumstances approval of permits of Indian land violations. • Eliminating the requirement for BIA Improvements Subpart D, Business Leases, addresses approval of subleases and assignments • leasing for business purposes, Requiring plans of development where certain conditions are met and schedules for construction of including: (1) Leases for residential • Imposing time limits on BIA to act purposes that are not covered in Subpart improvements to assist the BIA and on requests to approve leases, lease Indian landowners in enforcement of C; (2) leases for business purposes not assignments, and leasehold mortgages covered by Subpart E (wind energy • diligent development of the leased Establishing that BIA has 30 days to premises evaluation and wind and solar resource act on a request to approve a lease development); (3) leases for religious, amendment or sublease, or the Direct Pay educational, recreational, cultural, and document will be deemed approved • Allowing for direct pay (i.e., to the other public purposes; and (4) • Establishing that BIA must approve Indian landowners, rather than to BIA) commercial or industrial leases for leases, amendments, assignments, for residential, business, and wind and retail, office, manufacturing, storage, leasehold mortgages, and subleases solar resource leasing only where there biomass, waste-to-energy, and/or other unless it finds a compelling reason not are 10 or fewer landowners, and all business purposes. The regulations to do so, based on certain specified landowners consent to direct pay provide for a 60-day time frame within findings which BIA must issue a decision on a • Continuing direct pay unless and complete business lease application. Compensation and Valuations until 100 percent of the owners agree to Subpart E, WEELs and WSR Leases, • Providing that BIA will defer to the discontinue direct pay, but suspending establishes procedures for obtaining BIA tribe’s negotiated value for a lease of direct pay under certain circumstances review and approval of WEELs and tribal land and will not require These changes are intended to WSR leases. For wind energy, this rule valuations of tribal land increase the efficiency and transparency establishes a two-part process whereby • Automatically waiving valuation for of the BIA approval process for the developers may obtain BIA approval of leases of individually owned land if the residential, business, wind energy a short-term lease for possession of individual landowners provide 100 evaluation, and wind and solar resource Indian land for the purposes of percent consent leasing of Indian land, support installation and maintenance of wind • Allowing for BIA waiver of landowner decisions regarding the use evaluation equipment, such as compensation and valuation for of their land, support tribal self- meteorological towers. The WEEL may residential leases of individually owned determination, increase flexibility in provide the developer with an option to land under certain circumstances if the compensation and valuations, and lease the Indian land for wind energy lessee is a co-owner that has been living facilitate management of direct pay. development purposes. The on the tract for the past 7 years without These changes do not affect agricultural environmental reviews conducted for objection leasing.
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III. Responses to Comments on the better reflect an updated concept of trust lengthy and redundant. We retained the Proposed Rule responsibility that defers to tribes in separate subparts for user-friendliness. Tribal consultation on the proposed financial matters. We have reviewed the Several tribes stated that the proposed leasing rule, published November 29, regulation to ensure that the final rule rule made little distinction between 2011 (76 FR 73784), occurred during requires BIA to defer to tribes in all individual Indian landowners and tribes January 2012. We held three possible cases, consistent with our trust or tribal agencies, and noted that BIA consultation sessions on the proposed responsibility. should defer to the tribe and tribal rule: January 10, 2012, in Seattle, One tribe suggested we review the agency and exercise a lesser degree of Washington; January 12, 2012, in Palm regulation to reconsider each and every oversight than for individual Indian Springs, California; and January 18, regulatory burden it imposes. Likewise, landowners. To the extent consistent 2012, in Rapid City, South Dakota. The another tribe asked that we review the with the trust responsibility, we treated comment deadline was January 30, regulation to ensure tribes’ sovereign tribal and individual Indian landowners 2012. We received over 80 written rights are recognized. We followed these differently, providing more deference to submissions, and received written and recommendations and have deleted tribal landowners in the lease approval oral comments from approximately 50 regulatory burdens that are not process and in the lease enforcement Indian tribes during this round of tribal necessary for BIA to meet its statutory process. We highlighted this difference consultation, as well as comments from and trust responsibilities and have in the final rule by breaking out tribal organizations, tribal housing included provisions supporting tribes’ questions regarding rental compensation authorities, and tribal corporations. We sovereign rights. and valuation according to whether the also received comments from Several tribes stated that revision of lease is of tribal land or individually community development financial the business leasing regulations was owned Indian land. institutions (CDFIs), tribal members, long overdue. Tribes had suggestions for C. Subpart A—General Provisions and members of the public. limiting BIA’s role in the leasing process to an administrative role by, for We received the following comments The following is a summary of on sections within subpart A. comments received during consultation example, limiting BIA’s independent and the public comment period on the review of tribal leasing decisions for 162.002—How the Part Is Subdivided financial prudence. Another tribe said proposed rule, and an explanation of • Clarify the provision in 162.002 that tribes should be able to rely on BIA how we addressed those comments in stating that Subpart F (Special to process lease documents but not the final rule. We accepted a number of Requirements for Certain Reservations) make decisions affecting substantive wording changes that are incorporated is subject to subparts A and G. In lease contents or negotiations. We have into the final rule, but may not be response, we added a sentence to limited BIA’s involvement in specifically mentioned here. 162.002 to clarify which provisions substantive lease contents, and left lease Note: The section numbers in this apply if there is a conflict between provisions and issue resolutions to preamble refer to section numbers in the final Subpart F (or any act of Congress under negotiation, to the extent possible and rule. We have included a ‘‘PR’’ for ‘‘proposed which a Subpart F lease is made) and consistent with our trust responsibility. rule’’ to indicate the corresponding proposed Subparts A through G. Note that Subpart rule section where it differs from the final A few tribes requested deferring F is merely a redesignation of what was rule section number and may be helpful to finalization of the residential leasing Subpart E. the reader. subpart, to allow for further • Explain the effect of deleting the consultation and more time for all A. Overview former subpart addressing non- comments to be considered. We will agricultural leases on tribal regulations Many tribes and tribal organizations discuss these tribes’ comments in more modeled after that subpart. There will stated that they generally supported the detail, below. be no effect; the tribal regulations stand proposed rule, and that the proposed Tribes had suggestions for independent of Federal regulations. rule was a significant improvement over communicating the final rule’s changes, the previous draft (which was released including the following: 162.003—Definitions for consultation) because it more • Create a Web page dedicated solely • ‘‘Amendment’’—Define this term to accurately reflected the intent of BIA to to the new leasing regulations including include any changes to the terms of a streamline and expedite the leasing a repository of guidance and lease approved by BIA under part 162 process, advance economic informational materials. We are that are not contemplated by or development, and spur renewable developing a Web site accessible from provided for in the lease during its energy development. Tribes stated that www.bia.gov and will populate the Web initial or renewal period. We did not they supported the steps BIA took in the site with guidance and informational add this definition because it is self- proposed rule to recognize tribal materials as they are developed. evident. sovereignty and tribes’ achievements in • Provide checklists and sample lease • ‘‘Business day’’—Include tribally terms of their ability to manage their provisions to assist in the lease recognized holidays out of respect for own affairs on critical leasing issues. negotiation process. We will develop tribal sovereignty and to provide Tribes were particularly supportive of checklists and make them available on consistency for individuals and provisions for tribal waiver of the Web site. businesses dealing with tribes. We appraisals, deadlines for BIA action, and determined not to include tribally B. Format of Regulations BIA’s deference to the Indian recognized holidays because the wide landowners’ determination that the A few tribes commented on the format variation in tribally recognized holidays lease is in their best interest. of the regulations. The majority stated would make administration of the While tribes supported the proposed that they believe the common Federal regulations unworkable. rule overall, they had suggestions for provisions of separate subparts should • ‘‘Court of competent jurisdiction’’— improvement, which are summarized be kept separate because it is more user- Add that nothing in the definition alters below. A tribal organization stated, friendly. A minority stated that this preexisting allocations of jurisdiction broadly, that the regulations should format results in regulations that are too over any matter as among State, Federal,
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and tribal courts. While we agree this is functions may be included in this a TDHE, but is not separate from the true, we determined that explicitly definition. We did not make this change tribe, does not have to obtain a lease of including this in the definition could because these tribes are already tribal land (the tribe cannot lease to imply that, where this statement is not included in the definition, as part of itself) while entities separate from the made explicitly, preexisting allocations ‘‘BIA.’’ tribe must obtain a lease of tribal land. of jurisdiction are altered. • ‘‘Notice of violation’’—Revise to • ‘‘Fee interest’’—Clarify this account for situations in which a notice 162.004 (PR 162.006)—Applicability to definition to state when restrictions on of violation is issued against the Indian Indian Land and Life Estates alienation attach, if at all, to tribally landowner/lessor. We did not • Clarify how BIA addresses leases of acquired fee land. We determined that incorporate this change because BIA’s life estates where the land is this request is outside the scope of this obligation is to the Indian landowner, fractionated. We revised this section to rulemaking. not to enforce the lease on behalf of the clarify the difference between a life • ‘‘Government lands’’—Clarify that lessee. estate that includes all of the interests • this definition does not include tribal ‘‘Orphaned minor’’—Revise in a tract, and a life estate of a fractional lands. We incorporated this change. because the proposed rule’s definition interest in a tract—including clarifying • ‘‘Housing for public purposes’’— inaccurately suggests that every minor whose consent is required for the life Clarify that this term includes programs without a court-appointed guardian is tenant to lease in each case, and administered or substantially financed orphaned. We revised the definition to whether BIA approval of the lease is by any entity (not just not-for-profit match the common understanding of required in each case. Where the life entities) organized for the purpose of this term. • estate covers only a fractional interest in developing or improving low income ‘‘Permit’’—Revise to clarify that this a tract, the life tenant must obtain the housing using tax credits. We term does not include tribal grazing consent of the co-owners and BIA incorporated this change. permits. Because grazing permits are approval. • governed by another CFR part, 25 CFR ‘‘Immediate family’’—Leave this • Restrict BIA services in collecting part 166, this definition does not apply definition to tribes’ discretion. We rents on behalf of a life tenant so that to them; therefore, we determined that incorporated this change by providing they do not exceed services provided to no change to this definition is that the definition will apply only in the trust beneficiaries. In response, BIA is necessary. absence of a tribal law definition. not responsible for collecting the rents • ‘‘Indian landowner’’—Include tribal • ‘‘Single family residence’’—Restrict this term to one dwelling unit. We did on behalf of the life tenant, but may corporations organized under 25 U.S.C. where the life tenant’s whereabouts are 477 (‘‘section 17 corporations’’) in this not revise the definition, but the definition allows tribes to define the unknown. In these situations, the Trust definition, to the extent they have the Fund Accounting System (TFAS) will authorization to lease Indian land to term differently. This definition is consistent with the scope of financing distribute rent to an account for the life third parties. We did not incorporate tenant. this change because section 17 available under section 184 of the • Do not assume that all life estates corporations are exempt from the Housing and Community Development are held by non-Indians, because tribes requirement to obtain BIA approval of Act of 1992 (12 U.S.C. 1715z–13a). We use life estates as a form of estate leases under part 162. A few also added this term to the definition of planning for tribal members. The commenters also suggested defining ‘‘housing for public purposes’’ to clarify revised regulations clarify that BIA ‘‘individual Indian landowner’’ and that this housing may include a single treats life estates the same whether they ‘‘tribal landowner’’ to emphasize their family residence, rather than just are held by Indians or non-Indians; differences. We determined that these developments. We incorporated a tribal BIA’s trust responsibility is to the definitions were unnecessary. housing authority’s suggestion that we • add ‘‘or other tribal law’’ to allow tribal remaindermen. ‘‘Inherent Federal function’’—See • discussion of 162.018, below. law beyond just zoning law to define Delete provisions requiring lessees • ‘‘Lease’’—Add that a lessee’s right this term. to pay life tenants directly, because that to possession will limit the landowner’s • ‘‘Sublease’’—Revise to indicate that requirement exposes the life tenant’s right only to the extent provided in the the interest held by the sublessee should rental income to State court judgments; lease to avoid any possible argument be ‘‘no greater than’’ that of the lessee, whereas if BIA collected rent on behalf that common law definitions requiring since the sublessee may hold the same of the life tenant, the rental income exclusive right of possession be applied rights as the lessee. We incorporated would be protected from these to part 162. We incorporated the this change. judgments by an individual Indian suggested change. • ‘‘Tribal law’’—Revise to add that money (IIM) account. While we note • ‘‘Lease’’—Expand the definitions of the body of non-Federal law is ‘‘defined this point, the rule allows life tenants to ‘‘lease’’ and ‘‘lessee’’ to include by each tribe.’’ We did not incorporate enter into leases without BIA approval, subleases and assignments from this change because it would be and BIA does not administer such leases sublessees and assignees. We did not redundant, given that the definition on behalf of life tenants. The incorporate this change because it clearly establishes that the tribe defines requirement that lessees pay life tenants would expand the application of the its own body of law. directly is consistent with the rights and regulations beyond what is intended. • ‘‘TDHE’’ (tribally designated responsibilities afforded to life tenants • ‘‘Lease document’’—Add a housing entity)—Expand to include in the rule. As stated above, this rule definition for this term (the proposed tribally sponsored or tribally sanctioned treats life estates the same whether they rule used this term without a definition) not-for-profit entities. We incorporated are held by Indians or non-Indians. to expressly include a lease, this requested change. Expand to • Reflect Congress’s intent to extend amendment, assignment, sublease, and include a tribal council or other tribal BIA’s trust responsibility to protect leasehold mortgage. We added this departments fulfilling TDHE services. Indian descendants who are life tenants, definition. We did not incorporate this change without removing property from trust. • ‘‘LTRO’’—Revise to clarify that a because a tribal council or tribal BIA will protect the trust asset, but does tribe contracting or compacting LTRO department that fulfills the function of not agree that Congress expressed its
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intent to extend the fiduciary duty to owners’ use when 100 percent of the this comment by deleting the word life tenants. landowners agree. If not all 100 percent ‘‘temporary,’’ because a tribal land • Protect remaindermen from a agree, then a lease is required. The assignment may be for any appropriate situation where a life tenant enters into informal agreement may continue period of time under tribal law. a long-term lease for the duration of his throughout the lives of the landowners, • Clarify whether declarations of or her life and receives up-front or for whatever period they agreed to, tribal land set-asides must be submitted payments such that the life tenant until they no longer agree. to BIA for a determination that they are enjoys the income to the detriment of • Incorporate the current language of not leases, as permits must. Tribal land the remaindermen. If a life tenant enters 162.102(d) (regarding section 17 assignments and similar instruments into a lease only for the duration of his corporations) into the new subpart A. allowing use of tribal land cannot be or her life, he or she is entitled to enjoy This provision is incorporated at subject to part 162, and therefore do not the income, whether paid in a lump 162.005(b)(3). need to be submitted to BIA for BIA’s sum or over time, to the exclusion of the file or a determination that they are not 162.006 (PR 162.007)—Land Use remaindermen. The rule protects leases. Agreements Subject to This Part remaindermen by making it clear that, • Clarify that tribal ‘‘dedications to a upon the death of the life tenant, any • Clarify whether the regulations public use’’ and other means of setting lease of a life estate terminates. The apply to those tribes with tribe-specific aside tribal land for particular purposes remaindermen could evict the life statutory authority for leasing. We do not require an approved lease under tenant’s lessee or negotiate a new lease added provisions to 162.006 to clarify this part. Instruments such as these with new payment terms. If either the that tribes leasing Indian land under a would fall under ‘‘tribal land lessee or the remainderman believed special act of Congress that authorizes assignments and similar instruments they had grounds to do so, they could leasing without BIA approval are not authorizing uses of tribal land,’’ which attempt to recoup losses from the life subject to part 162. are not subject to part 162. tenant’s estate. • Clarify that tribes with special • Clarify the applicability of the Federal statutory authority to lease regulations to section 17 corporations. 162.005 (PR 162.008)—When Lease Is under tribal regulations approved by the We have added provisions to 162.006 to Needed Secretary may adopt any of the part 162 clarify that part 162 does not apply to • Add that an entity using a tribal regulations subject to Secretarial leases of tribal land by a section 17 land assignments or similar instruments approval of the amendment to tribal corporation under its charter to a third and permit holders do not need a lease regulations. We agree this is the case. party for a period not to exceed 25 to possess Indian land. We incorporated • Make Federal approval years, and to 162.005 to clarify that a this change. requirements, but not recording and section 17 corporation managing or • Exempt owners of a fractional enforcement provisions, inapplicable to having the power to manage tribal land interest from the requirement to obtain leases issued by section 17 corporations. directly under its Federal charter or a lease from the owners of the other We clarified in 162.006 that leases of under a tribal authorization (not under fractional interests in the same tract. We tribal land issued by section 17 a lease from the Indian tribe) does not did not incorporate this change. Section corporations under their charters are not need a lease under part 162 to do so. 162.005(a)(2) allows the co-owner to use subject to the regulations (including Several tribes stated that they disagree the tract if the other fractional co- enforcement provisions) for leases of 25 with the exemption for section 17 owners agree; otherwise, the co-owner years or less, but the leases must be corporations leasing to third parties, must obtain a lease from the other recorded. because tribes would have to obtain BIA fractional owners to ensure that they • State that a land use agreement that approval to lease to a third party. This consent (if leased, rent may not be encumbers tribal land and is authorized exemption is established in 25 U.S.C. necessary, as this situation is one in by 25 U.S.C. 81 is governed by 25 CFR 477 and applies to BIA approval of any which fair market rental may be part 84, rather than, as the proposed lease document that would otherwise waived). We disagree with the rule stated, that a land use agreement fall under part 162. commenters’ claim that each owner has that encumbers tribal land is governed full rights to use the property in any by 25 U.S.C 81. We incorporated this 162.007 (PR 162.004)—Permits manner, because one co-owner does not change. Tribes nearly unanimously supported have the right to exclude the others • Correct the erroneous suggestion in the proposed rule’s removal of the without their consent. For this reason, the table in 162.006 that all land use requirement to obtain BIA approval of we reject the commenters’ claim that agreements that can be called by a permits. The tribes stated that requiring a lease is diminishing the certain name are governed by the eliminating BIA permit approval property rights of each co-owner by corresponding CFR parts, because the increases tribal self-determination and requiring him or her to pay rent for use statutory authority determines what the streamlines the process. Some tribes of his or her own property. land use agreement is, and what the also stated that requirements for the • Clarify how 162.005(a)(2), which corresponding CFR part is. We landowners to follow relevant states that co-owners may agree to allow considered adding the statutory environmental and cultural resource one co-owner to use the tract without a authorities to this table but determined laws, and for BIA to confirm the lease, will work and when a lease, that it would be too voluminous and document is a permit, protect Indian rather than an informal agreement, is ultimately unhelpful. Instead, we land without burdening landowners required. While a lease documenting the clarified the statutory authorities for with an onerous approval process. In agreement is preferable, the rule part 162 leases and provide that other addition, we received the following provides for maximum flexibility by statutory authority governs the comments: allowing for informal agreements. A agreements in the table. • Reconcile 162.007’s explanation as lease is required if all the co-owners • Add that tribal laws and customs to what qualifies as a ‘‘permit’’ with the cannot agree to an informal agreement. must be deferred to in determining grazing regulations. Because grazing Section 162.005(a)(2) is consistent with whether a use is ‘‘temporary’’ under a permits are issued under a separate existing regulations, allowing for ‘‘tribal land assignment.’’ We addressed statutory authority and are governed by
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separate regulations at 25 CFR part 166, revenue opportunity for tribes beyond legally binding option to lease on the the description in part 162 does not leases and rights-of-way. BIA did not effective date of the new rules. The fact affect grazing permits. incorporate this change because tribal that a party is obligated to issue a lease • Clarify that the requirement that landowners have the right to receive will not change the applicability of the permits comply with applicable compensation for granting access regulations. environmental laws does not mean the through a permit, and tribal landowners National Environmental Policy Act may establish whatever compensation 162.009 (PR N/A)—Approval of (NEPA) applies. Because there is no they like. Subleasehold Mortgages (New Section) Federal approval of permits, neither • Clarify whether 162.007 allows BIA • We added a new section to clarify NEPA nor Section 106 of the National to grant permits on tribal land, without whether subleasehold mortgages require Historic Preservation Act applies to tribal approval. The final 162.007 does BIA approval, in response to comments permits. not allow BIA to grant permits on tribal on subleases and leasehold mortgages. • Add a timeline or process by which land, only on U.S. Government land 162.010 (PR 162.009)—How To Obtain a BIA ‘‘confirms’’ whether a document is covered by part 162. a permit or a lease. We incorporated this Lease change by adding a 10-day timeline by 162.008 (PR 162.005)—Applicability to • Narrow 162.010 so that only a tribe which BIA may notify the Indian Documents Submitted Before Effective may submit a lease to BIA for approval. landowners that a lease is required Date We did not add this restriction because because the permit grants an interest in • Clarify that those leases that were a lease of Indian land must be signed by Indian land. submitted to BIA before the effective the Indian landowners (or the BIA on • Clarify in the introductory date of the rule, but not approved by behalf of landowners in limited paragraph to the table that the BIA before the effective date of the rule, circumstances) and the lessee. BIA will characteristics are merely ‘‘examples of are governed by the rules in effect at the accept the lease document from either common characteristics,’’ to ensure that time of the submission. We reworded the prospective lessee or the Indian permits that lack one or more 162.008 to clarify that this is the case. landowner. characteristics are not necessarily • Clarify what version of the excluded from being considered a regulations will apply to leases 162.011 (PR 162.010)—Identifying and permit. We incorporated this change. approved before the effective date of the Contacting Indian Landowners • Delete the permit characteristic rule. We reworded 162.008 to clarify • Require prospective lessees to ‘‘does not grant an interest in Indian that new regulations will apply to leases contact tribes directly, rather than going land’’ because permits typically grant approved before the effective date of the through BIA first in 162.011. We non-possessory use rights, which are, in rule, except that where the provisions of addressed this comment by narrowing effect, an ‘‘interest.’’ BIA disagrees that the lease conflict with the provisions of application of this section to individual a non-possessory use privilege is a the regulation, the provisions of the Indian landowners. ‘‘legal interest’’ in the Indian land. For lease will govern. Likewise, options to • Add language to this section this reason, we did not make the renew in leases approved by BIA before requiring the prospective lessee to requested change. the effective date of the final rule will provide a written explanation of the • Narrow the permit characteristic, continue to be governed by the lease need for obtaining Indian landowner ‘‘unlimited access by others,’’ because it terms. Renewals after the effective date information. We added this is too broad. Tribal members retain of the final rule of leases that were requirement. rights of access on permitted lands, approved by BIA before the effective 162.013 (PR 162.012)—Consent including hunting privileges, cultural date of the final rule will not have to and spiritual use access, and easements. contain the final rule’s mandatory lease One tribe submitted extensive We revised this to clarify that a provisions. comments regarding its situation, permittee has a ‘‘non-possessory right of • Add a qualifying clause in the wherein tribal members constructed access.’’ beginning of 162.008 stating that it homes without a lease so long as the • Clarify that BIA will no longer applies ‘‘except as provided in 162.006’’ member had a fractional interest in the police compliance with permits or (‘‘To what land use agreements does this tract. Any person who owns a fractional collect and distribute permit payments, part apply?’’) for clarity. We interest in a tract must obtain consent and allow landowners to opt-in or opt- incorporated this change. from all of the other owners (co-owners) out of BIA approval for permits. BIA • Delete the provision in 162.008 of fractional interests in that tract in understands this is a significant change stating that BIA has the right to amend order to possess that tract without a for some areas that heavily rely on the regulations at any time, because it lease, or must obtain consent from the permits. Once this final rule is effective, may create uncertainty. BIA accepted co-owners representing the appropriate the landowner will be responsible for the request to delete this provision since percentage of ownership in the tract to collecting permit payments, rather than BIA retains the right to amend through lease the tract. See 162.005(a) (PR BIA. BIA will not collect permit income the Administrative Procedure Act 162.008(a)). Where a lease is required, from permittees, and BIA will not public notice and comment process, and consent to lease cannot be obtained distribute permit income to Indian regardless of whether this right is stated within 90 days, BIA may issue a lease landowners. If there is a dispute in the regulations. under paragraph 162.013(c)(6) (PR regarding the permit or whether the • Address the rule’s applicability to 162.012(c)(6)). One Alaska tribe with a permittees have made timely payments, leases issued by section 17 corporations unique situation stated that BIA should the Indian landowners’ remedy is with that are exempt from Federal approval. add a provision to part 162 addressing a court of competent jurisdiction. We As stated below, we clarified in 162.006 consent requirements specifically for added a provision to clarify that BIA that part 162 does not apply to these that tribe. Because the Indian Land will not administer or enforce permits. leases where the term is 25 years or less. Consolidation Act (ILCA) and its • Limit tribes’ ability to establish • Address the rule’s applicability to consent provisions do not apply to compensation and conditions to prevent leases that a tribe or tribal corporation Alaska, we were unable to incorporate permitting from being a separate is obligated to issue upon exercise of a this requested change.
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In addition, we received the following change out of respect for tribal regulations. The additional language in comments: sovereignty and because other 162.016 regarding the applicability of • Clarify that a section 17 corporation comments requested that it be limited to tribal law covers this. may consent to a lease. Because part 162 individual Indian landowners. does not apply to section 17 • Replace the term ‘‘consent’’ with 162.015 (PR N/A)—Tribal Employment corporations granting others the right to ‘‘grant’’ because the landowners actually Preference Laws (New Section) possess Indian land, we did not ‘‘grant’’ the lease. While it is true that • Add language recognizing the incorporate this change. landowners grant the lease, we adopted • A few tribes noted that where the the language of ILCA in referring to applicability of tribal preference laws to consent of the landowners of 100 ‘‘consent’’ to avoid potential confusion lessees. To clarify this applicability, we percent of the interests is required, it is where there are several owners of added a new section 162.015. Tribe- difficult to obtain a lease. Under ILCA, fractional interests and one ‘‘grants’’ the specific employment preferences as if there are one to five landowners in a lease but the others do not. provided in these regulations are tract, then the owners of 90 percent of • Delete paragraph (c)(6), which political preferences, not based on race the interests in that tract must consent. empowers BIA to consent to a lease if or national origin. They run to members In some cases, depending on the the landowners have been unable to of a particular federally-recognized tribe percentage of interests owned by each, reach an agreement for 3 months, or tribes whose trust or restricted lands this may mean that all of the because it favors the prospective lessee are at issue and with whom the United landowners must consent. BIA rather than the landowner where a non- States holds a political relationship. recognizes the practical problems that consenting landowner has legitimate These preferences are rationally are caused in those cases where all reasons for not consenting. We did not connected to the fulfillment of the landowners must consent, but is delete this paragraph because it federal government’s trust relationship constrained by statutory parameters. implements statutory authority (25 with the tribe that holds equitable or • Clarify what tribal consent is U.S.C. 380) and BIA will determine restricted title to the land at issue. These needed for tribal lands and for whether the lease is in the best interest preferences also further the United fractionated lands where individual of the landowners before exercising this States’ political relationship with Indian landowners owning the required authority. tribes. Tribes have a sovereign interest percentage of interests under the ILCA in achieving and maintaining economic have consented. If the tract is one in 162.014 (PR 162.013)—What Laws self-sufficiency, and the federal which 100 percent of the interests are Apply to Leases government has an established policy of owned by the tribe, the tribe must be a • Clarify when tribal laws apply to party to the lease of tribal land, and will leases under part 162, and when BIA encouraging tribal self-governance and need to authorize (i.e., consent to) the may waive part 162 due to conflicting tribal economic self-sufficiency. A tribe- lease. If the tract is fractionated, and less or inconsistent tribal law. We revised specific preference in accord with tribal than 100 percent of the interests are this section by incorporating the tribes’ law ensures that the economic owned by the tribe and the lease is suggested language to allow tribal laws development of a tribe’s land inures to authorized by the Native American to supersede or modify part 162 the tribe and its members. Tribal Housing and Self-Determination Act provisions, as long as certain conditions sovereign authority, which carries with (NAHASDA), tribal consent is still are fulfilled (e.g., the tribe notifies BIA it the right to exclude non-members, required. If the lease for a fractionated of the modifying or superseding effect). allows the tribe to regulate economic tract is entered into under another • Revise the proposed rule’s language relationships on its reservation between statutory authority, then tribal consent about when State law would be applied itself and non-members. See, generally, is not needed; Congress provided for because a Federal court could read the Equal Employment Opportunity this situation in stating that where a proposed rule’s provisions as providing Commission v. Peabody Western Coal tribe did not consent to a lease of authority for a court to apply State law. Company, No. 2:01-cv-01050 JWS (D. fractionated land, it is not considered a We revised the section to clarify that Ariz., Oct. 18, 2012) (upholding tribal party to the lease. See 25 U.S.C. State law may apply where a Federal preferences in leases of coal held in 2218(d)(2). court made it applicable in the absence trust for the Navajo Nation and Hopi • Revise the consent provisions to of Federal or tribal law. Another Tribe, but also citing with approval the apply to tribes, in addition to individual concern was that tribes should have the use of such preferences in business Indian landowners. Because the term flexibility to apply State law in certain leases). These regulations implement ‘‘Indian landowners’’ includes both circumstances. The final rule’s language the established policy of encouraging tribal landowners and individual Indian clarifies that a tribe may apply State tribal self-governance and tribal landowners, we did not revise these law. • economic self-sufficiency by explicitly provisions. Another tribe asked that we Clarify that the phrase ‘‘parties to a allowing for tribal employment add ‘‘individual’’ before ‘‘Indian specific lease may subject it to State or preferences. landowner’’ everywhere the rule local law in the absence * * *’’ does discusses consent. We did not not give individuals the authority to 162.016 (PR 162.014)—BIA Compliance incorporate this change because a tribal establish that the State or locality has With Tribal Laws landowner must also consent to a lease jurisdiction. We added language to • of its land. clarify that the individuals will be Restrict when BIA will defer to • Limit the parties’ ability to allow for subjecting only their lease to this tribal law by changing ‘‘making ‘‘deemed consent’’ in a lease to jurisdiction. decisions regarding leases’’ to ‘‘making individual landowners. The regulations • Add provisions that require BIA to the decision to approve or disapprove limit deemed consent lease provisions recognize and acknowledge tribal laws the proposed lease.’’ We did not to individual Indian landowners only. regulating activities on land under a incorporate this change because BIA One tribe requested adding tribes to lease, including land use, will defer to tribal law in decisions allow for tribes to be deemed to have environmental protection, and historic regarding leases beyond just the consented. We did not incorporate this preservation, as in the 2004 draft approval decision.
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162.017 (PR N/A)—What Taxes Apply Tribe v. Bracker, 448 U.S. 136, 143 • Allocation of insurance and other (New Section) (1980). The Bracker balancing test payment rights; • All tribal commenters supported requires a particularized examination of Secretarial cancellation of a lease proposed provisions clarifying that the relevant State, Federal, and tribal for violations; and • Abandonment of the leased improvements on trust or restricted land interests. In the case of leasing on premises. are not taxable by non-tribal entities; Indian lands, the Federal and tribal interests are very strong. The purposes of residential, business, however, many tribes requested and WSR leasing on Indian land are to clarification regarding other taxation The Federal statutes and regulations governing leasing on Indian lands (as promote Indian housing and to allow arising in the context of leasing Indian Indian landowners to use their land land. For this reason, we separated this well as related statutes and regulations concerning business activities, profitably for economic development, topic into its own section and moved it ultimately contributing to tribal well- from the residential, business, and WSR including leases, by Indian traders) occupy and preempt the field of Indian being and self-government. The leasing subparts to subpart A. This legislative history of section 415 section now addresses not only taxation leasing. The Federal statutory scheme for Indian leasing is comprehensive, and demonstrates that Congress intended to of improvements on leased Indian land, maximize income to Indian landowners but also taxation of the leasehold or accordingly precludes State taxation. In addition, the Federal regulatory scheme and encourage all types of economic possessory interest, and taxation of development on Indian lands. See Sen. activities (e.g., excise or severance taxes) is pervasive and leaves no room for State law. Federal regulations cover all Rpt. No. 84–375 at 2 (May 24, 1955). occurring or services performed on Assessment of State and local taxes leased Indian land. aspects of leasing: • Whether a party needs a lease to would obstruct Federal policies Tribes have inherent plenary and supporting tribal economic exclusive power over their citizens and authorize possession of Indian land; • How to obtain a lease; development, self-determination, and territory, which has been subject to • How a prospective lessee identifies strong tribal governments. State and limitations imposed by Federal law, and contacts Indian landowners to local taxation also threatens substantial including but not limited to Supreme negotiate a lease; tribal interests in effective tribal Court decisions, but otherwise may not • Consent requirements for a lease government, economic self-sufficiency, be transferred except by the tribe and who is authorized to consent; and territorial autonomy. The leasing of affirmatively granting such power. See, • What laws apply to leases; trust or restricted land is an Cohen’s Handbook of Federal Indian • Employment preference for tribal instrumental tool in fulfilling ‘‘the Law, 2012 Edition, § 4.01[1][b]. The U.S. members; traditional notions of sovereignty and [] Constitution, as well as treaties entered • Access to the leased premises by the federal policy of encouraging tribal into between the United States and roads or other infrastructure; independence.’’ Bracker, 448 U.S. at 145 Indian tribes, executive orders, statutes, • Combining tracts with different (citing McClanahan v. Arizona State and other Federal laws recognize tribes’ Indian landowners in a single lease; Tax Comm’n, 411 U.S. 164, 174–75 inherent authority and power of self- • Trespass; (1973)). The leasing of trust or restricted government. See, Worcester v. Georgia, • Emergency action by us if Indian lands facilitates the implementation of 31 U.S. 515 (1832); U.S. v. Winans, 198 land is threatened; the policy objectives of tribal • U.S. 371, 381 (1905)(‘‘[T]he treaty was Appeals; governments through vital residential, • not a grant of rights to the Indians, but Documentation required in economic, and governmental services. a grant of rights from them—a approving, administering, and enforcing Tribal sovereignty and self-government reservation of those not granted.’’); leases; • are substantially promoted by leasing Cohen’s Handbook of Federal Indian Lease duration; • under these regulations, which require Law, 2012 Edition, § 4.01[1][c] Mandatory lease provisions; significant deference, to the maximum • Construction, ownership, and (‘‘Illustrative statutes * * * include [but extent possible, to tribal determinations removal of permanent improvements, are not limited to] the Indian Civil that a lease provision or requirement is Rights Act of 1968, the Indian Financing and plans of development; in its best interest. See Joseph P. Kalt • Legal descriptions of the leased Act of 1974, the Indian Self- and Joseph William Singer, The Native land; Determination and Education • Amount, time, form, and recipient Nations Institute for Leadership, Assistance Act of 1975 * * * [and] the of rental payments (including non- Management, and Policy & The Harvard Tribe Self-Governance Act * * * In Project on American Indian Economic monetary rent), and rental reviews or addition, congressional recognition of Development, Joint Occasional Papers adjustments; tribal authority is [also] reflected in • Valuations; on Native Affairs, Myths and Realities of statutes requiring that various • Tribal Sovereignty: The Law and … Performance bond and insurance administrative acts of the Department requirements; Economics of Indian Self-Rule, No. of the Interior be carried out only with • Secretarial approval process, 2004–03 (2004) (‘‘economically and the consent of the Indian tribe, its head including timelines, and criteria for culturally, sovereignty is a key lever that of government, or its council.’’); Id. approval of leases; provides American Indian communities (‘‘Every recent president has affirmed • Recordation; with institutions and practices that can the governmental status of Indian • Consent requirements, Secretarial protect and promote their citizens nations and their special relationship to approval process, criteria for approval, interests and well-being [and] [w]ithout the United States’’). and effective date for lease amendments, that lever, the social, cultural, and With a backdrop of ‘‘traditional lease assignments, subleases, leasehold economic viability of American Indian notions of Indian self-government,’’ mortgages, and subleasehold mortgages; communities and, perhaps, even Federal courts apply a balancing test to • Investigation of compliance with a identities is untenable over the long determine whether State taxation of lease; run’’). non-Indians engaging in activity or • Negotiated remedies; Another important aspect of tribal owning property on the reservation is • Late payment charges or special sovereignty and self-governance is preempted. White Mountain Apache fees for delinquent payments; taxation. Permanent improvements and
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activities on the leased premises and the American Indians and Alaska Natives predominately on the reservation). As a leasehold interest itself may be subject was lower than the total population, and general matter, myriad activities on to taxation by the Indian tribe with that those who worked full-time earned leased lands related to economic jurisdiction over the leased property. less than the general population. development, infrastructure building, The Supreme Court has recognized that 162.017(a). Subject only to applicable and governmental operations provide ‘‘[t]he power to tax is an essential Federal law, permanent improvements important revenue and services to the attribute of Indian sovereignty because on trust or restricted land are not tribal economy and the generation of it is a necessary instrument of self- taxable by States or localities, regardless economic activity on leased land is an government and territorial of who owns the improvements. essential component of tribal self- management.’’ Merrion v. Jicarilla Permanent improvements are, by their sufficiency. State and local taxation Apache Tribe, 455 U.S. 130, 137 (1982). very definition, affixed to the land. undermines that important objective of State and local taxation of lessee-owned Accordingly, a property tax on the federal regulation of the leasing of improvements, activities conducted by improvements burdens the land, Indian lands. This subsection, like the lessee, and the leasehold interest particularly if a State or local 162.017(a), is intended to achieve the also has the potential to increase project government were to attempt to place a dual purposes of supporting tribal costs for the lessee and decrease the lien on the improvement. Numerous economic development and promoting funds available to the lessee to make provisions in the regulations address all tribal self-government. The additional rental payments to the Indian aspects of improvements, requiring the burden of State and local taxation on landowner. Increased project costs can Secretary to ensure himself that lease activities would significantly impede a tribe’s ability to attract non- adequate consideration has been given affect the marketability of Indian land Indian investment to Indian lands to the enumerated factors under section for economic development, as noted where such investment and 415(a). These include the height, safety, above in the introductory paragraphs. In participation are critical to the vitality and quality of improvements; provisions addition, tribes, as sovereigns, have of tribal economies. An increase in requiring the lease to address inherent authority to regulate zoning project costs is especially damaging to ownership, construction, and removal of and land use on Indian trust and economic development on Indian lands improvements; provisions imposing due restricted land, and the regulations given the difficulty Indian tribes and diligence requirements on the require BIA to comply with tribal laws individuals face in securing access to construction of improvements, and relating to land use. See 162.016. Such capital. A 2001 study by the U.S. provisions requiring plans of regulation is undermined by State and Department of the Treasury found that development for business and WSR local taxation. Indians’ lack of access to capital and leases. See, e.g.,162.314 through 162.017(c). Subject only to applicable financial services is a key barrier to 162.316, 162.414 through 162.416, Federal law, the leasehold or possessory economic advancement. U.S. Dept. of 162.514 through 162.516, and 162.543 interest itself is not taxable by States or the Treasury, Community Development through 162.545. In addition, the local governments. The ability of a tribe regulations require the BIA to comply and Financial Institutions Fund, The or individual Indian to convey an with tribal law, including tribal laws Report of the Native American Lending interest in trust or restricted land arises regulating improvements, when making Study at 2 (Nov. 2001). Along the same under Federal law, not State law; decisions concerning leases of trust or line, 66 percent of survey respondents Federal legislation has left the State restricted land. See 162.016. State and stated that private equity is difficult or with no duties or responsibilities for local taxation of improvements impossible to obtain for Indian business such interests, even recordation (25 undermine Federal and tribal regulation owners. Id. U.S.C. 5); and the leasehold interest is of improvements. In many cases, tribes contractually 162.017(b). Subject only to applicable exhaustively regulated by this rule, as agree to reimburse the non-Indian lessee Federal law, activities conducted under noted above. For example, a leasehold for the expense of the tax, resulting in a lease of trust or restricted land that interest may not be conveyed, the economic burden of the tax occur on the leased premises are not mortgaged, assigned, or subleased ultimately being borne directly by the taxable by States or localities, regardless without Secretarial approval, with tribe. Accordingly, the very possibility of who conducts the activities. An limited exceptions. Compelling Federal of an additional State or local tax has a example of this principle is in the interests in self-determination, chilling effect on potential lessees as trading business where the courts have economic self-sufficiency, and self- well as the tribe that as a result might held that taxation of such activities is government, as well as strong tribal refrain from exercising its own preempted by the Indian Trader interests in sovereignty and economic sovereign right to impose a tribal tax to Statutes, see 25 U.S.C. 261, and the all- self-sufficiency, are undermined by support its infrastructure needs. Such inclusive regulations under them, see 25 State and local taxation of the leasehold dual taxation can make some projects CFR 140.1–.26. Federal statutes and interest. less economically attractive, further regulations are ‘‘sufficient to show that Nothing in these regulations is discouraging development in Indian Congress has taken the business of intended to preclude tribes, States, and country. Economic development on Indian trading on reservations so fully local governments from entering into Indian lands is critical to improving the in hand that no room remains for State cooperative agreements to address these dire economic conditions faced by laws imposing additional burdens upon taxation issues, and in fact, the American Indians and Alaska Natives. traders.’’ Warren Trading Post Co. v. Department strongly encourages such The U.S. Census Report entitled We the Arizona State Tax Comm’n, 38 U.S. 685, agreements. People: American Indians and Alaska 690 (1995) (precluding imposition of In addition, we received the following Natives in the United States, issued State sales taxes); Central Machinery Co. comments: February 2006, documented that a v. Arizona State Tax Comm’n, 448 U.S. • Move the language regarding the higher ratio of American Indians and 160 (1980) (preemption applies even if justification for the taxation provisions Alaska Natives live in poverty compared vendor is not licensed as long as goods to the regulatory text. We did not make to the total population, that or services are traded to a tribe or its this change because the justification is participation in the labor force by members in a transaction occurring explanatory and therefore more
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appropriate in the preamble than in the 162.020 (PR 162.017)—Unitized Leases landowner, to include an explicit duty regulatory text. • Delete provisions basing rent of a to act and prevent situations like those • Correct the ambiguity caused by the unitized lease on acreage because that have led to litigation. Section location of the phrase ‘‘without regard different tracts may have different value. 162.023 of the final rule addresses this to ownership’’ in the proposed rule, We did not make any change to the situation. In that section, we did not because it could be construed as regulation in response to this comment assume a duty to evict because the describing the State tax such that the because the regulation states ‘‘unless the circumstances may require different section would bar only those State taxes lease provides otherwise,’’ which allows approaches (e.g., where there is a imposed without regard to ownership of holdover in negotiation with the the improvements. Because that the lease to establish a different rental scheme. The appraised value of an landowner); however, we did add an interpretation was not the intent of this explicit mention of eviction as an action provision, we have clarified the individual tract may be identified when consent is obtained or upon request. BIA may take. provision by moving the phrase • Expand the rule to provide that BIA ‘‘without regard to ownership’’ to 162.021 (PR 162.018)—BIA will enforce the lease against the Indian indicate that no improvements on Responsibilities in Approving Leases landowner if the landowner does not leased Indian land are subject to State • Add ‘‘and applicable tribal law’’ to comply with the terms and conditions taxation, regardless of who owns the recognize the need to comply with tribal of the lease. Because BIA is the trustee improvements. law. We accepted this change. for the Indian landowner, rather than • Delete the language following the the lessee, we did not incorporate this provision stating that improvements are 162.022 (PR 162.019)—BIA change. subject to 25 CFR 1.4. We deleted the Responsibilities in Enforcing Leases 162.023 (PR 162.020)—Trespass cross-reference to 25 CFR 1.4 and • Add that an Indian landowner may • Change the sentence stating that the instead added the crux of section 1.4 exercise remedies available under a Indian landowners may pursue any directly into 162.014. lease or applicable law. To address this remedies under ‘‘tribal law’’ to 162.018 (PR 162.015)—Tribal comment, we added a provision ‘‘applicable law’’ to ensure that the Administration of Part 162 clarifying that nothing in the section landowners are not restricted to tribal prevents an Indian landowner from • Clarify the phrase ‘‘inherent Federal law remedies. We incorporated this exercising remedies available under function.’’ We accepted this comment change. applicable law. by deleting the phrase and instead • Provide that BIA will act when the • Add a cross-reference to 162.024 providing a list of functions that cannot Indian landowners make a written (PR 162.021) (regarding emergency be contracted or compacted by tribes in request. This provision is already action) in paragraph (d). We added this the leasing context. included in each specific subpart at cross-reference. 162.364, 162.464, and 162.589; 162.019 (PR 162.016)—Access to Leased • Add a new paragraph stating that therefore, we did not add it to 162.023. Premises BIA will carry out the duties assigned to • Exempt roads and other it in the lease provisions. Because BIA’s 162.024 (PR 162.021)—Emergency infrastructure lease provisions from mission and duties are established by Action requiring part 169 approval where the statute, we were unable to add this • Notify individual Indian access is incidental to the development provision. landowners, but contact the Indian tribe • and use of the leased lands. Rights-of- Add a statement that tribes and with jurisdiction before taking way across Indian land require TDHEs have independent authority to emergency action. We incorporated this Secretarial approval, by statute. If access administer and enforce subleases, to change. to the leased premises is a new right-of- prevent sublessees from arguing that • Require BIA to make reasonable way across Indian land, then the access only BIA can take enforcement action. efforts to give actual notice to all Indian will require Secretarial approval We did not add a statement to this landowners before taking emergency through a right-of-way permit. If the section, because BIA does not enforce action, not just constructive notice. The leased premises include access roads, subleases and therefore will always final rule requires BIA to provide then no separate right-of-way permit is defer to the TDHE’s enforcement of a written notification to the tribe before needed. We added the sentence ‘‘[r]oads sublease. We have clarified in each of taking emergency action, but not or other infrastructure within the leased the subparts (see 162.365, 162.366, individual Indian landowners because premises do not require compliance 162.465, 162.466, 162.590, and 162.591) of the practical difficulties in contacting with 25 CFR part 169, unless otherwise that BIA will defer to ongoing lease all Indian landowners quickly enough to stated in the lease’’ to clarify this. enforcement actions by the tribes where take emergency action. • Provide for review of infrastructure the lease provides for the tribe to • Require notification ‘‘in writing’’ to for roads, etc., within the leased address violations. individual Indian landowners after premises under part 162 because it can • Limit BIA’s role in enforcing taking emergency action. Because the be done more efficiently than under part residential leases where its enforcement requirement for ‘‘constructive notice’’ 169. Section 162.019 allows for the lease overlaps with enforcement by tribes and already means that the notice must be to cover roads and other infrastructure TDHEs, in the context of residential in writing, we did not incorporate this that are on the leased premises. leasing. As stated above, TDHEs may wording; however, we added that BIA • Account for ‘‘implied access.’’ enforce subleases without BIA may choose to give actual notice in lieu Section 162.019 states that a lease may interference, and each of the subparts of constructive notice. expressly address access. It is the clarifies that BIA will defer to ongoing obligation of the parties to a lease (not enforcement actions to avoid overlap. 162.025 (PR 162.022)—Appeals BIA) to ensure access to leased • Add a new paragraph stating that Several tribes supported the proposed premises. We anticipate addressing BIA will take prompt action to evict rule’s limitation of ‘‘interested party’’ in other rights-of-way issues in future trespassers after lease expiration and 162.025 to those whose direct economic revisions to part 169. upon consultation with the Indian interest is adversely affected. A few
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tribes prefer a more expansive definition as possible, to ensure the environmental from the language that documents allowing for non-economic interests. We review process is as focused as possible. marked confidential propriety are retained the proposed rule’s limitation • Streamline the environmental protected from disclosure ‘‘to the extent to direct economic interests. In response review process to allow for expedited allowed by law.’’ The FOIA rules to comments regarding deemed review under NEPA, the National require BIA to consult with the tribes approval and appeals, we note that Historic Preservation Act (NHPA), the before disclosure. Much of the deemed approvals occur by operation of Endangered Species Act, and other information may be subject to the fourth law, and because there is no BIA action, Federal laws. While we are bound by FOIA exemption covering trade secrets the parties may not appeal under part 2. statutory requirements, BIA will use or commercial or financial information. We also clarified that BIA decisions to categorical exclusions where applicable, See, Utah v. U.S. Department of the disapprove a lease are appealable only and has proposed a categorical Interior, 256 F.3d 967 (10th Cir. 2001). by the Indian landowner, and decisions exclusion for leasing and funding for • Make it mandatory for BIA to to disapprove any other lease document single family homesites on Indian land, exempt confidential information to the are appealable only by the Indian including associated improvements and extent allowed by law. The regulation landowners and lessee. easements, that encompass five acres or states that BIA will exempt confidential less of contiguous land. See 77 FR information to the extent allowed by 162.026 (PR 162.023)—Contact for 26314 (May 3, 2012). law. Questions • Instead of stating in this section that 162.028 (PR N/A)—Obtaining • Add that the prospective lessee all approved leases must include Information on Leased Land (New should contact the tribe for a lease of disclosure provisions, move the Section) tribal land, to encourage early disclosure provisions to the sections in communication. If BIA is fulfilling the each subpart listing mandated lease • Clarify how tribes may obtain leasing function, BIA will direct the terms. We incorporated this change. information about leases on their land prospective lessee to the tribe, for tribal • Add language requiring BIA to so that they do not have to file FOIA land. We added that the prospective return documents once a lease is requests for basic information regarding lessee should contact the tribe that is approved. Under the Federal Records leases on trust land. We added a new contracting or compacting the leasing Act, once a Federal agency is provided 162.028 to clarify how a tribe may function for answers to questions about documents, the agency must archive obtain information about leases on its the leasing process. and retain them in accordance with the land. Federal records schedule, although D. Residential Leases 162.027 (PR 162.024)—NEPA & Records certain originals may be returned (e.g., • Expressly include the Department BIA will return the deed of trust for A number of tribes, tribal of Housing and Urban Development recording in the county land titles and organizations, and tribal housing (HUD) in paragraph (b), which states records office). For this reason, we authorities requested further revision to that BIA will adopt environmental could not accept this requested change. the residential leasing regulations to assessments and environmental impact • Define documents submitted to BIA ensure they are compatible with the statements of other Federal agencies, in a way that they would fall under a low-income housing programs carried etc. We incorporated this change by Freedom of Information Act (FOIA) out by tribes and TDHEs and avoid a including documents prepared under exemption from disclosure, to ensure ‘‘substantial disruption of longstanding NAHASDA (25 U.S.C. 4115). that they are kept confidential. We did Indian housing programs.’’ One tribe • Allow BIA to accept NEPA not incorporate this change. Even if we requested that we withdraw the documentation from tribes, in addition define the category of documents as residential leasing subpart because of to other Federal agencies. We added this ‘‘confidential’’ in part 162, it will not the requirement for valuations and fair requested language. guarantee their exemption from market rental payments to non- • Allow the use of pre-existing NEPA disclosure because the final rule cannot consenting owners, periodic rental documentation, when appropriate. BIA override the FOIA statute; rather, we reviews, and bonding and insurance encourages the use of pre-existing NEPA encourage each party submitting requirements. Some other tribes documentation, when appropriate, but documents to clearly indicate whether requested we defer promulgation we did not explicitly add this to they fall under a FOIA exemption. pending further consultation and a 162.027(b) since the statement allowing • Provide a mechanism for BIA comprehensive examination of the the use of NEPA documentation from review that would not place the existing statutory and regulatory other entities addresses this. documents into BIA custody. Because framework governing Native American • State that environmental review for BIA needs a record of the documents on housing and consideration of real world an amendment will be required only if which it makes its decision, generally, constraints. Withdrawal or deferral of the amendment adds lands to the leased BIA will need custody of the promulgation of this subpart would premises. We did not incorporate this documents. leave in place on-size-fits-all non- change because an amendment may • Add a cross-reference to FOIA rules agricultural leasing regulations that trigger the need for environmental (43 CFR part 2) to clarify that tribes and have been in place since 1961. We find review even if it does not add land (e.g., tribal entities will be given advance that to be unacceptable and not at all change in use). notice and opportunity to challenge any supportive of Indian housing programs. • Restrict the WEEL phase of disclosure of their documents. We While we are not withdrawing or environmental review to study only the incorporated this suggested change in deferring promulgation of this subpart, actual site locations used to install paragraph (c). we incorporated many of the requested facilities and equipment, which is a • Require a reasonable nexus between revisions and made additional revisions fraction of the land studied at the WSR a BIA request for disclosure and an to address these concerns, including: lease phase. BIA agrees this may be the opportunity to consult if the lessee or • Adding that a lease for housing for case, depending on the circumstances, tribe objects, to alleviate any negative public purposes is a basis for granting but encourages the parties to discuss impacts on project financing, a waiver of fair market value on each lease’s scope with the BIA, as early constructability, and operational issues individually owned Indian land (the
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tribe may waive fair market value on practical obstacle posed by requiring all housing program is part of a tribal tribal land—see 162.320(a)); landowners to consent to waiving the government (rather than a separate • Deleting the requirement for requirement for a valuation. Because it TDHE), each lease with an individual periodic rental reviews for leases for is sometimes impossible to obtain lessee must be approved by BIA. We housing for public purposes on consent of all the landowners, the note that this is the case, but we are individually owned Indian land (the proposed rule would have required that statutorily required to review and tribe may waive periodic rental reviews the lessee/homeowner obtain a approve leases of Indian land. One tribal on tribal land—see 162.328(a)); valuation and pay fair market rental to housing authority asked what happens • Allowing for waiver of valuations all the nonconsenting landowners, to tribal leases with a TDHE if the tribe and fair market rental for non- which the tribe argued was beyond what abolishes the TDHE. The tribal consenting landowners under certain the lessee/homeowner could afford. documentation creating the TDHE circumstances—see 162.321(c); and To address this situation, we are would govern what happens with the • Deleting the requirement for allowing in the final rule for waiver of leases and whether they merge with the bonding and insurance for all valuations and fair market rental in the tribal ownership and terminate by law. residential leases—see 162.334 and circumstance described above, where • Revise 162.301(a)(2) to allow for 162.335. the lessee is a co-owner who has been office complexes supporting housing for One tribe stated that these regulations living on the tract without objection public purposes. This would allow the will do more harm than good by being from the other co-owners. In these cases, current practice of TDHEs developing administratively and financially the co-owner will need to obtain the offices to house their operations within burdensome, impractical, and heavy consent of the owners of the appropriate the housing project and subleasing handed. We have made the revisions percentage of interests in the tract under office space to community development noted above to remove the specified ILCA, as amended by AIPRA. The lease financial institutions (CDFIs). We administrative and financial burdens. may provide for less than fair market incorporated this change. Because we incorporated as many value if certain conditions are met, and • In 162.302, include the Department changes as legally possible to address the lessee need not obtain a valuation or of Treasury as a partner in developing these concerns, we decided to move pay non-consenting landowners fair a model lease template to ensure forward with finalizing these market value. inclusion of CDFIs and tax credit regulations. In addition, we received the following financing tools. This section refers to a A tribe requested that we delete the comments specific to residential leasing: form that was developed in requirement to obtain a valuation and • Add an expedited review and coordination with HUD. We plan to pay fair market rental to owners who approval of leases for housing for public engage the Department of Treasury, did not consent to the lease because the purposes and exempting subleases, Federal Reserve, and tribes (in addition requirement to obtain 100 percent assignments, and amendments of leases to the agencies listed in this section) in consent to waive a valuation is not for housing for public purposes from revising this form. Another tribe feasible in many circumstances. We are BIA review. We made several revisions suggested the development of numerous unable to delete this requirement to expedite review of leases for housing model forms to improve processing because all Indian landowners are for public purposes, but we did not times, including one for low-income entitled to just compensation for use of include a separate approval timeline housing tax credit-financed projects in their land (and a valuation is required because the timeline established by this which the general partner is a tribe or to determine what just compensation regulation is intended to be expedited TDHE. BIA will consider this comment is), not just consenting landowners. for all residential leases, including in implementation of the final rule. However, we added provisions in leases for housing for public purposes. • Clarify why, in 162.338, which 162.321(c) for a waiver of valuations • Make leases for housing for public requires submission of a lessee and fair market rental under certain purposes, as well as assignments, business’s organizational documents, a circumstances to account for the ‘‘deemed approved.’’ Although we agree business would obtain a residential practical issues. Specifically, we added that allowing for ‘‘deemed approved’’ lease. The purpose of the lease, rather that we may waive the requirement for leases and assignments in these than the lessee’s identification, dictates valuation and fair market rental for instances would expedite the process, whether residential or business leasing residential leases if: we cannot incorporate this change procedures apply; for example, a • The lessee is a co-owner who, has because we are statutorily required to business that is obtaining a lease of been residing on the tract for at least 7 review and approve leases of Indian Indian land to develop housing for years as of the final rule’s effective date, land. public purposes would need to follow and no other co-owner raises an • Defer to the Indian landowners’ residential leasing procedures. objection to his or her continued determination that the lease is in their • Delete 162.340(e) (PR 162.339), possession of the tract within 180 days best interest when the lease is for which requires NAHASDA leases to be after the final rule’s effective date; or housing for public purposes. The approved by both BIA and the tribe • The tribe or lessee will construct proposed rule stated that BIA would because it could be construed to require infrastructure improvements on, or defer where the lease is negotiated; we BIA to approve agreements between serving, the leased premises, and we deleted this limitation and now provide TDHEs and tenants. We did not delete determine it is in the best interest of all that BIA will defer in all instances. this provision because it properly the landowners. (Note that we moved this provision to reflects statutory requirements, while The tribe that was the biggest a new 162.341 addressing the standard other provisions of the rule exempt opponent of the residential leasing BIA will use to determine whether to subleases for housing for public subpart also requested that BIA approve approve a lease). purposes between TDHEs and tenants and record consent lists from before • Clarify the applicability of the from BIA approval. Another commenter 2003; date them the year the home was leasing regulations to tribal housing asked whether this provision requires a constructed; and provide the lessees entities. We added a new 162.303 to tribe to approve leases even on with a 50-year lease with renewal. address this. A number of housing individually-owned Indian land. Where Ultimately, this tribe’s concern was the authorities noted that if a public the authority for the lease is NAHASDA,
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NAHASDA requires that the tribe proceedings to address violations under regulations is to streamline and clarify approve the lease. 162.365(e) (PR 162.362), and whether business leasing procedures for all • Include provisions requiring BIA to these proceedings are occurring or have intended uses to better serve tribes and recognize tribal laws regulating occurred. If there are no such individual Indian landowners. activities on land under a residential proceedings, or if it is not appropriate • Clarify what effect the business lease, including laws governing land for BIA to defer to the proceedings, then leasing regulations will have on use, environmental protection, and BIA will take action to address the overlapping regulatory regimes for historic or cultural preservation. This violation. We clarified this process in power generation, infrastructure, and provision is included in the general 162.366 (PR 162.363). transmission. We have limited our provisions at 162.016. • Include in 162.370 (PR 162.367) involvement in these matters under part • Adopt a standard for residential (governing effective date of a lease 162 to what is required by statute and leasing to acknowledge the role of the cancellation) language indicating that a our trust responsibility. This commenter United States in helping tribes improve tribe or TDHE may terminate a lease. also had questions about the housing conditions and socioeconomic Section 162.365 (PR 162.362), governing applicability of the regulations to leases status. We added an explicit standard negotiated remedies, provides that the under the Tribal Energy Resource for the approval of residential and other parties may include this option. Agreements (TERAs). These leases are leases. • Amend residential provisions to not subject to part 162 (see 162.006), • Better account for the landlord- allow for incorporation of specific providing that land use agreements tenant relationships in the housing for enforcement terms for tribes, TDHEs entered into under a special act of public purposes context. Where public and others without BIA approval. The Congress are not subject to part 162.) housing is provided through a TDHE section allowing the lease to provide for • Treat reviews of business leases of that has leased land from the tribe, BIA negotiated remedies allows this; retail and office space within existing will not be involved in enforcement of therefore, we did not revise the facilities on tribal land differently by the individual subleases (because BIA regulation as a result of this comment. exempting them from BIA approval. We does not enforce subleases). Where • Clarify whether BIA plans to evict have included a provision at 162.451(b) public housing is provided directly by individuals who are living on land but allowing for subleases without our a tribe (or TDHE, where the TDHE holds are in trespass. This commenter also approval. Leases of space within the land through some mechanism that asked who will undertake eviction of existing facilities on tribal land that is is not a lease), BIA may be involved in trespassers where the tribe contracts the not already leased (i.e., not subleases) enforcing individual leases, but the final realty program. If the tribe is contracting require BIA approval because they are a rule provides that BIA will consult with the realty functions, the tribe will be lease of the underlying land. the tribe before taking action and will responsible for enforcement actions. F. WEELs defer to ongoing proceedings. These Otherwise, we will implement and provisions should ensure that BIA does enforce our regulations, including Several tribes requested that we not interfere with tribal enforcement. eviction in appropriate cases. preserve the tribal permit option in the • Revise residential leasing context of wind energy evaluation. We provisions to require BIA to assist E. Business Leases addressed this comment in 162.502 to TDHEs in enforcing subleases. We did Most tribes stated their support for the clarify that a WEEL is not required in not incorporate this change because business leasing revisions. One certain circumstances, including when TDHEs will be responsible for enforcing commenter stated that clarifying and the Indian landowners have granted a their own subleases. BIA does not making uniform the business leasing permit under 162.007 (PR 162.004) or a enforce subleases. regulations injects more predictability, tribe authorizes wind energy evaluation • Revise provisions treating reduces costs, and increases activities on its own land under 25 individuals who stay after cancellation transparency for investors. One tribe U.S.C. 81. It is conceivable that there of a lease as ‘‘trespassers’’ because it is stated that the regulations will frustrate may be instances where possession to contrary to tribal law that provides for Congress’s desire to promote orderly evaluate wind energy resources does not a hearing before eviction. To address and expeditious development through rise to the level of requiring a lease; this comment, in 162.371 (PR 162.368), their long-term leasing authority. The parties should look to the guidance in we added that BIA will consult with the regulations allow for long-term leasing 162.007 (PR 162.004) in light of planned Indian landowners in determining where statutorily authorized, and we activities and infrastructure. Several whether to treat the unauthorized have reviewed the regulations and tribes stated their support for the two- possession as a trespass. revised them where needed to ensure phase WEEL/WSR lease process, and • Require BIA to defer to the tribe’s that they will not frustrate orderly and one stated that the WEEL approach is determination that a violation has expeditious development. In addition, flexible and workable in the present occurred because tribes often know of we received the following comments. environment, allowing a short-term violations before BIA, and a tribe’s • Clarify, in 162.401, the scope of lease while parties are engaging in due determination that a violation has what is included in the business leasing diligence and resource analysis. In occurred should be dispositive. We did subpart. We added language clarifying addition, we received the following not incorporate this change because BIA that any lease that is subject to part 162 comments: retains independent authority to but does not fit under another subpart • Expand WEELS to include any type determine whether there has been a is considered a ‘‘business lease.’’ of evaluation for alternative energy uses violation. If a tribe learns of a violation, • Clarify proposed 162.412(a)(6) (e.g., solar or biomass). We did not it may notify BIA that a violation has (‘‘any change to the terms of the lease include other alternative energy uses in occurred (see 162.364). will be considered an amendment’’). We the WEEL because, generally, one does • Require BIA to defer to applicable deleted this provision as unnecessary. not need possession of the land to tribal law regarding landlord-tenant • Amend business leasing evaluate solar or biomass resources. relations and due process in 162.366 requirements for telecommunications This commenter also requested (PR 162.363). BIA will first look to facilities on tribal lands to better serve clarification on whether WSR leases whether the lease allows tribal tribal people. The intent of these include other alternative energies, such
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as biomass. We added a cross-reference for WEELs. We agree with this on Indian lands. We are not taking a in 162.538 to clarify that leases for comment, but determined that no position on these issues at this time. biomass are addressed in business change to the regulation is necessary. One public commenter expressed leasing. • Limit the total time allotted to BIA concern that wind farms will result in • Explain how the leasing process for for review of a WEEL to 30 days. The bird kills. The NEPA analysis will a WEEL is fundamentally different from final rule limits the time allotted to BIA consider this issue on a case-by-case that of a WSR lease and why parties to 20 days. basis. would have the incentive to pursue a In addition, we received the following G. WSR Leases WEEL. The process for a WEEL is comments: different from a WSR lease in the A few tribes stated that BIA appears • Add language allowing a tribe to following ways: (1) To obtain approval to bootstrap authority over business enter into a simplified agreement with of a WEEL, as opposed to a WSR lease, matters commonly governed by other allottees, where a tribe is considering a the parties need not obtain a valuation agreements. In response to this wind or solar energy project that covers or justify compensation at less than fair comment, we made several revisions to both tribal and individually owned market rental; (2) BIA has a shorter limit BIA’s role to only what is Indian land. Tribes and individual timeframe for its review of a WEEL; and necessary for leasing approval. We Indian landowners are encouraged to (3) obtaining a WEEL allows for a deleted the requirement for BIA enter into these agreements; however, limited NEPA review, so BIA conducts approval of option agreements, the tribe will still be required to lease a NEPA review only of the wind energy expressly provide for alternatives to the land from the individual Indian evaluation activities. This NEPA review WEELs (such as section 81 agreements), landowners. can then be incorporated by reference, and loosened BIA review of technical • Lengthen the 90-day delay in any as appropriate, into a broader WSR capability where the lessee is owned phase of development before requiring a review, whereas if no WEEL is obtained, and operated by the tribe. revised resource development plan. We the full NEPA review would be One tribe asked whether a tribe could revised this provision to require only necessary at the time BIA reviews the use business leasing procedures rather submission of a revised plan to BIA, WSR lease. than WSR leasing procedures for a wind rather than requiring re-approval by • Clarify whether there is an acreage or solar energy project. Other tribes BIA. We retained the 90-day period to limit to a WEEL. There is no acreage stated that WSR should not be treated ensure that BIA is kept apprised of any limit. • separately from business leasing. We major delays. Strengthen 162.520 (PR 162.519) to • force the lessee to submit any wind note the need for maximum flexibility, Waive the requirement for energy data gathered if the WEEL is but we have tailored the WSR subpart documents demonstrating technical terminated. We did not make any to the unique issues raised by wind and capability for tribal corporations. We change to the proposed rule in response. solar energy projects; therefore, this incorporated this change by limiting the As written, the rule allows the parties to subpart will generally provide the more requirement to instances where the negotiate this point in order to afford appropriate procedures. While many of lessee is not an entity owned and maximum flexibility; but it provides the business leasing and WSR operated by the tribe. We also note that that if they don’t, then the information provisions are the same, our intent in documents from an entity’s parent becomes the property of the Indian making WSR leasing a separate subpart corporation may fulfill this requirement. • landowner. is to encourage future WSR Clarify how these leases will • Clarify how BIA will enforce the development of Indian land through interact with 169.27, which provides a provision in 162.520 (PR 162.519), making the procedures as transparent as process for obtaining approvals of establishing that wind energy data possible. rights-of-way for electric poles and lines becomes the property of the Indian One commenter questioned the greater than 66 kilovolts. This landowners in the absence of lease efficacy of having the Office of Indian commenter requested language to allow provisions stating otherwise. BIA may Energy and Economic Development part 162 to encompass transmission enforce this provision by refusing to (IEED) involved in valuation of a WSR facilities directly associated with the release the bond. lease and asked whether a landowner WSR infrastructure. As written, 162.543 • Delete provisions regulating the could instead obtain a valuation from a (PR 162.540) contemplates that the lease option to enter into a WSR lease because private entity with expertise in the will include associated infrastructure the time needed for the option period economics of wind energy development. necessary for the generation and should be subject to negotiation and the We addressed this comment by adding delivery of electricity. We added a option agreement is separate from a that a landowner may obtain its own cross-reference to 162.019 (PR 162.016) ‘‘lease’’ that BIA is statutorily required economic analysis, as long as IEED to clarify that no rights-of-way approval to approve. These commenters also approves it. Because tribes may is needed for infrastructure addressed in stated that the provision limiting the negotiate their own compensation for the lease and on the leased premises. WSR lease to only that land covered by tribal land, this will generally apply • Define the ‘‘resource development the WEEL is unreasonable because the only to individually owned Indian land. plan.’’ Since this term is used so parties do not have enough information One commenter requested that BIA infrequently, we included the definition as to what land is needed at the time the issue a policy statement exempting with the term at 162.563(i). This option is entered into and would result agreements with carbon offset sales from commenter also requested that we add in overly expansive WEELs. We part 162. Whether an agreement is a process for obtaining BIA approval if addressed these comments by deleting subject to part 162 depends upon changes to the plan are made after conditions for approval of an option in whether the specific terms of the approval of the lease. One tribe stated 162.522 (PR 162.521). agreement meet the requirements for a that requiring BIA to approve plan • Limit the scope of environmental lease in this part. This commenter also changes would be burdensome. In and archeological reports required by requested that BIA take a clear position response to these comments, we revised 162.528(f) to only the actual testing and on whether State rules apply to tribes 162.543(b) (PR 162.540) to require only monitoring locations and access routes seeking to sell carbon credits generated submission of the revised plan for BIA’s
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file, rather than requiring BIA approval approve of payments due upon exercise introduces hazardous materials onto the of the plan changes. of a renewal option. We deleted this leased premises during the term of the provision as unnecessary. lease. H. Cross-Cutting Comments Æ Delete the provision requiring 3. Mandatory Lease Provisions 1. Lease Term lessees to indemnify the United States • Delete the provision requiring the and Indian landowners for loss, • Specifically allow a month-to- lease to cite the authority under which liability, and damages because many month term for residential leases BIA is approving the lease under lessees are not willing to assume authorized by NAHASDA. In response because BIA, rather than the parties to liability for a tribe’s simple negligence, to these comments, we clarified the term the lease, should know the citation. We and the indemnity provision requires of NAHASDA leases (leases approved deleted this provision because we agree the lessee to assume liability except in under 25 U.S.C. 4211) versus the term that it is BIA’s responsibility to know its cases of gross negligence by the tribe. of leases approved under 25 U.S.C. authority. We narrowed the indemnification 415(a). Note also that many of these • Delete the mandatory lease provision, in response. month-to-month arrangements are provision stating that nothing would Æ Exempt leases for housing for actually occupancy agreements not prevent termination of the Federal trust public purposes from having to include requiring BIA approval because they are responsibility because there is no these provisions because a tribal essentially tribal land assignments. statutory requirement that this provision member seeking affordable housing may • Remove the restriction to one be included in leases and it reflects an hesitate to enter into a lease with this renewal for tribes with authority to lease offensive and outdated approach to requirement. We did not add an lands up to 99 years because this one- tribal relations. In response, we deleted exemption because this provision is size-fits-all approach does not work for this provision. necessary to protect trust assets, the many lease situations. We revised this • Clarify that wind energy projects Indian landowners, and the United provision to allow for flexibility in the shall not be deemed a ‘‘nuisance’’ for States. number of renewals where authorized the purposes of BIA’s review. While this Æ Loosen these provisions because by statute. statement is true, we did not add it to they are too restrictive and should be • Remove the two-year term the mandatory lease provisions. These subject to negotiation. We retained the restriction where the owners of trust regulations anticipate and encourage the indemnification provisions, as revised, and restricted interests are deceased and development of wind energy projects; to protect the trust assets, the Indian their heirs and devisees have not yet BIA does not deem wind energy projects landowners, and the United States. been determined. We deleted this to be a nuisance. • Delete the provision stating that provision as unnecessary. • Restrict the mandatory provision BIA may treat any lease provision that • Allow parties the flexibility to stating that BIA has the right to enter the violates Federal law as a violation of the negotiate holdover provisions for leased premises upon reasonable notice lease, and instead provide that the residential leases. We added this to allow BIA to enter only when it is parties may elect to terminate the lease flexibility by adding that the prohibition consistent with notice requirements or agree that Federal law will replace on holdovers applies only if the under applicable tribal law and lease the superseded provisions. We did not residential lease does not provide requirements. We incorporated this incorporate this suggested change. We otherwise. language. cannot approve a lease that violates • Clarify whether a lease amendment • Delete the mandatory provision Federal law and, during the cure period, that extends the term of the lease is stating that the lease is not a lease of fee the parties may agree to address the limited to a 25-year term and whether interests because it places responsibility provision; and if, after the fact, we this amendment could include an on the lessee to pay fee owners. discover that a lease provision violates option term. An amendment can amend Although this is the case, we deleted Federal law, we need the ability to the lease and include an option term, as this provision from the mandatory correct the problem. Using the lease long as the term meets statutory provisions as unnecessary to include in violation regulations (e.g., 162.366 and constraints. the lease. 162.367) affords the parties notice and • Restrict long lease terms because • Regarding the mandatory provisions an opportunity to either cure or dispute they may result in more permanent uses requiring lessee to indemnify and hold the violation. As part of this process, the by non-Indian lessees that threaten harmless the Indian landowners and the parties are free to agree that Federal law preservation of tribal culture and United States: will replace the offending lease society. There are statutory limitations Æ Make it discretionary whether to provision. to lease terms, but to the maximum include them in a lease because their extent possible, BIA will defer to the inclusion could be contrary to law in 4. Improvements Indian landowners’ decision that a lease certain contexts. We did not make • Delete the requirement for the lease is in their best interest. inclusion of these provisions to generally describe the location of the discretionary, but we moved these improvements to be constructed. We 2. Option To Renew provisions to a new paragraph to clarify require this information because it is • Add to the requirement for that they are not required where necessary for NEPA and NHPA review providing BIA with a confirmation of a prohibited by law. and we are statutorily required to renewal the phrase ‘‘unless the lease Æ Make it discretionary whether to review, among other things, the provides for automatic renewal.’’ We include the provision related to relationship of the use of neighboring accepted this language. hazardous materials where there is no lands, the height, quality, and safety of • Clarify the proposed rule’s evidence that hazardous materials are any structures or other facilities to be provision requiring a lease with an present on the land. We retained this as constructed on these lands. See 25 option to renew to state that ‘‘any a mandatory lease provision to account U.S.C. 415(a). change in the terms of the lease will be for any instances in which hazardous • Allow lessees the right to make considered an amendment,’’ including materials are discovered after the lease improvements on their houses without whether this means that BIA must is signed or the lessee or other party having to get the consent of other
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owners. Nothing in the final rule states incorporated this suggestion at 162.417, Records Office (LTRO) is now capable of that lessees must obtain the consent of by clarifying that the schedule may be accepting these descriptions. other landowners to make a separate document from the business • Delete the requirement for an improvements to their houses; however, lease, and that the parties must agree to official or certified survey, to be the lease may require consent for the a process for modifying the schedule. reviewed under the DOI Standards for construction of permanent For WSR leases, the resource Indian Trust Land Boundary Evidence, improvements. The regulations require development plan sets out the schedule because it will be too costly to only that the lessee provide reasonable for improvements. We revised 162.543 implement, result in fewer leases, and is notice to the landowners of the (PR 162.540) to provide that parties may redundant where BIA already has construction of any permanent make changes to the resource survey data available. In response to improvements not generally described development plan, and they merely these comments, we added flexibility to in the lease. have to provide BIA with a copy if the the survey requirements, providing that • Clarify that the lessee does not have changes affect certain items (rather than where reference to an official or to obtain consent for replacement air having to wait for BIA approval of the certified survey is not possible, the lease conditioners, etc. We agree and clarified changes). Through these revisions, we must include a legal description, a that the regulations are addressing added flexibility by allowing for a survey-grade GPS description, or other ‘‘permanent improvements.’’ A few separate construction schedule and description prepared by a registered tribes suggested including a new term, allow a process for obtaining the land surveyor that is sufficient to ‘‘major improvements,’’ with a dollar landowners’ consent to changes in the identify the leased premises. limit, but we instead are referring to schedule. 7. Compatible Uses permanent improvements, which are • Delete requirements for • Retain the flexibility allowed by the affixed to the real property. construction schedules, as BIA’s interest • proposed rule’s wording because it Clarify whether a lease with phased in the timing of improvements should leaves room for the lease to define development would require be minimal. We did not delete the amendments to the lease for compatible uses. We accepted this requirements for providing a suggestion. development phases after the initial construction schedule (although we phase. The lease may provide for • Revise to allow for compatible uses clarified that only a general schedule is by the landowner or someone development of a plan to avoid having necessary) because BIA’s interest in the to amend the lease to update the plan. authorized by the landowner, regardless timing of the construction is to ensure of whether the lease specifies that the The plan only needs to be as detailed as that anticipated development occurs. necessary for us to do a NEPA and compatible use is allowed. We did not • Revise 162.417 to make it NHPA review. incorporate this change because the • Add that the lease may provide that discretionary for the parties to include lease should specify if the Indian improvements may remain on the leased due diligence provisions in the lease. landowners will allow compatible uses. premises ‘‘in compliance with We did not incorporate this change Another commenter suggested requiring minimum building and health and because these provisions protect the the lease to identify what uses the safety requirements of the tribe with Indian landowners by ensuring landowner is reserving. While the lease jurisdiction.’’ The lease may specify development consistent with may specify the uses, the final rule is this, but we did not prescribe it in the landowners’ intent when they signed not requiring it. regulation. the lease. • • Delete the requirement for BIA 8. Rental/Payment Requirements— Delete provisions regarding removal Tribal Land of improvements because they may approval of a waiver of due diligence dissuade outside developers. We did not obligations because the time involved in Nearly all the tribal commenters delete the regulatory provisions because obtaining a waiver could chill supported the proposed rule’s they apply as a default, only in the investment and requiring BIA approval provisions allowing a tribe to negotiate absence of lease provisions. The parties of a waiver is paternalistic. We did not its own rental amount and determine may negotiate other requirements delete this provision because any waiver whether it wants a valuation, stating regarding removal of improvements in of the requirements will occur at the that they make the rules more workable, the lease. time of lease approval, so the waiver especially for housing for public process will not cause a delay and BIA purposes. One tribe did not support 5. Due Diligence will defer to the landowners’ these provisions, stating that the tribe • Revise due diligence provisions to determination that the lease (including should not have to request a valuation confirm that the ‘‘schedule for the waiver) is in their best interest, to in writing and BIA should require construction of improvements’’ in the the maximum extent possible. valuations to meet its trust business leasing subpart requires only • Loosen the timelines in 162.546 (PR responsibilities. Because most tribes tentative commencement and 162.543) for wind energy projects were in support, we retained this completion dates, rather than a detailed because it can take up to 9 months in provision. A tribal commenter stated its schedule. We incorporated this change northern climates to replace a support of the language allowing for less at 162.414 by adding ‘‘general’’ before substation. We addressed this comment than fair market rental during ‘‘schedule for construction.’’ by allowing the lease to define the time predevelopment stages of a business • Allow more flexibility in the periods during which facilities or lease. Several tribes expressed their construction schedule, including equipment must be repaired, placed into support of the proposed rule’s flexibility allowing a way for the construction service, or removed. for valuations of tribal land and schedule to be modified at later phases, allowing for alternative valuations in 6. Legal Description—Surveys as the parties may not be able to identify lieu of appraisals. Another tribe stated all improvements to be constructed over • Allow the use of survey grade their support of the provisions requiring the course of a phased development and global positioning system (GPS) for land waivers to be in writing, to clarify the a construction schedule may lock them descriptions. We revised the regulations landowners’ intent. In addition, we into an uneconomic schedule. We to allow this because the Land Title and received the following comments:
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• Allow a tribe to submit a rental rates could cause an impasse comment because the best interest certification, rather than a tribal between the lessee and the tribe. BIA determination of whether to waive fair authorization, stating that it determined notes that tribal landowners have the market rental allows BIA to balance this that receiving less than fair market right to establish compensation. risk on a case-by-case basis. The risk of rental is in its best interest, for business exploitation is higher for business 9. Rental/Payment Requirements— and WSR leases (in addition to Individually Owned Indian Land leases; therefore, we explicitly require residential leases). We have addressed the balancing test in 162.421, while for • this comment by providing that the tribe Add ‘‘the land is to be used for residential leases we automatically may submit either a certification housing for public purposes’’ as a basis waive fair market rental if all (meaning a statement signed by the for BIA to waive fair market value for landowners request the waiver. appropriate tribal official or officials) or individually owned Indian land. We a tribal authorization. incorporated this change. 10. Rental/Payment Requirements— • Remove the requirement for a tribal • Remove the requirement for non- Valuations certification or authorization stating that consenting individual Indian Several tribes noted that requiring all the tribe has determined the amount to landowners to receive fair market rental. landowners to waive the right to a be in its best interest because it is an We have determined that all non- valuation is unworkable in some additional layer of bureaucracy. We consenting landowners are entitled to instances, and may result in having to added a provision to each of the fair market value, as our trust conduct a valuation in order to ensure subparts to clarify that one tribal responsibility is to all landowners, not that non-consenting landowners are authorization may meet several just those who have consented. This paid fair market rental even when other purposes (see 162.338, 162.438, and requires a valuation to determine the landowners have agreed to less than fair 162.563). The tribe need not submit amount of the fair market rental. market rental. Tribes stated that BIA is multiple tribal authorizations; in fact, However, as described above, we added in effect forcing consent of all we encourage the tribe to provide this that, for residential leases, BIA may landowners for the lease. One tribe waive valuation and fair market rental if information and any other tribal alleged that if this consent is required, the lessee is a co-owner who has been authorization statements in the same homesite leasing on allotted land will living on the tract for at least 7 years authorization that it passes to authorize stop. This tribe stated that the consent and no other co-owner raises an the lease (e.g., a single tribal requirements will change the tribal objection to his or her continued authorization may authorize the lease members’ way of life and will cause a possession of the tract by a certain date. and do any or all of the following: hardship, especially where co-owners’ In addition, for all leases, we added that Allow for less than fair market rental, whereabouts are unknown. The tribe BIA may waive valuation and fair waive valuation, allow for alternative has over 400 leases that don’t have market rental if the lessee or tribe will forms of compensation, waive rental proper consent, but which followed the provide infrastructure improvements reviews, and waive rental adjustments). procedures at the time, and tribal • Remove the requirement for the and it is in the best interest of the members constructed homes on those tribe to provide a certification or landowners. tracts. We added flexibility by allowing authorization to set the rental amount • Exempt housing for public purposes BIA to waive the requirement for where the lease is for housing for public from the requirement for a valuation. valuation for non-consenting purposes. Many tribes noted that tribes We did not categorically exempt leases landowners in certain circumstances, use NAHASDA programs to provide for housing for public purposes on individually owned Indian land from described above. housing for public purposes and that • HUD already has provisions regarding valuations. BIA will waive the Apply the ILCA percentages to rent. We incorporated this change at requirement for a valuation of consent for waiving fair market rental 162.320(a). individually owned land if all and valuations. BIA has determined that • Clarify that a tribe may use market individual Indian landowners agree. We these percentages in ILCA apply to analyses or other methods of retained the requirement for 100 percent consents for a lease, but has determined determining fair market value. We of the landowners to waive the to require the payment of fair market incorporated this change. valuation for individually owned Indian rental to non-consenting landowners • Encourage tribes to pursue a ‘‘zero land to ensure that each owner who did because we have a trust responsibility to charge’’ policy for permits and leases to not consent to leasing for less than fair all landowners, not just the consenting service providers to place market rental (‘‘non-consenting owner’’) ones. Each individual can waive his or communications facilities infrastructure obtains fair market rental, unless that her own right to receive fair market in tribal communities. BIA did not make non-consenting owner waived the right rental; however, even if a majority any change to the regulation in response to a valuation. However, as described waives their right to fair market rental, to this comment because tribes above, we added that, for all residential they may not waive the right of the determine whether such a policy is leases, BIA may waive valuation and other, non-consenting owners to fair appropriate for them. This commenter fair market rental if the lessee is a co- market rental. also requested a mechanism for owner who has been living on the tract • Allow the option to use competitive adopting a market-based appraisal’s for at least 7 years and no other co- bidding as a form of valuation. We determination of fair market rental owner raises an objection to his or her added this option. where the Indian landowners and continued possession of the tract by a • Delete the provision stating what lessees cannot agree on compensation. certain date. type of valuation may be used in We did not incorporate this change • Balance the risk of exploitation by 162.322, because appraisal costs and because a lease requires the agreement unscrupulous developers against delays negatively affect the ability to of the Indian landowners and the increased flexibility when allowing less provide homesites. We retained this lessees to all terms of the lease, than fair market rental for business provision, but note that it is drafted to including compensation. This leases of individually owned Indian allow as much flexibility as possible in commenter stated its concern that land. We did not make any change to allowing valuations other than allowing tribes to establish their own the regulations in response to this appraisals.
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• Ensure the appraiser meets status of each landowner at all times 14. Rental/Payment Requirements— education, licensure, and experience throughout the lease. We did not make Types of Compensation requirements. We agree with this any changes in response to this • Clarify ‘‘in-kind consideration’’ to requirement but did not make any comment because the regulations reduce the subjectivity in determining change to the regulation since appraiser provide that direct pay is optional, and its value. We have allowed for competence will be necessary to comply available under limited circumstances. alternative forms of consideration, such with the Uniform Standards of The addresses to which the payments as ‘‘in-kind consideration’’ in order to Professional Appraisal Practice should be sent will be provided in the afford the maximum flexibility to Indian (USPAP). lease and, because direct pay is limited landowners in negotiating leases. BIA • Add provisions stating when an to 10 or fewer landowners, the burden will not determine the value of in-kind appraisal expires and how much time on the lessee to know the status of each consideration. We have revised 162.326 can lapse from its completion. We did is limited. to provide that we will defer to a tribe’s not address this issue in the regulations • Delete the limit on the number of because the Office of the Special Trustee determination that alternative forms of landowners and allow all landowners consideration are in its best interest, and for American Indians (OST), rather than the option for direct pay. We did not BIA, is responsible for conducting and we will determine whether the incorporate this change because the alternative forms of consideration are in reviewing appraisals. We also received Assistant Secretary made a policy a number of other questions regarding individual Indian landowners’ best decision to limit when direct pay is interest on a case-by-case basis. payment for appraisals, preparation of available to those situations when there • income tax forms, timing of appraisals, Do not force lessees to provide in- are 10 or fewer landowners who all kind consideration. The regulations and returning the appraisal function to consent to direct pay for administrative BIA from OST that were beyond the provide the parties the freedom to efficiency. negotiate for monetary or in-kind scope of this rulemaking. • Exempt crop share leases from consideration. 11. Rental/Payment Requirements— direct pay consent requirements. The • Consider, in 162.555 (PR 162.552), When Payment Is Due direct pay requirements included in this the value of the energy generated back • Revise 162.323 to apply only when final rule do not affect agricultural to the community as in-kind rent is required periodically throughout leases and therefore do not affect crop consideration. In-kind consideration is share leases. not considered in the valuation because the life of the lease, so that lessees may • make a one-time (‘‘lump’’) rental Clarify the timeframe for locating a the valuation is a monetary figure. The payment when a home is constructed landowner whose whereabouts are final rule allows for alternative forms of and incorporate the amount of the rental unknown so the lessee can send his or compensation, and BIA will consider payment into their mortgage. We did not her direct pay to BIA instead. The lessee whether energy generated back to the revise this section in response to these will know when a landowner’s community is an alternative form of comments because the regulations, as whereabouts are unknown because the compensation that is in the landowners’ written, allow for this situation. Section direct payment will be returned as best interest for individually owned 162.323 provides that a lease can undeliverable. This commenter also Indian land. asked when a lessee making direct provide for the timing of rental 15. Rental/Payment Reviews and payments (which may include one lump payments will know that a landowner has been declared non compos mentis. Adjustments sum) and that the lease can provide that • payments be made more than a year in A court of competent jurisdiction must Remove the requirement for rental advance. make a determination of non compos reviews, in 162.328, where a tribe • Delete the provision that prohibits mentis. Once BIA receives notice of a negotiates and certifies a rental amount. payments from being made more than landowner’s non compos mentis status, We addressed this comment by one year in advance because lessees the BIA will notify the lessee that all excluding residential, business, and should be allowed to make advance future payments under the lease must be WSR leases of tribal land from the payments. We did not delete the section sent to BIA. periodic rental review and adjustment requirements, where the tribe states in because it implements 25 U.S.C. 415b, 13. Rental/Payment Requirements— its authorization or certification that it and the phrase ‘‘unless the lease Payment Methods has determined that rental reviews and provides otherwise’’ means the parties • may include in the lease an allowance Allow cash rental payments for adjustments are not in its best interest. for payments more than one year in residential leases, and make any In addition, there are a number of advance. necessary adjustments to the lockbox circumstances in which rental reviews system to accept cash, because the are not required for residential leases of 12. Rental/Payment Requirements— refusal to accept cash imposes a individually owned Indian land, Direct Pay hardship. This request is outside the including where the lease provides for • Delete provisions allowing for scope of this rulemaking, but BIA has automatic adjustments and where the ‘‘direct pay’’ because the number of passed the request on to the Office of lease is for less than fair market rental. landowners should not have an impact the Special Trustee for American • Exempt residential leases from on whether BIA is complying with its Indians (OST). rental review and adjustment trust responsibility. Allowing for direct • Allow personal checks for business requirements because it is burdensome payment of rent to the landowners is not and WSR lease payments because BIA’s when applied to tribes and TDHEs and a derogation of the trust responsibility. refusal to accept personal checks for NAHASDA already provides limits on We have limited direct pay to 10 or business and WSR leasing imposes a the rent, its review and adjustment. In fewer landowners to ensure that direct hardship. We accepted this comment by response, we added that no periodic pay is administratively workable. allowing for payment by personal check review of the adequacy of rent or • Delete direct pay provisions for all types of leasing because many periodic adjustment is required if the because they impose a burden on the lessees rely on personal checks as a lease is for housing for public purposes lessee to know about the individual form of payment. (or, as stated above, if the tribe’s
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authorization or certification states that comments regarding insurance and attempting to be flexible enough to it is in the tribe’s best interest not to bonding for business and WSR leases: account for all types of leases. have these requirements for tribal land). • Clarify that a tribe may waive the • Revise the requirement for a • Change the phrase ‘‘at least every insurance requirement upon certifying statement from the appropriate tribal fifth year’’ to ‘‘no less frequently than that a waiver is in its best interest. We authority that the proposed use is in every fifth year.’’ We did not added that BIA will defer to the tribe’s compliance with tribal law because incorporate this change because these determination that a waiver is in its best some tribes do not currently examine phrases are equally clear. interest. proposed leases to determine whether • Add a requirement for a landowner • Add alternative forms (other than the lease complies with land use to consent to a waiver of rental performance bonds) of securing regulations and, further, do not consider adjustments in the lease, because when payment for lessee obligations, in order such examination to be within the scope the lease is for housing for public to avoid placing Indian lands at a of their responsibility. To accommodate purposes, the amount of rent affects the disadvantage, to allow tribes to retain situations where the tribe may not amount investors are willing to invest. their sovereign immunity (some require such a statement, we added the We did not add this requirement bonding companies require tribes to qualifier ‘‘if required by the tribe.’’ because the landowner may refuse to provide broad waivers of sovereign • Delete the requirement for waive rental adjustments as part of their immunity for a bond), and to provide environmental and archeological reports lease negotiations. maximum flexibility. We incorporated because this requirement causes lessees • Revise the factors in 162.428(b)(3) this change by allowing for alternative to expend resources before even and parallel WSR provisions (factors for forms of security. knowing if a lease will be approved. determining that waiving the Federal • Revise business leasing provisions One tribal corporation also stated that review of the adequacy of compensation the documents required may cause a is in the landowners’ best interest) to to state that any bond may be made payable to the tribe and that BIA may potential lessee to spend several months add a factor that reflects the needs of conducting due diligence and large investments that may only be adjust the bond only based on consultation with the tribe. We negotiating a lease, with no certainty of recouped over a period of many years. BIA approval. We did not delete this We added a factor to account for these incorporated these revisions at requirement because environmental and situations where ‘‘the lease provides for 162.434(b) by allowing a lease to archeological assessments are required graduated rent or non-monetary or include these requirements. • by statute. To help provide some various types of compensation.’’ Revise the process for waiving the • Delete or limit 162.424(b)(4), which bonding requirement, because BIA’s guidance in the BIA approval process, allows the lease to provide for payment decision to waive is based on its we added an ‘‘acknowledgment to parties other than the Indian determination as to the best interest of process’’ whereby the parties may landowners. We retained this provision the landowners, which introduces submit to BIA a proposed lease while to allow the parties maximum flexibility uncertainty and delay. To address this still preparing NEPA documentation or in negotiating lease terms, but note that comment, the final rule provides that obtaining a valuation. BIA will respond the parties may include limits on who BIA will defer to the tribe, for tribal within 10 days identifying any receives payments in the lease. Other land, that the waiver is in its best provisions that may justify BIA’s tribes requested that we revise this interest, to the maximum extent disapproval of a lease. Although this provision to add the phrase ‘‘unless possible. provision does not preclude BIA from otherwise provided by these • Allow cash as a form of security. identifying other issues at a later time in regulations.’’ We did not incorporate We did not incorporate this change exceptional circumstances or this change because the regulations do because the lockbox cannot accept cash, disapproving the lease, it does provide not restrict to whom rental payments but clarified that it is not an acceptable some measure of certainty that the lease may be made. form of security in the regulations. This would be acceptable if NEPA, valuation, commenter also stated that any interest and any other issues BIA identifies are 16. Bonding & Insurance earned on a security posted as a bond adequately addressed). Commenters overwhelmingly shall be payable to the lessee. We did • Requiring a restoration and opposed requiring insurance and not incorporate this change because the reclamation plan: bonding for residential leases because parties may negotiate this point. Æ Revise this requirement because they create barriers to homeownership • Revise 162.559(c) because allowing this plan may not be appropriate, due to credit requirements, availability BIA to adjust security or bonding depending on the land use. We of liquid assets, and income thresholds. requirements at any time creates too added that a restoration and In response to these comments, we much unpredictability. We revised this reclamation plan is required only deleted the requirements in these provision and the parallel provision in ‘‘if appropriate.’’ regulations for insurance and bonding the business leasing subpart at Æ Require only a preliminary plan. for residential leases. We received one 162.434(c) to state that the lease must We did not incorporate this change other comment for residential leasing specify conditions under which BIA because the plan will form the basis that requested we revise 162.369 (PR may adjust security or bonding for setting the reclamation bond 162.366) (stating that landowners get requirements, including consultation amount, if appropriate. proceeds from an insurance policy in with the tribe for tribal land before • A tribe stated that the requirements the absence of lease provisions) to making adjustments. for a restoration and reclamation protect the lessee’s interests. We did not plan, bonding, and a survey may be revise the rule in response to this 17. Approvals—Documents Required overwhelming to a new comment because the parties may agree The final rule defines with as much entrepreneur and may cause delays, to a different approach, while the rule certainty as possible exactly what making it difficult to establish provides a default rule in the absence of documents BIA will require. We sustainable small Indian-owned an agreed-to approach in the lease. In reviewed each category and provided as businesses on tribal land. BIA addition, we addressed the following much specificity as possible while requires plans and bonding, where
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appropriate, to protect the Indian tribal laws is already required by section subleases and amendments to land and the interests of the Indian 162.014 (PR 162.013). residential leases. landowner. We have replaced the • Allow the lessee and tribe the • Shorten the 60-day timeline to requirement for a survey with a option to develop a cultural mitigation approve a residential lease plus the 30- requirement for a legal description plan in case archeological resources are day timeline for review of leasehold of the land. encountered. Tribes have the option of mortgages because it is too long, • Delete the requirement for providing developing this plan under the NHPA. considering that the lessee may only documentation of the lessee’s We did not revise the regulations to submit a leasehold mortgage for history with similar projects include this as it is outside the scope of approval after the lease has been because many commercial lessees this rulemaking. approved. As stated earlier, we are single-project companies formed decreased the total time period for specifically for that project, with no 18. Approval Process & Timelines review of a residential lease to 30 days. previous development history, and, Most commenters stated their strong In response to this comment, we also in the WSR context, many support for including timelines for BIA decreased the time period for leasehold renewable energy companies are decisions on lease documents. In mortgage approval for residential leases new and do not have such a history. addition, we received the following to 20 days. • We addressed this comment by comments: Shorten the timelines for review of replacing ‘‘history in’’ with ‘‘ability • Require BIA to provide notice to the business leases (BIA has an initial 60- to.’’ day period in which to issue a decision, • landowner of the date it received the Explain BIA’s authority to question a complete lease proposal package. We plus 30 days if it exercises its option for lessee’s technical capability, incorporated this change and now additional time) because this time may especially given that the landowner require BIA to notify the parties of the cost the landowner almost 3 months of investigates these factors in date of receipt, so all are aware of when revenue while waiting for a BIA choosing a lessee. BIA will examine the timeline for approval begins. The decision and may not be commercially the technical capability only to timeline will still begin upon BIA’s feasible. Because these timelines are determine if there is a compelling receipt of the complete lease proposal intended to be the outer bounds of the time it will take for BIA review of reason not to approve the lease, and package. will defer, to the maximum extent business leases and are intended to • Clarify that the timelines do not possible, to the Indian landowners’ cover all business leases, from the begin to run until BIA has received all determination that the lease is in its simplest to the most complex, we did supporting documents, and address the best interest. not make any changes to the timeline in fact that it could take BIA years to • Explain whether an aliquot part response to these comments. description based on a BLM survey determine that it has received all the • Define the additional period for will be acceptable without documents. This comment is correct review as beginning either from the day providing an additional survey. An that the timelines do not begin to run BIA sends the notification that it needs aliquot part description will be until BIA has received all supporting more time, or from the end of the initial acceptable; however, we have documents. To provide certainty as to 60-day period, whichever is earlier. added flexibility to allow for other the timeline, BIA will provide the Because BIA is required to send its methods of obtaining a legal parties with the date on which the notification during the initial 60-day description. timeline begins to run. Also, the final period, the date BIA sends its • Delete the requirement for a rule establishes a limited list of notification will always be earlier than preliminary plan of development documents that must be submitted in the end of the initial 60-day period. For because such a plan may be support of a lease. The final rule also this reason, we did not incorporate this premature when a tribe or TDHE is includes new sections (see 162.339, e.g.) change. working with lending institutions to to allow for BIA review of a lease • Delete provisions allowing BIA to arrange financing for housing for pending completion of any required unilaterally decide it has an additional public purposes. We removed this NEPA and valuation documentation. 30 days to issue a decision. We deleted requirement in those cases in which The intent of this new provision is to this option for residential leasing and the tribe certifies the lease is for provide some guidance as to whether WEELs, but have retained it for business housing for public purposes. there are any red flags that would and WSR leases because we believe this • Delete the provision allowing BIA to prevent BIA approval of the lease. option is necessary to account for • request ‘‘any additional Clarify how BIA will meet its particularly complex leases. documentation * * * reasonably timelines for approval when it may take 19. How BIA Decides To Approve Lease necessary for approval’’ or require much longer to obtain landowner Documents BIA to provide a compelling reason consent. The timeline for BIA approval for the additional documentation. begins when BIA receives the lease and Several tribes supported provisions We deleted this provision in an all supporting documents, including the exempting lease actions from further effort to better define what a required consents. BIA approval where the lease so complete lease proposal package • Require BIA to show good cause for provides. A few tribes opposed the includes. extending its review of a residential ‘‘deemed approved’’ result because it • Allow tribes to waive the lease beyond 30 days because may result in uncertainty about whether mandatory provisions where residential leases are generally not a provision of the lease is consistent inappropriate. Tribes can seek a waiver voluminous or complex; alternatively, with Federal law. These tribes believe of one or more of these provisions under delete the second review period or BIA must take affirmative action. 25 CFR 1.2. decrease both the initial and second Because most tribes support the • Revise the mandatory provisions to review period. We addressed these ‘‘deemed approved’’ provisions, we are require compliance with all tribal comments by deleting the extra 30 days retaining them for amendments and business licensing, land use, permitting, for residential lease review. We also subleases. In addition, we received the and zoning laws. Compliance with these deleted the extra 30-day review time for following comments:
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• Extend ‘‘deemed approved’’ best interest of the Indian landowners interest of the Indian landowners. We provisions to leases, assignments, and because BIA is required to determine did not delete these factors because leasehold mortgages. We did not accept whether this is true. others had requested clarification of the this request for leases because we are • Always defer to the tribe’s ‘‘compelling reason’’ standard. statutorily required to review and discretion that something is in its best • Provide that short-term leases will approve leases of Indian land. We did interest, not just ‘‘to the maximum be routinely approved but that BIA will not accept this request for assignments extent possible.’’ We retained this find a compelling reason to withhold because we believe we are also qualifier because it is necessary in light approval for long-term leases only when statutorily bound to review them as they of our statutory obligation to review the lease could imperil the tribal land are, in effect, new leases. Many of these leases. base or tribal community. Because there commenters did not agree that lenders • Automatically consider leases for may be other compelling reasons to would rely only on affirmative BIA housing for public purposes to be in the withhold approval, we did not approval of leasehold mortgages. We did best interest of the Indian landowner. incorporate this change. The timelines not incorporate ‘‘deemed approved’’ for We expect that BIA will determine that and standards for approval are intended leasehold mortgages because, based on leases for housing for public purposes to provide the certainty associated with our consultation with representatives of are in the best interest of the landowner. routine approvals, while still allowing HUD, affirmative BIA approval is But in order to implement its statutory BIA the ability to fulfill its required by mortgagees and lenders mandate to review leases, BIA must responsibilities in reviewing leases. even if the regulations were to provide examine whether there is some reason • Clarify that provisions governing for a deemed approved process. the lease is not in the landowners’ best the BIA approval process for • Include a written BIA approval with interest, even while deferring to the amendments, assignments, subleases, a ‘‘deemed approved’’ amendment or landowners’ determination to the and leasehold mortgages apply only to sublease. We did not make a change to maximum extent possible. leases approved under part 162, and the regulation in response to this • Consider in the ‘‘best interest’’ that documents that can be agreed to comment but note that the parties may determination factors beyond just fair without BIA approval are exempt from request written confirmation from BIA market rental, including traditional and these approval procedures. We did not that a document has been deemed cultural values, the need for adequate make any change to the rule in response approved and/or that its provisions are housing in Indian country, and the to this comment because the general consistent with Federal law. ability of tribal member lessees to pay provisions establish the applicability of • Clarify whether the qualification fair market rental for residential leases. part 162 to certain lease documents, that a document is ‘‘deemed approved’’ We agree that the best interest including amendments, assignments, only ‘‘to the extent consistent with determination includes factors beyond subleases, and leasehold mortgages. As Federal law’’ devours the whole deemed monetary compensation and that it will written, the regulation does not allow approved process, such that there may vary according to circumstances. BIA to require approval of amendments, be pieces of what has been ‘‘deemed • Add a provision requiring BIA to assignments, subleases, and leasehold approved’’ that are not actually approve leases unless there is a mortgages related to documents that are approved. Our goal is to have compelling reason not to do so. In not otherwise governed by part 162. affirmative approvals by BIA, so that the response to this comment, we added a • Require BIA to inquire into whether ‘‘deemed approval’’ acts only as a new section at 162.341 (and parallel a lease applicant has complied with all guarantee that a decision will occur by sections for business, WEEL, and WSR pertinent tribal laws before approving a a certain time. To reduce potential leases) specifically addressing the business lease. A tribe may choose to uncertainty that could result from a standard by which BIA will determine require the lessee to obtain a statement deemed approved action, we added a whether to approve a lease. The rule from the tribal authority that the provision stating that any amendment or requires BIA to approve leases unless proposed use is in conformance with sublease provision that is inconsistent there is a compelling reason not to do tribal law. Where the tribe requires this, with Federal law will be severed and so and to provide a basis for its BIA will require the statement from the the remainder of the amendment or determination. tribe to be included in the package sublease will be enforceable. • Add examples of what a submitted to BIA. See 162.438. • Clarify whether, after an ‘‘compelling reason’’ to disapprove may • Restrict BIA approval to a amendment or sublease is deemed be. We could not identify an example, ‘‘confirmation that the lease is within approved, BIA will review it to but believe the provision is necessary if the tribe’s authority under applicable determine whether any provisions a unique situation arises that is not tribal law,’’ without considering conflict with Federal law. We did not contemplated by these regulations but compliance with Federal law, in those revise the regulation in response to this would clearly warrant disapproval. Two situations where BIA approval of a comment, but note that the deemed other tribal commenters objected to the specified tribe’s lease is not required approval provisions are intended as ‘‘compelling reason’’ standard as under 25 U.S.C. 415(b), but tribal law backstops, and we anticipate that BIA paternalistic and effectively standard- requires BIA approval of the lease. We will be actively reviewing amendments less. The rule uses the ‘‘compelling did not accept this change. The criteria, and subleases before the deadline to reason’’ standard as the highest if any, for approval of these leases will ensure consistency with Federal law. administrative standard of review; the be those in the applicable tribal law. • Delete the requirement for BIA to rule also requires that BIA articulate its determine that a lease is in the best basis for disapproval, so if it relies on 20. Effective Date of Leases interest of the Indian landowners a ‘‘compelling reason,’’ it must state • Clarify provisions regarding the because leases should automatically be what that reason is in writing. This effective date of lease documents, by in the best interest of Indian determination may be appealed. adding that documents not requiring landowners. In response to these • Delete the factors of what BIA will BIA approval are effective upon comments, we clarified the approval consider in determining whether there execution by the parties unless the process for leases. We were unable to is a compelling reason to disapprove a document provides for a different provide that leases are always in the lease document to protect the best effective date. We incorporated this
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change (see 162.342, 162.442, 162.532, simplified the definition of ‘‘appeal consent or BIA approval because they and 162.567). bond’’ and provisions regarding appeal circumvent due diligence to ensure the bonds to refer to 25 CFR part 2. assignee is suitable and capable of 21. Recording performing; alternatively, limit these 23. Amendments • TDHEs and CDFIs stated that the provisions to only those of lessee’s requirement to record residential • Define ‘‘amendment’’ to clarify that subsidiaries that are solvent and in good subleases should be removed as it does not include an alteration of lease standing in the State where the onerous. In response, we deleted the provisions that was expressly corporation is registered. We did not requirement to record residential contemplated in the original lease. We make any changes to this section subleases. did not incorporate this change because because the regulations provide that • Clarify that ‘‘lease documents’’ any amendment of the provisions of the assignments do not need consent or rather than just ‘‘leases’’ must be original lease will be an amendment, approval in these circumstances only if recorded in 162.343, 162.434, 162.533, whereas compliance with provisions of the lease so provides; the parties have and 162.568. We clarified that all lease the original lease would not. the opportunity to negotiate this. • documents must be recorded except for Delete the provision stating that a • Clarify that a lessee may assign the residential subleases. lease may not be amended if the lease • lease as collateral for any financing or Several tribes asked whether the prohibits amendments because it is refinancing of the project. We did not LTRO will record a document that has unlikely a lease would state this. We incorporate this change because a lease been ‘‘deemed approved’’ or a lease deleted this provision. • may be assigned for any reason. document that does not require BIA Add that landowners may not be • Add a process by which a financing approval (e.g., an assignment to a deemed to have consented, and their party can obtain acknowledgment from leasehold mortgage acquiring through representatives may not consent on their the tribe that the assignment provisions foreclosure). BIA realty staff will work behalf, to any amendments that would are valid. Because this is a matter with the LTRO to ensure that these modify the dispute resolution between the tribe, lessee, and documents are recorded. One tribe provisions. We incorporated this mortgagee, we did not incorporate this stated that the absence of an affirmative change. change. BIA approval will prevent maintaining • Clarify that a lease may be amended • Allow a lease to provide for accurate records at county offices to secure financing of the project that is assignments without BIA approval or because the county recorder may not the subject of the lease. We did not landowner consent to any number of record something without BIA approval. incorporate this change because a lease distinct legal entities identified in the We are working on implementation may be amended for any reason. lease. We rejected this change to keep issues to ensure that it is clear on the • Add that BIA will approve BIA review of the original lease face of a document that it has been amendments where the lease is for manageable, but increased the number approved (either through affirmative housing for public purposes and is in of distinct legal entities that may be approval or deemed approval). the tribe’s best interest. To address this • identified from two to three. Allow recording of an original comment, we added that we will defer, • memorandum of lease rather than the to the maximum extent possible, to the Treat assignments of residential, full lease. This is a broader issue Indian landowner’s determination that business and WSR leases the same. We regarding title records, which is the amendment is in their best interest. reorganized the provisions related to governed by another regulation, 25 CFR • Exempt amendments that are not assignments of residential leases to 150.11. material from the requirement for address this comment. • Address alternative recording with consent. We did not incorporate this 25. Subleases tribal and State recording offices change because, unless the lease because the tribe has had difficulty provides for deemed consent or consent Nearly all tribes opposed the recording with the LTRO where the by representatives, the landowners must conditions for residential subleasing lease is on restricted fee lands. The consent to all amendments. without consent or BIA approval, which LTRO records leases on restricted fee required an approved rent schedule, 24. Assignments lands. plan of development, and sublease form. • Clarify whether there is a lease • Authorize assignments without They objected to these provisions tracking system in place with lease further BIA approval or landowner because, for leases for housing for amounts and details on each lease that consent if the lease is for housing for public purposes, HUD already regulates is readily available to realty offices. BIA public purposes and the assignee is a these items. We deleted these realty staff uses the Title Asset TDHE or other tribal entity. We conditions so that a lessee may sublease Accounting and Management System incorporated this change at 162.349 (PR without obtaining BIA approval or (TAAMS) as the lease tracking system. 162.347). landowner consent, as long as the lease • Delete the provision at 162.352(c) so provides. 22. Appeal Bonds (PR 162.350) requiring the assignee to Several commenters expressed their • Delete the proposed rule’s pay fair market rental to the landowner concern with regard to tribes that requirement that the lessee post an where the assignee is not a member of operate their housing programs as appeal bond for residential leasing as the landowner’s immediate family, departments, rather than as separate unnecessary. We deleted this because it would limit assignments in entities such as TDHEs. These tribes requirement. the housing for public purposes context. directly lease to individuals and, under • Revise appeal bond requirements The final rule provides that assignments the regulations, must obtain a BIA for business leases to state that an of leases for housing for public purposes approval for each individual lease. appeal bond will not be required for an do not require BIA approval, so this While this is true of the proposed and appeal of a decision on a leasehold restriction will not affect assignments of final rule, it is also true of the current mortgage or if the tribe is a party to the leases for housing for public purposes. regulations. Because BIA is statutorily appeal and the tribe requests a waiver. • Delete provisions allowing obligated to review and approve each We incorporated these changes and also assignments to subsidiaries without lease, we could not identify a legally
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permissible means of exempting these 26. Leasehold Mortgages 27. Appeal From Inaction leases. • Clarify what is meant by the lease • Include a different remedy for BIA’s In addition, we received the following providing a ‘‘general authorization’’ for comments: failure to act on a lease proposal leasehold mortgages, to exempt the • Exempt commercial leases of retail package because the appeals process leasehold mortgage from consent and office space within existing under 25 CFR part 2 is so slow that it facilities from BIA review. The final rule requirements. We clarified the final rule is not an effective remedy for delays in provides that the lease may allow for to state that no landowners’ consent is BIA’s decisions on lease documents. In subleasing without BIA review. A tribe required if the lease so provides. response, we added a new process to • Delete the requirement for obtaining noted that mall developers who enforce timelines on BIA whereby the sublease for retail or office space need consent from all landowners for a matter is first elevated from the flexibility to meet the needs of leasehold mortgage because there may Superintendent to the Regional Director, individual retailers, and asked that be privacy issues related to the lessee’s and from the Regional Director to the these types of review be exempted. financial situation. We clarified that the Director of BIA. This will instill more While we did not categorically exempt lease may allow for leasehold mortgages accountability for issuing timely these, they may be exempt from BIA without landowner consent. decisions and will provide a more • Exempt leasehold mortgages from approval if the lease so provides. effective remedy for parties seeking a • Exempt subleases between parents BIA approval where the lease is for decision. These procedures are intended and children from the requirement for housing for public purposes because of to supplant 25 CFR 2.8 entirely, so a BIA approval and landowner consent. situations where a TDHE records a party is not required to submit a section Because the final rule states that all mortgage and may file an additional 2.8 demand letter giving the official a residential subleases are exempt from mortgage if the costs exceed the original certain time period to act before approval and consent where the lease projected amount. We did not include allowing an appeal. We acknowledge provides, we determined this change an exemption because BIA approval of that the formal adjudication process was unnecessary. leasehold mortgages is required in all before the Interior Board of Indian • Establish a default rule that instances to ensure that only the Appeals may not be the most leasehold is encumbered. subleases do not need BIA approval • appropriate or expeditious process unless the lease specifically requires. Add that where the leasehold when a BIA official fails to meet The regulations are intended to be as mortgage is for a lease for housing for regulatory deadlines. Our hope is that flexible as possible, consistent with our public purposes, BIA will defer, to the inserting a supervisory official, the BIA trust responsibility, by allowing for maximum extent possible, to the Director, into the process will obviate subleasing without further approval if judgment of the tribe and will complete the need for any further relief; and we the lease so provides. its review in 30 days. Because we defer may consult with tribes on the Board’s • Delete the provision allowing to the judgment of the tribe with regard role with respect to instances of BIA lessees to sublease without BIA to all leasehold mortgages, and we have inaction in the future. reduced the timeline for BIA approval of approval if the lease so provides, as • Revise the appeal process to allow inconsistent with the Department’s trust leasehold mortgages to 20 days (see approvals and timelines section, above), for an informal conference process responsibility. BIA did not incorporate similar to 25 CFR 900.153, rather than this suggestion because of tribal we did not incorporate this suggested language. the part 2 process. We did not comments stating that flexibility in • incorporate this process for appeals subleasing is necessary to meet housing Clarify the role of BIA staff, and whether they have the knowledge to from inaction because an informal and economic development needs. conference would likely further delay • Limit or prohibit subleasing determine if a leasehold mortgage is in the lessee’s best interest or are assuming issuance of a decision. We did because it can result in the lessee’s incorporate an abbreviated form of this obtaining rental income far in excess of the role of an underwriter. The scope of BIA’s review of the leasehold mortgage process for appeals of disapprovals of what the landowner receives. The WEELs because these are intended to be comment related to leasing for oil and is limited to determining whether the landowners have consented, the short-term leases on a particularly gas, which is not subject to this expedited approval schedule. rulemaking, whereas in the residential requirements of the subpart have been context this is generally not an issue. met, and there is a compelling reason to 28. Compliance and Enforcement • disapprove the leasehold mortgage. We Involve the tribe in any assignment • or sublease decision if it owns any deleted several factors and replaced Clarify cancellation versus portion of the affected land. We added them with a factor regarding whether termination. We added definitions for a provision to require notification to all mortgage proceeds would be used for each of these terms to clarify that only Indian landowners of these actions, purposes unrelated to the lease to clarify BIA may cancel a lease, but an Indian unless the lease provides otherwise. this limited scope of BIA’s review. We landowner may terminate a lease. • Add that BIA will defer, to the also revised the provision stating that • Clarify how BIA will ‘‘defer’’ to maximum extent possible, to the Indian BIA ‘‘will’’ consider certain factors in tribal court judgments, because if BIA landowners’ determination that the determining whether there is a can take unilateral action regardless of sublease is in their best interest. We compelling reason to disapprove to tribal court proceedings addressing the added this provision. instead state that BIA ‘‘may’’ consider same issue, then it will undermine • Delete the proposed rule’s provision those factors. This revision provides parties’ efforts to provide for requiring the sublessee to be bound by BIA with flexibility to rely on another appropriate forums to resolve disputes. the terms of the lease because it is Federal agency’s approval or guarantee If the parties are addressing a lease overly restrictive and would prohibit of the leasehold mortgage. Likewise, compliance issue in tribal court or other partial subleases. We deleted this when a leasehold mortgage is associated court of competent jurisdiction, through provision and instead included a with housing for public purposes, BIA’s a tribal governing body or an alternative provision requiring the lessee to remain review of the compelling reasons will be dispute resolution method, BIA liable under the lease. less intensive. generally will wait for those
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proceedings to close and defer to the BIA may coordinate with other law To the extent we can do so within the outcome. enforcement officials, as necessary. current statutory framework, we have • Restore the current rule’s provision • Add timeframes for BIA to provide attempted to remove BIA as a barrier to that BIA will assist Indian landowners a notice of violation. We did not fostering business opportunities and in the enforcement of negotiated incorporate these changes because BIA economic development through leasing remedies. We added a provision in has enforcement discretion in on Indian land. 162.365(d), 162.465(d), and 162.590(d) determining when to issue a notice of • Add a new section to allow BIA to to provide that landowners may request violation. This commenter requested amend or correct a lease due to a BIA assistance in enforcing negotiated that the timeframe for the lessee to cure mistake, such as an incorrect legal land remedies. a violation be extended from 10 days to description, a mistake allowing a party • Delete the requirement for BIA to 30 or 60 days. We did not incorporate to avoid legal obligations under an contact each individual Indian this change because the regulations approved mortgage, or other mistake as landowner to ensure removal of allow the lessee to request a longer time necessary to protect the interests of the improvements because it is unrealistic. period to cure. Indian landowners. We did not add this We did not change the rule in response • Require the lessee to notify the section because the parties must agree to to this comment because the rule tribe, in addition to BIA, that it has any amendments of the lease; BIA has provides that BIA will contact cured a violation. We incorporated this no authority to interfere with the individual Indian landowners, where change. contractual agreement of the parties • feasible, and other commenters had Add specific timeframes (rather even where it determines that a requested that BIA attempt to contact than ‘‘promptly’’) for BIA to investigate ‘‘mistake’’ has occurred. individual Indian landowners to ensure a potential violation. Because BIA’s • Develop a model lease to expedite removal. ability to investigate potential violations the review and approval process. A • Clarify the statement that BIA may varies with the availability of resources, model lease has been developed for order the lessee to ‘‘stop work.’’ We we did not add a specific timeframe. residential leases of tribal land. BIA has • revised this provision to clarify that BIA Allow financing parties the right to not developed a model lease for may order the lessee to ‘‘cease cure on behalf of the lessee. The business or WSR because the leases vary operations under the lease.’’ regulations allow financing parties this • widely; however, we will develop Restrict BIA’s ability to enforce right, as they continue to be responsible checklists for guidance. leases so that BIA action is triggered for the obligations in the lease. • • Allow for the right to receive lease only by a ‘‘material’’ violation. We did Clarify that enforcement of program income from exchange assignments, not restrict BIA’s authority to material occupancy documents is left to the which had been encouraged by BIA. The violations, but note that BIA will tribes. BIA does not enforce program parties may address exchange consult with Indian landowners occupancy documents. assignments in the lease. regarding violations. • Provide that tribal courts should be • • We received several comments Require written notice of the ultimate arbiter of land disputes. We regarding rights-of-way, utility nonpayment from Indian landowners in did not make a change to the rule in easements, encouraging broadband 162.366(c)(1)(ii) (PR 162.363). We did response to this comment, but note that network investment, agricultural not incorporate this change because the parties may include in the lease that leasing, BIA resources, assisting tribes ‘‘actual notice’’ provides more flexibility the tribal court is the ultimate arbiter of in preparing their own tax regulations, to the Indian landowners, allowing any lease disputes between the parties. LTROs, TAAMS, Government • Allow a one-time lump sum rental them to notify BIA either in writing, in Performance and Results Act (GPRA) payment, to render much of the person, or by phone. reporting, carbon sequestration and cap- • Allow the tribe, rather than BIA, to compliance and enforcement process and-trade programs, administration of establish fees. The fees referred to in unnecessary. The regulations do allow individual Indian money (IIM) accounts, 162.368 (PR 162.365) and parallel for a one-time lump sum rental procedures for contacting landowners provisions are those due to the United payment, but the compliance and whose whereabouts are unknown, and States under the Debt Collection Act. enforcement process is still necessary background checks; we are not This section does not affect whether for violations other than failure to pay addressing these comments here tribes may impose their own fees. rent. because they are outside the scope of Another tribe stated that if a lessee 29. Miscellaneous this rulemaking. doesn’t have the resources to pay rent on time, they won’t have the resources • Carefully consider the implication IV. Procedural Requirements to pay the fees. These fees are required of the Helping Expedite and Advance A. Regulatory Planning and Review under the Debt Collection Act. The Responsible Tribal Home Ownership (E.O. 12866 and 13563) parties to a lease may agree not to Act of 2012 (HEARTH Act) on charge late payment charges or other implementation of these regulations, to Executive Order (E.O.) 12866 provides fees under the lease. avoid two conflicting systems. These that the Office of Information and • Include mandatory language to regulations would allow for two Regulatory Affairs (OIRA) at the Office force BIA to make a trespass finding or independent, consistent processes, if a of Management and Budget (OMB) will take other enforcement action. We did tribe develops its own leasing review all significant rules. OIRA has not incorporate this change in order to regulations under the HEARTH Act. determined that this rule is significant retain enforcement discretion. One tribe suggested that instead of because it raises novel legal or policy • Require BIA, in 162.464 (PR promulgating leasing regulations, BIA issues. 162.461), to coordinate with other should incorporate the essence of the E.O. 13563 reaffirms the principles of Federal, tribal, or State law enforcement HEARTH Act. BIA is statutorily E.O. 12866 while calling for officials as needed to evict, in order to required to approve leases; the HEARTH improvements in the nation’s regulatory prevent litigation on this matter. We did Act removes that requirement under system to promote predictability, to not make a change to the regulation in certain conditions (e.g., the tribe reduce uncertainty, and to use the best, response to this comment, but note that develops its own leasing regulations). most innovative, and least burdensome
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tools for achieving regulatory ends. The tribal governments or the private sector 31, 2011 in Minnesota; and April 6, E.O. directs agencies to consider of more than $100 million per year. The 2011, in Albuquerque, New Mexico. We regulatory approaches that reduce rule does not have a significant or requested that tribes submit written burdens and maintain flexibility and unique effect on State, local, or tribal comments by April 18, 2011. We freedom of choice for the public where governments or the private sector. A received written and oral comments these approaches are relevant, feasible, statement containing the information from over 70 Indian tribes during tribal and consistent with regulatory required by the Unfunded Mandates consultation. We reviewed each objectives. E.O. 13563 emphasizes Reform Act (2 U.S.C. 1531 et seq.) is not comment in depth and revised the rule further that regulations must be based required. accordingly. The proposed rule on the best available science and that incorporated those revisions. We also the rulemaking process must allow for E. Takings (E.O. 12630) compiled a summary of tribal comments public participation and an open Under the criteria in Executive Order received and our responses to those exchange of ideas. We have developed 12630, this rule does not affect comments and are making that this rule in a manner consistent with individual property rights protected by document available to tribes at http:// these requirements. This rule is also the Fifth Amendment nor does it www.bia.gov/WhoWeAre/AS-IA/ part of the Department’s commitment involves a compensable ‘‘taking.’’ A Consultation/index.htm. We notified under the Executive Order to reduce the takings implication assessment is not tribes of the publication of the proposed number and burden of regulations. required. rule on November 28, 2011, provided them with a Web site link to responses B. Regulatory Flexibility Act F. Federalism (E.O. 13132) to tribal comments and other materials, The Department of the Interior Under the criteria in Executive Order and announced additional consultation certifies that this rule will not have a 13132, this rule has no substantial direct sessions. Following publication of the significant economic effect on a effect on the States, on the relationship proposed rule, we held additional tribal substantial number of small entities between the national government and consultation sessions on January 10, under the Regulatory Flexibility Act (5 the States, or on the distribution of 2012, in Seattle, Washington; January U.S.C. 601 et seq.). Small entities are not power and responsibilities among the 12, 2012, in Palm Springs, California; likely to enter into residential leases on various levels of government. This rule and January 18, 2012, in Rapid City, Indian land because tribal housing governs leasing on Indian land, which is South Dakota. We received written and authorities and tribal members usually land held by the Federal Government in oral comments from approximately 50 enter into these leases. It is possible that trust or restricted status for individual tribes, and several tribal organizations small entities may enter into business Indians or Indian tribes. This land is and tribal members and took them into leases or wind or solar resources leases subject to tribal law and Federal law, consideration in formulating this final but this rule does not impose any only, except in limited circumstances rule, as described above. requirements in obtaining or complying and areas where Congress or a Federal I. Paperwork Reduction Act with a lease that would have a court has made State law applicable. significant economic effect on those This rule therefore does not affect the The Paperwork Reduction Act (PRA), entities. relationship between the Federal 44 U.S.C. 3501 et seq., prohibits a Government and States or among the Federal agency from conducting or C. Small Business Regulatory various levels of government. sponsoring a collection of information Enforcement Fairness Act that requires OMB approval, unless this This rule is not a major rule under 5 G. Civil Justice Reform (E.O. 12988) approval has been obtained and the U.S.C. 804(2), the Small Business This rule complies with the collection request displays a currently Regulatory Enforcement Fairness Act. It requirements of Executive Order 12988. valid OMB control number. No person will not result in the expenditure by Specifically, this rule has been reviewed is required to respond to an information State, local, or tribal governments, in the to eliminate errors and ambiguity and collection request that has not complied aggregate, or by the private sector of written to minimize litigation; and is with the PRA. $100 million or more in any one year. written in clear language and contains In the Federal Register of November The rule’s requirements will not result clear legal standards. 29, 2011, the Department published the in a major increase in costs or prices for proposed rule and invited comments on H. Consultation With Indian Tribes consumers, individual industries, the proposed collection of information. (E.O. 13175) Federal, State, or local government The Department submitted the agencies, or geographic regions. The In accordance with the President’s information collection request to the rule continues to require lessees to pay memorandum of April 29, 1994, Office of Management and Budget at least fair market rental, with certain ‘‘Government-to-Government Relations (OMB) for review and approval. OMB exceptions, and adds that lessees may with Native American Tribal did not approve this collection of agree to some other amount negotiated Governments,’’ Executive Order 13175 information, but instead, filed comment. by the Indian tribe. Nor will this rule (59 FR 22951, November 6, 2000), and In filing comment on this collection of have significant adverse effects on 512 DM 2, we have evaluated the information, OMB requested that, before competition, employment, investment, potential effects on federally recognized publication of the final rule, the productivity, innovation, or the ability Indian tribes and Indian trust assets. Department provide all comments on of the U.S.-based enterprises to compete During development of the proposed the recordkeeping and reporting with foreign-based enterprises because rule, the Department discussed the rule requirements in the proposed rule, the the rule is limited to Indian land and is with tribal representatives at several Department’s response to these intended to promote economic consultation sessions. We distributed a comments, and a summary of any development. preliminary draft of the rule to tribes in changes to the information collections. February 2011 and held three We did not receive any public D. Unfunded Mandates Reform Act consultation sessions: Thursday, March comments regarding the information This rule does not impose an 17, 2011 at the Reservation Economic collection burden estimates in response unfunded mandate on State, local, or Summit (RES) 2011 in Las Vegas; March to publication of the proposed rule in
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the Federal Register; however, some of information, these did not affect the OMB Control No. 1076–0155 the comments on the rule related to burden estimates. currently authorizes the collections of comments on information collections, OMB has approved the revision to the information in 25 CFR part 162, totaling including comments on NEPA information collections approved under an estimated 106,065 annual burden documentation and supporting OMB Control No. 1076–0155 to reflect hours. The final rule increases the annual burden hours by an estimated documents. These are discussed in the information collections in this final 2,910 hours. Because the sections where Section III.C. under the heading for rule. This approval will expire on XX/ section 162.027, above, and Section the information collections occur XX/XXXX. Questions or comments changes, we are including a table III.H.17, above. Because the changes concerning this information collection made as a result to these comments do showing the section changes and should be directed to the person listed whether a change to the information not change the overall estimates of how in the FOR FURTHER INFORMATION long it takes to collect and provide collection requirement associated with CONTACT section of this preamble. those sections has changed.
Current CFR cite New CFR cite Information collection requirement Explanation of change
162.109, 162.204, 162.205 162.109, 162.204, Provide notice of tribal leasing laws, reg- No change. Previously required, but now 162.205, 162.338(e), ulations, exemptions. listed in specific subparts. 162.438(e), 162.528(d), 162.570(e). 162.320, 162.420, 162,549 Request for fair market rental/valuation New. on tribal land. 162.321, 162.421, 162.550 Request for waiver of fair market rental/ New. valuation for individually owned land. 162.324, 162.424, 162.553 Agreement to suspend direct pay ...... New. 162.371, 162.471, 162.596 Notification of good faith negotiations New. with holdover. 162.207, 162.242–244, 162.009, 162.207, Submit lease, assignment, amendment, No change. Previously required, but now 162.604(a), 162.610. 162.242–244, 162.347, leasehold mortgage for approval. listed in separate subparts. 351, 355, 359, 162.447, 451, 455, 459, 162.529, 534, 565, 572, 576, 580, 584. 162.213, 162.604(a) ...... 162.024 162.213, 162.338, Provide supporting documentation ...... No change. Previously required, but now 162.438, 162.528, listed in separate subparts. 162.563. 162.007 ...... Submit permits to BIA for file ...... Permits must now be submitted to BIA for file. 162.217, 162.246 ...... 162.217, 162.246, Submit lease for recording ...... No change. Previously required, but now 162.343, 162.443, listed in separate subparts. 162.568. 162.234, 162.604(c) ...... 162.234, 162.434, Provide a bond ...... No change. Previously required, but now 162.525, 162.559. listed in separate subparts. 162.237, 162.604(d) ...... 162.237, 162.437, Provide information for acceptable insur- No change. Previously required, but now 162.527, 162.562. ance. listed in separate subparts. 162.241 ...... 162.241 ...... Administrative fees ...... No change. 162.247, 162.613 ...... 162.247, 162.325, 329, Pay rent ...... No change. Previously required, but now 162.425, 429, 162.523, listed in separate subparts. 551. 162.248, 162.616 ...... 162.248, 162.368, Pay penalties for late payment ...... No change. Previously required, but now 162.468, 162.593. listed in separate subparts. 162.212, 162.606 ...... 162.009, 162.212 ...... Bidding on advertised lease ...... No change. Previously required, but now listed in separate subparts. 162.603 ...... 162.005(b)(2) ...... Use of minor’s land ...... No change. Previously required, but now listed in separate subparts. 162.251, 162.618 ...... 162.251, 162.366, Provide notice of curing violation ...... No change. Previously required, but now 162.466, 162.591. listed in separate subparts. 162.256, 162.623 ...... 162.256, 162.371, Respond to notice of trespass ...... No change. Previously required, but now 162.471, 162.596. listed in separate subparts. 162.113 ...... 162.025, 162.113 ...... Appealing decisions ...... No change. Previously required, but now listed in separate subparts.
The table showing the burden of the information collection is included below for your information.
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Respondent Number Annual Burden hours Total annual CFR cite Description type respondents responses per response burden hours
162.109, 162.204, Provide notice of tribal Tribal ...... 500 500 0 .5 250 162.205, 162.338(e) leasing laws, regula- 162.438(e), 162.528(d), tions, exemptions. 162.570(e). 162.320, 162.420, Request for fair market Tribal ...... 50 50 0 .5 25 162,549. rental/valuation on tribal land. 162.321, 162.421, Request for waiver of fair Individuals ...... 5,000 5,000 0.5 2,500 162.550. market rental/valuation for individually-owned land. 162.324, 162.424 162.553 Agreement to suspend di- Individuals ...... 20 20 0 .5 10 rect pay. 162.371, 162.471, Notification of good faith Tribal ...... 100 100 0.5 50 162.596. negotiations with hold- over. Individuals ...... 500 500 0.5 250 162.009, 162.207, 242– Submit lease, assignment, Individuals ...... 10,000 10,000 1 10,000 244, 162, 347, 351, amendment, leasehold 355, 359, 162.447, 451, mortgage for approval. 455, 459, 162.529, 534, 565, 572, 576, 580, 584. Businesses ...... 2,500 2,500 1 2,500 Tribal ...... 2,000 2,000 1 2,000 162.024, 162.213, Provide supporting docu- Individuals ...... 5,000 5,000 0.25 1,250 162.338, 162.438, mentation. 162.528, 162.563. Businesses ...... 2,000 2,000 0 .25 500 Tribal ...... 250 250 0.25 62.5 162.007 ...... Submit permits to BIA for Individuals ...... 100 100 0 .25 25 file. Businesses ...... 100 100 0 .25 25 Tribal ...... 100 100 0.25 25 162.217, 162.246, Submit lease for recording Individuals ...... 10,000 10,000 0 .5 5,000 162.343, 162.443, 162.568. Businesses ...... 2,500 2,500 0 .5 1,250 Tribal ...... 2,000 2,000 0 .5 1,000 162.234, 162.434, Provide a bond ...... Individuals ...... 10,000 10,000 0 .5 5,000 162.525, 162.559. Businesses ...... 2,500 2,500 0 .5 1,250 Tribal ...... 2,000 2,000 0 .5 1,000 162.237, 162.437, Provide information for ac- Individuals ...... 10,000 10,000 0.25 2,500 162.527, 162.562. ceptable insurance. Businesses ...... 2,500 2,500 0 .25 625 Tribal ...... 2,000 2,000 0 .25 500 162.241 ...... Administrative fees ...... Individuals ...... 10,000 10,000 2 20,000 Businesses ...... 2,500 2,500 2 5,000 Tribal ...... 2,000 2,000 2 4,000 162.247, 162.325, 329, Pay rent ...... Individuals ...... 10,000 10,000 0 .25 2,500 162.425, 429, 162.523, 551. Businesses ...... 2,500 2,500 0 .25 625 Tribal ...... 2,000 2,000 0 .25 500 162.248, 162.368, Pay penalties for late pay- Individuals ...... 3,000 3,000 0.25 750 162.468, 162.593. ment. Businesses ...... 600 600 0 .25 150 Tribal ...... 25 25 0 .25 6 162.009, 162.212 ...... Bidding on advertised Individuals ...... 10,000 10,000 1 10,000 lease. Businesses ...... 2,500 2,500 1 2,500 Tribal ...... 2,000 2,000 1 2,000 162.005(b)(2) ...... Use of a minor’s land ...... All ...... 7,250 7,250 3 21,750 162.251, 162.366, Provide notice of curing Individuals ...... 100 100 0.5 50 162.466, 162.591. violation. Businesses ...... 45 45 0 .5 23 162.256, 162.371, Respond to notice of tres- Individuals ...... 100 100 0.5 50 162.471, 162.596. pass. Businesses ...... 45 45 0 .5 23 162.025, 162.113 ...... Appealing decisions ...... Individuals ...... 400 400 2 800 Businesses ...... 225 225 2 450 Tribal ...... 100 100 2 200
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Respondent Number Annual Burden hours Total annual CFR cite Description type respondents responses per response burden hours
...... Total ...... 127,110 127,110 ...... 108,975
J. National Environmental Policy Act Subpart A—General Provisions Subpart A—General Provisions This rule does not constitute a major Purpose, Definitions, and Scope Purpose, Definitions, and Scope Federal action significantly affecting the Sec. quality of the human environment 162.001 What is the purpose of this part? § 162.001 What is the purpose of this part? because these are ‘‘regulations * * * 162.002 How is this part subdivided? (a) The purpose of this part is to whose environmental effects are too 162.003 What key terms do I need to know? promote leasing on Indian land for 162.004 To what land does this part apply? broad, speculative, or conjectural to housing, economic development, and lend themselves to meaningful analysis When To Get a Lease other purposes. and will later be subject to the NEPA 162.005 When do I need a lease to authorize (b) This part specifies: process, either collectively or case-by- possession of Indian land? (1) Conditions and authorities under case.’’ 43 CFR 46.210(j). No 162.006 To what types of land use which we will approve leases of Indian extraordinary circumstances exist that agreements does this part apply? land and may issue permits on would require greater NEPA review. 162.007 To what permits does this part apply? Government land; K. Effects on the Energy Supply (E.O. 162.008 Does this part apply to lease (2) How to obtain leases; 13211) documents I submitted for approval (3) Terms and conditions required in before January 4, 2013? leases; This rule is not a significant energy 162.009 Do I need BIA approval of a (4) How we administer and enforce action under the definition in Executive subleasehold mortgage? leases; and Order 13211. A Statement of Energy How To Get a Lease (5) Special requirements for leases Effects is not required. 162.010 How do I obtain a lease? made under special acts of Congress that List of Subjects in 25 CFR Part 162 162.011 How does a prospective lessee apply only to certain Indian identify and contact individual Indian reservations. Indians—lands. landowners to negotiate a lease? (c) If any section, paragraph, or For the reasons stated in the 162.012 What are the consent requirements provision of this part is stayed or held preamble, the Department of the for a lease? invalid, the remaining sections, Interior, Bureau of Indian Affairs, 162.013 Who is authorized to consent to a lease? paragraphs, or provisions of this part amends part 162 in Title 25 of the Code remain in full force and effect. of Federal Regulations as follows: Lease Administration § 162.002 How is this part subdivided? 162.014 What laws apply to leases PART 162—LEASES AND PERMITS approved under this part? (a) This part includes multiple 162.015 May a lease contain a preference subparts relating to: ■ 1. Revise the authority citation for part consistent with tribal law for (1) General Provisions (Subpart A); 162 to read as follows: employment of tribal members? (2) Agricultural Leases (Subpart B); 162.016 Will BIA comply with tribal laws Authority: 5 U.S.C. 301, R.S. 463 and 465; in making lease decisions? (3) Residential Leases (Subpart C); 25 U.S.C. 2 and 9. Interpret or apply sec. 3, 162.017 What taxes apply to leases (4) Business Leases (Subpart D); 26 Stat. 795, sec. 1, 28 Stat. 305, secs. 1, 2, approved under this part? (5) Wind Energy Evaluation, Wind 31 Stat. 229, 246, secs. 7, 12, 34 Stat. 545, 162.018 May tribes administer this part on Resource, and Solar Resource Leases 34 Stat. 1015, 1034, 35 Stat. 70, 95, 97, sec. BIA’s behalf? 4, 36 Stat. 856, sec. 1, 39 Stat. 128, 41 Stat. (Subpart E); 162.019 May a lease address access to the (6) Special Requirements for Certain 415, as amended, 751, 1232, sec. 17, 43 Stat. leased premises by roads or other 636, 641, 44 Stat. 658, as amended, 894, infrastructure? Reservations (Subpart F); and 1365, as amended, 47 Stat. 1417, sec. 17, 48 162.020 May a lease combine tracts with (7) Records (Subpart G). Stat. 984, 988, 49 Stat. 115, 1135, sec. 55, 49 different Indian landowners? (b) Leases covered by subpart B are Stat. 781, sec. 3, 49 Stat. 1967, 54 Stat. 745, 162.021 What are BIA’s responsibilities in not subject to the provisions in subpart 1057, 60 Stat. 308, secs. 1, 2, 60 Stat. 962, approving leases? A. Leases covered by subpart B are sec. 5, 64 Stat. 46, secs. 1, 2, 4, 5, 6, 64 Stat. 162.022 What are BIA’s responsibilities in subject to the provisions in subpart G, 470, 69 Stat. 539, 540, 72 Stat. 968, 107 Stat. administering and enforcing leases? 2011, 108 Stat. 4572, March 20, 1996, 110 except that if a provision in subpart B 162.023 What if an individual or entity conflicts with a provision of subpart G, Stat. 4016; 25 U.S.C. 380, 393, 393a, 394, 395, takes possession of or uses Indian land 397, 402, 402a, 403, 403a, 403b, 403c, 409a, without an approved lease or other then the provision in subpart B will 413, 415, 415a, 415b, 415c, 415d, 416, 477, proper authorization? govern. 635, 2201 et seq., 3701, 3702, 3703, 3712, 162.024 May BIA take emergency action if (c) Subpart F applies only to leases 3713, 3714, 3715, 3731, 3733, 4211; 44 U.S.C. Indian land is threatened? made under special acts of Congress 3101 et seq. 162.025 May decisions under this part be covering particular Indian reservations. § 162.100 [Removed] appealed? Leases covered by subpart F are also 162.026 Who can answer questions about subject to the provisions in subparts A ■ 2. Remove § 162.100. leasing? through G, except to the extent that 162.027 What documentation may BIA subparts A through G are inconsistent §§ 162.101 through 162.113 [Transferred to require in approving, administering, and Subpart B] enforcing leases? with the provisions in subpart F or any act of Congress under which the lease is ■ 3. Transfer §§ 162.101 through 162.028 How may an Indian tribe obtain information about leases on its land? made, in which case the provisions in 162.113 from subpart A to subpart B. 162.029 How does BIA provide notice to subpart F or any act of Congress under ■ 4. Revise subpart A to read as follows: the parties to a lease? which the lease is made will govern.
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§ 162.003 What key terms do I need to Fractionated tract means a tract of lessee, whereby the lessee is granted a know? Indian land owned in common by right to possess Indian land, for a Adult means a person who is 18 years Indian landowners and/or fee owners specified purpose and duration. The of age or older. holding undivided interests therein. lessee’s right to possess will limit the Appeal bond means a bond posted Government land means any tract, or Indian landowners’ right to possess the upon filing of an appeal. interest therein, in which the surface leased premises only to the extent Approval means written authorization estate is owned and administered by the provided in the lease. by the Secretary or a delegated official United States, not including Indian Lease document means a lease, or, where applicable, the ‘‘deemed land. amendment, assignment, sublease, or approved’’ authorization of an Holdover means circumstances in leasehold mortgage. amendment or sublease. which a lessee remains in possession of Leasehold mortgage means a Assignment means an agreement the leased premises after the lease term mortgage, deed of trust, or other between a lessee and an assignee, expires. instrument that pledges a lessee’s whereby the assignee acquires all or Housing for public purposes means leasehold interest as security for a debt some of the lessee’s rights, and assumes multi-family developments, single- or other obligation owed by the lessee all or some of the lessee’s obligations, family residential developments, and to a lender or other mortgagee. under a lease. single-family residences: Lessee means person or entity who BIA means the Secretary of the (1) Administered by a tribe or tribally has acquired a legal right to possess Interior or the Bureau of Indian Affairs designated housing entity (TDHE); or Indian land by a lease under this part. within the Department of the Interior (2) Substantially financed using a Life estate means an interest in and any tribe acting on behalf of the tribal, Federal, or State housing property held only for the duration of a Secretary or Bureau of Indian Affairs assistance program or TDHE. designated person(s)’ life. A life estate under § 162.018. Immediate family means, in the may be created by a conveyance Business day means Monday through absence of a definition under applicable document or by operation of law. Friday, excluding federally recognized tribal law, a spouse, brother, sister, aunt, LTRO means the Land Titles and holidays and other days that the uncle, niece, nephew, first cousin, lineal Records Office of the BIA. applicable office of the Federal ancestor, lineal descendant, or member Mail means to send something by U.S. Government is closed to the public. of the household. Postal Service or commercial delivery Indian means: Cancellation means BIA action to end service. (1) Any person who is a member of a lease. Minor means an individual who is any Indian tribe, is eligible to become a Consent or consenting means written less than 18 years of age. member of any Indian tribe, or is an authorization by an Indian landowner to Mortgagee means the holder of a owner as of October 27, 2004, of a trust a specified action. leasehold mortgage. Constructive notice means notice: or restricted interest in land; NEPA means the National (2) Any person meeting the definition (1) Posted at the tribal government Environmental Policy Act of 1969, 42 of Indian under the Indian office, tribal community building, and/ U.S.C. 4321 et seq. Reorganization Act (25 U.S.C. 479) and or the United States Post Office; and Nominal rental or nominal the regulations promulgated thereunder; (2) Published in the local compensation means a rental amount and newspaper(s) nearest to the affected (3) With respect to the inheritance that is so insignificant that it bears no land and/or announced on a local radio and ownership of trust or restricted land relationship to the value of the property station(s). in the State of California under 25 that is being leased. Court of competent jurisdiction means U.S.C. 2206, any person described in Non compos mentis means that the a Federal, tribal, or State court with paragraph (1) or (2) of this definition or person to whom the term is applied has jurisdiction. any person who owns a trust or been legally determined by a court of Day means a calendar day, unless restricted interest in a parcel of such competent jurisdiction to be of unsound otherwise specified. land in that State. mind or incapable of managing his or Emancipated minor means a person Indian land means any tract in which her own affairs. less than 18 years of age who is married any interest in the surface estate is Notice of violation means a letter or who is determined by a court of owned by a tribe or individual Indian in notifying the lessee of a violation of the competent jurisdiction to be legally able trust or restricted status and includes lease and providing the lessee with a to care for himself or herself. both individually owned Indian land specified period of time to show cause Equipment installation plan means a and tribal land. why the lease should not be cancelled plan that describes the type and location Indian landowner means a tribe or for the violation. A 10-day show cause of any improvements to be installed by individual Indian who owns an interest letter is one type of notice of violation. the lessee to evaluate the wind in Indian land. Orphaned minor means a minor resources and a schedule showing the Individually owned Indian land whose parents are deceased. tentative commencement and means any tract, or interest therein, in Performance bond means security for completion dates for installation of which the surface estate is owned by an the performance of certain lease those improvements. individual Indian in trust or restricted obligations, as furnished by the lessee, Fair market rental means the amount status. or a guaranty of such performance as of rental income that a leased tract of Indian tribe means an Indian tribe furnished by a third-party surety. Indian land would most probably under section 102 of the Federally Permanent improvements means command in an open and competitive Recognized Indian Tribe List Act of buildings, other structures, and market, or as determined by competitive 1994 (25 U.S.C. 479a). associated infrastructure attached to the bidding. Interest, when used with respect to leased premises. Fee interest means an interest in land Indian land, means an ownership right Permit means a written, non- that is owned in unrestricted fee status, to the surface estate of Indian land. assignable agreement between Indian and is thus freely alienable by the fee Lease means a written contract landowners or BIA and the permittee, owner. between Indian landowners and a whereby the permittee is granted a
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temporary, revocable privilege to use Indian corporation chartered under responsible for accounting to the owners Indian land or Government land, for a section 17 of the Act of June 18, 1934 of any fee interests that may exist in the specified purpose. (48 Stat. 988; 25 U.S.C. 477). property being leased. Permittee means a person or entity Tribal land assignment means a (2) We will not include the fee who has acquired a privilege to use contract or agreement that conveys to interests in a tract in calculating the Indian land or Government land by a tribal members or wholly owned tribal applicable percentage of interests permit. corporations any rights for the use of required for consent to a lease Power of attorney means an authority tribal lands, assigned by an Indian tribe document. by which one person enables another to in accordance with tribal laws or (b) This paragraph (b) applies if there act for him or her as attorney-in-fact. customs. is a life estate on the land to be leased. Remainder interest means an interest Tribal law means the body of non- (1) When all of the trust or restricted in Indian land that is created at the same Federal law that governs lands and interests in a tract are subject to a single time as a life estate, for the use and activities under the jurisdiction of a life estate, the life tenant may lease the enjoyment of its owner after the life tribe, including ordinances or other land without the consent of the owners estate terminates. enactments by the tribe, and tribal court of the remainder interests or our Restoration and reclamation plan rulings. approval, for the duration of the life means a plan that defines the Trust or restricted land means any estate. reclamation, revegetation, restoration, tract, or interest therein, held in trust or (i) The lease will terminate upon the and soil stabilization requirements for restricted status. death of the life tenant. the project area, and requires the Trust or restricted status means: (ii) The life tenant must record the expeditious reclamation of construction (1) That the United States holds title lease in the LTRO. areas and revegetation of disturbed areas to the tract or interest in trust for the (iii) The lessee must pay rent directly to reduce invasive plant infestation and benefit of one or more tribes or to the life tenant under the terms of the erosion. individual Indians; or lease unless the whereabouts of the life Secretary means the Secretary of the (2) That one or more tribes or tenant are unknown, in which case we Interior. individual Indians holds title to the may collect rents on behalf of the life Single-family residence means a tract or interest, but can alienate or tenant. building with one to four dwelling units encumber it only with the approval of (iv) We may monitor the use of the on a tract of land under a single the United States because of limitations land on behalf of the owners of the residential lease, or as defined by in the conveyance instrument under remainder interests, as appropriate, but applicable tribal law or other tribal Federal law or limitations in Federal will not be responsible for enforcing the authorization. law. lease on behalf of the life tenant. Single-family residential development Undivided interest means a fractional (v) We will not lease the remainder means two or more single-family share in the surface estate of Indian interests or join in a lease by the life residences owned, managed, or land, where the surface estate is owned tenant on behalf of the owners of the developed by a single entity. in common with other Indian remainder interests except as needed to Sublease means a written agreement landowners or fee owners. preserve the value of the land. by which the lessee grants to an USPAP means the Uniform Standards (vi) We will be responsible for individual or entity a right to possession of Professional Appraisal Practice enforcing the terms of the lease on no greater than that held by the lessee promulgated by the Appraisal Standards behalf of the owners of the remainder under the lease. Board of the Appraisal Foundation to interests. Surety means one who guarantees the establish requirements and procedures (2) When less than all of the trust or performance of another. for professional real property appraisal restricted interests in a tract are subject TDHE means a tribally designated practice. to a single life estate, the life tenant may housing entity under 25 U.S.C. Us/we/our means the BIA. lease his or her interest without the 4103(22), a tribally-sponsored or tribally Violation means a failure to take an consent of the owners of the remainder sanctioned not-for-profit entity, or any action, including payment of interests, but must obtain the consent of limited partnership or other entity compensation, when required by the the co-owners and our approval. organized for the purpose of developing lease, or to otherwise not comply with (i) We will not lease on the life or improving low-income housing a term of the lease. This definition tenant’s behalf. utilizing tax credits. applies for purposes of our enforcement (ii) The lease must provide that the Termination means action by Indian of a lease under this part no matter how lessee pays the life tenant directly, landowners to end a lease. ‘‘violation’’ or ‘‘default’’ is defined in unless the life tenant’s whereabouts are Trespass means any unauthorized the lease. unknown in which case we may collect occupancy, use of, or action on any rents on behalf of the life tenant. Indian land or Government land. § 162.004 To what land does this part (iii) The lease must be recorded in the Tribal authorization means a duly apply? LTRO, even where our approval is not adopted tribal resolution, tribal (a) This part applies to Indian land required. ordinance, or other appropriate tribal and Government land, including any (iv) We will be responsible for document authorizing the specified tract in which an individual Indian or enforcing the terms of the lease on action. Indian tribe owns an interest in trust or behalf of the owners of the remainder Tribal land means any tract, or restricted status. interests. interest therein, in which the surface (1) We will not take any action on a (3) Where the remaindermen and the estate is owned by one or more tribes in lease of fee interests or collect rent on life tenant have not entered into a lease trust or restricted status, and includes behalf of fee interest owners. We will or other written agreement approved by such lands reserved for BIA not condition our approval of a lease of the Secretary providing for the administrative purposes. The term also the trust and restricted interests on your distribution of rent monies under the includes the surface estate of lands held having obtained a lease from the owners lease, the life tenant will receive by the United States in trust for an of any fee interests. The lessee will be payment in accordance with the
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distribution and calculation scheme set When to Get a Lease unless you are authorized to possess or forth in Part 179 of this chapter. use the Indian land by a land use (4) The life tenant may not cause or § 162.005 When do I need a lease to authorize possession of Indian land? agreement not subject to this part under allow permanent injury to the land. § 162.006(b) or by a permit. (5) The life tenant must provide a (a) You need a lease under this part copy of the executed lease to all owners to possess Indian land if you meet one of the remainder interests. of the criteria in the following table,
If you are . . . then you must obtain a lease under this part . . .
(1) A person or legal entity (including an independent legal entity from the owners of the land before taking possession of the land or owned and operated by a tribe) who is not an owner of the Indian any portion thereof. land. (2) An Indian landowner of a fractional interest in the land ...... from the owners of other trust and restricted interests in the land, un- less all of the owners have given you permission to take or continue in possession without a lease.
(b) You do not need a lease to possess (1) You are an Indian landowner who (2) You meet any of the criteria in the Indian land if: owns 100 percent of the trust or following table. restricted interests in a tract; or
You do not need a lease if you are . . . but the following conditions apply . . .
(i) A parent or guardian of a minor child who owns 100 percent of the We may require you to provide evidence of a direct benefit to the trust or restricted interests in the land. minor child and when the child is no longer a minor, you must obtain a lease to authorize continued possession. (ii) A 25 U.S.C. 477 corporate entity that manages or has the power to You must record documents in accordance with § 162.343, § 162.443, manage the tribal land directly under its Federal charter or under a and § 162.568. tribal authorization (not under a lease from the Indian tribe).
§ 162.006 To what types of land use U.S.C. 380, 25 U.S.C. 415(a), and 25 (b) This part does not apply to: agreements does this part apply? U.S.C. 4211, and other tribe-specific (1) Land use agreements entered into (a) This part applies to leases of statutes authorizing surface leases of under other statutory authority, such as Indian land entered into under 25 Indian land with our approval. the following:
This part does not apply to . . . which are covered by . . .
(i) Contracts or agreements that encumber tribal land under 25 U.S.C. 25 CFR part 84. 81. (ii) Traders’ licenses ...... 25 CFR part 140. (iii) Timber contracts ...... 25 CFR part 163. (iv) Grazing permits ...... 25 CFR part 166. (v) Rights-of-way ...... 25 CFR part 169. (vi) Mineral leases, prospecting permits, or mineral development agree- 25 CFR parts 211, 212, 213, 225, 226, 227. ments. (vii) Tribal land assignments and similar instruments authorizing uses tribal laws. of tribal land.
(2) Leases of water rights associated (ii) A lease of Indian land under a environmental and cultural resource with Indian land, except to the extent special act of Congress authorizing laws; and the use of water rights is incorporated leasing without our approval. (2) Submit all permits to the in a lease of the land itself. appropriate BIA office to allow us to § 162.007 To what permits does this part (3) The following leases, which do not maintain a copy of the permit in our apply? records. If we determine within 10 days require our approval, except that you of submission that the document does must record these leases in accordance (a) Permits for the use of Indian land not meet the definition of ‘‘permit’’ and with §§ 162.343, 162.443, and 162.568: do not require our approval; however, you must fulfill the following grants a legal interest in Indian land, we (i) A lease of tribal land by a 25 U.S.C. requirements: will notify you that a lease is required. 477 corporate entity under its charter to (b) The following table provides a third party for a period not to exceed (1) Ensure that permitted activities examples of some common 25 years; and comply with all applicable characteristics of permits versus leases.
Permit Lease
Does not grant a legal interest in Indian land ...... Grants a legal interest in Indian land. Shorter term ...... Longer term. Limited use ...... Broader use with associated infrastructure.
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Permit Lease
Permittee has non-possessory right of access ...... Lessee has right of possession, ability to limit or prohibit access by others. Indian landowner may terminate at any time ...... Indian landowner may terminate under limited circumstances.
(c) We will not administer or enforce you do not need our approval of a (b) Generally, residential, business, permits on Indian land. subleasehold mortgage. If the lease or wind energy evaluation, wind resource, (d) We may grant permits for the use sublease requires, or parties request, our and solar resource leases will not be of Government land. The leasing approval, we will use the procedures advertised for competitive bid. regulations in this part will apply to governing our review of leasehold such permits, as appropriate. mortgages. § 162.011 How does a prospective lessee identify and contact individual Indian § 162.008 Does this part apply to lease How to Get a Lease landowners to negotiate a lease? documents I submitted for approval before (a) Prospective lessees may submit a January 4, 2013? § 162.010 How do I obtain a lease? written request to us to obtain the This part applies to all lease (a) This section establishes the basic following information. The request must documents, except as provided in steps to obtain a lease. specify that it is for the purpose of § 162.006. If you submitted your lease (1) Prospective lessees must: negotiating a lease: document to us for approval before (i) Directly negotiate with Indian (1) Names and addresses of the January 4, 2013, the qualifications in landowners for a lease; and individual Indian landowners or their paragraphs (a) and (b) of this section (ii) For fractionated tracts, notify all representatives; also apply. Indian landowners and obtain the (a) If we approved your lease consent of the Indian landowners of the (2) Information on the location of the document before January 4, 2013, this applicable percentage of interests, under parcel; and part applies to that lease document; § 162.012; and (3) The percentage of undivided however, if the provisions of the lease (2) Prospective lessees and Indian interest owned by each individual document conflict with this part, the landowners must: Indian landowner. provisions of the lease govern. (i) Prepare the required information (b) We may assist prospective lessees (b) If you submitted a lease document and analyses, including information to in contacting the individual Indian but we did not approve it before January facilitate our analysis under applicable landowners or their representatives for 4, 2013, then: environmental and cultural resource the purpose of negotiating a lease, upon (1) We will review the lease document requirements; and request. under the regulations in effect at the (ii) Ensure the lease complies with the (c) We will assist individual Indian time of your submission; and requirements in subpart C for residential (2) Once we approve the lease landowners in lease negotiations, upon leases, subpart D for business leases, or document, this part applies to that lease their request. subpart E for wind energy evaluation, document; however, if the provisions of wind resource, or solar resource leases; § 162.012 What are the consent the lease document conflict with this requirements for a lease? and part, the provisions of the lease (a) For fractionated tracts: document govern. (3) Prospective lessees or Indian landowners must submit the lease, and (1) Except in Alaska, the owners of § 162.009 Do I need BIA approval of a required information and analyses, to the following percentage of undivided subleasehold mortgage? the BIA office with jurisdiction over the trust or restricted interests in a Unless the lease provides otherwise, lands covered by the lease, for our fractionated tract of Indian land must sublease, or by request of the parties, review and approval. consent to a lease of that tract:
If the number of owners of the undivided trust or restricted interest in Then the required percentage of the undivided trust or restricted inter- the tract is . . . est is . . .
(i) One to five, ...... 90 percent; (ii) Six to 10, ...... 80 percent; (iii) 11 to 19, ...... 60 percent; (iv) 20 or more, ...... Over 50 percent.
(2) Leases in Alaska require consent of (ii) That lease document will not bind in paragraph (a)(1) of this section based all of the Indian landowners in the tract. a non-consenting Indian tribe, except on our records on the date on which the (3) If the prospective lessee is also an with respect to the tribally owned lease is submitted to us for approval. Indian landowner, his or her consent fractional interest, and the non- (b) Tribal land subject to a tribal land will be included in the percentages in consenting Indian tribe will not be assignment may only be leased with the treated as a party to the lease. Nothing paragraphs (a)(1) and (2) of this section. consent of the tribe. (4) Where owners of the applicable in this paragraph affects the sovereignty percentages in paragraph (a)(1) of this or sovereign immunity of the Indian § 162.013 Who is authorized to consent to section consent to a lease document: tribe. a lease? (i) That lease document binds all non- (5) We will determine the number of (a) Indian tribes, adult Indian consenting owners to the same extent as owners of, and undivided interests in, a landowners, and emancipated minors, if those owners also consented to the fractionated tract of Indian land, for the may consent to a lease of their land, lease document; and purposes of calculating the percentages
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including undivided interests in Lease Administration § 162.015 May a lease contain a preference fractionated tracts. consistent with tribal law for employment of § 162.014 What laws will apply to leases tribal members? (b) The following individuals or approved under this part? entities may consent on behalf of an A lease of Indian land may include a individual Indian landowner: (a) In addition to the regulations in provision, consistent with tribal law, this part, leases approved under this (1) An adult with legal custody acting requiring the lessee to give a preference part: on behalf of his or her minor children; to qualified tribal members, based on (1) Are subject to applicable Federal (2) A guardian, conservator, or other their political affiliation with the tribe. laws and any specific Federal statutory fiduciary appointed by a court of requirements that are not incorporated § 162.016 Will BIA comply with tribal laws competent jurisdiction to act on behalf in this part; in making lease decisions? of an individual Indian landowner; (2) Are subject to tribal law, subject to (3) Any person who is authorized to Unless contrary to Federal law, BIA paragraph (b) of this section; and practice before the Department of the will comply with tribal laws in making Interior under 43 CFR 1.3(b) and has (3) Are not subject to State law or the decisions regarding leases, including been retained by the Indian landowner law of a political subdivision thereof tribal laws regulating activities on for this purpose; except that: leased land under tribal jurisdiction, including, but not limited to, tribal laws (4) BIA, under the circumstances in (i) State law or the law of a political relating to land use, environmental paragraph (c) of this section; or subdivision thereof may apply in the specific areas and circumstances in protection, and historic or cultural (5) An adult or legal entity who has preservation. been given a written power of attorney Indian country where the Indian tribe that: with jurisdiction has made it expressly § 162.017 What taxes apply to leases applicable; (i) Meets all of the formal approved under this part? (ii) State law may apply in the requirements of any applicable law (a) Subject only to applicable Federal under § 162.014; specific areas and circumstances in Indian country where Congress has law, permanent improvements on the (ii) Identifies the attorney-in-fact; and made it expressly applicable; and leased land, without regard to ownership of those improvements, are (iii) Describes the scope of the powers (iii) State law may apply where a not subject to any fee, tax, assessment, granted, to include leasing land, and Federal court has expressly applied levy, or other charge imposed by any any limits on those powers. State law to a specific area or State or political subdivision of a State. (c) BIA may give written consent to a circumstance in Indian country in the Improvements may be subject to lease, and that consent must be counted absence of Federal or tribal law. in the percentage ownership described taxation by the Indian tribe with (b) Tribal laws generally apply to land jurisdiction. in § 162.012, on behalf of: under the jurisdiction of the tribe (1) The individual owner if the owner enacting the laws, except to the extent (b) Subject only to applicable Federal is deceased and the heirs to, or devisees that those tribal laws are inconsistent law, activities under a lease conducted of, the interest of the deceased owner with these regulations or other on the leased premises are not subject have not been determined; applicable Federal law. However, these to any fee, tax, assessment, levy, or (2) An individual whose whereabouts regulations may be superseded or other charge (e.g., business use, are unknown to us, after we make a modified by tribal laws, as long as: privilege, public utility, excise, gross revenue taxes) imposed by any State or reasonable attempt to locate the (1) The tribe has notified us of the individual; superseding or modifying effect of the political subdivision of a State. Activities may be subject to taxation by (3) An individual who is found to be tribal laws; the Indian tribe with jurisdiction. non compos mentis or determined to be (2) The superseding or modifying of an adult in need of assistance who does the regulation would not violate a (c) Subject only to applicable Federal not have a guardian duly appointed by Federal statute or judicial decision, or law, the leasehold or possessory interest a court of competent jurisdiction, or an conflict with our general trust is not subject to any fee, tax, assessment, individual under legal disability as responsibility under Federal law; and levy, or other charge imposed by any State or political subdivision of a State. defined in part 115 of this chapter; (3) The superseding or modifying of (4) An orphaned minor who does not the regulation applies only to tribal Leasehold or possessory interests may have a guardian duly appointed by a land. be subject to taxation by the Indian tribe with jurisdiction. court of competent jurisdiction; (c) Unless prohibited by Federal law, (5) An individual who has given us a the parties to a lease may subject that § 162.018 May tribes administer this part written power of attorney to lease their lease to State or local law in the absence on BIA’s behalf? land; and of Federal or tribal law, if: A tribe or tribal organization may (6) The individual Indian landowners (1) The lease includes a provision to contract or compact under the Indian of a fractionated tract where: this effect; and Self-Determination and Education (i) We have given the Indian (2) The Indian landowners expressly Assistance Act (25 U.S.C. 450f et seq.) landowners written notice of our intent agree to the application of State or local to administer any portion of this part to consent to a lease on their behalf; law. that is not an approval or disapproval of (ii) The Indian landowners are unable (d) An agreement under paragraph (c) a lease document, waiver of a to agree upon a lease during a 3 month of this section does not waive a tribe’s requirement for lease approval negotiation period following the notice; sovereign immunity unless the tribe (including but not limited to waivers of and expressly states its intention to waive fair market rental and valuation, (iii) The land is not being used by an sovereign immunity in the lease of tribal bonding, and insurance), cancellation of Indian landowner under § 162.005(b)(1). land. a lease, or an appeal.
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§ 162.019 May a lease address access to 162.589. Nothing in this part prevents only by an Indian landowner. Our the leased premises by roads or other an Indian landowner from exercising decision to disapprove any other lease infrastructure? remedies available to the Indian document may be appealed only by the A lease may address access to the landowners under the lease or Indian landowners or the lessee. leased premises by roads or other applicable law. infrastructure, as long as the access (b) We will promptly respond to § 162.026 Who can answer questions complies with applicable statutory and requests for BIA approval of about leasing? regulatory requirements, including 25 amendments, assignments, leasehold An Indian landowner or prospective CFR part 169. Roads or other mortgages, and subleases, as specified in lessee may contact the local BIA realty infrastructure within the leased subparts C, D, and E. office (or of any tribe acting on behalf premises do not require compliance (c) We will respond to Indian of BIA under § 162.018) with with 25 CFR part 169 during the term landowners’ concerns regarding the jurisdiction over the land for answers to of the lease, unless otherwise stated in management of their land. questions about the leasing process. the lease. (d) We will take emergency action as needed to preserve the value of the land § 162.027 What documentation may BIA § 162.020 May a lease combine tracts with under § 162.024. require in approving, administering, and different Indian landowners? enforcing leases? (a) We may approve a lease that § 162.023 What if an individual or entity (a) We may require that the parties combines multiple tracts of Indian land takes possession of or uses Indian land provide any pertinent environmental into a unit, if we determine that without an approved lease or other proper and technical records, reports, and other authorization? unitization is: information (e.g., records of lease (1) In the Indian landowners’ best If an individual or entity takes payments), related to approval of lease interest; and possession of, or uses, Indian land documents and enforcement of leases. without a lease and a lease is required, (2) Consistent with the efficient (b) We will adopt environmental the unauthorized possession or use is a administration of the land. assessments and environmental impact trespass. We may take action to recover (b) For a lease that covers multiple statements prepared by another Federal possession, including eviction, on tracts, the minimum consent agency, Indian tribe, entity, or person behalf of the Indian landowners and requirements apply to each tract under 43 CFR 46.320 and 42 CFR pursue any additional remedies separately. 1506.3, including those prepared under available under applicable law. The (c) Unless the lease provides 25 U.S.C. 4115 and 25 CFR part 1000, Indian landowners may pursue any otherwise, the rent or other but may require a supplement. We will available remedies under applicable compensation will be prorated in use any reasonable evidence that law. proportion to the acreage each tract another Federal agency has accepted the contributes to the entire lease. Once § 162.024 May BIA take emergency action environmental report, including but not prorated per tract, the rent will be if Indian land is threatened? limited to, letters of approval or distributed to the owners of each tract (a) We may take appropriate acceptance. based upon their respective percentage emergency action if there is a natural (c) Upon our request, the parties must interest in that particular tract. disaster or if an individual or entity make appropriate records, reports, or § 162.021 What are BIA’s responsibilities causes or threatens to cause immediate information available for our inspection in approving leases? and significant harm to Indian land. and duplication. We will keep (a) We will work to provide assistance Emergency action may include judicial confidential any information that is to Indian landowners in leasing their action seeking immediate cessation of marked confidential or proprietary and land, either through negotiations or the activity resulting in or threatening will exempt it from public release to the advertisement. the harm. extent allowed by law and in (b) We will promote tribal control and (b) We will make reasonable efforts to accordance with 43 CFR part 2. We may, self-determination over tribal land and notify the individual Indian landowners at our discretion, treat a lessee’s failure other land under the tribe’s jurisdiction, before and after taking emergency to cooperate with such request, provide including through contracts and self- action. In all cases, we will notify the data, or grant access to information or governance compacts entered into under Indian landowners after taking records as a lease violation. the Indian Self-Determination and emergency action by actual or constructive notice. We will provide § 162.028 How may an Indian tribe obtain Education Assistance Act, as amended, information about leases on its land? 25 U.S.C. 450f et. seq. written notification of our action to the (c) We will promptly respond to Indian tribe exercising jurisdiction over Upon request of the Indian tribe with requests for BIA approval of leases, as the Indian land before and after taking jurisdiction, BIA will promptly provide specified in §§ 162.340, 162.440, emergency action. information on the status of leases on 162.530, and 162.565. tribal land, without requiring a Freedom (d) We will work to ensure that the § 162.025 May decisions under this part be of Information Act request. appealed? use of the land is consistent with the Appeals from BIA decisions under § 162.029 How does BIA provide notice to Indian landowners’ wishes and the parties to a lease? applicable tribal law. this part may be taken under part 2 of this chapter, except for deemed (a) When this part requires us to § 162.022 What are BIA’s responsibilities approvals and as otherwise provided in notify the parties of the status of our in administering and enforcing leases? this part. For purposes of appeals from review of a lease document (including (a) Upon written notification from an BIA decisions under this part, but not limited to, providing notice to Indian landowner that the lessee has ‘‘interested party’’ is defined as any the parties of the date of receipt of a failed to comply with the terms and person whose own direct economic lease document, informing the parties of conditions of the lease, we will interest is adversely affected by an the need for additional review time, and promptly take appropriate action, as action or decision. Our decision to informing the parties that a lease specified in §§ 162.364, 162.464, and disapprove a lease may be appealed proposal package is not complete):
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(1) For leases of tribal land, we will ‘‘lease’’ in paragraph (b) and add in its 162.315 How must a residential lease notify the lessee and the tribe by mail; place the words ‘‘agricultural lease’’. address ownership of permanent and improvements? (2) For leases of individually owned § 162.109 [Amended] 162.316 How will BIA enforce removal requirements in a residential lease? ■ Indian land, we will notify the lessee by 9b. In newly transferred § 162.109, 162.317 How must a residential lease mail and, where feasible, the individual remove the word ‘‘leases’’ from the describe the land? Indian landowners either by section heading and paragraph (a) and constructive notice or by mail. add in its place the words ‘‘agricultural Rental Requirements (b) When this part requires us to leases’’ in its place and remove the three 162.320 How much rent must be paid under notify the parties of our determination occurrences of the word ‘‘lease’’ in a residential lease of tribal land? to approve or disapprove a lease paragraph (c) and add in their place the 162.321 How much rent must be paid under a residential lease of individually owned document, and to provide any right of words ‘‘agricultural lease’’. Indian land? appeal: § 162.110 [Amended] 162.322 How will BIA determine fair (1) For leases of tribal land, we will market rental for a residential lease? notify the lessee and the tribe by mail; ■ 9c. In newly transferred § 162.110, 162.323 When are rental payments due and remove the word ‘‘leases’’ wherever it under a residential lease? (2) For leases of individually owned appears and add in its place the words 162.324 Must a residential lease specify Indian land, we will notify the lessee by ‘‘agricultural leases’’. who receives rental payments? mail and the individual Indian ■ 10. In newly transferred § 162.111, 162.325 What form of payment is landowners either by constructive acceptable under a residential lease? revise the section heading, paragraph (a) 162.326 May a residential lease provide for notice or by mail. introductory text, and paragraph (b) to non-monetary or varying types of read as follows: compensation? Subpart B—Agricultural Leases 162.327 Will BIA notify a lessee when a § 162.111 Who owns the records payment is due under a residential lease? ■ 5. In newly transferred § 162.101, associated with this subpart? 162.328 Must a residential lease provide for revise the section heading and the (a) Records associated with this rental reviews or adjustments? introductory text to read as follows: subpart are the property of the United 162.329 What other types of payments are required under a residential lease? § 162.101 What key terms do I need to States if they: know for this subpart? * * * * * Bonding and Insurance For the purposes of this subpart: (b) Records associated with this 162.334 Is a performance bond required for * * * * * subpart not covered by paragraph (a) of a residential lease document? this section that are made or received by 162.335 Is insurance required for a §§ 162.102 through 162.104 [Removed] a tribe or tribal organization in the residential lease document? conduct of business with the 162.336 [Reserved] ■ 6. Remove newly transferred 162.337 [Reserved] §§ 162.102 through 162.104. Department of the Interior under this subpart are the property of the tribe. Approval § 162.105 [Amended] ■ 11. Revise the heading for § 162.112 to 162.338 What documents are required for ■ 7a. In newly transferred § 162.105, read as follows: BIA approval of a residential lease? remove the word ‘‘leasing’’ from the 162.339 Will BIA review a proposed § 162.112 How must records associated residential lease before or during section heading and add in its place the with this part be preserved? preparation of the NEPA review words ‘‘agricultural leasing’’ and * * * * * documentation? remove the word ‘‘lease’’ and add in its 162.340 What is the approval process for a place the words ‘‘agricultural lease’’ § 162.113 [Amended] residential lease? wherever it appears. 162.341 How will BIA decide whether to ■ 12. In newly transferred § 162.113 approve a residential lease? § 162.106 [Amended] remove the word ‘‘part’’ wherever it 162.342 When will a residential lease be ■ 7b. In newly transferred § 162.106, appears and add in its place the word effective? ‘‘subpart’’. 162.343 Must a residential lease document remove the word ‘‘lease’’ and add in its ■ be recorded? place the words ‘‘agricultural lease’’ 13. Add new subparts C through D to read as follows: 162.344 Will BIA require an appeal bond wherever it appears. for an appeal of a decision on a ■ 8. In newly transferred § 162.107, Subpart C—Residential Leases residential lease document? revise the section heading and add Residential Leasing General Provisions Amendments introductory text to read as follows: Sec. 162.345 May the parties amend a § 162.107 What are BIA’s objectives in 162.301 What types of leases does this residential lease? granting and approving agricultural leases? subpart cover? 162.346 What are the consent requirements We will assist Indian landowners in 162.302 Is there a model residential lease for an amendment of a residential lease? form? 162.347 What is the approval process for an leasing their land for agricultural 162.303 Who needs a lease for housing for amendment of a residential lease? purposes. For the purposes of public purposes? 162.348 How will BIA decide whether to §§ 162.102 through 162.256: approve an amendment of a residential Lease Requirements * * * * * lease? 162.311 How long may the term of a § 162.108 [Amended] residential lease run? Assignments ■ 162.312 What must the lease include if it 162.349 May a lessee assign a residential 9a. In newly transferred § 162.108, contains an option to renew? lease? remove the word ‘‘leases’’ from the 162.313 Are there mandatory provisions 162.350 What are the consent requirements section heading and paragraph (b) and that a residential lease must contain? for an assignment of a residential lease? add in its place the words ‘‘agricultural 162.314 May permanent improvements be 162.351 What is the approval process for an leases’’ in its place and remove the word made under a residential lease? assignment of a residential lease?
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162.352 How will BIA decide whether to Lease Requirements Amendments approve an assignment of a residential 162.411 How long may the term of a 162.445 May the parties amend a business lease? business lease run? lease? Subleases 162.412 What must the lease include if it 162.446 What are the consent requirements contains an option to renew? for an amendment to a business lease? 162.353 May a lessee sublease a residential 162.413 Are there mandatory provisions 162.447 What is the approval process for an lease? that a business lease must contain? amendment to a business lease? 162.354 What are the consent requirements 162.414 May permanent improvements be 162.448 How will BIA decide whether to for a sublease of a residential lease? made under a business lease? approve an amendment to a business 162.355 What is the approval process for a 162.415 How must a business lease address lease? sublease of a residential lease? ownership of permanent improvements? 162.356 How will BIA decide whether to 162.416 How will BIA enforce removal Assignments approve a sublease of a residential lease? requirements in a business lease? 162.449 May a lessee assign a business 162.417 What requirements for due Leasehold Mortgages lease? diligence must a business lease include? 162.450 What are the consent requirements 162.357 May a lessee mortgage a residential 162.418 How must a business lease describe for an assignment of a business lease? lease? the land? 162.451 What is the approval process for an 162.358 What are the consent requirements 162.419 May a business lease allow assignment of a business lease? for a leasehold mortgage of a residential compatible uses? 162.452 How will BIA decide whether to lease? Monetary Compensation Requirements approve an assignment of a business 162.359 What is the approval process for a lease? leasehold mortgage of a residential lease? 162.420 How much monetary compensation 162.360 How will BIA decide whether to must be paid under a business lease of Subleases tribal land? approve a leasehold mortgage of a 162.453 May a lessee sublease a business 162.421 How much monetary compensation residential lease? lease? must be paid under a business lease of 162.454 What are the consent requirements Effectiveness, Compliance, and Enforcement individually owned Indian land? for a sublease of a business lease? 162.422 How will BIA determine fair 162.361 When will an amendment, 162.455 What is the approval process for a market rental for a business lease? assignment, sublease, or leasehold sublease of a business lease? 162.423 When are monetary compensation mortgage of a residential lease be 162.456 How will BIA decide whether to payments due under a business lease? effective? approve a sublease of a business lease? 162.362 What happens if BIA disapproves 162.424 Must a business lease specify who receives monetary compensation an amendment, assignment, sublease, or Leasehold Mortgages payments? leasehold mortgage? 162.457 May a lessee mortgage a business 162.425 What form of monetary 162.363 What happens if BIA does not meet lease? compensation payment is acceptable a deadline for issuing a decision on a 162.458 What are the consent requirements under a business lease? lease document? for a leasehold mortgage of a business 162.426 May the business lease provide for lease? 162.364 May BIA investigate compliance non-monetary or varying types of 162.459 What is the approval process for a with a residential lease? compensation? leasehold mortgage of a business lease? 162.365 May a residential lease provide for 162.427 Will BIA notify a lessee when a 162.460 How will BIA decide whether to negotiated remedies if there is a payment is due under a business lease? approve a leasehold mortgage of a violation? 162.428 Must a business lease provide for business lease? 162.366 What will BIA do about a violation compensation reviews or adjustments? of a residential lease? 162.429 What other types of payments are Effectiveness, Compliance, and Enforcement 162.367 What will BIA do if the lessee does required under a business lease? not cure a violation of a residential lease 162.461 When will an amendment, on time? Bonding and Insurance assignment, sublease, or leasehold 162.368 Will late payment charges or 162.434 Must a lessee provide a mortgage of a business lease be effective? special fees apply to delinquent performance bond for a business lease? 162.462 What happens if BIA disapproves payments due under a residential lease? 162.435 What forms of security are an amendment, assignment, sublease, or 162.369 How will payment rights relating to acceptable under a business lease? leasehold mortgage of a business lease? a residential lease be allocated? 162.436 What is the release process for a 162.463 What happens if BIA does not meet 162.370 When will a cancellation of a performance bond or alternative form of a deadline for issuing a decision on a residential lease be effective? security under a business lease? lease document? 162.371 What will BIA do if a lessee 162.437 Must a lessee provide insurance for 162.464 May BIA investigate compliance remains in possession after a residential a business lease? with a business lease? lease expires or is terminated or 162.465 May a business lease provide for Approval cancelled? negotiated remedies if there is a violation? 162.372 Will BIA appeal bond regulations 162.438 What documents are required for 162.466 What will BIA do about a violation apply to cancellation decisions involving BIA approval of a business lease? of a business lease? residential leases? 162.439 Will BIA review a proposed 162.467 What will BIA do if the lessee does 162.373 When will BIA issue a decision on business lease before or during not cure a violation of a business lease an appeal from a residential leasing preparation of the NEPA review on time? decision? documentation? 162.468 Will late payment charges or 162.374 What happens if the lessee 162.440 What is the approval process for a special fees apply to delinquent abandons the leased premises? business lease? 162.441 How will BIA decide whether to payments due under a business lease? Subpart D—Business Leases approve a business lease? 162.469 How will payment rights relating to 162.442 When will a business lease be a business lease be allocated? Business Leasing General Provisions effective? 162.470 When will a cancellation of a Sec. 162.443 Must a business lease document be business lease be effective? 162.401 What types of leases does this recorded? 162.471 What will BIA do if a lessee subpart cover? 162.444 Will BIA require an appeal bond remains in possession after a business 162.402 Is there a model business lease for an appeal of a decision on a business lease expires or is terminated or form? lease document? cancelled?
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162.472 Will BIA appeal bond regulations Lease Requirements § 162.313 Are there mandatory provisions apply to cancellation decisions involving that a residential lease must contain? business leases? § 162.311 How long may the term of a (a) All residential leases must residential lease run? 162.473 When will BIA issue a decision on identify: an appeal from a business leasing (a) A residential lease must provide (1) The tract or parcel of land being decision? 162.474 What happens if the lessee for a definite lease term, state if there is leased; abandons the leased premises? an option to renew, and if so, provide (2) The purpose of the lease and for a definite term for the renewal authorized uses of the leased premises; Subpart C—Residential Leases period. (3) The parties to the lease; (1) The maximum term of a lease (4) The term of the lease; Residential Leasing General Provisions approved under 25 U.S.C. 4211 may not (5) The ownership of permanent improvements and the responsibility for § 162.301 What types of leases does this exceed 50 years or may be month-to- subpart cover? month. The lease may provide for an constructing, operating, maintaining, and managing permanent improvements (a) This subpart covers both ground initial term of less than 50 years with a provision for one or more renewals, so under § 162.315; and leases (undeveloped land) and leases of (6) Payment requirements and late developed land (together with the long as the maximum term, including all renewals, does not exceed 50 years. payment charges, including interest. permanent improvements thereon) on (b) Where a representative executes a Indian land, for housing purposes. (2) The maximum term of a lease lease on behalf of an Indian landowner Leases covered by this subpart would approved under 25 U.S.C. 415(a) may or lessee, the lease must identify the authorize the construction or use of: not exceed 50 years (consisting of an landowner or lessee being represented (1) A single-family residence; and initial term not to exceed 25 years and and the authority under which the (2) Housing for public purposes, one renewal not to exceed 25 years), action is taken. which may include office space unless a Federal statute provides for a (c) All residential leases must include necessary to administer programs for longer maximum term (e.g., 25 U.S.C. the following provisions: housing for public purposes. 415(a) allows for a maximum term of 99 (1) The obligations of the lessee to the (b) Leases for other residential years for certain tribes), a different Indian landowners are also enforceable development (for example, single-family initial term, renewal term, or number of by the United States, so long as the land residential developments and multi- renewals. remains in trust or restricted status; family developments that are not (b) For tribal land, we will defer to the (2) There must not be any unlawful housing for public purposes) are tribe’s determination that the lease term, conduct, creation of a nuisance, illegal covered under subpart D of this part. including any renewal, is reasonable. activity, or negligent use or waste of the For individually owned Indian land, we leased premises; § 162.302 Is there a model residential lease will review the lease term, including (3) The lessee must comply with all form? any renewal, to ensure it is reasonable, applicable laws, ordinances, rules, (a) We will make available one or given the: regulations, and other legal more model lease forms that satisfy the (1) Purpose of the lease; requirements under § 162.014; formal requirements of this part, (2) Type of financing; and (4) If historic properties, archeological including, as appropriate, the model resources, human remains, or other tribal lease form jointly developed by (3) Level of investment. cultural items not previously reported BIA, the Department of Housing and (c) Unless the lease provides are encountered during the course of Urban Development, the Department of otherwise, a residential lease may not be any activity associated with this lease, Veterans’ Affairs, and the Department of extended by holdover. all activity in the immediate vicinity of Agriculture. Use of a model lease form § 162.312 What must the lease include if it the properties, resources, remains, or is not mandatory, provided all contains an option to renew? items will cease and the lessee will requirements of this part are met. contact BIA and the tribe with (b) If a model lease form prepared by (a) If the lease provides for an option jurisdiction to determine how to us is not used by the parties to a to renew, the lease must specify: proceed and appropriate disposition; residential lease, we will assist the (1) The time and manner in which the (5) BIA has the right, at any Indian landowners, upon their request, option must be exercised or is reasonable time during the term of the in drafting lease provisions or in using automatically effective; lease and upon reasonable notice in tribal lease forms that conform to the (2) That confirmation of the renewal accordance with § 162.364, to enter the requirements of this part. will be submitted to us, unless the lease leased premises for inspection and to provides for automatic renewal; ensure compliance; and § 162.303 Who needs a lease for housing (6) BIA may, at its discretion, treat as for public purposes? (3) Whether Indian landowner consent to the renewal is required; a lease violation any failure by the A TDHE or tribal housing authority (4) That the lessee must provide lessee to cooperate with a BIA request must obtain an approved residential notice of the renewal to the Indian to make appropriate records, reports, or lease under this subpart from the Indian landowners and any mortgagees; information available for BIA inspection landowners if, under the terms of its and duplication. charter, it is a legal entity independent (5) The additional consideration, if (d) Unless the lessee would be from the tribe, regardless of whether it any, that will be due upon the exercise prohibited by law from doing so, the is owned and operated by the tribe. A of the option to renew or the start of the lease must also contain the following TDHE or tribal housing authority does renewal term; and provisions: not need an approved residential lease (6) Any other conditions for renewal (1) The lessee holds the United States under this subpart if the tribe has (e.g., that the lessee not be in violation and the Indian landowners harmless authorized the TDHE’s or tribal housing of the lease at the time of renewal). from any loss, liability, or damages authority’s possession through a tribal (b) We will record any renewal of a resulting from the lessee’s use or land assignment. lease in the LTRO. occupation of the leased premises; and
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(2) The lessee indemnifies the United § 162.316 How will BIA enforce removal lease of individually owned Indian land States and the Indian landowners requirements in a residential lease? that provides for the payment of against all liabilities or costs relating to We may take appropriate enforcement nominal rent, or less than a fair market use, handling, treatment, removal, action to ensure removal of the rental, if: storage, transportation, or disposal of permanent improvements and (1) One hundred percent of the Indian hazardous materials, or release or restoration of the premises at the landowners execute a written waiver of discharge of any hazardous material lessee’s expense: the right to receive fair market rental; or from the leased premises that occurs (a) In consultation with the tribe for (2) We waive the requirement under during the lease term, regardless of tribal land or, where feasible, with paragraph (c) of this section. fault, with the exception that the lessee Indian landowners for individually (b) We will require a valuation in is not required to indemnify the Indian owned Indian land; and accordance with § 162.322, unless: (b) Before or after expiration, landowners for liability or cost arising (1) One hundred percent of the Indian termination, or cancellation of the lease. from the Indian landowners’ negligence landowners submit to us a written or willful misconduct. § 162.317 How must a residential lease request to waive the valuation (e) We may treat any provision of a describe the land? requirement; or lease document that violates Federal (a) A residential lease must describe (2) We waive the requirement under law as a violation of the lease. the leased premises by reference to a paragraph (c) of this section. public or private survey, if possible. If (c) If the owners of the applicable § 162.314 May permanent improvements percentage of interests under § 162.012 be made under a residential lease? the land cannot be so described, the lease must include one or more of the consent to a residential lease on behalf (a) The lessee may construct following: of all the Indian landowners of a permanent improvements under a (1) A legal description; fractionated tract, the lease must residential lease if the residential lease (2) A survey-grade global positioning provide that the non-consenting Indian authorizes the construction and system description; or landowners (and those on whose behalf generally describes the type and (3) Another description prepared by a we have consented) receive fair market location of the permanent registered land surveyor that is rental, as determined by a valuation, improvements to be constructed during sufficient to identify the leased unless we waive the requirement the lease term. premises. because: (b) The lessee must provide (b) If the tract is fractionated, we will (1) The lessee is a co-owner who, as reasonable notice to the Indian identify the undivided trust or restricted of January 4, 2013, has been residing on landowners of the construction of any interests in the leased premises. the tract for at least 7 years, and no permanent improvements not generally Rental Requirements other co-owner raises an objection to described in the lease. BIA by July 3, 2013 to the lessee’s § 162.320 How much rent must be paid continued possession of the tract; or § 162.315 How must a residential lease under a residential lease of tribal land? (2) The tribe or lessee will construct address ownership of permanent (a) A residential lease of tribal land infrastructure improvements on, or improvements? may allow for any payment amount serving, the leased premises, and we (a) A residential lease must specify negotiated by the tribe, and we will determine it is in the best interest of all who will own any permanent defer to the tribe and not require a the landowners. improvements the lessee constructs valuation, if: (1) The lease is for housing for public § 162.322 How will BIA determine fair during the lease term. In addition, the market rental for a residential lease? lease must indicate whether each purposes; or specific permanent improvement the (2) The tribe submits a signed (a) We will use a market analysis, lessee constructs will: certification or tribal authorization appraisal, or other appropriate valuation stating that it has determined the method to determine the fair market (1) Remain on the leased premises negotiated amount to be in its best rental for residential leases of upon expiration, termination, or interest. individually owned Indian land. We cancellation of the lease, in a condition (b) The tribe may request, in writing, will also do this, at the request of the satisfactory to the Indian landowners that we determine fair market rental, in tribe, for tribal land. and become the property of the Indian which case we will use a valuation in (b) We will either: landowners; accordance with § 162.322. After (1) Prepare, or have prepared, a (2) Be removed within a time period providing the tribe with the fair market market analysis, appraisal, or other specified in the lease, at the lessee’s rental, we will defer to a tribe’s decision appropriate valuation method; or expense, with the leased premises to be to allow for any payment amount (2) Use an approved market analysis, restored as closely as possible to their negotiated by the tribe. appraisal, or other appropriate valuation condition before construction of the (c) If the conditions in paragraph (a) method from the Indian landowners or permanent improvements; or or (b) of this section are not met, we will lessee. (3) Be disposed of by other specified require that the lease provide for fair (c) We will use or approve a market means. market rental based on a valuation in analysis, appraisal, or other appropriate accordance with § 162.322. (b) A lease that requires the lessee to valuation method for use only if it: remove the permanent improvements § 162.321 How much rent must be paid (1) Has been prepared in accordance must also provide the Indian under a residential lease of individually with USPAP or a valuation method landowners with an option to take owned Indian land? developed by the Secretary under 25 possession of and title to the permanent (a) A residential lease of individually U.S.C. 2214; and improvements if the improvements are owned Indian land must require (2) Complies with Department not removed within the specified time payment of not less than fair market policies regarding appraisals, including period. rental except that we may approve a third-party appraisals.
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§ 162.323 When are rental payments due payment must be acceptable to the (2) The lease is for housing for public under a residential lease? Indian landowners. purposes. (a) A residential lease must specify (b) When payments are made to us, (b) For a residential lease of the dates on which payments are due. our preferred method of payment is individually Indian owned land, unless (b) Unless the lease provides electronic funds transfer payments. We the lease provides otherwise, no otherwise, payments may not be made will also accept: periodic review of the adequacy of rent or accepted more than one year in (1) Money orders; or rental adjustment is required if: advance of the due date. (2) Personal checks; (c) Payments are due at the time (3) Certified checks; or (1) The lease is for housing for public specified in the lease, regardless of (4) Cashier’s checks. purposes; whether the lessee receives an advance (c) We will not accept cash or foreign (2) The term of the lease is 5 years or billing or other notice that a payment is currency. less; due. (d) We will accept third-party checks (3) The lease provides for automatic only from financial institutions or rental adjustments; or § 162.324 Must a residential lease specify Federal agencies. who receives rental payments? (4) We determine it is in the best (a) A residential lease must specify § 162.326 May a residential lease provide interest of the Indian landowners not to whether the lessee will make payments for non-monetary or varying types of require a review or automatic directly to the Indian landowners (direct compensation? adjustment based on circumstances pay) or to us on their behalf. (a) A lease may provide for the including, but not limited to, the (b) The lessee may make payments following, subject to the conditions in following: directly to the Indian landowners if: paragraphs (b) and (c) of this section: (i) The lease provides for payment of (1) The Indian landowners’ trust (1) Alternative forms of rental, less than fair market rental; or including, but not limited to in-kind accounts are unencumbered; (ii) The lease provides for most or all (2) There are 10 or fewer beneficial consideration; or rent to be paid during the first 5 years owners; and (2) Varying types of compensation at of the lease term or before the date the (3) One hundred percent of the specific stages during the life of the review would be conducted. beneficial owners (including those on lease. whose behalf we have consented) agree (b) For tribal land, we will defer to the (c) If the conditions in paragraph (a) to receive payment directly from the tribe’s determination that the or (b) of this section are not met, a lessee at the start of the lease. compensation under paragraph (a) of review of the adequacy of rent must (c) If the lease provides that the lessee this section is in its best interest, if occur at least every fifth year, in the will directly pay the Indian landowners, either: manner specified in the lease. The lease then: (1) The lease is for housing for public must specify: (1) The lease must include provisions purposes; or (1) When adjustments take effect; for proof of payment upon our request. (2) The tribe submits a signed (2) Who can make adjustments; (2) When we consent on behalf of an certification or tribal authorization Indian landowner, the lessee must make stating that it has determined the (3) What the adjustments are based payment to us on behalf of that compensation under paragraph (a) of on; and landowner. this section to be in its best interest. (4) How to resolve disputes arising (3) The lessee must send direct (c) For individually owned Indian from the adjustments. payments to the parties and addresses land, we may approve a lease that (d) When a review results in the need specified in the lease, unless the lessee provides for compensation under for adjustment of rent, the Indian receives notice of a change of ownership paragraph (a) of this section if we landowners must consent to the or address. determine that it is in the best interest adjustment in accordance with (4) Unless the lease provides of the Indian landowners. § 162.012, unless the lease provides otherwise, payments may not be made otherwise. payable directly to anyone other than § 162.327 Will BIA notify a lessee when a the Indian landowners. payment is due under a residential lease? § 162.329 What other types of payments (5) Direct payments must continue Upon request of the Indian are required under a residential lease? through the duration of the lease, except landowners, we may issue invoices to a (a) The lessee may be required to pay that: lessee in advance of the dates on which additional fees, taxes, and assessments (i) The lessee must make all Indian payments are due under a residential associated with the use of the land, as landowners’ payments to us if 100 lease. The lessee’s obligation to make determined by entities having percent of the Indian landowners agree these payments in a timely manner will jurisdiction, except as provided in to suspend direct pay and provide us not be excused if invoices are not § 162.017. The lessee must pay these with documentation of their agreement; issued, delivered, or received. amounts to the appropriate office. and (ii) The lessee must make an § 162.328 Must a residential lease provide (b) If the leased premises are within for rental reviews or adjustments? individual Indian landowner’s payment an Indian irrigation project or drainage to us if that individual Indian (a) For a residential lease of tribal district, except as otherwise provided in landowner who dies, is declared non land, unless the lease provides part 171 of this chapter, the lessee must compos mentis, owes a debt resulting in otherwise, no periodic review of the pay all operation and maintenance a trust account encumbrance, or his or adequacy of rent or rental adjustment is charges that accrue during the lease her whereabouts become unknown. required if: term. The lessee must pay these (1) The tribe states in a tribal amounts to the appropriate office in § 162.325 What form of payment is certification or authorization that it has charge of the irrigation project or acceptable under a residential lease? determined that not having rental drainage district. We will treat failure to (a) When payments are made directly reviews and/or adjustments is in its best make these payments as a violation of to Indian landowners, the form of interest; or the lease.
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Bonding and Insurance (2) The lease will be enforceable (c) If we do not meet the deadlines in against the lessee; and this section, then the parties may take § 162.334 Is a performance bond required action under § 162.363. for a residential lease document? (3) The legal entity is in good standing and authorized to conduct business in (d) We will provide any lease We will not require a lessee or the jurisdiction where the land is approval or disapproval and the basis assignee to provide a performance bond located. for the determination, along with or alternative form of security for a notification of any appeal rights under residential lease document. § 162.339 Will BIA review a proposed part 2 of this chapter, in writing to the residential lease before or during § 162.335 Is insurance required for a parties to the lease. preparation of the NEPA review (e) Any residential lease issued under residential lease document? documentation? We will not require a lessee or the authority of the Native American Upon request of the Indian Housing Assistance and Self- assignee to provide insurance for a landowners, we will review the residential lease document. Determination Act, 25 U.S.C 4211(a), proposed residential lease after whether on tribal land or on § 162.336 [Reserved] negotiation by the parties, before or individually owned Indian land, must during preparation of the NEPA review be approved by us and by the affected § 162.337 [Reserved] documentation and any valuation. tribe. Approval Within 10 days of receiving the (f) We will provide approved proposed lease, we will provide an residential leases on tribal land to the § 162.338 What documents are required acknowledgement of the terms of the lessee and provide a copy to the tribe. for BIA approval of a residential lease? lease and identify any provisions that, We will provide approved residential A lessee or the Indian landowners based on this acknowledgment review, leases on individually owned Indian must submit the following documents to would justify disapproval of the lease, land to the lessee, and make copies us to obtain BIA approval of a pending results of the NEPA review and available to the Indian landowners upon residential lease: any valuation. written request. (a) A lease executed by the Indian landowners and the lessee that meets § 162.340 What is the approval process for § 162.341 How will BIA decide whether to the requirements of this part; a residential lease? approve a residential lease? (b) For tribal land, a tribal (a) Before we approve a residential (a) We will approve a residential lease authorization for the lease and, if lease, we must determine that the lease unless: applicable, meeting the requirements of is in the best interest of the Indian (1) The required consents have not §§ 162.320(a), 162.326(b), and landowners. In making that been obtained from the parties to the 162.328(a), or a separate signed determination, we will: lease; certification meeting the requirements (1) Review the lease and supporting (2) The requirements of this subpart of §§ 162.320(a), 162.326(b), and documents; have not been met; or (3) We find a compelling reason to 162.328(a); (2) Ensure compliance with withhold our approval in order to (c) A valuation, if required under applicable laws and ordinances; protect the best interests of the Indian § 162.320 or § 162.321; (3) If the lease is being approved (d) A statement from the appropriate landowners. under 25 U.S.C. 415, assure ourselves (b) We will defer, to the maximum tribal authority that the proposed use is that adequate consideration has been in conformance with applicable tribal extent possible, to the Indian given to the factors in 25 U.S.C. 415(a); landowners’ determination that the law, if required by the tribe; and (e) Reports, surveys, and site residential lease is in their best interest. (4) Require any lease modifications or assessments as needed to facilitate (c) We may not unreasonably mitigation measures necessary to satisfy compliance with applicable Federal and withhold approval of a lease. any requirements including any other tribal environmental and land use Federal or tribal land use requirements. § 162.342 When will a residential lease be requirements, including any (b) Upon receiving a residential lease effective? documentation prepared under (a) A residential lease will be effective § 162.027(b); package, we will promptly notify the parties whether the package is or is not on the date that we approve the lease, (f) A preliminary site plan identifying even if an appeal is filed under part 2 the proposed location of residential complete. A complete package includes all the information and supporting of this chapter. development, roads, and utilities, if (b) The lease may specify a date on applicable, unless the lease is for documents required under this subpart, including but not limited to, NEPA which the obligations between the housing for public purposes; parties to a residential lease are (g) A legal description of the land review documentation and valuation documentation, where applicable. triggered. Such date may be before or under § 162.317; after the approval date under paragraph (1) If the residential lease package is (h) If the lease is being approved (a) of this section. under 25 U.S.C. 415, information to not complete, our letter will identify the assist us in our evaluation of the factors missing information or documents § 162.343 Must a residential lease in 25 U.S.C. 415(a); and required for a complete package. If we document be recorded? (i) If the lessee is a corporation, do not respond to the submission of a (a) Any residential lease, amendment, limited liability company, partnership, residential lease package, the parties assignment, or leasehold mortgage must joint venture, or other legal entity, may take action under § 162.363. be recorded in the LTRO with except a tribal entity, information such (2) If the residential lease package is jurisdiction over the leased land. A as organizational documents, complete, we will notify the parties of residential sublease need not be certificates, filing records, and the date of receipt. Within 30 days of recorded. resolutions, that demonstrates that: the receipt date, we will approve or (1) We will record the lease or other (1) The representative has authority to disapprove the lease or return the document immediately following our execute a lease; package for revision. approval.
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(2) When our approval of an (1) A copy of the executed (c) We may not unreasonably assignment is not required, the parties amendment or other documentation of withhold approval of an amendment. must record the assignment in the LTRO any Indian landowners’ actual consent; Assignments with jurisdiction over the leased land. (2) Proof of mailing of the amendment (b) The tribe must record lease to any Indian landowners who are § 162.349 May a lessee assign a residential documents for the following types of deemed to have consented; and lease? leases in the LTRO with jurisdiction (3) Any other pertinent information (a) A lessee may assign a residential over the leased lands, even though BIA for review. lease by meeting the consent (d) Unless specifically authorized in approval is not required: requirements in § 162.350 and obtaining the lease, a written power of attorney, or (1) Leases of tribal land that a our approval of the assignment under a court document, Indian landowners corporate entity leases to a third party §§ 162.351 and 162.352 or by meeting may not be deemed to have consented under 25 U.S.C. 477; and the conditions in paragraph (b) of this to, and an Indian landowner’s (2) Leases of tribal land under a section. designated representative may not special act of Congress authorizing (b) The lessee may assign the lease negotiate or consent to, an amendment leases without our approval under without our approval or meeting certain conditions. that would: (1) Reduce the payment obligations to consent requirements if: § 162.344 Will BIA require an appeal bond the Indian landowners; (1) The lease is for housing for public for an appeal of a decision on a residential (2) Increase or decrease the lease area; purposes, or the assignee is a leasehold lease document? or mortgagee or its designee, acquiring the BIA will not require an appeal bond (3) Terminate or change the term of lease either through foreclosure or by for an appeal of a decision on a the lease. conveyance; residential lease document. (2) The assignee agrees in writing to § 162.347 What is the approval process for assume all of the obligations and Amendments an amendment of a residential lease? conditions of the lease; and § 162.345 May the parties amend a (a) When we receive an amendment (3) The assignee agrees in writing that residential lease? that meets the requirements of this any transfer of the lease will be in subpart, we will notify the parties of the The parties may amend a residential accordance with applicable law under date we receive it. We have 30 days lease by obtaining: § 162.014. from receipt of the executed (a) The lessee’s signature; amendment, proof of required consents, § 162.350 What are the consent (b) The Indian landowners’ consent and required documentation to approve requirements for an assignment of a under the requirements in § 162.346; or disapprove the amendment. Our residential lease? and determination whether to approve the (a) Unless the lease provides (c) BIA approval of the amendment amendment will be in writing and will otherwise, the lessee must notify all under §§ 162.347 and 162.348. state the basis for our approval or Indian landowners of the proposed § 162.346 What are the consent disapproval. assignment. requirements for an amendment of a (b) If we do not send a determination (b) The Indian landowners, or their residential lease? within 30 days from receipt of the representatives under § 162.013, must (a) Unless the lease provides required documents, the amendment is consent to an assignment of a residential otherwise, the lessee must notify all deemed approved to the extent lease in the same percentages and Indian landowners of the proposed consistent with Federal law. Unless the manner as a new residential lease under amendment. lease provides otherwise, provisions of § 162.012, unless the lease: (b) The Indian landowners, or their the amendment that are inconsistent (1) Provides for assignments without representatives under § 162.013, must with Federal law will be severed and further consent of the Indian consent to an amendment of a unenforceable; all other provisions of landowners or with consent in specified residential lease in the same percentages the amendment will remain in force. percentages and manner; and manner as a new residential lease (2) Provides that individual Indian § 162.348 How will BIA decide whether to landowners are deemed to have under § 162.012, unless the lease: approve an amendment of a residential (1) Provides that individual Indian lease? consented where they do not object in writing to the assignment within a landowners are deemed to have (a) We may disapprove a residential specified period of time following the consented if they do not object in lease amendment only if at least one of landowners’ receipt of the assignment writing to the amendment within a the following is true: and the lease meets the requirements of specified period of time following (1) The Indian landowners have not paragraph (c) of this section; Indian landowners’ receipt of the consented and their consent is required; amendment and the lease meets the (2) The lessee’s mortgagees have not (3) Authorizes one or more of the requirements of paragraph (c) of this consented; Indian landowners to consent on behalf section; (3) The lessee is in violation of the of all Indian landowners; or (2) Authorizes one or more lease; (4) Designates us as the Indian representatives to consent to an (4) The requirements of this subpart landowners’ representative for the amendment on behalf of all Indian have not been met; or purposes of consenting to an landowners; or (5) We find a compelling reason to assignment. (3) Designates us as the Indian withhold our approval in order to (c) If the lease provides for deemed landowners’ representative for the protect the best interests of the Indian consent under paragraph (b)(2) of this purposes of consent to an amendment. landowners. section, it must require the parties to (c) If the lease provides for deemed (b) We will defer, to the maximum submit to us: consent under paragraph (b)(1) of this extent possible, to the Indian (1) A copy of the executed assignment section, it must require the parties to landowners’ determination that the or other documentation of any Indian submit to us: amendment is in their best interest. landowners’ actual consent;
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(2) Proof of mailing of the assignment §§ 162.355 and 162.356, or by meeting otherwise, provisions of the sublease to any Indian landowners who are the conditions in paragraph (b) of this that are inconsistent with Federal law deemed to have consented; and section. will be severed and unenforceable; all (3) Any other pertinent information (b) The lessee may sublease without other provisions of the sublease will for us to review. meeting consent requirements or remain in force. (d) The lessee must obtain the consent obtaining BIA approval of the sublease, of the holders of any mortgages. if: § 162.356 How will BIA decide whether to approve a sublease of a residential lease? (1) The lease provides for subleasing § 162.351 What is the approval process for without meeting consent requirements (a) We may disapprove a sublease of an assignment of a residential lease? or obtaining BIA approval; and a residential lease only if at least one of (a) When we receive an assignment (2) The sublease does not relieve the the following is true: (1) The Indian landowners have not that meets the requirements of this lessee/sublessor of any liability. subpart, we will notify the parties of the consented, and their consent is date we receive it. If our approval is § 162.354 What are the consent required; required, we have 30 days from receipt requirements for a sublease of a residential (2) The lessee’s mortgagees have not of the executed assignment, proof of lease? consented; required consents, and required (a) Unless the lease provides (3) The lessee is in violation of the documentation to approve or otherwise, the lessee must notify all lease; disapprove the assignment. Our Indian landowners of the proposed (4) The lessee will not remain liable determination whether to approve the sublease. under the lease; (5) The requirements of this subpart assignment will be in writing and will (b) The Indian landowners must have not been met; or state the basis for our approval or consent to a sublease of a residential (6) We find a compelling reason to disapproval. lease in the same percentages and withhold our approval in order to (b) If we do not meet the deadline in manner as a new residential lease under protect the best interests of the Indian this section, the lessee or Indian § 162.012, unless the lease: (1) Provides that individual Indian landowners. landowners may take appropriate action (b) In making the finding required by landowners are deemed to have under § 162.363. paragraph (a)(6) of this section, we may consented where they do not object in consider whether the value of any part § 162.352 How will BIA decide whether to writing to the sublease within a of the leased premises not covered by approve an assignment of a residential specified period of time following the lease? the sublease would be adversely landowners’ receipt of the sublease and affected. (a) We may disapprove an assignment the lease meets the requirements of of a residential lease only if at least one (c) We will defer, to the maximum paragraph (c) of this section; extent possible, to the Indian of the following is true: (2) Authorizes one or more of the (1) The Indian landowners have not landowners’ determination that the Indian landowners to consent on behalf sublease is in their best interest. consented, and their consent is of all Indian landowners; or required; (d) We may not unreasonably (3) Designates us as the Indian withhold approval of a sublease. (2) The lessee’s mortgagees have not landowners’ representative for the consented; purposes of consenting to a sublease. Leasehold Mortgages (3) The lessee is in violation of the (c) If the lease provides for deemed lease; § 162.357 May a lessee mortgage a consent under paragraph (b)(1) of this residential lease? (4) The assignee does not agree to be section, it must require the parties to bound by the terms of the lease; (a) A lessee may mortgage a submit to us: residential lease by meeting the consent (5) The requirements of this subpart (1) A copy of the executed sublease or have not been met; or requirements in § 162.358 and obtaining other documentation of any landowner’s BIA approval of the leasehold mortgage (6) We find a compelling reason to actual consent; withhold our approval in order to under in §§ 162.359 and 162.360. (2) Proof of mailing of the sublease to (b) Refer to § 162.349(b) for protect the best interests of the Indian any Indian landowners who are deemed landowners. information on what happens if a sale to have consented; and or foreclosure under an approved (b) In making the finding required by (3) Any other pertinent information paragraph (a)(6) of this section, we may mortgage of the leasehold interest for us to review. occurs. consider whether the value of any part (d) The lessee must obtain the consent of the leased premises not covered by of any mortgagees. § 162.358 What are the consent the assignment would be adversely requirements for a leasehold mortgage of a affected. § 162.355 What is the approval process for residential lease? (c) We will defer, to the maximum a sublease of a residential lease? (a) Unless the lease provides extent possible, to the Indian (a) When we receive a sublease that otherwise, the lessee must notify all landowners’ determination that the meets the requirements of this subpart, Indian landowners of the proposed assignment is in their best interest. we will notify the parties of the date we leasehold mortgage. (d) We may not unreasonably receive it. If our approval is required, (b) The Indian landowners, or their withhold approval of an assignment. we have 30 days from receipt of the representatives under § 162.013, must Subleases executed sublease, proof of required consent to a leasehold mortgage of a consents, and required documentation residential lease in the same percentages § 162.353 May a lessee sublease a to approve or disapprove the sublease. and manner as a new residential lease residential lease? (b) If we do not send a determination under § 162.012, unless the lease: (a) A lessee may sublease a residential within 30 days from receipt of required (1) States that landowner consent is lease by meeting the consent documents, the sublease is deemed not required for a leasehold mortgage requirements in § 162.354 and obtaining approved to the extent consistent with and identifies what law would apply in our approval of the sublease under Federal law. Unless the lease provides case of foreclosure;
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(2) Provides that individual Indian (2) The leasehold mortgage is limited (c) The parties may file a written landowners are deemed to have to the leasehold. notice to compel action with the BIA consented where they do not object in (c) We will defer, to the maximum Director if: writing to the leasehold mortgage within extent possible, to the Indian (1) The Regional Director does not a specified period of time following the landowners’ determination that the meet the deadline in paragraph (b) of landowners’ receipt of the leasehold leasehold mortgage is in their best this section; mortgage and the lease meets the interest. (2) The Superintendent does not issue requirements of paragraph (c) of this (d) We may not unreasonably a decision within the time set by the section; withhold approval of a leasehold Regional Director under paragraph (b)(2) (3) Authorizes one or more mortgage. of this section; or representatives to consent to a leasehold (3) The initial decision on the lease, Effectiveness, Compliance, and mortgage on behalf of all Indian assignment, or leasehold mortgage is Enforcement landowners; or with the Regional Director, and he or (4) Designates us as the Indian § 162.361 When will an amendment, she does not meet the deadline for such landowners’ representative for the assignment, sublease, or leasehold decision. purposes of consenting to a leasehold mortgage of a residential lease be (d) The BIA Director has 15 days from mortgage. effective? receiving the notice to: (c) If the lease provides for deemed (a) An amendment, assignment, (1) Issue a decision; or consent under paragraph (b)(2) of this sublease, or leasehold mortgage of a (2) Order the Regional Director or section, it must require the parties to residential lease will be effective when Superintendent to issue a decision submit to us: approved, even if an appeal is filed within the time set out in the order. (1) A copy of the executed leasehold under part 2 of this chapter, except: (e) If the Regional Director or mortgage or other documentation of any (1) If the amendment or sublease was Superintendent does not issue a Indian landowners’ actual consent; deemed approved under § 162.347(b) or decision within the time set out in the (2) Proof of mailing of the leasehold § 162.355(b), the amendment or sublease order under paragraph (d)(2) of this mortgage to any Indian landowners who becomes effective 45 days from the date section, then the BIA Director must are deemed to have consented; and the parties mailed or delivered the issue a decision within 15 days from the (3) Any other pertinent information document to us for our review; and expiration of the time set out in the for us to review. (2) An assignment that does not order. require our approval under § 162.349(b) (f) The parties may file an appeal from § 162.359 What is the approval process for our inaction to the Interior Board of a leasehold mortgage of a residential lease? or a sublease that does not require our approval under § 162.353(b) becomes Indian Appeals if the Director does not (a) When we receive leasehold effective on the effective date specified meet the deadline in paragraph (d) or (e) mortgage that meets the requirements of in the assignment or sublease. If the of this section. this subpart, we will notify the parties assignment or sublease does not specify (g) The provisions of 25 CFR 2.8 do of the date we receive it. We have 20 the effective date, it becomes effective not apply to the inaction of BIA officials days from receipt of the executed upon execution by the parties. with respect to a decision on a lease, leasehold mortgage, proof of required (b) We will provide copies of amendment, assignment, sublease, or consents, and required documentation approved documents to the party leasehold mortgage under this subpart. to approve or disapprove the leasehold requesting approval, to the tribe for mortgage. Our determination whether to § 162.364 May BIA investigate compliance tribal land, and upon request, to other with a residential lease? approve the leasehold mortgage will be parties to the lease document. in writing and will state the basis for (a) We may enter the leased premises our approval or disapproval. § 162.362 What happens if BIA at any reasonable time, upon reasonable (b) If we do not meet the deadline in disapproves an amendment, assignment, notice, and consistent with any notice this section, the lessee may take sublease, or leasehold mortgage? requirements under applicable tribal appropriate action under § 162.363. If we disapprove an amendment, law and applicable lease documents, to assignment, sublease, or leasehold protect the interests of the Indian § 162.360 How will BIA decide whether to mortgage of a residential lease, we will landowners and ensure that the lessee is approve a leasehold mortgage of a residential lease? notify the parties immediately and in compliance with the requirements of advise the landowners of their right to the lease. (a) We may disapprove a leasehold appeal the decision under part 2 of this (b) If an Indian landowner notifies us mortgage of a residential lease only if at chapter. that a specific lease violation has least one of the following is true: occurred, we will promptly initiate an (1) The Indian landowners have not § 162.363 What happens if BIA does not appropriate investigation. consented, and their consent is meet a deadline for issuing a decision on required; a lease document? § 162.365 May a residential lease provide (2) The requirements of this subpart (a) If a Superintendent does not meet for negotiated remedies if there is a have not been met; or a deadline for issuing a decision on a violation? (3) We find a compelling reason to lease, assignment, or leasehold (a) A residential lease of tribal land withhold our approval in order to mortgage, the parties may file a written may provide either or both parties with protect the best interests of the Indian notice to compel action with the negotiated remedies in the event of a landowners. appropriate Regional Director. lease violation, including, but not (b) In making the finding required by (b) The Regional Director has 15 days limited to, the power to terminate the paragraph (a)(3) of this section, we may from receiving the notice to: lease. If the lease provides one or both consider whether: (1) Issue a decision; or parties with the power to terminate the (1) The leasehold mortgage proceeds (2) Order the Superintendent to issue lease: would be used for purposes unrelated to a decision within the time set out in the (1) BIA approval of the termination is the leased premises; and order. not required;
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(2) The termination is effective landowners for individually owned to the Department of the Treasury for without BIA cancellation; and Indian land. collection; or (3) The Indian landowners must (2) The notice of violation will advise (4) The lessee should be granted notify us of the termination so that we the lessee that, within 10 business days additional time in which to cure the may record it in the LTRO. of the receipt of a notice of violation, the violation. (b) A residential lease of individually lessee must: (b) Following consultation with the owned Indian land may provide either (i) Cure the violation and notify us, tribe for tribal land or, where feasible, or both parties with negotiated and the tribe for tribal land, in writing with Indian landowners for individually remedies, so long as the lease also that the violation has been cured; owned Indian land, we may take action specifies the manner in which those (ii) Dispute our determination that a to recover unpaid rent and any remedies may be exercised by or on violation has occurred; or associated late payment charges. behalf of the Indian landowners of the (iii) Request additional time to cure (1) We do not have to cancel the lease applicable percentage of interests under the violation. or give any further notice to the lessee § 162.012 of this part. If the lease (3) The notice of violation may order before taking action to recover unpaid provides one or both parties with the the lessee to cease operations under the rent. power to terminate the lease: lease. (2) We may still take action to recover (1) BIA concurrence with the (c) A lessee’s failure to pay rent in the any unpaid rent if we cancel the lease. termination is required to ensure that time and manner required by a (c) If we decide to cancel the lease, we the Indian landowners of the applicable residential lease is a violation of the will send the lessee and any mortgagee percentage of interests have consented; lease, and we will issue a notice of a cancellation letter by certified mail, and violation in accordance with this return receipt requested within 5 (2) BIA will record the termination in paragraph. business days of our decision. We will the LTRO. (1) We will send the lessee and any send a copy of the cancellation letter to (c) The parties must notify any mortgagee a notice of violation by the tribe for tribal land, and will provide mortgagee of any violation that may certified mail, return receipt requested: Indian landowners for individually result in termination and the (i) Promptly following the date on owned Indian land with actual or termination of a residential lease. which the payment was due, if the lease constructive notice of the cancellation. (d) Negotiated remedies may apply in requires that rental payments be made The cancellation letter will: addition to, or instead of, the to us; or (1) Explain the grounds for cancellation remedy available to us, as (ii) Promptly following the date on cancellation; specified in the lease. The landowners which we receive actual notice of non- (2) If applicable, notify the lessee of may request our assistance in enforcing payment from the Indian landowners, if the amount of any unpaid rent or late negotiated remedies. the lease provides for payment directly payment charges due under the lease; (e) A residential lease may provide to the Indian landowners. (3) Notify the lessee of the lessee’s that lease violations will be addressed (2) We will send a copy of the notice right to appeal under part 2 of this by the tribe, and that lease disputes will of violation to the tribe for tribal land, chapter; be resolved by a tribal court, any other or provide constructive notice to Indian (4) Order the lessee to vacate the court of competent jurisdiction, or by a landowners for individually owned property within 31 days of the date of tribal governing body in the absence of Indian land. receipt of the cancellation letter, if an a tribal court, or through an alternative (3) The notice of violation will require appeal is not filed by that time; and dispute resolution method. We may not the lessee to provide adequate proof of (5) Order the lessee to take any other be bound by decisions made in such payment. action BIA deems necessary to protect forums, but we will defer to ongoing (d) The lessee will continue to be the Indian landowners. actions or proceedings, as appropriate, responsible for the obligations in the (d) We may invoke any other in deciding whether to exercise any of lease until the lease expires or is remedies available to us under the lease, the remedies available to us. terminated or cancelled. including collecting on any available performance bond, and the Indian 162.366 What will BIA do about a violation § 162.367 What will BIA do if the lessee landowners may pursue any available of a residential lease? does not cure a violation of a residential lease on time? remedies under tribal law. (a) In the absence of actions or (e) We will ensure that any action we proceedings described in § 162.365(e), (a) If the lessee does not cure a take is consistent with 25 U.S.C. 4137, or if it is not appropriate for us to defer violation of a residential lease within as applicable. to the actions or proceedings, we will the required time period, or provide follow the procedures in paragraphs (b), adequate proof of payment as required § 162.368 Will late payment charges or (c), and (d) of this section and, as in the notice of violation, we will special fees apply to delinquent payments applicable, ensure consistency with 25 consult with the tribe for tribal land or, due under a residential lease? U.S.C. 4137. where feasible, with Indian landowners (a) Late payment charges will apply as (b) If we determine there has been a for individually owned Indian land, and specified in the lease. The failure to pay violation of the conditions of a determine whether: these amounts will be treated as a lease residential lease other than a violation (1) We should cancel the lease; violation. of payment provisions covered by (2) The Indian landowners wish to (b) We may assess the following paragraph (c) of this section, we will invoke any remedies available to them special fees to cover administrative promptly send the lessee and any under the lease; costs incurred by the United States in mortgagee a notice of violation by (3) We should invoke other remedies the collection of the debt, if rent is not certified mail, return receipt requested. available under the lease or applicable paid in the time and manner required, (1) We will send a copy of the notice law, including collection on any in addition to late payment charges that of violation to the tribe for tribal land, available performance bond or, for must be paid to the Indian landowners or provide constructive notice to Indian failure to pay rent, referral of the debt under the lease:
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The lessee will pay . . . For . . .
(1) $50.00 ...... Any dishonored check. (2) $15.00 ...... Processing of each notice or demand letter. (3) 18 percent of balance due ...... Treasury processing following referral for collection of delinquent debt.
§ 162.369 How will payment rights relating whom the appeal is made reconsider the tribal lease forms that conform to the to a residential lease be allocated? appeal bond decision, based on requirements of this part. The residential lease may allocate extraordinary circumstances. Any Lease Requirements rights to payment for insurance reconsideration decision is final for the proceeds, trespass damages, Department. § 162.411 How long may the term of a condemnation awards, settlement funds, business lease run? § 162.373 When will BIA issue a decision and other payments between the Indian (a) A business lease must provide for landowners and the lessee. If not on an appeal from a residential leasing decision? a definite term, state if there is an option specified in the lease, insurance policy, BIA will issue a decision on an appeal to renew, and if so, provide for a order, award, judgment, or other definite term for the renewal period. document, the Indian landowners will from a leasing decision within 30 days of receipt of all pleadings. The maximum term of a lease approved be entitled to receive these payments. under 25 U.S.C. 415(a) may not exceed § 162.370 When will a cancellation of a § 162.374 What happens if the lessee 50 years (consisting of an initial term residential lease be effective? abandons the leased premises? not to exceed 25 years and one renewal (a) A cancellation involving a If a lessee abandons the leased not to exceed 25 years), unless a Federal residential lease will not be effective premises, we will treat the statute provides for a longer maximum until 31 days after the lessee receives a abandonment as a violation of the lease. term (e.g., 25 U.S.C. 415(a) allows for a cancellation letter from us, or 41 days The lease may specify a period of non- maximum term of 99 years for certain from the date we mailed the letter, use after which the lease premises will tribes), a different initial term, renewal whichever is earlier. be considered abandoned. term, or number of renewals. (b) The cancellation decision will not (b) For tribal land, we will defer to the be effective if an appeal is filed unless Subpart D—Business Leases tribe’s determination that the lease term, the cancellation is made immediately Business Leasing General Provisions including any renewal, is reasonable. effective under part 2 of this chapter. For individually owned Indian land, we While a cancellation decision is § 162.401 What types of leases does this will review the lease term, including ineffective, the lessee must continue to subpart cover? any renewal, to ensure it is reasonable, pay rent and comply with the other (a) This subpart covers both ground given the: terms of the lease. leases (undeveloped land) and leases of (1) Purpose of the lease; developed land (together with the (2) Type of financing; and § 162.371 What will BIA do if a lessee permanent improvements thereon) on (3) Level of investment. remains in possession after a residential Indian land that are not covered in (c) The lease may not be extended by lease expires or is terminated or cancelled? another subpart of this part, including: holdover. If a lessee remains in possession after (1) Leases for residential purposes the expiration, termination, or that are not covered in subpart C; § 162.412 What must the lease include if it contains an option to renew? cancellation of a residential lease, we (2) Leases for business purposes that may treat the unauthorized possession are not covered in subpart E; (a) If the lease provides for an option as a trespass under applicable law in (3) Leases for religious, educational, to renew, the lease must specify: consultation with the Indian recreational, cultural, or other public (1) The time and manner in which the landowners. Unless the Indian purposes; and option must be exercised or is landowners of the applicable percentage (4) Commercial or industrial leases for automatically effective; of interests under § 162.012 have retail, office, manufacturing, storage, (2) That confirmation of the renewal notified us in writing that they are biomass, waste-to-energy, or other will be submitted to us, unless the lease engaged in good faith negotiations with business purposes. provides for automatic renewal; the holdover lessee to obtain a new (b) Leases covered by this subpart (3) Whether Indian landowner lease, we may take action to recover may authorize the construction of consent to the renewal is required; possession on behalf of the Indian single-purpose or mixed-use projects (4) That the lessee must provide landowners, and pursue any additional designed for use by any number of notice of the renewal to the Indian remedies available under applicable lessees or occupants. landowners and any sureties and law, such as a forcible entry and mortgagees; detainer action. § 162.402 Is there a model business lease (5) The additional consideration, if form? any, that will be due upon the exercise § 162.372 Will BIA appeal bond regulations There is no model business lease form of the option to renew or the start of the apply to cancellation decisions involving because of the need for flexibility in renewal term; and residential leases? negotiating and writing business leases; (6) Any other conditions for renewal (a) Except as provided in paragraph however, we may: (e.g., that the lessee not be in violation (b) of this section, the appeal bond (a) Provide other guidance, such as of the lease at the time of renewal). provisions in part 2 of this chapter will checklists and sample lease provisions, (b) We will record any renewal of a apply to appeals from lease cancellation to assist in the lease negotiation process; lease in the LTRO. decisions. and (b) The lessee may not appeal the (b) Assist the Indian landowners, § 162.413 Are there mandatory provisions appeal bond decision. The lessee may, upon their request, in developing that a business lease must contain? however, request that the official to appropriate lease provisions or in using (a) All business leases must identify:
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(1) The tract or parcel of land being information available for BIA inspection condition before construction of the leased; and duplication. permanent improvements; or (2) The purpose of the lease and (d) Unless the lessee would be (3) Be disposed of by other specified authorized uses of the leased premises; prohibited by law from doing so, the means. (3) The parties to the lease; lease must also contain the following (b) A lease that requires the lessee to (4) The term of the lease; provisions: remove the permanent improvements (5) The ownership of permanent (1) The lessee holds the United States must also provide the Indian improvements and the responsibility for and the Indian landowners harmless landowners with an option to take constructing, operating, maintaining, from any loss, liability, or damages possession of and title to the permanent and managing permanent improvements resulting from the lessee’s use or improvements if the improvements are under § 162.415; occupation of the leased premises; and not removed within the specified time (6) Payment requirements and late (2) The lessee indemnifies the United period. payment charges, including interest; States and the Indian landowners (7) Due diligence requirements under § 162.416 How will BIA enforce removal against all liabilities or costs relating to requirements in a business lease? § 162.417 (unless the lease is for the use, handling, treatment, removal, (a) We may take appropriate religious, educational, recreational, storage, transportation, or disposal of enforcement action to ensure removal of cultural, or other public purposes); hazardous materials, or the release or the permanent improvements and (8) Insurance requirements under discharge of any hazardous material restoration of the premises at the § 162.437; and from the leased premises that occurs lessee’s expense: (9) Bonding requirements under during the lease term, regardless of § 162.434. If a performance bond is (1) In consultation with the tribe, for fault, with the exception that the lessee tribal land or, where feasible, with required, the lease must state that the is not required to indemnify the Indian lessee must obtain the consent of the Indian landowners for individually landowners for liability or cost arising owned Indian land; and surety for any legal instrument that from the Indian landowners’ negligence directly affects their obligations and (2) Before or after expiration, or willful misconduct. termination, or cancellation of the lease. liabilities. (e) We may treat any provision of a (b) Where a representative executes a (b) We may collect and hold the lease document that violates Federal performance bond or alternative form of lease on behalf of an Indian landowner law as a violation of the lease. or lessee, the lease must identify the security until removal and restoration landowner or lessee being represented § 162.414 May permanent improvements are completed. and the authority under which the be made under a business lease? § 162.417 What requirements for due action is taken. The lessee may construct permanent diligence must a business lease include? (c) All business leases must include improvements under a business lease if (a) If permanent improvements are to the following provisions: the business lease specifies, or provides be constructed, the business lease must (1) The obligations of the lessee and for the development of: include due diligence requirements that its sureties to the Indian landowners are (a) A plan that describes the type and require the lessee to complete also enforceable by the United States, so location of any permanent construction of any permanent long as the land remains in trust or improvements to be constructed by the improvements within the schedule restricted status; lessee; and specified in the lease or general (2) There must not be any unlawful (b) A general schedule for schedule of construction, and a process conduct, creation of a nuisance, illegal construction of the permanent for changing the schedule by mutual activity, or negligent use or waste of the improvements, including dates for consent of the parties. If construction leased premises; commencement and completion of does not occur, or is not expected to be (3) The lessee must comply with all construction. completed, within the time period applicable laws, ordinances, rules, specified in the lease, the lessee must regulations, and other legal § 162.415 How must a business lease provide the Indian landowners and BIA requirements under § 162.014; address ownership of permanent with an explanation of good cause as to (4) If historic properties, archeological improvements? the nature of any delay, the anticipated resources, human remains, or other (a) A business lease must specify who date of construction of facilities, and cultural items not previously reported will own any permanent improvements evidence of progress toward are encountered during the course of the lessee constructs during the lease term and may specify under what commencement of construction. any activity associated with this lease, (b) Failure of the lessee to comply conditions, if any, permanent all activity in the immediate vicinity of with the due diligence requirements of improvements the lessee constructs may the properties, resources, remains, or the lease is a violation of the lease and be conveyed to the Indian landowners items will cease and the lessee will may lead to cancellation of the lease during the lease term. In addition, the contact BIA and the tribe with under § 162.467. jurisdiction over the land to determine lease must indicate whether each (c) BIA may waive the requirements how to proceed and appropriate specific permanent improvement the in this section if such waiver is in the disposition; lessee constructs will: best interest of the Indian landowners. (5) BIA has the right, at any (1) Remain on the leased premises, (d) The requirements of this section reasonable time during the term of the upon the expiration, cancellation, or do not apply to leases for religious, lease and upon reasonable notice, in termination of the lease, in a condition educational, recreational, cultural, or accordance with § 162.464, to enter the satisfactory to the Indian landowners, other public purposes. leased premises for inspection and to and become the property of the Indian ensure compliance; and landowners; § 162.418 How must a business lease (6) BIA may, at its discretion, treat as (2) Be removed within a time period describe the land? a lease violation any failure by the specified in the lease, at the lessee’s (a) A business lease must describe the lessee to cooperate with a BIA request expense, with the leased premises to be leased premises by reference to an to make appropriate records, reports, or restored as closely as possible to their official or certified survey, if possible. If
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the land cannot be so described, the lease must establish how the fixed lease of individually owned Indian land lease must include one or more of the amount, percentage, or combination will or, at the request of the tribe, for tribal following: be calculated and the frequency at land. (1) A legal description; which the payments will be made. (b) We will either: (2) A survey-grade global positioning (b) We may approve a lease of (1) Prepare, or have prepared, a system description; or individually owned Indian land that market analysis, appraisal, or other (3) Another description prepared by a provides for the payment of nominal appropriate valuation method; or registered land surveyor that is compensation, or less than a fair market (2) Use an approved market analysis, sufficient to identify the leased rental, if: appraisal, or other appropriate valuation premises. (1) The Indian landowners execute a method from the Indian landowners or (b) If the tract is fractionated we will written waiver of the right to receive fair lessee. identify the undivided trust or restricted market rental; and (c) We will use or approve use of a interests in the leased premises. (2) We determine it is in the Indian market analysis, appraisal, or other landowners’ best interest, based on appropriate valuation method only if it: § 162.419 May a business lease allow factors including, but not limited to: (1) Has been prepared in accordance compatible uses? (i) The lessee is a member of the with USPAP or a valuation method A business lease may provide for the immediate family, as defined in developed by the Secretary under 25 Indian landowners to use, or authorize § 162.003, of an individual Indian U.S.C. 2214; and others to use, the leased premises for landowner; (2) Complies with Departmental other uses compatible with the purpose (ii) The lessee is a co-owner in the policies regarding appraisals, including of the business lease and consistent leased tract; third-party appraisals. with the terms of the business lease. (iii) A special relationship or (d) Indian landowners may use Any such use or authorization by the circumstances exist that we believe competitive bidding as a valuation Indian landowners will not reduce or warrant approval of the lease; method. offset the monetary compensation for (iv) The lease is for religious, the business lease. educational, recreational, cultural, or § 162.423 When are monetary compensation payments due under a Monetary Compensation Requirements other public purposes; (v) We have waived the requirement business lease? § 162.420 How much monetary for a valuation under paragraph (e) of (a) A business lease must specify the compensation must be paid under a this section. dates on which all payments are due. business lease of tribal land? (c) We may approve a lease that (b) Unless the lease provides (a) A business lease of tribal land may provides for payment of less than a fair otherwise, payments may not be made allow for any payment amount market rental during the pre- or accepted more than one year in negotiated by the tribe, and we will development or construction periods, if advance of the due date. defer to the tribe and not require a we determine it is in the Indian (c) Payments are due at the time valuation if the tribe submits a tribal landowners’ best interest. The lease specified in the lease, regardless of authorization expressly stating that it: must specify the amount of the whether the lessee receives an advance (1) Has negotiated compensation compensation and the applicable billing or other notice that a payment is satisfactory to the tribe; periods. due. (2) Waives valuation; and (d) We will require a valuation in accordance with § 162.422, unless: § 162.424 Must a business lease specify (3) Has determined that accepting who receives monetary compensation such negotiated compensation and (1) 100 percent of the Indian payments? waiving valuation is in its best interest. landowners submit to us a written (a) A business lease must specify (b) The tribe may request, in writing, request to waive the valuation whether the lessee will make payments that we determine fair market rental, in requirement; or directly to the Indian landowners (direct which case we will use a valuation in (2) We waive the requirement under pay) or to us on their behalf. accordance with § 162.422. After paragraph (e) of this section. (b) The lessee may make payments providing the tribe with the fair market (e) If the owners of the applicable directly to the Indian landowners if: rental, we will defer to a tribe’s decision percentage of interests under § 162.012 (1) The Indian landowners’ trust to allow for any payment amount of this part execute a business lease on accounts are unencumbered; negotiated by the tribe. behalf of all of the Indian landowners of (2) There are 10 or fewer beneficial (c) If the conditions in paragraph (a) a fractionated tract, the lease must owners; and or (b) of this section are not met, we will provide that the non-consenting Indian (3) One hundred percent of the require that the lease provide for fair landowners, and those on whose behalf beneficial owners (including those on market rental based on a valuation in we have consented, receive a fair market whose behalf we have consented) agree accordance with § 162.422. rental, as determined by a valuation, unless we waive the requirement to receive payment directly from the § 162.421 How much monetary because the tribe or lessee will construct lessee at the start of the lease. compensation must be paid under a infrastructure improvements on, or (c) If the lease provides that the lessee business lease of individually owned Indian serving, the leased premises, and we will directly pay the Indian landowners, land? determine it is in the best interest of all then: (a) A business lease of individually the landowners. (1) The lease must include provisions owned Indian land must require for proof of payment upon our request. payment of not less than fair market § 162.422 How will BIA determine fair (2) When we consent on behalf of an rental before any adjustments, based on market rental for a business lease? Indian landowner, the lessee must make a fixed amount, a percentage of the (a) We will use a market analysis, payment to us on behalf of that projected income, or some other appraisal, or other appropriate valuation landowner. method, unless paragraphs (b) or (c) of method to determine the fair market (3) The lessee must send direct this section permit a lesser amount. The rental before we approve a business payments to the parties and addresses
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specified in the lease, unless the lessee (c) For individually owned land, we (d) When a review results in the need receives notice of a change of ownership may approve a lease that provides for for adjustment of compensation, the or address. compensation under paragraph (a) of Indian landowners must consent to the (4) Unless the lease provides this section if we determine that it is in adjustment in accordance with otherwise, compensation payments may the best interest of the Indian § 162.012, unless the lease provides not be made payable directly to anyone landowners. otherwise. other than the Indian landowners. (5) Direct payments must continue § 162.427 Will BIA notify a lessee when a § 162.429 What other types of payments through the duration of the lease, except payment is due under a business lease? are required under a business lease? that: Upon request of the Indian (a) The lessee may be required to pay (i) The lessee must make all Indian landowners, we may issue invoices to a additional fees, taxes, and assessments landowners’ payments to us if 100 lessee in advance of the dates on which associated with the use of the land, as percent of the Indian landowners agree payments are due under a business determined by entities having to suspend direct pay and provide us lease. The lessee’s obligation to make jurisdiction, except as provided in with documentation of their agreement; these payments in a timely manner will § 162.017. The lessee must pay these and not be excused if invoices are not amounts to the appropriate office. (ii) The lessee must make that issued, delivered, or received. (b) If the leased premises are within individual Indian landowner’s payment an Indian irrigation project or drainage § 162.428 Must a business lease provide district, except as otherwise provided in to us if any individual Indian for compensation reviews or adjustments? landowner who dies, is declared non part 171 of this chapter, the lessee must (a) For a business lease of tribal land, compos mentis, owes a debt resulting in pay all operation and maintenance unless the lease provides otherwise, no a trust account encumbrance, or his or charges that accrue during the lease periodic review of the adequacy of her whereabouts become unknown. term. The lessee must pay these compensation or adjustment is required amounts to the appropriate office in § 162.425 What form of monetary if the tribe states in its tribal charge of the irrigation project or compensation payment is acceptable under certification or authorization that it has drainage district. We will treat failure to a business lease? determined that not having make these payments as a violation of (a) When payments are made directly compensation reviews and/or the lease. to Indian landowners, the form of adjustments is in its best interest. (c) Where the property is subject to at payment must be acceptable to the (b) For a business lease of least one other lease for another Indian landowners. individually owned Indian land, unless compatible use, the lessees may agree (b) When payments are made to us, the lease provides otherwise, no among themselves how to allocate our preferred method of payment is periodic review of the adequacy of payment of the Indian irrigation electronic funds transfer payments. We compensation or adjustment is required operation and maintenance charges. will also accept: if: (1) Money orders; (1) If the term of the lease is 5 years Bonding and Insurance (2) Personal checks; or less; (3) Certified checks; or (2) The lease provides for automatic § 162.434 Must a lessee provide a performance bond for a business lease? (4) Cashier’s checks. adjustments; or (c) We will not accept cash or foreign (3) We determine it is in the best The lessee must provide a currency. interest of the Indian landowners not to performance bond or alternative form of (d) We will accept third-party checks require a review or automatic security, except as provided in only from financial institutions or adjustment based on circumstances paragraph (f) of this section. Federal agencies. including, but not limited to, the (a) The performance bond or following: alternative form of security must be in § 162.426 May the business lease provide (i) The lease provides for payment of an amount sufficient to secure the for non-monetary or varying types of contractual obligations including: compensation? less than fair market rental; (ii) The lease is for religious, (1) No less than: (a) A lease may provide for the educational, recreational, cultural, or (i) The highest annual rental specified following, subject to the conditions in other public purposes; in the lease, if compensation is paid paragraphs (b) and (c) of this section: (iii) The lease provides for most or all annually; or (1) Alternative forms of of the compensation to be paid during (ii) If the compensation is not paid compensation, including but not limited the first 5 years of the lease term or annually, another amount established to, in-kind consideration and payments before the date the review would be by BIA in consultation with the tribe for based on percentage of income; or conducted; or tribal land or, where feasible, with (2) Varying types of compensation at (iv) The lease provides for graduated Indian landowners for individually specific stages during the life of the rent or non-monetary or various types of owned Indian land; lease, including but not limited to fixed compensation. (2) The construction of any required annual payments during construction, (c) If the conditions in paragraph (a) permanent improvements; payments based on income during an or (b) of this section are not met, a (3) The operation and maintenance operational period, and bonuses. review of the adequacy of compensation charges for any land located within an (b) For tribal land, we will defer to the must occur at least every fifth year, in irrigation project; and tribe’s determination that the the manner specified in the lease. The (4) The restoration and reclamation of compensation under paragraph (a) of lease must specify: the leased premises, to their condition this section is in its best interest, if the (1) When adjustments take effect; at the start of the lease term or some tribe submits a signed certification or (2) Who can make adjustments; other specified condition. tribal authorization stating that it has (3) What the adjustments are based (b) The performance bond or other determined the compensation under on; and security: paragraph (a) of this section to be in its (4) How to resolve disputes arising (1) Must be deposited with us and best interest. from the adjustments. made payable only to us, and may not
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be modified without our approval, limited to an escrow agreement and us to obtain BIA approval of a business except as provided in paragraph (b)(2) of assigned savings account. lease: this section; and (c) All forms of performance bonds or (a) A lease executed by the Indian (2) For tribal land, if the lease so alternative security must, if applicable: landowners and the lessee that meets provides, may be deposited with the (1) Indicate on their face that BIA the requirements of this part; tribe and made payable to the tribe, and approval is required for redemption; (b) For tribal land, a tribal may not be modified without the (2) Be accompanied by a statement authorization for the lease and, if approval of the tribe. granting full authority to BIA to make an applicable, meeting the requirements of (c) The lease must specify the immediate claim upon or sell them if §§ 162.420(a), 162.426(b), and conditions under which we may adjust the lessee violates the lease; 162.428(a), or a separate signed security or performance bond (3) Be irrevocable during the term of certification meeting the requirements requirements to reflect changing the performance bond or alternative of §§ 162.426(b) and 162.428(a)); conditions, including consultation with security; and (c) A valuation, if required under the tribal landowner for tribal land (4) Be automatically renewable during § 162.420 or § 162.421; before the adjustment. the term of the lease. (d) Proof of insurance, if required (d) We may require that the surety (d) We will not accept cash bonds. under § 162.437; provide any supporting documents § 162.436 What is the release process for (e) A performance bond or other needed to show that the performance a performance bond or alternative form of security, if required under § 162.434; bond or alternative forms of security security under a business lease? (f) Statement from the appropriate will be enforceable, and that the surety (a) Upon expiration, termination, or tribal authority that the proposed use is will be able to perform the guaranteed cancellation of the lease, the lessee may in conformance with applicable tribal obligations. ask BIA in writing to release the law, if required by the tribe; (e) The performance bond or other performance bond or alternative form of (g) Environmental and archeological security instrument must require the security. reports, surveys, and site assessments as surety to provide notice to us at least 60 (b) Upon receiving a request under needed to facilitate compliance with days before canceling a performance paragraph (a) of this section, BIA will: applicable Federal and tribal bond or other security. This will allow (1) Confirm with the tribe, for tribal environmental and land use us to notify the lessee of its obligation land or, where feasible, with the Indian requirements, including any to provide a substitute performance landowners for individually owned documentation prepared under bond or other security and require Indian land, that the lessee has § 162.027(b); collection of the bond or security before complied with all lease obligations; and (h) A restoration and reclamation plan the cancellation date. Failure to provide (2) Release the performance bond or (and any subsequent modifications to a substitute performance bond or alternative form of security to the lessee, the plan), if appropriate; security is a violation of the lease. unless we determine that the bond or (i) Where the lessee is not an entity (f) We may waive the requirement for security must be redeemed to fulfill the owned and operated by the tribe, a performance bond or alternative form contractual obligations. documents that demonstrate the of security if either: technical capability of the lessee or (1) The lease is for religious, § 162.437 Must a lessee provide insurance lessee’s agent to construct, operate, for a business lease? educational, recreational, cultural, or maintain, and terminate the proposed other public purposes; or Except as provided in paragraph (c) of project and the lessee’s ability to (2) The Indian landowners request it this section, a lessee must provide successfully design, construct, or obtain and we determine a waiver is in the insurance necessary to protect the the funding for a project similar to the Indian landowners’ best interest. interests of the Indian landowners and proposed project, if appropriate; (g) For tribal land, we will defer, to in the amount sufficient to protect all (j) A preliminary plan of development the maximum extent possible, to the insurable permanent improvements on that describes the type and location of tribe’s determination that a waiver of a the premises. any permanent improvements the lessee performance bond or alternative form of (a) The insurance may include plans to construct and a schedule security is in its best interest. property, crop, liability, and casualty showing the tentative commencement insurance, depending on the Indian and completion dates for those § 162.435 What forms of security are landowners’ interests to be protected. improvements, if appropriate; acceptable under a business lease? (b) Both the Indian landowners and (k) A legal description of the land (a) We will accept a performance the United States must be identified as under § 162.418; bond only in one of the following forms: additional insured parties. (l) If the lease is being approved under (1) Certificates of deposit issued by a (c) We may waive the requirement for 25 U.S.C. 415, information to assist us federally insured financial institution insurance upon the request of the Indian in our evaluation of the factors in 25 authorized to do business in the United landowner, if a waiver is in the best U.S.C. 415(a); and States; interest of the Indian landowner, (m) If the lessee is a corporation, (2) Irrevocable letters of credit issued including if the lease is for less than fair limited liability company, partnership, by a federally insured financial market rental or nominal compensation. joint venture, or other legal entity, institution authorized to do business in For tribal land, we will defer, to the except a tribal entity, information such the United States; maximum extent possible, to the tribe’s as organizational documents, (3) Negotiable Treasury securities; or determination that a waiver is in its best certificates, filing records, and (4) Surety bonds issued by a company interest. resolutions, that demonstrates that: approved by the U.S. Department of the Approval (1) The representative has authority to Treasury. execute a lease; (b) We may accept an alternative form § 162.438 What documents are required (2) The lease will be enforceable of security approved by us that provides for BIA approval of a business lease? against the lessee; and adequate protection for the Indian A lessee or the Indian landowners (3) The legal entity is in good standing landowners and us, including but not must submit the following documents to and authorized to conduct business in
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the jurisdiction where the land is must identify our initial concerns and (b) The tribe must record lease located. invite the parties to respond within 15 documents for the following types of days of the date of the letter; and leases in the LTRO with jurisdiction § 162.439 Will BIA review a proposed (ii) We have 30 days from sending the over the leased lands, even though BIA business lease before or during preparation of the NEPA review documentation? letter informing the parties that we need approval is not required: additional time to approve or (1) Leases of tribal land a corporate Upon request of the Indian disapprove the lease. entity leases to a third party under 25 landowners, we will review the (c) If we do not meet the deadlines in U.S.C. 477; and proposed business lease after this section, then the parties may take (2) Leases of tribal land under a negotiation by the parties, before or appropriate action under § 162.463. special act of Congress authorizing during preparation of the NEPA review (d) We will provide any lease leases without our approval under documentation and any valuation. approval or disapproval and the basis certain conditions. Within 60 days of receiving the for the determination, along with proposed lease, we will provide an § 162.444 Will BIA require an appeal bond notification of any appeal rights under for an appeal of a decision on a business acknowledgement of the terms of the part 2 of this chapter, in writing to the lease and identify any provisions that, lease document? parties to the lease. (a) If a party appeals our decision on based on this acknowledgment review, (e) We will provide approved a lease, assignment, amendment, or would justify disapproval of the lease, business leases on tribal land to the sublease, then the official to whom the pending results of the NEPA review and lessee and provide a copy to the tribe. appeal is made may require the any valuation. We will provide approved business appellant to post an appeal bond in leases on individually owned Indian § 162.440 What is the approval process for accordance with part 2 of this chapter. a business lease? land to the lessee, and make copies We will not require an appeal bond: (a) Before we approve a business available to the Indian landowners upon (1) For an appeal of a decision on a lease, we must determine that the lease written request. leasehold mortgage; or is in the best interest of the Indian § 162.441 How will BIA decide whether to (2) If the tribe is a party to the appeal landowners. In making that approve a business lease? and requests a waiver of the appeal determination, we will: bond. (1) Review the lease and supporting (a) We will approve a business lease unless: (b) The appellant may not appeal the documents; appeal bond decision. The appellant (2) Identify potential environmental (1) The required consents have not been obtained from the parties to the may, however, request that the official impacts and ensure compliance with all to whom the appeal is made reconsider applicable environmental laws, land use lease; (2) The requirements of this subpart the bond decision, based on laws, and ordinances; extraordinary circumstances. Any (3) If the lease is being approved have not been met; or (3) We find a compelling reason to reconsideration decision is final for the under 25 U.S.C. 415, assure ourselves Department. that adequate consideration has been withhold our approval in order to given to the factors in 25 U.S.C. 415(a); protect the best interests of the Indian Amendments and landowners. (b) We will defer, to the maximum § 162.445 May the parties amend a (4) Require any lease modifications or business lease? mitigation measures necessary to satisfy extent possible, to the Indian any requirements including any other landowners’ determination that the The parties may amend a business Federal or tribal land use requirements. lease is in their best interest. lease by obtaining: (b) Upon receiving a business lease (c) We may not unreasonably (a) The lessee’s signature; (b) The Indian landowners’ consent package, we will promptly notify the withhold approval of a lease. under the requirements in § 162.446; parties whether the package is or is not § 162.442 When will a business lease be and complete. A complete package includes effective? (c) BIA approval of the amendment all the information and supporting (a) A business lease will be effective under §§ 162.447 and 162.448. documents required under this subpart, on the date that we approve the lease, including but not limited to, NEPA even if an appeal is filed under part 2 § 162.446 What are the consent review documentation and valuation of this chapter. requirements for an amendment to a business lease? documentation, where applicable. (b) The lease may specify a date on (1) If the business lease package is not which the obligations between the (a) Unless the lease provides complete, our letter will identify the parties to the business lease are otherwise, the lessee must notify all missing information or documents triggered. Such date may be before or Indian landowners of the proposed required for a complete package. If we after the approval date under paragraph amendment. do not respond to the submission of a (a) of this section. (b) The Indian landowners, or their business lease package, the parties may representatives under § 162.013, must take action under § 162.463. § 162.443 Must a business lease document consent to an amendment of a business (2) If the business lease package is be recorded? lease in the same percentages and complete, we will notify the parties of (a) Any business lease document must manner as a new business lease under the date of our receipt. Within 60 days be recorded in our LTRO with § 162.012, unless the lease: of the receipt date, we will approve or jurisdiction over the leased land. (1) Provides that individual Indian disapprove the lease, return the package (1) We will record the lease document landowners are deemed to have for revision, or inform the parties in immediately following our approval. consented where they do not object in writing that we need additional review (2) If our approval of an assignment or writing to the amendment within a time. If we inform the parties in writing sublease is not required, the parties specified period of time following the that we need additional time, then: must record the assignment or sublease landowners’ receipt of the amendment (i) Our letter informing the parties in the LTRO with jurisdiction over the and the lease meets the requirements of that we need additional review time leased land. paragraph (c) of this section;
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(2) Authorizes one or more will be severed and unenforceable; all Indian landowners of the proposed representatives to consent to an other provisions of the amendment will assignment. amendment on behalf of all Indian remain in force. (b) The Indian landowners, or their landowners; or representatives under § 162.013, must (3) Designates us as the Indian § 162.448 How will BIA decide whether to consent to an amendment of a business approve an amendment to a business lease in the same percentages and landowners’ representative for the lease? purposes of consenting to an manner as a new business lease under amendment. (a) We may disapprove a business § 162.012, unless the lease: (c) If the lease provides for deemed lease amendment only if at least one of (1) Provides that individual Indian consent under paragraph (b)(1) of this the following is true: landowners are deemed to have (1) The Indian landowners have not section, it must require the parties to consented where they do not object in consented and their consent is required; submit to us: writing to the amendment within a (2) The lessee’s mortgagees or sureties (1) A copy of the executed specified period of time following the have not consented; landowners’ receipt of the amendment amendment or other documentation of (3) The lessee is in violation of the and the lease meets the requirements of any Indian landowners’ actual consent; lease; (2) Proof of mailing of the amendment (4) The requirements of this subpart paragraph (c) of this section; (2) Authorizes one or more to any Indian landowners who are have not been met; or deemed to have consented; and (5) We find a compelling reason to representatives to consent to an (3) Any other pertinent information withhold our approval in order to amendment on behalf of all Indian for us to review. protect the best interests of the Indian landowners; or (3) Designates us as the Indian (d) Unless specifically authorized in landowners. the lease, a written power of attorney, or (b) We will defer, to the maximum landowners’ representative for the a court document, Indian landowners extent possible to the Indian purposes of consenting to an may not be deemed to have consented landowners’ determination that the amendment. (c) If the lease provides for deemed to, and an Indian landowner’s amendment is in their best interest. designated representative may not (c) We may not unreasonably consent under paragraph (b)(1) of this negotiate or consent to, an amendment withhold approval of an amendment. section, it must require the parties to that would: submit to us: (1) Reduce the payment obligations to Assignments (1) A copy of the executed the Indian landowners; amendment or other documentation of § 162.449 May a lessee assign a business any Indian landowners’ actual consent; (2) Increase or decrease the lease area; lease? (3) Terminate or change the term of (2) Proof of mailing of the amendment (a) A lessee may assign a business the lease; or to any Indian landowners who are (4) Modify the dispute resolution lease by meeting the consent deemed to have consented; and procedures. requirements in § 162.450 and obtaining (3) Any other pertinent information our approval of the assignment under for us to review. § 162.447 What is the approval process for §§ 162.451 and 162.452, or by meeting (d) The lessee must obtain the consent an amendment to a business lease? the conditions in paragraphs (b) or (c) of of the holders of any bonds or (a) When we receive an amendment this section. mortgages. that meets the requirements of this (b) Where provided in the lease, the subpart, we will notify the parties of the lessee may assign the lease to the § 162.451 What is the approval process for an assignment of a business lease? date we receive it. We have 30 days following without meeting consent from receipt of the executed requirements or obtaining BIA approval (a) When we receive an assignment amendment, proof of required consents, of the assignment, as long as the lessee that meets the requirements of this and required documentation to approve notifies BIA of the assignment within 30 subpart, we will notify the parties of the or disapprove the amendment or inform days after it is executed: date we receive it. If our approval is the parties in writing that we need (1) Not more than three distinct legal required, we have 30 days from receipt additional review time. Our entities specified in the lease; or of the executed assignment, proof of determination whether to approve the (2) The lessee’s wholly owned required consents, and required amendment will be in writing and will subsidiaries. documentation to approve or state the basis for our approval or (c) The lessee may assign the lease disapprove the assignment. Our disapproval. without our approval or meeting determination whether to approve the (b) Our letter informing the parties consent requirements if: assignment will be in writing and will that we need additional review time (1) The assignee is a leasehold state the basis for our approval or must identify our initial concerns and mortgagee or its designee, acquiring the disapproval. invite the parties to respond within 15 lease either through foreclosure or by (b) If we do not meet the deadline in days of the date of the letter. We have conveyance; this section, the lessee or Indian (2) The assignee agrees in writing to 30 days from sending the letter landowners may take appropriate action assume all of the obligations and informing the parties that we need under § 162.463. conditions of the lease; and additional time to approve or (3) The assignee agrees in writing that § 162.452 How will BIA decide whether to disapprove the amendment. any transfer of the lease will be in approve an assignment of a business (c) If we do not meet the deadline in lease? accordance with applicable law under paragraph (a) or this section, or § 162.014. (a) We may disapprove an assignment paragraph (b) of this section if of a business lease only if at least one applicable, the amendment is deemed § 162.450 What are the consent of the following is true: approved to the extent consistent with requirements for an assignment of a (1) The Indian landowners have not Federal law. Unless the lease provides business lease? consented and their consent is required; otherwise, provisions of the amendment (a) Unless the lease provides (2) The lessee’s mortgagees or sureties that are inconsistent with Federal law otherwise, the lessee must notify all have not consented;
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(3) The lessee is in violation of the (1) Provides that individual Indian (1) The Indian landowners have not lease; landowners are deemed to have consented and their consent is required; (4) The assignee does not agree to be consented where they do not object in (2) The lessee’s mortgagees or sureties bound by the terms of the lease; writing to the sublease within a have not consented; (5) The requirements of this subpart specified period of time following the (3) The lessee is in violation of the have not been met; or landowners’ receipt of the sublease and lease; (6) We find a compelling reason to the lease meets the requirements of (4) The lessee will not remain liable withhold our approval in order to paragraph (c) of this section; under the lease; protect the best interests of the Indian (2) Authorizes one or more (5) The requirements of this subpart landowners. representatives to consent to a sublease have not been met; or (b) In making the finding required by on behalf of all Indian landowners; or (6) We find a compelling reason to paragraph (a)(6) of this section, we may (3) Designates us as the Indian withhold our approval in order to consider whether: landowners’ representative for the protect the best interests of the Indian (1) The value of any part of the leased purposes of consenting to a sublease. landowners. premises not covered by the assignment (c) If the lease provides for deemed (b) In making the finding required by would be adversely affected; and consent under paragraph (b)(1) of this paragraph (a)(6) of this section, we may (2) If a performance bond is required, section, it must require the parties to consider whether the value of any part the assignee has posted the bond or submit to us: of the leased premises not covered by security and provided supporting (1) A copy of the executed sublease or the sublease would be adversely documents that demonstrate that: other documentation of any Indian affected. (i) The lease will be enforceable landowners’ actual consent; (c) We will defer, to the maximum against the assignee; and (2) Proof of mailing of the sublease to extent possible, to the Indian (ii) The assignee will be able to any Indian landowners who are deemed landowners’ determination that the perform its obligations under the lease to have consented; and sublease is in their best interest. or assignment. (3) Any other pertinent information (d) We may not unreasonably (c) We will defer, to the maximum for us to review. withhold approval of a sublease. extent possible, to the Indian Leasehold Mortgages landowners’ determination that the § 162.455 What is the approval process for a sublease of a business lease? assignment is in their best interest. § 162.457 May a lessee mortgage a (d) We may not unreasonably (a) When we receive a sublease that business lease? withhold approval of an assignment. meets the requirements of this subpart, (a) A lessee may mortgage a business we will notify the parties of the date we Subleases lease by meeting the consent receive it. If our approval is required, requirements in § 162.458 and obtaining § 162.453 May a lessee sublease a we have 30 days from receipt of the our approval of the leasehold mortgage business lease? executed sublease, proof of required under §§ 162.459 and 162.460. (a) A lessee may sublease a business consents, and required documentation (b) Refer to § 162.449(c) for lease by meeting the consent to approve or disapprove the sublease or information on what happens if a sale requirements in § 162.454 and obtaining inform the parties in writing that we or foreclosure under an approved our approval of the sublease under need additional review time. Our mortgage of the leasehold interest §§ 162.455 and 162.456, or by meeting determination whether to approve the occurs. the conditions in paragraph (b) of this sublease will be in writing and will state section. the basis for our approval or § 162.458 What are the consent disapproval. requirements for a leasehold mortgage of a (b) Where the sublease is part of a business lease? commercial development or residential (b) Our letter informing the parties development, the lessee may sublease that we need additional review time (a) Unless the lease provides without meeting consent requirements must identify our initial concerns and otherwise, the lessee must notify all or obtaining BIA approval of the invite the parties to respond within 15 Indian landowners of the proposed sublease, if: days of the date of the letter. We have leasehold mortgage. (1) The lease provides for subleasing 30 days from sending the letter (b) The Indian landowners, or their without meeting consent requirements informing the parties that we need representatives under § 162.013, must or obtaining BIA approval; additional time to approve or consent to a leasehold mortgage of a (2) The sublease does not relieve the disapprove the sublease. business lease in the same percentages lessee/sublessor of any liability; and (c) If we do not meet the deadline in and manner as a new business lease (3) The parties provide BIA with a paragraph (a) of this section, or under § 162.012, unless the lease: copy of the sublease within 30 days paragraph (b) of this section if (1) States that landowner consent is after it is executed. applicable, the sublease is deemed not required for a leasehold mortgage approved to the extent consistent with and identifies what law would apply in § 162.454 What are the consent Federal law. Unless the lease provides case of foreclosure; requirements for a sublease of a business otherwise, provisions of the sublease (2) Provides that individual Indian lease? that are inconsistent with Federal law landowners are deemed to have (a) Unless the lease provides will be severed and unenforceable; all consented where they do not object in otherwise, the lessee must notify all other provisions of the sublease will writing to the leasehold mortgage within Indian landowners of the proposed remain in force. a specified period of time following the sublease. landowners’ receipt of the leasehold (b) The Indian landowners must § 162.456 How will BIA decide whether to mortgage and the lease meets the consent to a sublease of a business lease approve a sublease of a business lease? requirements of paragraph (c) of this in the same percentages and manner as (a) We may disapprove a sublease of section; a new business lease under § 162.012, a business lease only if at least one of (3) Authorizes one or more unless the lease: the following is true: representatives to consent to a leasehold
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mortgage on behalf of all Indian Effectiveness, Compliance, and (1) The Regional Director does not landowners; or Enforcement meet the deadline in paragraph (b) of (4) Designates us as the Indian this section; landowners’ representative for the § 162.461 When will an amendment, (2) The Superintendent does not issue assignment, sublease, or leasehold purposes of consenting to a leasehold mortgage of a business lease be effective? a decision within the time set by the mortgage. Regional Director under paragraph (b)(2) (c) If the lease provides for deemed (a) An amendment, assignment, of this section; or consent under paragraph (b)(2) of this sublease, or leasehold mortgage of a (3) The initial decision on the lease, section, it must require the parties to business lease will be effective when assignment, or leasehold mortgage is submit to us: approved, even if an appeal is filed with the Regional Director, and he or (1) A copy of the executed leasehold under part 2 of this chapter, except: she does not meet the deadline for such (1) If the amendment or sublease was mortgage or other documentation of any decision. deemed approved under § 162.447(c) or Indian landowners’ actual consent; (d) The BIA Director has 15 days from § 162.455(c), the amendment or sublease (2) Proof of mailing of the leasehold receiving the notice to: becomes effective 45 days from the date mortgage to any Indian landowners who (1) Issue a decision; or the parties mailed or delivered the are deemed to have consented; and (2) Order the Regional Director or (3) Any other pertinent information document to us for our review or, if we Superintendent to issue a decision for us to review. sent a letter informing the parties that within the time set out in the order. we need additional time to approve or (e) If the Regional Director or § 162.459 What is the approval process for disapprove the lease, the amendment or Superintendent does not issue a a leasehold mortgage of a business lease? sublease becomes effective 45 days from decision within the time set out in the (a) When we receive a leasehold the date of the letter informing the order under paragraph (d)(2), then the mortgage that meets the requirements of parties that we need additional time to BIA Director must issue a decision this subpart, we will notify the parties approve or disapprove the lease; and within 15 days from the expiration of of the date we receive it. We have 20 (2) An assignment that does not the time set out in the order. days from receipt of the executed require our approval under § 162.449(b) (f) The parties may file an appeal from leasehold mortgage, proof of required or § 162.449(c) or a sublease that does our inaction to the Interior Board of consents, and required documentation not require our approval under Indian Appeals if the Director does not to approve or disapprove the leasehold § 152.453(b) becomes effective on the meet the deadline in paragraph (d) or (e) mortgage. Our determination whether to effective date specified in the of this section. approve the leasehold mortgage will be assignment or sublease. If the (g) The provisions of 25 CFR 2.8 do in writing and will state the basis for assignment or sublease does not specify not apply to the inaction of BIA officials our approval or disapproval. the effective date, it becomes effective with respect to a decision on a lease, (b) If we do not meet the deadline in upon execution by the parties. amendment, assignment, sublease, or (b) We will provide copies of this section, the lessee may take leasehold mortgage under this subpart. appropriate action under § 162.463. approved documents to the party requesting approval, to the tribe for § 162.464 May BIA investigate compliance § 162.460 How will BIA decide whether to tribal land, and upon request, to other with a business lease? approve a leasehold mortgage of a parties to the lease document. (a) We may enter the leased premises business lease? at any reasonable time, upon reasonable (a) We may disapprove a leasehold § 162.462 What happens if BIA disapproves an amendment, assignment, notice, and consistent with any notice mortgage of a business lease only if at requirements under applicable tribal least one of the following is true: sublease, or leasehold mortgage of a business lease? law and applicable lease documents, to (1) The Indian landowners have not If we disapprove an amendment, protect the interests of the Indian consented and their consent is required; landowners and to determine if the (2) The lessee’s mortgagees or sureties assignment, sublease, or leasehold mortgage of a business lease, we will lessee is in compliance with the have not consented; requirements of the lease. (3) The requirements of this subpart notify the parties immediately and advise the landowners of their right to (b) If an Indian landowner notifies us have not been met; or that a specific lease violation has (4) We find a compelling reason to appeal the decision under part 2 of this chapter. occurred, we will promptly initiate an withhold our approval in order to appropriate investigation. protect the best interests of the Indian § 162.463 What happens if BIA does not landowners. meet a deadline for issuing a decision on § 162.465 May a business lease provide for (b) In making the finding required by a lease document? negotiated remedies if there is a violation? paragraph (a)(4) of this section, we may (a) If a Superintendent does not meet (a) A business lease of tribal land may consider whether: a deadline for issuing a decision on a provide either or both parties with (1) The leasehold mortgage proceeds lease, assignment, or leasehold negotiated remedies in the event of a would be used for purposes unrelated to mortgage, the parties may file a written lease violation, including, but not the leased premises; and notice to compel action with the limited to, the power to terminate the (2) The leasehold mortgage is limited appropriate Regional Director. lease. If the lease provides one or both to the leasehold. (b) The Regional Director has 15 days parties with the power to terminate the (c) We will defer, to the maximum from receiving the notice to: lease: extent possible, to the Indian (1) Issue a decision; or (1) BIA approval of the termination is landowners’ determination that the (2) Order the Superintendent to issue not required; leasehold mortgage is in their best a decision within the time set out in the (2) The termination is effective interest. order. without BIA cancellation; and (d) We may not unreasonably (c) The parties may file a written (3) The Indian landowners must withhold approval of a leasehold notice to compel action with the BIA notify us of the termination so that we mortgage. Director if: may record it in the LTRO.
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(b) A business lease of individually (i) Cure the violation and notify us, (b) Following consultation with the owned Indian land may provide either and the tribe for tribal land, in writing tribe for tribal land or, where feasible, or both parties with negotiated that the violation has been cured; with Indian landowners for individually remedies, so long as the lease also (ii) Dispute our determination that a owned Indian land, we may take action specifies the manner in which those violation has occurred; or to recover unpaid compensation and remedies may be exercised by or on (iii) Request additional time to cure any associated late payment charges. behalf of the Indian landowners of the the violation. (1) We do not have to cancel the lease applicable percentage of interests under (3) The notice of violation may order or give any further notice to the lessee § 162.012 of this part. If the lease the lessee to cease operations under the before taking action to recover unpaid provides one or both parties with the lease. compensation. power to terminate the lease: (c) A lessee’s failure to pay (2) We may still take action to recover (1) BIA concurrence with the compensation in the time and manner any unpaid compensation if we cancel termination is required to ensure that required by a business lease is a the lease. the Indian landowners of the applicable violation of the lease, and we will issue (c) If we decide to cancel the lease, we percentage of interests have consented; a notice of violation in accordance with will send the lessee and any surety and and this paragraph. mortgagee a cancellation letter by (2) BIA will record the termination in (1) We will send the lessees and any certified mail, return receipt requested, the LTRO. surety and mortgagee a notice of within 5 business days of our decision. (c) The parties must notify any surety violation by certified mail, return We will send a copy of the cancellation or mortgagee of any violation that may receipt requested: letter to the tribe for tribal land, and will result in termination and the (i) Promptly following the date on provide Indian landowners for termination of a business lease. which the payment was due, if the lease individually owned Indian land with (d) Negotiated remedies may apply in requires that payments be made to us; actual or constructive notice of the addition to, or instead of, the or cancellation. The cancellation letter cancellation remedy available to us, as (ii) Promptly following the date on will: which we receive actual notice of non- specified in the lease. The landowners (1) Explain the grounds for payment from the Indian landowners, if may request our assistance in enforcing cancellation; the lease provides for payment directly negotiated remedies. (2) If applicable, notify the lessee of to the Indian landowners. (e) A business lease may provide that the amount of any unpaid compensation (2) We will send a copy of the notice lease violations will be addressed by a or late payment charges due under the of violation to the tribe for tribal land, tribe, and that lease disputes will be lease; or provide constructive notice to the resolved by a tribal court, any other Indian landowners for individually (3) Notify the lessee of the lessee’s court of competent jurisdiction, or by a owned Indian land. right to appeal under part 2 of this tribal governing body in the absence of (3) The notice of violation will require chapter, including the possibility that a tribal court, or through an alternative the lessee to provide adequate proof of the official to whom the appeal is made dispute resolution method. We may not payment. may require the lessee to post an appeal be bound by decisions made in such (d) The lessee and its sureties will bond; forums, but we will defer to ongoing continue to be responsible for the (4) Order the lessee to vacate the actions or proceedings, as appropriate, obligations in the lease until the lease property within 31 days of the date of in deciding whether to exercise any of expires, or is terminated or cancelled. receipt of the cancellation letter, if an the remedies available to us. appeal is not filed by that time; and § 162.467 What will BIA do if the lessee (5) Order the lessee to take any other § 162.466 What will BIA do about a does not cure a violation of a business violation of a business lease? action BIA deems necessary to protect lease on time? the Indian landowners. (a) In the absence of actions or (a) If the lessee does not cure a (d) We may invoke any other proceedings described in § 162.465(e), violation of a business lease within the remedies available to us under the lease, or if it is not appropriate for us to defer required time period, or provide including collecting on any available to the actions or proceedings, we will adequate proof of payment as required performance bond, and the Indian follow the procedures in paragraphs (b) in the notice of violation, we will landowners may pursue any available and (c) of this section. consult with the tribe for tribal land or, remedies under tribal law. (b) If we determine there has been a where feasible, with Indian landowners violation of the conditions of a business for individually owned Indian land, and § 162.468 Will late payment charges or lease, other than a violation of payment determine whether: special fees apply to delinquent payments provisions covered by paragraph (c) of (1) We should cancel the lease; due under a business lease? this section, we will promptly send the (2) The Indian landowners wish to (a) Late payment charges will apply as lessee and any surety and mortgagee a invoke any remedies available to them specified in the lease. The failure to pay notice of violation by certified mail, under the lease; these amounts will be treated as a lease return receipt requested. (3) We should invoke other remedies violation. (1) We will send a copy of the notice available under the lease or applicable (b) We may assess the following of violation to the tribe for tribal land, law, including collection on any special fees to cover administrative or provide constructive notice to Indian available performance bond or, for costs incurred by the United States in landowners for individually owned failure to pay compensation, referral of the collection of the debt, if Indian land. the debt to the Department of the compensation is not paid in the time (2) The notice of violation will advise Treasury for collection; or and manner required, in addition to the the lessee that, within 10 business days (4) The lessee should be granted late payment charges that must be paid of the receipt of a notice of violation, the additional time in which to cure the to the Indian landowners under the lessee must: violation. lease:
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The lessee will pay . . . For . . .
(1) $50.00 ...... Any dishonored check. (2) $15.00 ...... Processing of each notice or demand letter. (3) 18 percent of balance due ...... Treasury processing following referral for collection of delinquent debt.
§ 162.469 How will payment rights relating however, request that the official to 162.518 How must a WEEL describe the to a business lease be allocated? whom the appeal is made reconsider the land? The business lease may allocate rights appeal bond decision, based on 162.519 May a WEEL allow for compatible to payment for insurance proceeds, uses by the Indian landowner? extraordinary circumstances. Any 162.520 Who owns the energy resource trespass damages, condemnation reconsideration decision is final for the information obtained under the WEEL? awards, settlement funds, and other Department. 162.521 May a lessee incorporate its WEEL payments between the Indian analyses into its WSR lease analyses? landowners and the lessee. If not § 162.473 When will BIA issue a decision 162.522 May a WEEL contain an option for specified in the lease, insurance policy, on an appeal from a business leasing a lessee to enter into a WSR lease? decision? order, award, judgment, or other BIA will issue a decision on an appeal WEEL Monetary Compensation document, the Indian landowners or Requirements lessees will be entitled to receive these from a business leasing decision within 60 days of receipt of all pleadings. 162.523 How much compensation must be payments. paid under a WEEL? § 162.470 When will a cancellation of a § 162.474 What happens if the lessee 162.524 Will BIA require a valuation for a business lease be effective? abandons the leased premises? WEEL? (a) A cancellation involving a If a lessee abandons the leased WEEL Bonding and Insurance business lease will not be effective until premises, we will treat the 162.525 Must a lessee provide a 31 days after the lessee receives a abandonment as a violation of the lease. performance bond for a WEEL? cancellation letter from us, or 41 days The lease may specify a period of non- 162.526 [Reserved] from the date we mailed the letter, use after which the lease premises will 162.527 Must a lessee provide insurance for whichever is earlier. be considered abandoned. a WEEL? (b) The cancellation decision will not WEEL Approval Subpart F—[Removed] be effective if an appeal is filed unless 162.528 What documents are required for the cancellation is made immediately ■ 14a. Remove subpart F, consisting of BIA approval of a WEEL? effective under part 2 of this chapter. §§ 162.600 through 162.623. 162.529 Will BIA review a proposed WEEL While a cancellation decision is before or during preparation of the NEPA ineffective, the lessee must continue to Subpart E [Redesignated as Subpart F] review documentation? pay compensation and comply with the 162.530 What is the approval process for a other terms of the lease. ■ 14b. Redesignate subpart E, consisting WEEL? of §§ 162.500 through 162.503, as new 162.531 How will BIA decide whether to approve a WEEL? § 162.471 What will BIA do if a lessee subpart F under the following heading: remains in possession after a business 162.532 When will a WEEL be effective? lease expires or is terminated or cancelled? 162.533 Must a WEEL lease document be Subpart F—Special Requirements for recorded? If a lessee remains in possession after Certain Reservations the expiration, termination, or WEEL Administration cancellation of a business lease, we may ■ 15. Add a new subpart E to read as 162.534 May the parties amend, assign, treat the unauthorized possession as a follows: sublease, or mortgage a WEEL? trespass under applicable law in Subpart E—Wind and Solar Resource WEEL Compliance and Enforcement consultation with the Indian Leases 162.535 What effectiveness, compliance, landowners. Unless the Indian and enforcement provisions apply to landowners of the applicable percentage General Provisions Applicable to WEELs and WSR Leases WEELs? of interests under § 162.012 have 162.536 Under what circumstance may a notified us in writing that they are Sec. WEEL be terminated? engaged in good faith negotiations with 162.501 What types of leases does this 162.537 [Reserved] subpart cover? the holdover lessee to obtain a new 162.502 Who must obtain a WEEL or WSR WSR Leases lease, we may take action to recover lease? 162.538 What is the purpose of a WSR possession on behalf of the Indian 162.503 Is there a model WEEL or WSR lease? landowners, and pursue any additional lease? 162.539 Must I obtain a WEEL before remedies available under applicable WEELs obtaining a WSR lease? law, such as a forcible entry and 162.540 How long may the term of a WSR detainer action. 162.511 What is the purpose of a WEEL? lease run? 162.512 How long may the term of a WEEL 162.541 What must the lease include if it § 162.472 Will BIA appeal bond regulations run? contains an option to renew? apply to cancellation decisions involving 162.513 Are there mandatory provisions a 162.542 Are there mandatory provisions a business leases? WEEL must contain? WSR lease must contain? (a) Except as provided in paragraph 162.514 May permanent improvements be 162.543 May permanent improvements be made under a WEEL? (b) of this section, the appeal bond made under a WSR lease? 162.515 How must a WEEL address 162.544 How must a WSR lease address provisions in part 2 of this chapter will ownership of permanent improvements? ownership of permanent improvements? apply to appeals from lease cancellation 162.516 How will BIA enforce removal 162.545 How will BIA enforce removal decisions requirements in a WEEL? requirements in a WSR lease? (b) The lessee may not appeal the 162.517 What requirements for due 162.546 What requirements for due appeal bond decision. The lessee may, diligence must a WEEL include? diligence must a WSR lease include?
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162.547 How must a WSR lease describe 162.576 What is the approval process for an for the purpose of installing, operating, the land? assignment of a WSR lease? and maintaining instrumentation, and 162.548 May a WSR lease allow compatible 162.577 How will BIA decide whether to associated infrastructure, such as uses? approve an assignment of a WSR lease? meteorological towers, to evaluate wind WSR Lease Monetary Compensation WSR Lease Subleases resources for electricity generation; and Requirements 162.578 May a lessee sublease a WSR lease? (2) Wind and solar resource (WSR) 162.549 How much monetary compensation 162.579 What are the consent requirements leases, which are leases that authorize must be paid under a WSR lease of tribal for a sublease of a WSR lease? possession of Indian land for the land? 162.580 What is the approval process for a purpose of installing, operating, and 162.550 How much monetary compensation sublease of a WSR lease? maintaining instrumentation, facilities, must be paid under a WSR lease of 162.581 How will BIA decide whether to and associated infrastructure, such as approve a sublease of a WSR lease? individually owned Indian land? wind turbines and solar panels, to 162.551 How will BIA determine fair WSR Lease Leasehold Mortgages harness wind and/or solar energy to market rental for a WSR lease? generate and supply electricity: 162.552 When are monetary compensation 162.582 May a lessee mortgage a WSR payments due under a WSR lease? lease? (i) For resale on a for-profit or non- 162.583 What are the consent requirements 162.553 Must a WSR lease specify who profit basis; for a leasehold mortgage of a WSR lease? receives monetary compensation (ii) To a utility grid serving the public 162.584 What is the approval process for a payments? generally; or leasehold mortgage of a WSR lease? 162.554 What form of monetary (iii) To users within the local 162.585 How will BIA decide whether to compensation payment is acceptable approve a leasehold mortgage of a WSR community (e.g., on and adjacent to a under a WSR lease? lease? reservation). 162.555 May a WSR lease provide for non- (b) If the generation of electricity is monetary or varying types of WSR Lease—Effectiveness, Compliance, and solely to support a use approved under compensation? Enforcement subpart B, Agricultural Leases; subpart 162.556 Will BIA notify a lessee when a 162.586 When will an amendment, C, Residential Leases; or subpart D payment is due under a WSR lease? assignment, sublease, or leasehold Business Leases (including religious, 162.557 Must a WSR lease provide for mortgage of a WSR lease be effective? compensation reviews or adjustments? educational, recreational, cultural, or 162.587 What happens if BIA disapproves other public purposes), for the same 162.558 What other types of payments are an amendment, assignment, sublease, or required under a WSR lease? leasehold mortgage of a WSR lease? parcel of land, then the installation, operation, and maintenance of WSR Lease Bonding and Insurance 162.588 What happens if BIA does not meet a deadline for issuing a decision on a instrumentation, facilities, and 162.559 Must a lessee provide a lease document? associated infrastructure are governed performance bond for a WSR lease? 162.589 May BIA investigate compliance by subpart B, C, or D, as appropriate. 162.560 What forms of security are with a WSR lease? acceptable under a WSR lease? 162.590 May a WSR lease provide for § 162.502 Who must obtain a WEEL or 162.561 What is the release process for a negotiated remedies if there is a WSR lease? performance bond or alternative form of violation? security under a WSR lease? (a) Anyone seeking to possess Indian 162.591 What will BIA do about a violation land to conduct activities associated 162.562 Must a lessee provide insurance for of a WSR lease? a WSR lease? with the evaluation of wind resources 162.592 What will BIA do if a lessee does must obtain a WEEL, except that a WSR Lease Approval not cure a violation of a WSR lease on time? WEEL is not required if use or 162.563 What documents are required for 162.593 Will late payment charges or possession of the Indian land to conduct BIA approval of a WSR lease? special fees apply to delinquent wind energy evaluation activities is 162.564 Will BIA review a proposed WSR payments due under a WSR lease? authorized: lease before or during preparation of the 162.594 How will payment rights relating to (1) Under § 162.005(b); NEPA review documentation? WSR leases be allocated? 162.565 What is the approval process for a (2) By a permit from the Indian 162.595 When will a cancellation of a WSR WSR lease? landowners under § 162.007; or lease be effective? 162.566 How will BIA decide whether to (3) By a tribe on its land under 25 162.596 What will BIA do if a lessee approve a WSR lease? U.S.C. 81. remains in possession after a WSR lease 162.567 When will a WSR lease be (b) Except as provided in expires or is terminated or cancelled? effective? 162.597 Will BIA appeal bond regulations §§ 162.005(b), 162.501, and paragraph 162.568 Must a WSR lease document be apply to cancellation decisions involving (c) of this section, anyone seeking to recorded? WSR leases? possess Indian land to conduct activities 162.569 Will BIA require an appeal bond 162.598 When will BIA issue a decision on associated with the development of for an appeal of a decision on a WSR an appeal from a WSR leasing decision? lease document? wind and/or solar resources must obtain 162.599 What happens if the lessee a WSR lease. WSR Lease Amendments abandons the leased premises? (c) A tribe that conducts wind and 162.570 May the parties amend a WSR solar resource activities on its tribal Subpart E—Wind and Solar Resource lease? land does not need a WEEL or WSR Leases 162.571 What are the consent requirements under this subpart. for an amendment to a WSR lease? General Provisions Applicable to 162.572 What is the approval process for an § 162.503 Is there a model WEEL or WSR amendment to a WSR lease? WEELs and WSR Leases lease? 162.573 How will BIA decide whether to § 162.501 What types of leases does this There is no model WEEL or WSR approve an amendment to a WSR lease? subpart cover? lease because of the need for flexibility WSR Lease Assignments (a) This subpart covers: in negotiating and writing WEELs and 162.574 May a lessee assign a WSR lease? (1) Wind energy evaluation leases WSR leases; however, we may: 162.575 What are the consent requirements (WEELs), which are short-term leases (a) Provide other guidance, such as for an assignment of a WSR lease? that authorize possession of Indian land checklists and sample lease provisions,
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to assist in the lease negotiation process; or lessee, the lease must identify the infrastructure of a size and magnitude and landowner or lessee being represented necessary for evaluation of wind (b) Assist the Indian landowners, and the authority under which the resource capacity and potential effects upon their request, in developing action is taken. of development. These facilities and appropriate lease provisions or in using (c) All WEELs must include the associated infrastructure are considered tribal lease forms that conform to the following provisions: permanent improvements. An requirements of this part. (1) The obligations of the lessee and equipment installation plan must be its sureties to the Indian landowners are submitted with the lease under WEELs also enforceable by the United States, so § 162.528(g). § 162.511 What is the purpose of a WEEL? long as the land remains in trust or (b) If any of the following changes are A WEEL is a short-term lease that restricted status; made to the equipment installation allows the lessee to possess trust or (2) There must not be any unlawful plan, the Indian landowners must restricted lands for the purpose of conduct, creation of a nuisance, illegal approve the revised plan and the lessee evaluating wind resources. The lessee activity, or negligent use or waste of must provide a copy of the revised plan may use information collected under the leased premises; to BIA: WEEL to assess the potential for wind (3) The lessee must comply with all (1) Location of permanent energy development, and determine applicable laws, ordinances, rules, improvements; (2) Type of permanent improvements; future placement and type of wind regulations, and other legal or energy technology to use in developing requirements under § 162.014; (3) Delay of 90 days or more in any the energy resource potential of the (4) If historic properties, archeological phase of development. leased area. resources, human remains, or other cultural items, not previously reported § 162.515 How must a WEEL address § 162.512 How long may the term of a are encountered during the course of ownership of permanent improvements? WEEL run? any activity associated with this lease, (a) A WEEL must specify who will (a) A WEEL must provide for a all activity in the immediate vicinity of own any permanent improvements the definite term, state if there is an option the properties, resources, remains, or lessee installs during the lease term. In to renew and if so, provide for a definite items will cease, and the lessee will addition, the WEEL must indicate term for the renewal period. WEELs are contact BIA and the tribe with whether any permanent improvements for project evaluation purposes, and jurisdiction to determine how to the lessee installs: therefore may have: proceed and appropriate disposition; (1) Will remain on the premises upon (1) An initial term that is no longer (5) BIA has the right, at any expiration, termination, or cancellation than 3 years; and reasonable time during the term of the of the lease whether or not the WEEL is (2) One renewal period not to exceed lease, and upon reasonable notice, in followed by a WSR lease, in a condition 3 years. accordance with § 162.589, to enter the (b) The exercise of the option to satisfactory to the Indian landowners; leased premises for inspection; and (2) May be conveyed to the Indian renew must be in writing and the WEEL (6) BIA may, at its discretion, treat as landowners during the WEEL term and must specify: a lease violation any failure by the under what conditions the permanent (1) The time and manner in which the lessee to cooperate with a BIA request option must be exercised or is improvements may be conveyed; to make appropriate records, reports, or (3) Will be removed within a time automatically effective; information available for BIA inspection period specified in the WEEL, at the (2) That confirmation of the renewal and duplication. will be submitted to us, unless the lessee’s expense, with the leased (d) Unless the lessee would be premises to be restored as closely as WEEL provides for automatic renewal; prohibited by law from doing so, the and possible to their condition before lease must also contain the following installation of the permanent (3) Additional consideration, if any, provisions: that will be due upon the exercise of the improvements; or (1) The lessee holds the United States (4) Will be disposed of by other option to renew or the start of the and the Indian landowners harmless renewal term. specified means. from any loss, liability, or damages (b) A WEEL that requires the lessee to § 162.513 Are there mandatory provisions resulting from the lessee’s use or remove the permanent improvements a WEEL must contain? occupation of the leased premises; must also provide the Indian (a) All WEELs must identify: (2) The lessee indemnifies the United landowners with an option to take (1) The tract or parcel of land being States and the Indian landowners possession and title to the permanent leased; against all liabilities or costs relating to improvements if the improvements are (2) The purpose of the WEEL and the use, handling, treatment, removal, not removed within the specified time authorized uses of the leased premises; storage, transportation, or disposal of period. (3) The parties to the WEEL; hazardous materials, or the release or (4) The term of the WEEL; discharge of any hazardous material § 162.516 How will BIA enforce removal (5) The ownership of permanent from the leased premises that occurs requirements in a WEEL? improvements and the responsibility for during the lease term, regardless of We may take appropriate enforcement constructing, operating, maintaining, fault, with the exception that the lessee action to ensure removal of the and managing permanent is not required to indemnify the Indian permanent improvements and improvements, under § 162.515; landowners for liability or cost arising restoration of the premises at the (6) Payment requirements and late from the Indian landowners’ negligence lessee’s expense: payment charges, including interest; or willful misconduct. (a) In consultation with the tribe, for and tribal land or, where feasible, with (7) Due diligence requirements, under § 162.514 May permanent improvements Indian landowners for individually § 162.517. be made under a WEEL? owned Indian land; and (b) Where a representative executes a (a) A WEEL anticipates the (b) After termination, cancellation, or lease on behalf of an Indian landowner installation of facilities and associated expiration of the WEEL.
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§ 162.517 What requirements for due (b) Unless otherwise specified in the § 162.526 [Reserved] diligence must a WEEL include? WEEL, the energy resource information (a) A WEEL must include due § 162.527 Must a lessee provide insurance the lessee obtains through the leased for a WEEL? diligence requirements that require the activity becomes the property of Indian lessee to: landowners at the expiration, Except as provided in paragraph (d) of (1) Install testing and monitoring termination, or cancellation of the this section, a lessee must provide facilities within 12 months after the WEEL or upon failure by the lessee to insurance necessary to protect the effective date of the WEEL or other diligently install testing and monitoring interests of Indian landowners and in period designated in the WEEL and facilities on the leased premises in the amount sufficient to protect all consistent with the plan of accordance with § 162.517. insurable permanent improvements on the leased premises. development; and (c) BIA will keep confidential any (2) If installation does not occur, or is (a) The insurance may include information it is provided that is not expected to be completed, within property, crop, liability, and casualty marked confidential or proprietary and the time period specified in paragraph insurance, depending on the Indian that is exempt from public release, to (a)(1) of this section, provide the Indian landowners’ interests to be protected. the extent allowed by law. landowners and BIA with an (b) Both the Indian landowners and explanation of good cause for any delay, § 162.521 May a lessee incorporate its the United States must be identified as the anticipated date of installation of WEEL analyses into its WSR lease additional insured parties. facilities, and evidence of progress analyses? (c) Lease insurance may be increased toward installing or completing testing and extended for use as the required Any analyses a lessee uses to bring a WSR lease insurance. and monitoring facilities. WEEL activity into compliance with (b) Failure of the lessee to comply (d) We may waive the requirement for applicable laws, ordinances, rules, insurance upon the request of the Indian with the due diligence requirements of regulations under § 162.014 and any the WEEL is a violation of the WEEL landowner, if a waiver is in the best other legal requirements may be interest of the Indian landowner, and may lead to: incorporated by reference, as (1) Cancellation of the WEEL under including if the lease is for less than fair appropriate, into the analyses of a § 162.592; and market rental or nominal compensation. (2) Application of the requirement proposed WSR lease. For tribal land, we will defer, to the that the lessee transfer ownership of § 162.522 May a WEEL contain an option maximum extent possible, to the tribe’s energy resource information collected for the lessee to enter into a WSR lease? determination that a waiver is in its best under the WEEL to the Indian interest. landowners under § 162.520. (a) A WEEL may provide for an option period following the expiration of the WEEL Approval § 162.518 How must a WEEL describe the WEEL term during which the lessee and § 162.528 What documents are required land? the Indian landowners may enter into a for BIA approval of a WEEL? (a) A WEEL must describe the leased WSR lease. A lessee or the Indian landowners premises by reference to a public or (b) Our approval of a WEEL that must submit the following documents to private survey, if possible. If the land contains an option to enter into a WSR us to obtain BIA approval of a WEEL: cannot be so described, the lease must lease does not guarantee or imply our (a) A WEEL executed by the Indian include one or more of the following: approval of any WSR lease. landowners and the lessee that meets (1) A legal description; WEEL Monetary Compensation the requirements of this part; (2) A survey-grade global positioning (b) For tribal land, a tribal Requirements system description; or authorization for the WEEL; (3) Another description prepared by a § 162.523 How much compensation must (c) Proof of insurance, as required by registered land surveyor that is be paid under a WEEL? § 162.527; sufficient to identify the leased (d) Statement from the appropriate (a) The WEEL must state how much premises. tribal authority that the proposed use is compensation will be paid. (b) If the tract is fractionated, we will in conformance with applicable tribal identify the undivided trust or restricted (b) A WEEL must specify the date on law, if required by the tribe; interests in the leased premises. which compensation will be due. (e) Environmental and archeological § 162.519 May a WEEL allow for (c) Failure to make timely payments is reports, surveys, and site assessments as compatible uses by the Indian landowner? a violation of the WEEL and may lead needed to facilitate compliance with The WEEL may provide for the Indian to cancellation of the WEEL. applicable Federal and tribal landowners to use, or authorize others (d) The lease compensation environmental and land use to use, the leased premises for other requirements of §§ 162.552 through requirements, including any noncompeting uses compatible with the 162.558 also apply to WEELs. documentation prepared under purpose of the WEEL. This may include § 162.027(b); the right to lease the premises for other § 162.524 Will BIA require a valuation for a (f) An equipment installation plan; compatible purposes. Any such use by WEEL? (g) A restoration and reclamation plan (and any subsequent modifications to the Indian landowners will not reduce We will not require a valuation for a the plan); or offset the monetary compensation for WEEL. the WEEL. (h) Where the lessee is not an entity WEEL Bonding and Insurance owned and operated by the tribe, § 162.520 Who owns the energy resource documents that demonstrate the information obtained under the WEEL? § 162.525 Must a lessee provide a technical capability of the lessee or performance bond for a WEEL? (a) The WEEL must specify the lessee’s agent to construct, operate, ownership of any energy resource We will not require the lessee to maintain, and terminate the proposed information the lessee obtains during provide a performance bond or project and the lessee’s ability to the WEEL term. alternative form of security for a WEEL. successfully design, construct, or obtain
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the funding for a project similar to the (1) If the WEEL package is not § 162.532 When will a WEEL be effective? proposed project, if appropriate; complete, our letter will identify the (a) A WEEL will be effective on the (i) A legal description of the land missing information or documents date on which we approve the WEEL, under § 162.518; required for a complete package. If we even if an appeal is filed under part 2 (j) If the lease is being approved under do not respond to the submission of a of this chapter. 25 U.S.C. 415, information to assist us WEEL package, the parties may take (b) The WEEL may specify a date on in our evaluation of the factors in 25 action under § 162.588. which the obligations between the U.S.C. 415(a); and (2) If the WEEL package is complete, parties to a WEEL are triggered. Such (k) If the lessee is a corporation, we will notify the parties of the date we date may be before or after the approval limited liability company, partnership, receive the complete package, and, date under paragraph (a) of this section. joint venture, or other legal entity, within 20 days of the date of receipt of (c) WEEL lease documents not except a tribal entity, information such the package at the appropriate BIA requiring our approval are effective as organizational documents, office, approve or disapprove the WEEL upon execution by the parties, or on the certificates, filing records, and or return the package for revision. effective date specified in the lease resolutions, that demonstrates that: (c) If we do not meet the deadline in document. If the WEEL lease document (1) The representative has authority to this section, then the parties may take does not specify an effective date, it execute a lease; appropriate action under § 162.588. becomes effective upon execution by the (2) The lease will be enforceable parties. against the lessee; and (d) We will provide any WEEL (3) The legal entity is in good standing approval determination and the basis for § 162.533 Must a WEEL lease document be and authorized to conduct business in the determination, along with recorded? notification of appeal rights under part the jurisdiction where the land is (a) Any WEEL lease document must 2 of this chapter, in writing to the located. be recorded in our LTRO with parties to the WEEL. jurisdiction over the leased land. § 162.529 Will BIA review a proposed (e) We will provide any WEEL (1) We will record the lease document WEEL before or during preparation of the disapproval determination and the basis NEPA review documentation? immediately following our approval. for the determination, along with (2) If our approval of an assignment or Upon request of the Indian notification of rights to an informal sublease is not required, the parties landowners, we will review the conference, in writing to the parties. must record the assignment or sublease proposed WEEL after negotiation by the Within 30 days of receipt of the in the LTRO with jurisdiction over the parties, before or during preparation of disapproval determination, the parties leased land. the NEPA review documentation. may request an informal conference (b) The tribe must record lease Within 10 days of receiving the with the official who issued the documents for the following types of proposed WEEL, we will provide an determination. Within 30 days of leases in the LTRO with jurisdiction acknowledgement of the terms of the receiving this request, the official must over the tribal lands, even though BIA lease and identify any provisions that, hold the informal conference with the approval is not required: based on this acknowledgment review, parties. Within 10 days of the informal (1) Leases of tribal land that a would justify disapproval of the lease, conference, the official must issue a corporate entity leases to a third party pending results of the NEPA review. decision and the basis for the decision, under 25 U.S.C. 477; and § 162.530 What is the approval process for along with a notification of appeal rights (2) Leases of tribal land under a a WEEL? under part 2 of this chapter, in writing special act of Congress authorizing (a) Before we approve a WEEL, we to the parties to the WEEL. leases without our approval. (f) We will provide the approved must determine that the WEEL is in the WEEL Administration best interest of the Indian landowners. WEEL on tribal land to the lessee and In making that determination, we will: provide a copy to the tribe. We will § 162.534 May the parties amend, assign, (1) Review the WEEL and supporting provide the approved WEEL on sublease, or mortgage a WEEL? documents; individually owned Indian land to the The parties may amend, assign, (2) Identify potential environmental lessee, and make copies available to the sublease, or mortgage a WEEL by impacts and ensure compliance with all Indian landowners upon written following the procedures and applicable environmental laws, land use request. requirements for amending, assigning, laws, and ordinances; § 162.531 How will BIA decide whether to subleasing, or mortgaging a WSR lease. (3) If the lease is being approved approve a WEEL? under 25 U.S.C. 415, assure ourselves WEEL Compliance and Enforcement that adequate consideration has been (a) We will approve a WEEL unless: (1) The required consents have not § 162.535 What effectiveness, compliance, given to the factors in 25 U.S.C. 415(a); and enforcement provisions apply to and been obtained from the parties to the WEELs? WEEL; (4) Require any lease modifications or (a) The provisions at § 162.586 apply (2) The requirements applicable to mitigation measures necessary to satisfy to WEEL lease documents. WEELs have not been met; or any requirements including any other (b) The provisions at §§ 162.587 Federal or tribal land use requirements. (3) We find a compelling reason to through 162.589 and 162.591 through (b) Upon receiving the WEEL package, withhold our approval in order to 162.599 apply to WEELs, except that we will promptly notify the parties protect the best interests of the Indian any references to § 162.590 will apply whether the package is or is not landowners. instead to § 162.536. complete. A complete package includes (b) We will defer, to the maximum all the information and supporting extent possible, to the Indian § 162.536 Under what circumstances may documents required for a WEEL, landowners’ determination that the a WEEL be terminated? including but not limited to, NEPA WEEL is in their best interest. A WEEL must state whether, and review documentation, where (c) We may not unreasonably under what conditions, the Indian applicable. withhold approval of a WEEL. landowners may terminate the WEEL.
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§ 162.537 [Reserved] (4) That the lessee must provide (4) If historic properties, archeological WSR Leases notice of the renewal to the Indian resources, human remains, or other landowners and any sureties and cultural items not previously reported § 162.538 What is the purpose of a WSR mortgagees; are encountered during the course of lease? (5) The additional consideration, if any activity associated with the lease, A WSR lease authorizes a lessee to any, that will be due upon the exercise all activity in the immediate vicinity of possess Indian land to conduct activities of the option to renew or the start of the the properties, resources, remains, or related to the installation, operation, renewal term; and items will cease and the lessee will and maintenance of wind and/or solar (6) Any other conditions for renewal contact BIA and the tribe with energy resource development projects. (e.g., that the lessee not be in violation jurisdiction to determine how to Activities include installing of the lease at the time of renewal). proceed and appropriate disposition; instrumentation facilities and (b) We will record any renewal of a (5) BIA has the right, at any infrastructure associated with the lease in the LTRO. reasonable time during the term of the generation, transmission, and storage of § 162.542 Are there mandatory provisions lease and upon reasonable notice, in electricity and other related activities. a WSR lease must contain? accordance with § 162.589, to enter the Leases for biomass or waste-to-energy leased premises for inspection and to (a) All WSR leases must identify: purposes are governed by subpart D of ensure compliance; and this part. (1) The tract or parcel of land being leased; (6) BIA may, at its discretion, treat as § 162.539 Must I obtain a WEEL before (2) The purpose of the lease and a lease violation any failure by the obtaining a WSR lease? authorized uses of the leased premises; lessee to cooperate with a BIA request to make appropriate records, reports, or You may enter into a WSR lease (3) The parties to the lease; information available for BIA inspection without a WEEL. While you may enter (4) The term of the lease; and duplication. into a lease as a direct result of energy (5) The ownership of permanent resource information gathered from a improvements and the responsibility for (d) Unless the lessee would be WEEL activity, obtaining a WEEL is not constructing, operating, maintaining, prohibited by law from doing so, the a precondition to entering into a WSR and managing, WSR equipment, roads, lease must also contain the following lease. transmission lines and related facilities provisions: under § 162.543; (1) The lessee holds the United States § 162.540 How long may the term of a WSR (6) Who is responsible for evaluating and the Indian landowners harmless lease run? the leased premises for suitability; from any loss, liability, or damages (a) A WSR lease must provide for a purchasing, installing, operating, and resulting from the lessee’s use or definite lease term, state if there is an maintaining WSR equipment; occupation of the leased premises; and option to renew, and if so, provide for negotiating power purchase agreements; (2) The lessee indemnifies the United a definite term for the renewal period. and transmission; States and the Indian landowners The maximum term of a lease approved (7) Payment requirements and late against all liabilities or costs relating to under 25 U.S.C. 415(a) may not exceed payment charges, including interest; the use, handling, treatment, removal, 50 years (consisting of an initial term (8) Due diligence requirements, under storage, transportation, or disposal of not to exceed 25 years and one renewal § 162.546; hazardous materials, or the release or not to exceed 25 years), unless a Federal (9) Insurance requirements, under discharge of any hazardous material statute provides for a longer maximum § 162.562; and from the leased premises that occurs term (e.g., 25 U.S.C. 415(a) allows for a (10) Bonding requirements under during the lease term, regardless of maximum term of 99 years for certain § 162.559. If a performance bond is fault, with the exception that the lessee tribes), a different initial term, renewal required, the lease must state that the is not required to indemnify the Indian term, or number of renewals. lessee must obtain the consent of the landowners for liability or cost arising (b) For tribal land, we will defer to the surety for any legal instrument that from the Indian landowners’ negligence tribe’s determination that the lease term, directly affects their obligations and or willful misconduct. including any renewal, is reasonable. liabilities. (e) We may treat any provision of a For individually owned Indian land, we (b) Where a representative executes a lease document that violates Federal will review the lease term, including lease on behalf of an Indian landowner law as a violation of the lease. any renewal, to ensure it is reasonable, or lessee, the lease must identify the given the: landowner or lessee being represented § 162.543 May permanent improvements (1) Purpose of the lease; and the authority under which such be made under a WSR lease? (2) Type of financing; and action is taken. (a) A WSR lease must provide for the (3) Level of investment. (c) All WSR leases must include the installation of a facility and associated (c) The lease may not be extended by following provisions: infrastructure of a size and magnitude holdover. (1) The obligations of the lessee and necessary for the generation and § 162.541 What must the lease include if it its sureties to the Indian landowners are delivery of electricity, in accordance contains an option to renew? also enforceable by the United States, so with § 162.019. These facilities and (a) If the lease provides for an option long as the land remains in trust or associated infrastructure are considered to renew, the lease must specify: restricted status; permanent improvements. A resource (1) The time and manner in which the (2) There must not be any unlawful development plan must be submitted for option must be exercised or is conduct, creation of a nuisance, illegal approval with the lease under automatically effective; activity, or negligent use or waste of the § 162.563(h). (2) That confirmation of the renewal leased premises; (b) If the parties agree to any of the will be submitted to us, unless the lease (3) The lessee must comply with all following changes to the resource provides for automatic renewal; applicable laws, ordinances, rules, development plan after lease approval, (3) Whether Indian landowner regulations, and other legal they must submit the revised plan to consent to the renewal is required; requirements under § 162.014; BIA for the file:
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(1) Location of permanent (2) If installation does not occur, or is WSR Lease Monetary Compensation improvements; not expected to be completed, within Requirements (2) Type of permanent improvements; the time period specified in paragraph § 162.549 How much monetary or (a)(1) of this section, provide the Indian (3) Delay of 90 days or more in any compensation must be paid under a WSR landowners and BIA with an lease of tribal land? phase of development. explanation of good cause as to the (a) A WSR lease of tribal land may nature of any delay, the anticipated date § 162.544 How must a WSR lease address allow for any payment negotiated by the of installation of facilities, and evidence ownership of permanent improvements? tribe, and we will defer to the tribe and (a) A WSR lease must specify who of progress toward commencement of not require a valuation if the tribe will own any permanent improvements installation; submits a tribal authorization expressly the lessee installs during the lease term (3) Maintain all on-site electrical stating that it: and may specify under what conditions, generation equipment and facilities and (1) Has negotiated compensation if any, permanent improvements the related infrastructure in accordance satisfactory to the tribe; lessee constructs may be conveyed to with the design standards in the (2) Waives valuation; and the Indian landowners during the lease resource development plan; and (3) Has determined that accepting term. In addition, the lease must (4) Repair, place into service, or such negotiated compensation and indicate whether each specific remove from the site within a time waiving valuation is in its best interest. permanent improvement the lessee period specified in the lease any idle, (b) The tribe may request, in writing, installs will: improperly functioning, or abandoned that we determine fair market rental, in (1) Remain on the leased premises which case we will use a valuation in upon the expiration, termination, or equipment or facilities that have been inoperative for a continuous period accordance with § 162.551. After cancellation of the lease, in a condition providing the tribe with the fair market satisfactory to the Indian landowners specified in the lease (unless the equipment or facilities were idle as a rental, we will defer to a tribe’s decision and become the property of the Indian to allow for any payment amount result of planned suspension of landowners; negotiated by the tribe. operations, for example, for grid (2) Be removed within a time period (c) If the conditions in paragraph (a) operations or during bird migration specified in the lease, at the lessee’s or (b) of this section are not met, we will season). expense, with the leased premises to be require that the lease provide for fair restored as closely as possible to their (b) Failure of the lessee to comply market rental based on a valuation in condition before installation of the with the due diligence requirements of accordance with § 162.551. permanent improvements; or the lease is a violation of the lease and (3) Be disposed of by other specified may lead to cancellation of the lease § 162.550 How much monetary means. under § 162.592. compensation must be paid under a WSR (b) A lease that requires the lessee to lease of individually owned Indian land? remove the permanent improvements § 162.547 How must a WSR lease describe (a) A WSR lease of individually must also provide the Indian the land? owned Indian land must require landowners with an option to take (a) A WSR lease must describe the payment of not less than fair market possession of and title to the permanent leased premises by reference to a private rental before any adjustments, based on improvements if the improvements are or public survey, if possible. If the land a fixed amount, a percentage of the not removed within the specified time cannot be so described, the lease must projected gross income, megawatt period. include one or more of the following: capacity fee, or some other method, unless paragraphs (b) or (c) of this § 162.545 How will BIA enforce removal (1) A legal description; section permit a lesser amount. The requirements in a WSR lease? (2) A survey-grade global positioning lease must establish how the fixed (a) We may take appropriate system description; or amount, percentage or combination will enforcement action to ensure removal of be calculated and the frequency at the permanent improvements and (3) Another description prepared by a registered land surveyor that is which the payments will be made. restoration of the premises at the (b) We may approve a lease of lessee’s expense: sufficient to identify the leased premises. individually owned Indian land that (1) In consultation with the tribe, for provides for the payment of nominal tribal land or, where feasible, with (b) If the tract is fractionated, we will compensation, or less than a fair market Indian landowners for individually identify the undivided trust or restricted rental, if: owned Indian land; and interests in the leased premises. (1) The Indian landowners execute a (2) Before or after expiration, written waiver of the right to receive fair termination, or cancellation of the lease. § 162.548 May a WSR lease allow (b) We may collect and hold the compatible uses? market rental; and performance bond until removal and (2) We determine it is in the Indian The lease may provide for the Indian restoration are completed. landowners’ best interest, based on landowners to use, or authorize others factors including, but not limited to: § 162.546 What requirements for due to use, the leased premises for other (i) The lessee is a member of the diligence must a WSR lease include? uses compatible with the purpose of the immediate family, as defined in (a) A WSR lease must include due WSR lease and consistent with the § 162.003, of an Indian landowner; diligence requirements that require the terms of the WSR lease. This may (ii) The lessee is a co-owner of the lessee to: include the right to lease the premises leased tract; (1) Commence installation of energy for other compatible purposes. Any (iii) A special relationship or facilities within 2 years after the such use or authorization by the Indian circumstances exist that we believe effective date of the lease or consistent landowners will not reduce or offset the warrant approval of the lease; with a timeframe in the resource monetary compensation for the WSR (iv) The lease is for public purposes; development plan; lease. or
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(v) We have waived the requirement (2) Complies with Department to us if any individual Indian for a valuation under paragraph (e) of policies regarding appraisals, including landowner who dies, is declared non this section. third-party appraisals. compos mentis, owes a debt resulting in (c) We may approve a lease that (d) Indian landowners may use a trust account encumbrance, or his or provides for the payment of less than a competitive bidding as a valuation her whereabouts become unknown. fair market rental during the periods method. before the generation and transmission § 162.554 What form of monetary compensation payment is acceptable under of electricity begins, if we determine it § 162.552 When are monetary compensation payments due under a WSR a WSR lease? is in the Indian landowners’ best lease? interest. The lease must specify the (a) When payments are made directly amount of the compensation and the (a) A WSR lease must specify the to Indian landowners, the form of applicable periods. dates on which all payments are due. payment must be acceptable to the (d) We will require a valuation in (b) Unless the lease provides Indian landowners. accordance with § 162.422, unless: otherwise, payments may not be made (b) When payments are made to us, (1) 100 percent of the landowners or accepted more than one year in our preferred method of payment is submit to us a written request to waive advance of the due date. electronic funds transfer payments. We the valuation requirement; or (c) Payments are due at the time will also accept: (2) We waive the requirement under specified in the lease, regardless of (1) Money orders; paragraph (e) of this section; or whether the lessee receives an advance (2) Personal checks; (3) We determine it is in the best billing or other notice that a payment is (3) Certified checks; or interest of the Indian landowners to due. (4) Cashier’s checks. accept an economic analysis in lieu of § 162.553 Must a WSR lease specify who (c) We will not accept cash or foreign an appraisal and: receives monetary compensation currency. (i) The Indian landowners submit an payments? (d) We will accept third-party checks economic analysis that is approved by (a) A WSR lease must specify whether only from financial institutions or the Office of Indian Energy & Economic the lessee will make payments directly Federal agencies. Development (IEED); or to the Indian landowners (direct pay) or (ii) IEED prepares an economic § 162.555 May a WSR lease provide for to us on their behalf. non-monetary or varying types of analysis at the request of the Indian (b) The lessee may make payments compensation? landowners. directly to the Indian landowners if: (e) If the owners of the applicable (a) A WSR lease may provide for the (1) The Indian landowners’ trust percentage of interests under § 162.011 following, subject to the conditions in accounts are unencumbered; of this part grant a WSR lease on behalf paragraphs (b) and (c) of this section: (2) There are 10 or fewer beneficial of all of the Indian landowners of a (1) Alternative forms of owners; and fractionated tract, the lease must compensation, including but not limited (3) One hundred percent of the provide that the non-consenting Indian to, in-kind consideration and payments beneficial owners (including those on landowners, and those on whose behalf based on percentage of income; or whose behalf we have consented) agree we have consented, receive a fair market (2) Varying types of consideration at to receive payment directly from the rental, as determined by a valuation, specific stages during the life of the lessee at the start of the lease. unless we waive the requirement lease, including but not limited to fixed (c) If the lease provides that the lessee because the tribe or lessee will construct annual payments during installation, will directly pay the Indian landowners, infrastructure improvements on, or payments based on income during an then: serving, the leased premises, and we operational period, and bonuses. (1) The lease must include provisions determine it is in the best interest of all (b) For tribal land, we will defer to the for proof of payment upon our request. the landowners. tribe’s determination that the (2) When we consent on behalf of an compensation in paragraph (a) of this § 162.551 How will BIA determine fair Indian landowner, the lessee must make section is in its best interest, if the tribe market rental for a WSR lease? payment to us on behalf of that submits a signed certification or tribal (a) We will use a market analysis, landowner. authorization stating that it has appraisal, or other appropriate valuation (3) The lessee must send direct determined the compensation in method to determine the fair market payments to the parties and addresses paragraph (a) of this section to be in its rental before we approve a WSR lease of specified in the lease, unless the lessee best interest. individually owned Indian land or, at receives notice of a change of ownership (c) For individually owned land, we the request of the tribe, for tribal land. or address. may approve a lease that provides for (b) We will either: (4) Unless the lease provides compensation under paragraph (a) of (1) Prepare, or have prepared, a otherwise, payments may not be made this section if we determine that it is in market analysis, appraisal, or other payable directly to anyone other than the best interest of the Indian appropriate valuation method; or the Indian landowners. landowners. (2) Use an approved market analysis, (5) Direct payments must continue appraisal, or other appropriate valuation through the duration of the lease, except § 162.556 Will BIA notify a lessee when a method from the Indian landowners or that: payment is due under a WSR lease? lessee. (i) The lessee must make all Indian Upon request of the Indian (c) We will use or approve use of a landowners’ payments to us if 100 landowners, we may issue invoices to a market analysis, appraisal, or other percent of the Indian landowners agree lessee in advance of the dates on which appropriate valuation method only if it: to suspend direct pay and provide us payments are due under a WSR lease. (1) Has been prepared in accordance with documentation of their agreement; The lessee’s obligation to make these with USPAP or a valuation method and payments in a timely manner will not be developed by the Secretary under 25 (ii) The lessee must make that excused if invoices are not delivered or U.S.C. 2214; and individual Indian landowner’s payment received.
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§ 162.557 Must a WSR lease provide for charges that accrue during the lease will be able to perform the guaranteed compensation reviews or adjustments? term. The lessee must pay these obligations. (a) For a WSR lease of tribal land, amounts to the appropriate office in (e) The performance bond or other unless the lease provides otherwise, no charge of the irrigation project or security instrument must require the periodic review of the adequacy of drainage district. We will treat failure to surety to provide notice to us at least 60 compensation or adjustment is required make these payments as a violation of days before canceling a performance if the tribe states in its tribal the lease. bond or other security. This will allow certification or authorization that it has (c) Where the property is subject to at us to notify the lessee of its obligation determined that not having reviews least one other lease for another to provide a substitute performance and/or adjustments is in its best interest. compatible use, such as grazing, the bond or other security and require (b) For a WSR lease of individually lessees may agree among themselves collection of the bond or security before owned Indian land, unless the lease how to allocate payment of the the cancellation date. Failure to provide provides otherwise, no periodic review operation and maintenance charges. a substitute performance bond or of the adequacy of compensation or security is a violation of the lease. adjustment is required if: WSR Lease Bonding and Insurance (f) We may waive the requirement for (1) If the term of the lease is 5 years § 162.559 Must a lessee provide a a performance bond or alternative forms or less; performance bond for a WSR lease? of security if: (2) The lease provides for automatic The lessee must provide a (1) The lease is for public purposes; adjustments; or performance bond or alternative form of or (2) The Indian landowners request it (3) We determine it is in the best security, except as provided in and we determine a waiver is in the interest of the Indian landowners not to paragraph (f) of this section. Indian landowners’ best interest. require a review or automatic (a) The performance bond or (g) For tribal land, we will defer to the adjustment based on circumstances alternative form of security must be in tribe’s determination that a waiver of including, but not limited to, the an amount sufficient to secure the the performance bond or alternative following: contractual obligations including: form of security is in its best interest, to (i) The lease provides for payment of (1) No less than: the maximum extent possible. less than fair market rental; (i) The highest annual rental specified (ii) The lease is for public purposes; in the lease, if the compensation is paid § 162.560 What forms of security are (iii) The lease provides for most or all annually; or acceptable under a WSR lease? of the compensation to be paid during (ii) If the compensation is not paid (a) We will accept a performance the first 5 years of the lease term or annually, another amount established before the date the review would be bond only in one of the following forms: by BIA in consultation with the tribe for (1) Certificates of deposit issued by a conducted; or tribal land or, where feasible, with federally insured financial institution (iv) The lease provides for graduated Indian landowners for individually authorized to do business in the United rent or non-monetary or various types of owned Indian land; States; compensation. (2) The installation of any required (2) Irrevocable letters of credit issued (c) If the conditions in paragraph (a) permanent improvements; by a federally insured financial or (b) of this section are not met, a (3) The operation and maintenance institution authorized to do business in review of the adequacy of compensation charges for any land located within an the United States; must occur at least every fifth year, in irrigation project; and (3) Negotiable Treasury securities; or the manner specified in the lease. The (4) The restoration and reclamation of (4) Surety bonds issued by a company lease must specify: the leased premises, to their condition approved by the U.S. Department of the (1) When adjustments take effect; at the start of the lease term or some Treasury. (2) Who can make adjustments; (b) We may accept an alternative form (3) What the adjustments are based other specified condition. (b) The performance bond or other of security approved by us that provides on; and adequate protection for the Indian (4) How to resolve disputes arising security: (1) Must be deposited with us and landowners and us, including but not from the adjustments. limited to an escrow agreement and (d) When a review results in the need made payable only to us, and may not assigned savings account. for adjustment of compensation, the be modified without our approval, except as provided in paragraph (b)(2) of (c) All forms of performance bonds or Indian landowners must consent to the alternative security must, if applicable: adjustment in accordance with this section; and (2) For tribal land, if the lease so (1) Indicate on their face that BIA § 162.012, unless the lease provides approval is required for redemption; otherwise. provides, may be deposited with the tribe and made payable to the tribe, and (2) Be accompanied by a statement § 162.558 What other types of payments may not be modified without the granting full authority to BIA to make an are required under a WSR lease? approval of the tribe. immediate claim upon or sell them if (a) The lessee may be required to pay (c) The lease must specify the the lessee violates the terms of the lease; additional fees, taxes, and assessments conditions under which we may adjust (3) Be irrevocable during the term of associated with the use of the land, as security or performance bond the performance bond or alternative determined by entities having requirements to reflect changing security; and (4) Be automatically renewable during jurisdiction, except as provided in conditions, including consultation with the term of the lease. the tribal landowner for tribal land § 162.017. The lessee must pay these (d) We will not accept cash bonds. amounts to the appropriate office. before adjustment. (b) If the leased premises are within (d) We may require that the surety § 162.561 What is the release process for an Indian irrigation project or drainage provide any supporting documents a performance bond or alternative form of district, except as otherwise provided in needed to show that the performance security under a WSR lease? part 171 of this chapter, the lessee must bond or alternative forms of security (a) Upon expiration, termination, or pay all operation and maintenance will be enforceable, and that the surety cancellation of the lease, the lessee must
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ask BIA in writing to release the in conformance with applicable tribal § 162.565 What is the approval process for performance bond or alternative form of law, if required by the tribe; a WSR lease? security. (g) Environmental and archeological (a) Before we approve a WSR lease, (b) Upon receiving the request under reports, surveys, and site assessments as we must determine that the lease is in paragraph (a) of this section, BIA will: needed to facilitate compliance with the best interest of the Indian (1) Confirm with the tribe, for tribal applicable Federal and tribal landowners. In making that land or, where feasible, with the Indian environmental and land use determination, we will: landowners for individually owned requirements, including any (1) Review the lease and supporting Indian land, that the lessee has documentation prepared under documents; complied with all lease obligations; and § 162.027(b); (2) Identify potential environmental (2) Release the performance bond or (h) A resource development plan that impacts and ensure compliance with all alternative form of security to the lessee describes the type and location of any applicable environmental laws, land use unless we determine that the bond or permanent improvements the lessee laws, and ordinances; security must be redeemed to fulfill the plans to install and a schedule showing (3) If the lease is being approved contractual obligations. the tentative commencement and under 25 U.S.C. 415, assure ourselves completion dates for those that adequate consideration has been § 162.562 Must a lessee provide insurance improvements; given to the factors in 25 U.S.C. 415(a); for a WSR lease? (i) A restoration and reclamation plan and (4) Require any lease modifications or Except as provided in paragraph (c) of (and any subsequent modifications to mitigation measures necessary to satisfy this section, a lessee must provide the plan); insurance when necessary to protect the any requirements including any other (j) Where the lessee is not an entity Federal or tribal land use requirements. interests of Indian landowners and in owned and operated by the tribe, the amount sufficient to protect all (b) Upon receiving a WSR lease documents that demonstrate the package, we will promptly notify the insurable permanent improvements on technical capability of the lessee or the leased premises. parties whether the package is or is not lessee’s agent to construct, operate, complete. A complete package includes (a) The insurance may include maintain, and terminate the proposed property, liability, and casualty all the information and supporting project and the lessee’s ability to documents required under this subpart, insurance, depending on the Indian successfully design, construct, or obtain landowners’ interests to be protected. including but not limited to, NEPA the funding for a project similar to the review documentation and valuation (b) Both the Indian landowners and proposed project, if appropriate; the United States must be identified as documentation, where applicable. (k) A legal description of the land additional insured parties. (1) If the WSR lease package is not under § 162.547; (c) We may waive the requirement for complete, our letter will identify the (l) If the lease is being approved under insurance upon the request of the Indian missing information or documents 25 U.S.C. 415, information to assist us landowner, if a waiver is in the best required for a complete package. If we in our evaluation of the factors in 25 interest of the Indian landowner, do not respond to the submission of a U.S.C. 415(a); and including if the lease is for less than fair WSR lease package, the parties may take (m) If the lessee is a corporation, market rental or nominal compensation. action under § 162.588. limited liability company, partnership, For tribal land, we will defer, to the (2) If the WSR lease package is joint venture, or other legal entity, maximum extent possible, to the tribe’s complete, we will notify the parties of except a tribal entity, information such determination that a waiver is in its best the date of receipt. Within 60 days of as organizational documents, interest. the receipt date, we will approve or certificates, filing records, and disapprove the lease, return the package WSR Lease Approval resolutions, that demonstrates that: for revision, or inform the parties in (1) The representative has authority to writing that we need additional review § 162.563 What documents are required for BIA approval of a WSR lease? execute a lease; time. If we inform the parties in writing (2) The lease will be enforceable that we need additional time, then: A lessee or the Indian landowners against the lessee; and (i) Our letter informing the parties must submit the following documents to (3) The legal entity is in good standing that we need additional review time us to obtain BIA approval of a WSR and authorized to conduct business in must identify our initial concerns and lease: the jurisdiction where the land is invite the parties to respond within 15 (a) A lease executed by the Indian located. days of the date of the letter; and landowners and the lessee that meets (ii) We have 30 days from sending the the requirements of this part; § 162.564 Will BIA review a proposed WSR letter informing the parties that we need (b) For tribal land, a tribal lease before or during preparation of the additional time to approve or authorization for the lease and, if NEPA review documentation? disapprove the lease. applicable, meeting the requirements of Upon request of the Indian (c) If we do not meet the deadlines in §§ 162.549(a), 162.555(b), and landowners, we will review the this section, then the parties may take 162.557(a), or a separate signed proposed WSR lease after negotiation by appropriate action under § 162.588. certification meeting the requirements the parties, before or during preparation (d) We will provide any lease of §§ 162.555(b) and 162.557(a)); of the NEPA review documentation and approval or disapproval and the basis (c) A valuation, if required under any valuation. Within 60 days of for the determination, along with § 162.549 or § 162.550; receiving the proposed lease, we will notification of any appeal rights under (d) Proof of insurance, if required provide an acknowledgement of the part 2 of this chapter, in writing to the under § 162.562; terms of the lease and identify any parties to the lease. (e) A performance bond or other provisions that, based on this (e) We will provide approved WSR security, if required under § 162.559; acknowledgment review, would justify leases on tribal land to the lessee and (f) Statement from the appropriate disapproval of the lease, pending results provide a copy to the tribe. We will tribal authority that the proposed use is of the NEPA review and any valuation. provide approved WSR leases on
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individually owned Indian land to the (1) For an appeal of a decision on a a court document, Indian landowners lessee, and make copies available to the leasehold mortgage; or may not be deemed to have consented Indian landowners upon written (2) If the tribe is a party to the appeal to, and an Indian landowner’s request. and requests a waiver of the appeal designated representative may not bond. negotiate or consent to, an amendment § 162.566 How will BIA decide whether to (b) The appellant may not appeal the that would: approve a WSR lease? appeal bond decision. The appellant (1) Reduce the payment obligations to (a) We will approve a WSR lease may, however, request that the official the Indian landowners; unless: to whom the appeal is made reconsider (2) Increase or decrease the lease area; (1) The required consents have not the bond decision, based on (3) Terminate or change the term of been obtained from the parties to the extraordinary circumstances. Any the lease; or lease; reconsideration decision is final for the (4) Modify dispute resolution (2) The requirements of this subpart procedures. have not been met; or Department. (3) We find a compelling reason to WSR Lease Amendments § 162.572 What is the approval process for withhold our approval in order to an amendment to a WSR lease? protect the best interests of the Indian § 162.570 May the parties amend a WSR (a) When we receive an amendment landowners. lease? that meets the requirements of this (b) We will defer, to the maximum The parties may amend a WSR lease subpart, we will notify the parties of the extent possible, to the Indian by obtaining: date we receive it. We have 30 days landowners’ determination that the (a) The lessee’s signature; from receipt of the executed WSR lease is in their best interest. (b) The Indian landowners’ consent amendment, proof of required consents, (c) We may not unreasonably under the requirements in § 162.571; and required documentation to approve withhold approval of a WSR lease. and or disapprove the amendment or inform (c) BIA approval of the amendment the parties in writing that we need § 162.567 When will a WSR lease be under §§ 162.572 and 162.573. effective? additional review time. Our (a) A WSR lease will be effective on § 162.571 What are the consent determination whether to approve the the date that we approve the lease, even requirements for an amendment to a WSR amendment will be in writing and will if an appeal is filed under part 2 of this lease? state the basis for our approval or chapter. (a) Unless the lease provides disapproval. (b) The lease may specify a date on otherwise, the lessee must notify all (b) Our letter informing the parties which the obligations between the Indian landowners of the proposed that we need additional review time parties to the lease are triggered. Such amendment. must identify our initial concerns and date may be before or after the approval (b) The Indian landowners, or their invite the parties to respond within 15 date under paragraph (a) of this section. representatives under § 162.013, must days of the date of the letter. We have consent to an amendment of a WSR 30 days from sending the letter § 162.568 Must a WSR lease document be lease in the same percentages and informing the parties that we need recorded? manner as a new WSR lease under additional time to approve or (a) Any WSR lease document must be § 162.012, unless the lease: disapprove the amendment. recorded in the LTRO with jurisdiction (1) Provides that individual Indian (c) If we do not meet the deadline in over the leased land. landowners are deemed to have paragraph (a) of this section, or (1) We will record the lease document consented if they do not object in paragraph (b) of this section if immediately following our approval. writing to the amendment within a applicable, the amendment is deemed (2) If our approval of an assignment or specified period of time following the approved to the extent consistent with sublease is not required, the parties landowners’ receipt of the amendment Federal law. Unless the lease provides must record the assignment or sublease and the lease meets the requirements of otherwise, provisions of the amendment in the LTRO with jurisdiction over the paragraph (c) of this section; that are inconsistent with Federal law leased land. (2) Authorizes one or more will be severed and unenforceable; all (b) The tribe must record lease representatives to consent to an other provisions of the amendment will documents for the following types of amendment on behalf of all Indian remain in force. leases in the LTRO with jurisdiction landowners; or over the tribal lands, even though BIA § 162.573 How will BIA decide whether to (3) Designates us as the Indian approval is not required: approve an amendment to a WSR lease? (1) Leases of tribal land that a landowners’ representative for the (a) We may disapprove a WSR lease corporate entity leases to a third party purposes of consenting to an amendment only if at least one of the under 25 U.S.C. 477; and amendment. following is true: (2) Leases of tribal land under a (c) If the lease provides for deemed (1) The Indian landowners have not special act of Congress authorizing consent under paragraph (b)(1) of this consented and their consent is required; leases without our approval. section, it must require the parties to (2) The lessee’s mortgagees or sureties submit to us: have not consented; § 162.569 Will BIA require an appeal bond (1) A copy of the executed (3) The lessee is in violation of the for an appeal of a decision on a WSR lease amendment or other documentation of lease; document? any Indian landowners’ actual consent; (4) The requirements of this subpart (a) If a party appeals our decision on (2) Proof of mailing of the amendment have not been met; or a WSR lease, assignment, amendment, to any Indian landowners who are (5) We find a compelling reason to or sublease, then the official to whom deemed to have consented; and withhold our approval in order to the appeal is made may require the (3) Any other pertinent information protect the best interests of the Indian appellant to post an appeal bond in for review. landowners. accordance with part 2 of this chapter. (d) Unless specifically authorized in (b) We will defer, to the maximum We will not require an appeal bond: the lease, a written power of attorney, or extent possible, to the Indian
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landowners’ determination that the section, it must require the parties to landowners’ determination that the amendment is in their best interest. submit to us: assignment is in their best interest. (c) We may not unreasonably (1) A copy of the executed assignment (d) We may not unreasonably withhold approval of an amendment. or other documentation of any Indian withhold approval of an assignment. landowners’ actual consent; WSR Lease Assignments WSR Lease Subleases (2) Proof of mailing of the assignment § 162.574 May a lessee assign a WSR to any Indian landowners who are § 162.578 May a lessee sublease a WSR lease? deemed to have consented; and lease? (a) A lessee may assign a WSR lease (3) Any other pertinent information (a) A lessee may sublease a WSR lease by meeting the consent requirements in for us to review. by meeting the consent requirements in § 162.575 and obtaining our approval of (d) The lessee must obtain the consent § 162.579 and obtaining our approval of the assignment under §§ 162.576 and of the holders of any bonds or the sublease under §§ 162.580 and 162.577 or by meeting the conditions in mortgages. 162.581, or by meeting the conditions in paragraphs (b) or (c) of this section. § 162.576 What is the approval process for paragraph (b) of this section. (b) Where provided in the lease, the an assignment of a WSR lease? (b) The lessee may sublease without lessee may assign the lease to the (a) When we receive an assignment meeting consent requirements or following without meeting consent that meets the requirements of this obtaining BIA approval of the sublease, requirements or obtaining BIA approval subpart, we will notify the parties of the if: of the assignment, as long as the lessee (1) The lease provides for subleasing date we receive it. If our approval is notifies BIA of the assignment within 30 without meeting consent requirements required, we have 30 days from receipt days after it is executed: or obtaining BIA approval; (1) Not more than three distinct legal of the executed assignment, proof of (2) The sublease does not relieve the entities specified in the lease; or required consents, and required lessee/sublessor of any liability; and (2) The lessee’s wholly owned documentation to approve or (3) The parties provide BIA with a subsidiaries. disapprove the assignment. Our copy of the sublease within 30 days (c) The lessee may assign the lease determination whether to approve the after it is executed. without our approval or meeting assignment will be in writing and will consent requirements if: state the basis for our approval or § 162.579 What are the consent (1) The assignee is a leasehold disapproval. requirements for a sublease of a WSR mortgagee or its designee, acquiring the (b) If we do not meet any of the lease? lease either through foreclosure or by deadlines in this section, the lessee or (a) Unless the lease provides conveyance; Indian landowners may take appropriate otherwise, the lessee must notify all (2) The assignee agrees in writing to action under § 162.588. Indian landowners of the proposed assume all of the obligations and sublease. conditions of the lease; and § 162.577 How will BIA decide whether to (b) The Indian landowners, or their (3) The assignee agrees in writing that approve an assignment of a WSR lease? representatives under § 162.013, must any transfer of the lease will be in (a) We may disapprove an assignment consent to a sublease in the same accordance with applicable law under of a WSR lease only if at least one of the percentages and manner as a new WSR § 162.014. following is true: lease under § 162.012, unless the lease: (1) The Indian landowners have not (1) Provides that individual Indian § 162.575 What are the consent consented and their consent is required; landowners are deemed to have requirements for an assignment of a WSR (2) The lessee’s mortgagees or sureties consented where they do not object in lease? have not consented; writing to the sublease within a (a) Unless the lease provides (3) The lessee is in violation of the specified period of time following the otherwise, the lessee must notify all lease; landowners’ receipt of the sublease and Indian landowners of the proposed (4) The assignee does not agree to be the lease meets the requirements in assignment. bound by the terms of the lease; paragraph (c) of this section; (b) The Indian landowners, or their (5) The requirements of this subpart (2) Authorizes one or more representatives under § 162.013, must have not been met; or representatives to consent to a sublease consent to an assignment in the same (6) We find a compelling reason to on behalf of all Indian landowners; or percentages and manner as a new WSR withhold our approval in order to (3) Designates us as the Indian lease under § 162.012, unless the lease: protect the best interests of the Indian landowners’ representative for the (1) Provides that individual Indian landowners. purposes of consenting to a sublease. landowners are deemed to have (b) In making the finding required by (c) If the lease provides for deemed consented where they do not object in paragraph (a)(6) of this section, we may consent under paragraph (b)(1) of this writing to the assignment within a consider whether: section, it must require the parties to specified period of time following the (1) The value of any part of the leased submit to us: landowners’ receipt of the assignment premises not covered by the assignment (1) A copy of the executed sublease or and the lease meets the requirements of would be adversely affected; and other documentation of any Indian paragraph (c) of this section; (2) If a performance bond is required, landowners’ actual consent; (2) Authorizes one or more the assignee has posted the bond or (2) Proof of mailing of the sublease to representatives to consent to an security and provided supporting any Indian landowners who are deemed assignment on behalf of all Indian documents that demonstrate that: to have consented; and landowners; or (i) The lease will be enforceable (3) Any other pertinent information (3) Designates us as the Indian against the assignee; and for us to review. landowners’ representative for the (ii) The assignee will be able to purposes of consenting to an perform its obligations under the lease § 162.580 What is the approval process for assignment. or assignment. a sublease of a WSR lease? (c) If the lease provides for deemed (c) We will defer, to the maximum (a) When we receive a sublease that consent under paragraph (b)(1) of this extent possible, to the Indian meets the requirements of this subpart,
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we will notify the parties of the date we our approval of the leasehold mortgage (b) If we do not meet the deadline in receive it. If our approval is required, under §§ 162.584 and 162.585. this section, the lessee may take we have 30 days from receipt of the (b) Refer to § 162.574(c) for appropriate action under § 162.588. executed sublease, proof of required information on what happens if a sale consents, and required documentation or foreclosure under an approved § 162.585 How will BIA decide whether to approve a leasehold mortgage of a WSR to approve or disapprove the sublease or mortgage of the leasehold interest lease? inform the parties to the sublease and occurs. Indian landowners in writing that we (a) We may disapprove a leasehold need additional review time. Our § 162.583 What are the consent mortgage of a WSR lease only if at least requirements for a leasehold mortgage of a determination whether to approve the one of the following is true: WSR lease? (1) The Indian landowners have not sublease will be in writing and will state consented and their consent is required; the basis for our approval or (a) Unless the lease provides (2) The lessee’s mortgagees or sureties disapproval. otherwise, the lessee must notify all have not consented; (b) Our letter informing parties that Indian landowners of the proposed (3) The requirements of this subpart we need additional review time must leasehold mortgage. have not been met; or identify our initial concerns and invite (b) The Indian landowners, or their (4) We find a compelling reason to the parties to respond within 15 days of representatives under § 162.013, must withhold our approval in order to the date of the letter. We have 30 days consent to a leasehold mortgage in the protect the best interests of the Indian from sending the letter informing the same percentages and manner as a new landowners. parties that we need additional time to WSR lease under § 162.012, unless the lease: (b) In making the finding required by approve or disapprove the sublease. paragraph (a)(4) of this section, we may (c) If we do not meet the deadline in (1) States that landowner consent is not required for a leasehold mortgage consider whether: paragraph (a) of this section, or (1) The leasehold mortgage proceeds paragraph (b) of this section if and identifies what law would apply in case of foreclosure; would be used for purposes unrelated to applicable, the sublease is deemed the leased premises; and approved to the extent consistent with (2) Provides that individual Indian landowners are deemed to have (2) The leasehold mortgage is limited Federal law. Unless the lease provides to the leasehold. otherwise, provisions of the sublease consented where they do not object in writing to the leasehold mortgage within (c) We will defer, to the maximum that are inconsistent with Federal law extent possible, to the Indian will be severed and unenforceable; all a specified period of time following the landowners’ receipt of the leasehold landowners’ determination that the other provisions of the sublease will leasehold mortgage is in their best remain in force. mortgage and the lease meets the requirements of paragraph (c) of this interest. § 162.581 How will BIA decide whether to section; (d) We may not unreasonably approve a sublease of a WSR lease? (3) Authorizes one or more withhold approval of a leasehold (a) We may disapprove a sublease of representatives to consent to a leasehold mortgage. a WSR lease only if at least one of the mortgage on behalf of all Indian WSR Lease Effectiveness, Compliance, following is true: landowners; or and Enforcement (1) The Indian landowners have not (4) Designates us as the Indian consented and their consent is required; landowners’ representative for the § 162.586 When will an amendment, (2) The lessee’s mortgagees or sureties purposes of consenting to a leasehold assignment, sublease, or leasehold have not consented; mortgage. mortgage of a WSR lease be effective? (3) The lessee is in violation of the (c) If the lease provides for deemed (a) An amendment, assignment, lease; consent under paragraph (b)(2) of this sublease, or leasehold mortgage of a (4) The lessee will not remain liable section, it must require the parties to WSR lease will be effective when under the lease; and submit to us: approved, even if an appeal is filed (5) We find a compelling reason to (1) A copy of the executed leasehold under part 2 of this chapter, except: withhold our approval in order to mortgage or other documentation of any (1) If the amendment or sublease was protect the best interests of the Indian Indian landowners’ actual consent; deemed approved under § 162.572(b) or landowners. (2) Proof of mailing of the leasehold § 162.580(b), the amendment or sublease (b) In making the finding required by mortgage to any Indian landowners who becomes effective 45 days from the date paragraph (a)(5) of this section, we may are deemed to have consented; and the parties mailed or delivered the consider whether the value of any part (3) Any other pertinent information document to us for our review or, if we of the leased premises not covered by for us to review. sent a letter informing the parties that the sublease would be adversely we need additional time to approve or affected. § 162.584 What is the approval process for disapprove the lease, the amendment or (c) We will defer, to the maximum a leasehold mortgage of a WSR lease? sublease becomes effective 45 days from extent possible, to the Indian (a) When we receive a leasehold the date of the letter informing the landowners’ determination that the mortgage that meets the requirements of parties that we need additional time to sublease is in their best interest. this subpart, we will notify the parties approve or disapprove the lease; and (d) We may not unreasonably of the date we receive it. We have 20 (2) An assignment that does not withhold approval of a sublease. days from receipt of the executed require our approval under § 162.574(b) WSR Leasehold Mortgages leasehold mortgage, proof of required or a sublease that does not require our consents, and required documentation approval under § 162.578(b) becomes § 162.582 May a lessee mortgage a WSR to approve or disapprove the leasehold effective on the effective date specified lease? mortgage. Our determination whether to in the assignment or sublease. If the (a) A lessee may mortgage a WSR approve the leasehold mortgage will be assignment or sublease does not specify lease by meeting the consent in writing and will state the basis for the effective date, it becomes effective requirements in § 162.583 and obtaining our approval or disapproval. upon execution by the parties.
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(b) We will provide copies of § 162.589 May BIA investigate compliance be bound by decisions made in such approved documents to the party with a WSR lease? forums, but we will defer to ongoing requesting approval, to the tribe for (a) We may enter the leased premises actions and proceedings, as appropriate, tribal land, and upon request, to other at any reasonable time, upon reasonable in deciding whether to exercise any of parties to the lease document. notice, and consistent with any notice the remedies available to us. requirements under applicable tribal § 162.587 What happens if BIA law and applicable lease documents, to § 162.591 What will BIA do about a disapproves an amendment, assignment, violation of a WSR lease? protect the interests of the Indian sublease, or leasehold mortgage of a WSR (a) In the absence of actions or lease? landowners and to determine if the lessee is in compliance with the proceedings described in § 162.590(e), If we disapprove an amendment, requirements of the lease. or if it is not appropriate for us to defer assignment, sublease, or leasehold (b) If an Indian landowner notifies us to the actions or proceedings, we will mortgage of a WSR lease, we will notify that a specific lease violation has follow the procedures in paragraphs (b) the parties immediately and advise the occurred, we will promptly initiate an and (c) of this section. landowners of their right to appeal the (b) If we determine there has been a appropriate investigation. decision under part 2 of this chapter. violation of the conditions of a WSR § 162.590 May a WSR lease provide for lease, other than a violation of payment § 162.588 What happens if BIA does not negotiated remedies if there is a violation? provisions covered by paragraph (c) of meet a deadline for issuing a decision on a lease document? (a) A WSR lease of tribal land may this section, we will promptly send the provide either or both parties with lessee and any surety and mortgagee a (a) If a Superintendent does not meet notice of violation by certified mail, a deadline for issuing a decision on a negotiated remedies in the event of a lease violation, including, but not return receipt requested. lease, assignment, or leasehold (1) We will send a copy of the notice mortgage, the parties may file a written limited to, the power to terminate the lease. If the lease provides one or both of violation to the tribe for tribal land, notice to compel action with the or provide constructive notice to Indian appropriate Regional Director. parties with the power to terminate the lease: landowners for individually owned (b) The Regional Director has 15 days Indian land. from receiving the notice to: (1) BIA approval of the termination is not required; (2) The notice of violation will advise (1) Issue a decision; or the lessee that, within 10 business days (2) Order the Superintendent to issue (2) The termination is effective without BIA cancellation; and of the receipt of a notice of violation, the a decision within the time set out in the lessee must: order. (3) The Indian landowners must notify us of the termination so that we (i) Cure the violation and notify us, (c) The parties may file a written and the tribe for tribal land, in writing notice to compel action with the BIA may record it in the LTRO. (b) A WSR lease of individually that the violation has been cured; Director if: (ii) Dispute our determination that a owned Indian land may provide either (1) The Regional Director does not violation has occurred; or meet the deadline in paragraph (b) of or both parties with negotiated (iii) Request additional time to cure this section; remedies, so long as the lease also the violation. (2) The Superintendent does not issue specifies the manner in which those (3) The notice of violation may order a decision within the time set by the remedies may be exercised by or on the lessee to cease operations under the Regional Director under paragraph (b)(2) behalf of the Indian landowners of the lease. of this section; or applicable percentage of interests under (c) A lessee’s failure to pay (3) The initial decision on the lease, § 162.012 of this part. If the lease compensation in the time and manner assignment, or leasehold mortgage is provides one or both parties with the required by a WSR lease is a violation with the Regional Director, and he or power to terminate the lease: of the lease, and we will issue a notice she does not meet the deadline for such (1) BIA concurrence with the of violation in accordance with this decision. termination is required to ensure that paragraph. (d) The BIA Director has 15 days from the Indian landowners of the applicable (1) We will send the lessees and any receiving the notice to: percentage of interests have consented; surety and mortgagee a notice of (1) Issue a decision; or and violation by certified mail, return (2) Order the Regional Director or (2) BIA will record the termination in receipt requested: Superintendent to issue a decision the LTRO. (i) Promptly following the date on within the time set out in the order. (c) The parties must notify any surety which payment was due, if the lease (e) If the Regional Director or or mortgagee of any violation that may requires that payments be made to us; Superintendent does not issue a result in termination and the or decision within the time set out in the termination of a WSR lease. (ii) Promptly following the date on order under paragraph (d)(2), then the (d) Negotiated remedies may apply in which we receive actual notice of non- BIA Director must issue a decision addition to, or instead of, the payment from the Indian landowners, if within 15 days from the expiration of cancellation remedy available to us, as the lease provides for payment directly the time set out in the order. specified in the lease. The landowners to the Indian landowners. (f) The parties may file an appeal from may request our assistance in enforcing (2) We will send a copy of the notice our inaction to the Interior Board of negotiated remedies. of violation to the tribe for tribal land, Indian Appeals if the Director does not (e) A WSR lease may provide that or provide constructive notice to the meet the deadline in paragraph (d) or (e) lease violations will be addressed by the Indian landowners for individually of this section. tribe, and that lease disputes will be owned Indian land. (g) The provisions of 25 CFR 2.8 do resolved by a tribal court, any other (3) The notice of violation will require not apply to the inaction of BIA officials court of competent jurisdiction, or by a the lessee to provide adequate proof of with respect to a decision on a lease, tribal governing body in the absence of payment. amendment, assignment, sublease, or a tribal court, or through an alternative (d) The lessee and its sureties will leasehold mortgage under this subpart. dispute resolution method. We may not continue to be responsible for the
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obligations in the lease until the lease owned Indian land, we may take action may require the lessee to post an appeal expires or is terminated or cancelled. to recover unpaid compensation and bond; any associated late payment charges. § 162.592 What will BIA do if a lessee does (4) Order the lessee to vacate the (1) We do not have to cancel the lease property within 31 days of the date of not cure a violation of a WSR lease on or give any further notice to the lessee time? receipt of the cancellation letter, if an before taking action to recover unpaid appeal is not filed by that time; and (a) If the lessee does not cure a compensation. (5) Order the lessee to take any other violation of a WSR lease within the (2) We may still take action to recover required time period, or provide any unpaid compensation if we cancel action BIA deems necessary to protect adequate proof of payment as required the lease. the Indian landowners. in the notice of violation, we will (c) If we decide to cancel the lease, we (d) We may invoke any other consult with the tribe for tribal land or, will send the lessee and any surety and remedies available to us under the lease, where feasible, with Indian landowners mortgagee a cancellation letter by including collecting on any available for individually owned Indian land, and certified mail, return receipt requested, performance bond, and the Indian determine whether: within 5 business days of our decision. landowners may pursue any available (1) We should cancel the lease; We will send a copy of the cancellation remedies under tribal law. (2) The Indian landowners wish to letter to the tribe for tribal land, and will invoke any remedies available to them § 162.593 Will late payment charges or provide Indian landowners for special fees apply to delinquent payments under the lease; individually owned Indian land with due under a WSR lease? (3) We should invoke other remedies actual or constructive notice of the available under the lease or applicable cancellation. The cancellation letter (a) Late payment charges will apply as law, including collection on any will: specified in the lease. The failure to pay available performance bond or, for (1) Explain the grounds for these amounts will be treated as a lease failure to pay compensation, referral of cancellation; violation. the debt to the Department of the (2) If applicable, notify the lessee of (b) We may assess the following Treasury for collection; or the amount of any unpaid compensation special fees to cover administrative (4) The lessee should be granted or late payment charges due under the costs incurred by the United States in additional time in which to cure the lease; the collection of the debt, if violation. (3) Notify the lessee of the lessee’s compensation is not paid in the time (b) Following consultation with the right to appeal under part 2 of this and manner required, in addition to late tribe for tribal land or, where feasible, chapter, including the possibility that payment charges that must be paid to with Indian landowners for individually the official to whom the appeal is made the Indian landowners under the lease:
The lessee will pay . . . For . . .
(1) $50.00 ...... Any dishonored check. (2) $15.00 ...... Processing of each notice or demand letter. (3) 18 percent of balance due ...... Treasury processing following referral for collection of delinquent debt.
§ 162.594 How will payment rights relating § 162.596 What will BIA do if a lessee apply to appeals from lease cancellation to WSR leases be allocated? remains in possession after a WSR lease decisions. expires or is terminated or cancelled? The WSR lease may allocate rights to (b) The lessee may not appeal the payment for insurance proceeds, If a lessee remains in possession after appeal bond decision. The lessee may, trespass damages, compensation the expiration, termination, or however, request that the official to awards, settlement funds, and other cancellation of a WSR lease, we may whom the appeal is made reconsider the payments between the Indian treat the unauthorized possession as a appeal bond decision, based on landowners and the lessee. If not trespass under applicable law in extraordinary circumstances. Any specified in the lease, insurance policy, consultation with the Indian reconsideration decision is final for the order, award, judgment, or other landowners. Unless the Indian Department. document, the Indian landowners will landowners of the applicable percentage be entitled to receive these payments. § 162.598 When will BIA issue a decision of interests under § 162.012 have on an appeal from a WSR leasing decision? § 162.595 When will a cancellation of a notified us in writing that they are BIA will issue a decision on an appeal WSR lease be effective? engaged in good faith negotiations with from a WSR leasing decision within 60 (a) A cancellation involving a WSR the holdover lessee to obtain a new days of receipt of all pleadings. lease will not be effective until 31 days lease, we may take action to recover after the lessee receives a cancellation possession on behalf of the Indian § 162.599 What happens if the lessee letter from us, or 41 days from the date landowners, and pursue any additional abandons the leased premises? we mailed the letter, whichever is remedies available under applicable If a lessee abandons the leased earlier. law, such as a forcible entry and premises, we will treat the (b) The cancellation decision will not detainer action. abandonment as a violation of the lease. be effective if an appeal is filed unless The lease may specify a period of non- § 162.597 Will BIA appeal bond regulations the cancellation is made immediately use after which the lease premises will apply to cancellation decisions involving effective under part 2 of this chapter. WSR leases? be considered abandoned. While a cancellation decision is ■ 16. Add subpart G to read as follows: ineffective, the lessee must continue to (a) Except as provided in paragraph pay compensation and comply with the (b) of this section, the appeal bond Subpart G—Records other terms of the lease. provisions in part 2 of this chapter will Sec.
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162.701 Who owns the records associated Department of the Interior under this under this part, it may prevent the tribe with this part? part are the property of the tribe. or tribal organization from being able to 162.702 How must records associated with adequately document essential § 162.702 How must records associated this part be preserved? transactions or furnish information 162.703 How does the Paperwork with this part be preserved? necessary to protect its legal and Reduction Act affect this part? (a) Any organization, including a tribe financial rights or those of persons or tribal organization, that has records directly affected by its activities. Subpart G—Records identified in § 162.701(a) of this part, § 162.701 Who owns the records must preserve the records in accordance § 162.703 How does the Paperwork associated with this part? with approved Departmental records Reduction Act affect this part? retention procedures under the Federal (a) Records are the property of the Records Act, 44 U.S.C. chapters 29, 31 The collections of information in this United States if they: and 33. These records and related part have been approved by the Office (1) Are made or received by a tribe or records management practices and of Management and Budget under 44 tribal organization in the conduct of a safeguards required under the Federal U.S.C. 3501 et seq. and assigned OMB Federal trust function under 25 U.S.C. Records Act are subject to inspection by Control Number 1076–0155. Response is 450f et seq., including the operation of the Secretary and the Archivist of the required to obtain a benefit. A Federal a trust program; and United States. agency may not conduct or sponsor, and (2) Evidence the organization, (b) A tribe or tribal organization you are not required to respond to, a functions, policies, decisions, should preserve the records identified collection of information unless it procedures, operations, or other in § 162.701(b) of this part, for the displays a currently valid OMB Control activities undertaken in the performance period of time authorized by the Number. of a Federal trust function under this Archivist of the United States for similar Dated: June 7, 2012. part. Department of the Interior records under (b) Records not covered by paragraph 44 U.S.C. chapter 33. If a tribe or tribal Donald E. Laverdure, (a) of this section that are made or organization does not preserve records Acting Assistant Secretary—Indian Affairs. received by a tribe or tribal organization associated with its conduct of business [FR Doc. 2012–28926 Filed 11–28–12; 4:15 pm] in the conduct of business with the with the Department of the Interior BILLING CODE 4310–6W–P
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Part III
Environmental Protection Agency
40 CFR Part 52 Approval, Disapproval and Promulgation of Air Quality Implementation Plans; Arizona; Regional Haze State and Federal Implementation Plans; Final Rule
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ENVIRONMENTAL PROTECTION http://www.regulations.gov or in hard (14) The initials CEMS mean or refer AGENCY copy at EPA Region 9, 75 Hawthorne to continuous emission monitoring Street, San Francisco, California. Please system. 40 CFR Part 52 note that while many of the documents (15) The term Cholla refers to Cholla in the docket are listed at http:// Power Plant. [EPA–R09–OAR–2012–0021, FRL–9754–3] www.regulations.gov, some information (16) The term Class I area refers to a 1 Approval, Disapproval and may not be specifically listed in the mandatory Class I Federal area. Promulgation of Air Quality index to the docket and may be publicly (17) The term coal-fired BART units Implementation Plans; Arizona; available only at the hard copy location refers to Apache Generating Station Regional Haze State and Federal (e.g., copyrighted material, large maps, Units 2 and 3; Cholla Power Plant Units Implementation Plans multi-volume reports or otherwise 2, 3 and 4 and Coronado Generating voluminous materials), and some may Station Units 1 and 2. AGENCY: Environmental Protection not be available at either locations (e.g., (18) The initials COFA mean or refer Agency (EPA). confidential business information). To to close-coupled overfire air. (19) The term Coronado refers to ACTION: Final rule. inspect the hard copy materials, please schedule an appointment during normal Coronado Generating Station. SUMMARY: EPA is taking final action to business hours with the contact listed (20) The initials CY mean or refer to approve in part and disapprove in part directly below. Calendar Year. a portion of Arizona’s State (21) The initials EGU mean or refer to FOR FURTHER INFORMATION CONTACT: Electric Generating Unit. Implementation Plan (SIP) submittal for Thomas Webb, U.S. EPA, Region 9, its regional haze program and to (22) The initials ESPs mean or refer to Planning Office, Air Division, Air-2, 75 electrostatic precipitators. promulgate a Federal Implementation Hawthorne Street, San Francisco, CA Plan (FIP) for the disapproved elements (23) The words EPA, we, us or our 94105. Thomas Webb can be reached at mean or refer to the United States of the SIP. The State and Federal plans telephone number (415) 947–4139 and are to implement the regional haze Environmental Protection Agency. via electronic mail at (24) The initials FGD mean or refer to program in Arizona for the first [email protected]. flue gas desulfurization. planning period through 2018. This SUPPLEMENTARY INFORMATION: (25) The initials FGR mean or refer to final rule addresses only the portion of flue gas recirculation. the SIP related to Arizona’s Throughout this document, wherever ‘‘we,’’ ‘‘us,’’ or ‘‘our,’’ is used, we mean (26) The initials FIP mean or refer to determination of Best Available Retrofit Federal Implementation Plan. Technology (BART) to control emissions the United States Environmental Protection Agency (EPA). (27) The initials FLMs mean or refer from eight units at three electric to Federal Land Managers. generating stations: Apache Generating Definitions (28) The initials FR mean or refer to Station, Cholla Power Plant and For the purpose of this document, we the Federal Register. Coronado Generating Station. Consistent are giving meaning to certain words or (29) The initials GEP mean or refer to with our proposal, EPA approves in this initials as follows: Good Engineering Practice. final rule the State’s determination that (1) The words or initials CAA or Act (30) The initials IMPROVE mean or the three sources are subject to BART, mean or refer to the Clean Air Act, refer to Interagency Monitoring of and approves the State’s emissions unless the context indicates otherwise. Protected Visual Environments limits for sulfur dioxide (SO2) and (2) The initials ACC refer to the monitoring network. particulate matter less than or equal to Arizona Corporation Commission. (31) The initials IWAQM mean or 10 micrometers (PM10) at all the units, (3) The initials ACCCE mean or refer refer to Interagency Workgroup on Air but disapproves Arizona’s BART to American Coalition for Clean Coal Quality Modeling. emissions limits for nitrogen oxides Electricity. (32) The initials IPM mean or refer to (NOX) at the coal-fired units of the three (4) The initials ADEQ mean or refer to Integrated Planning Model. power plants. We also are promulgating the Arizona Department of (33) The initials LNB mean or refer to a FIP that contains new emissions limits Environmental Quality. low-NOX burners. for NOX at these coal-fired units and (5) The initials AEPCO mean or refer (34) The initials LTS mean or refer to compliance schedules for to Arizona Electric Power Cooperative. Long-Term Strategy. implementation of BART as well as (6) The initials AFUDC mean or refer (35) The initials MMBtu mean or refer requirements for equipment to allowance for funds used during to Million British thermal units. maintenance, monitoring, recordkeeping construction. (36) The initials MW mean or refer to and reporting for all units and all (7) The term Apache refers to Apache megawatts. pollutants at the three sources. In Generating Station. (37) The initials MWh mean or refer today’s action, we are revising some (8) The initials APS mean or refer to to megawatt hours. elements of the proposed FIP in Arizona Public Service Company. (38) The initials NEI mean or refer to response to comments and additional (9) The words Arizona and State National Emission Inventory. information that we received. mean the State of Arizona. (39) The initials NH3 mean or refer to (10) The initials BART mean or refer ammonia. DATES: Effective date: This rule is to Best Available Retrofit Technology. (40) The initials NOX mean or refer to effective January 4, 2013. (11) The term BART units refers to nitrogen oxides. Compliance dates: The owners/ Apache Generating Station Units 1, 2 (41) The initials NP mean or refer to operators of each unit subject to this and 3; Cholla Power Plant Units 2, 3 and National Park. final rule shall comply by the dates 4 and Coronado Generating Station specified in the regulatory text. Units 1 and 2. 1 Although states and tribes may designate as ADDRESSES: EPA has established docket (12) The initials CBI mean or refer to Class I additional areas which they consider to have visibility as an important value, the requirements of number EPA–R09–OAR–2012–0021 for Confidential Business Information. the visibility program set forth in section 169A of this action. Generally, documents in the (13) The initials CCM mean or refer to the CAA apply only to ‘‘mandatory Class I Federal docket are available electronically at EPA’s Cost Control Manual. areas.’’
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(42) The initials NPRM mean or refer (72) The initials WEP mean or refer to emissions limits for NOX at all of the to Notice of Proposed Rulemaking. Weighted Emissions Potential. coal-fired BART units (i.e., all of the (43) The initials O&M mean or refer (73) The initials WFGD mean or refer BART units except for Apache Unit 1). to operation and maintenance. to wet flue gas desulfurization. We also proposed to disapprove the (44) The initials OC mean or refer to (74) The initials WRAP mean or refer compliance schedules and requirements organic carbon. to the Western Regional Air Partnership. for equipment maintenance and (45) The initials OFA mean or refer to Table of Contents operation, including monitoring, over fire air. recordkeeping and reporting (46) The initials PM mean or refer to I. Background requirements for BART at all of the particulate matter. A. Summary of Our Proposed Action BART units, since these were not (47) The initials PM mean or refer to B. Legal Basis for Our Final Action 10 II. Overview of Final Action included in the SIP submittal. particulate matter with an aerodynamic III. Final BART Determinations Proposed FIP: The proposed FIP diameter of less than 10 micrometers IV. EPA’s Responses to Comments contained BART emissions limits for (coarse particulate matter). A. General Comments on ADEQ’s NOX at all of the coal-fired BART units, (48) The initials PM2.5 mean or refer Approach to BART as well as compliance deadlines and to fine particulate matter with an B. Comments on ADEQ’s Individual BART requirements for equipment aerodynamic diameter of less than 2.5 Analyses and Determinations maintenance and operation, including C. General Comments on EPA’s BART FIP micrometers. monitoring, recordkeeping and (49) The initials PNG mean or refer to Analyses and Determinations D. Source-Specific Comments on EPA’s reporting, to ensure the enforceability of pipeline natural gas. BART Analyses and Determinations the BART limits for all of the BART (50) The initials ppm mean or refer to E. Comments on Enforceability units. Because our proposed FIP parts per million. Requirements in EPA’s BART FIP emission limits would likely result in (51) The initials PSD mean or refer to F. Comments on Legal Issues changes in stack conditions from those Prevention of Significant Deterioration. G. Other Comments anticipated in the SIP, we invited (52) The initials RACT mean or refer V. Summary of Final Action comment on whether an alternative test VI. Statutory and Executive Order Reviews to Reasonably Available Control method to the one required in the SIP Technology. I. Background is acceptable for PM10. In addition, we (53) The initials RAVI mean or refer A. Summary of Our Proposed Action specifically sought comment on whether to Reasonably Attributable Visibility we should require lower SO2 emissions Impairment. Our notice of proposed rulemaking limits or removal efficiency (54) The initials RATA mean or refer (NPRM) was signed on July 2, 2012, and requirements for any of the coal-fired to relative accuracy test audit. was published in the Federal Register BART units. Finally, in the regulatory 2 (55) The initials RHR mean or refer to on July 20, 2012. In that notice, we text in our NPRM, we proposed to the Regional Haze Rule, originally proposed to approve in part and incorporate by reference into the FIP promulgated in 1999 and codified at 40 disapprove in part a portion of two provisions of the Arizona CFR 51.301–309. Arizona’s Regional Haze SIP (submitted Administrative Code, R18–2–310 and (56) The initials RMB refer to RMB on February 28, 2011) and proposed a R18–2–310.01, which we characterized Consulting & Research, Inc. FIP to address the deficiencies in the as establishing an affirmative defense (57) The initials RMC mean or refer to disapproved portions of the SIP. The for excess emissions due to Regional Modeling Center. proposed rule addressed the BART malfunctions.3 (58) The initials RP mean or refer to requirements for eight units at three Reasonable Progress. electric generating stations: Arizona B. Legal Basis for Our Final Action (59) The initials RPG or RPGs mean or Electric Power Company’s (AEPCO) Our action is based on an evaluation refer to Reasonable Progress Goal(s). Apache Generating Station (Apache) of Arizona’s Regional Haze SIP (60) The initials RPOs mean or refer Units 1, 2 and 3; Arizona Public submitted on February 28, 2011, to meet to regional planning organizations. Service’s (APS) Cholla Power Plant the requirements of Section 308 of the (61) The initials SCR mean or refer to (Cholla) Units 2, 3 and 4; and Salt River RHR. We evaluated the SIP against the Selective Catalytic Reduction. Project’s (SRP) Coronado Generating requirements of the RHR and Clean Air (62) The initials SIP mean or refer to Station (Coronado) Units 1 and 2. We Act (CAA) sections 169A and 169B. We State Implementation Plan. did not propose action on any other part also applied the general SIP (63) The initials SNCR mean or refer of Arizona’s SIP related to the remaining requirements in CAA section 110. Our to Selective Non-catalytic Reduction. requirements of the Regional Haze Rule authority for action on Arizona’s (64) The initials SO mean or refer to 2 (RHR). In summary, we proposed the Regional Haze SIP is based on CAA sulfur dioxide. following: section 110(k). Our authority to (65) The initials SOFA mean or refer Proposed Approval: We proposed to promulgate a FIP is based on CAA to separated over fire air. approve Arizona’s determination that section 110(c). (66) The initials SRP mean or refer to the following sources and units are Salt River Project Agricultural subject to BART: Apache Units 1, 2 and II. Overview of Final Action Improvement and Power District. 3; Cholla Units 2, 3 and 4; and Coronado EPA is taking final action to approve (67) The initials TCI mean or refer to Units 1 and 2 (collectively ‘‘BART in part and disapprove in part a portion total capital investment. units’’). We proposed to approve of Arizona’s SIP for Regional Haze, and (68) The initials tpy mean tons per Arizona’s BART emissions limits for to promulgate a FIP for the disapproved year. SO2 and PM10 at all three sources and elements of the SIP. This final rule only (69) The initials TSD mean or refer to units and the emissions limit for NOX at addresses the BART requirements for Technical Support Document. Apache Unit 1. the eight BART units identified above. (70) The initials VOC mean or refer to Proposed Disapproval: We proposed volatile organic compounds. to disapprove Arizona’s BART 3 Those provisions also include an affirmative (71) The initials WA mean or refer to defense for excess emissions due to startups and Wilderness Area. 2 77 FR 42834. shutdowns, which we did not intend to incorporate.
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Most notably, and with the exception of proposal, and have concluded that some We have revised certain elements of Apache Unit 1, the FIP includes NOX changes are warranted based on public our proposed FIP based on public emission limits for all the units that are comments and additional information comments and additional information as achievable with SCR. At this time, EPA we received in response to questions follows: is not taking action on the State’s other raised in the proposal. • Apache Units 2 and 3: The final BART determinations or any other parts Final Approval: EPA is approving emissions limit for NOX is 0.070 pounds of the SIP regarding the remaining Arizona’s determination that the per million British thermal units (lb/ requirements of the RHR. following sources and units are subject MMBtu) determined as an average of the EPA takes very seriously a decision to to BART: Apache Units 1, 2 and 3; two units, based on a rolling 30-boiler- disapprove any state plan. To approve a Cholla Units 2, 3 and 4; and Coronado operating-day average. Compared to the state plan, EPA must be able to find that Units 1 and 2 (collectively ‘‘BART proposed emissions limit of 0.050 lb/ the state plan is consistent with the units’’). We are approving the emissions MMBtu on each unit, this higher limit requirements of the CAA and EPA’s limits for NOX, PM10 and SO2 at Apache and the addition of a two-unit average regulations. Further, EPA’s oversight Unit 1 as proposed. We are approving provides an extra margin of compliance role requires us to ensure fair the State’s emissions limits for PM10 and to account for periods of startup and implementation of CAA requirements SO2 for all the units. shutdown as well as additional by states across the country, even while Final Disapproval: Based on our operational flexibility for Apache given acknowledging that individual evaluation described in the proposal AEPCO’s status as a small entity. When decisions from source to source or state and in this document, we are either one of the two units is not to state may not have identical disapproving the State’s BART operating, its emissions from its own outcomes. In this instance, for the emissions limits for NOX at all the preceding thirty boiler-operating-days reasons described in our proposal and BART units except for Apache Unit 1, will continue to be included in the two- in this document, we find that the for which the SIP’s BART determination unit average. The final compliance date State’s NOX BART determinations for consists of fuel switching to pipeline for this NOX limit remains five years the coal-fired units are not consistent natural gas (PNG). We also are from the date of publication of this final with the applicable statutory and disapproving the compliance schedules rule. For SO2 and PM10 we are regulatory requirements. Furthermore, and requirements for equipment extending the compliance deadline to the Arizona Regional Haze SIP does not maintenance and operation, including four years from publication of this final include the necessary compliance monitoring, recordkeeping and rule in order to provide AEPCO with schedules and requirements for reporting requirements for BART at all sufficient time to implement upgrades equipment maintenance and operation, the BART units since these were not to the existing scrubbers and including monitoring, recordkeeping included in the Arizona Regional Haze electrostatic precipitators (ESPs) at these and reporting requirements for BART. 4 units. SIP. • As a result, EPA believes this final Final Federal Implementation Plan: Cholla Units 2, 3 and 4: The final disapproval is the only path that is We are promulgating a FIP that includes emissions limit for NOX is 0.055 lb/ consistent with the Act at this time. emissions limitations representing MMBtu determined as an average of the We encourage the State to submit a three units, based on a rolling 30-boiler- BART for NOX at all the coal-fired revised SIP to replace all portions of our BART units. The FIP also includes operating-day average. Compared to the FIP, and are ready to work with the compliance schedules and requirements proposed emissions limit of 0.050 lb/ State to develop a revised plan. The for equipment maintenance, monitoring, MMBtu on each unit, the higher limit CAA requires states to prevent any testing, recordkeeping and reporting for and three-unit average provide an extra future and remedy any existing man- margin of compliance to account for all the BART units. For PM10 at all made impairment of visibility in 156 units, we allow the use of Method 5 as periods of startup and shutdown. When national parks and wilderness areas an alternative to Method 201A/202. In any of the three units is not operating, designated as Class I areas. Arizona has addition, the FIP includes a removal its emissions from its own preceding a wealth of such areas. The three power thirty boiler-operating-days will efficiency requirement for SO2 on plants affect visibility at 18 national Cholla Units 2, 3 and 4, which will continue to be included in the three- parks and wilderness areas, including ensure that the scrubbers on these units unit average. As proposed, the final the Grand Canyon, Mesa Verde and the are properly operated and maintained. compliance date to install and operate Petrified Forest. The State and EPA Finally, we are incorporating into the controls is five years from the date of
must work together to ensure that plans FIP an affirmative defense provision for publication of this final rule. For SO2, we are adding a removal efficiency are in place to make progress toward excess emissions due to malfunctions.5 natural visibility conditions at these requirement of 95 percent for the national treasures. 4 For each BART source, the SIP must include a scrubbers on Cholla Units 2, 3 and 4, in order to ensure that these scrubbers are III. Final BART Determinations requirement to install and operate control equipment as expeditiously as practicable (40 CFR properly operated and maintained, This section is a summary of EPA’s 51.308(e)(1)(iv)); a requirement to maintain control consistent with 40 CFR 51.308(e)(1)(v). final action on the BART determinations equipment (40 CFR 51.308(e)(1)(v)); and procedures We are retaining the other compliance to ensure control equipment is properly operated for the BART units at Apache, Cholla and maintained, including requirements for deadlines as proposed, except for Cholla and Coronado electric generating monitoring, recordkeeping and reporting (40 CFR Unit 2, where we are extending the stations. Please refer to Table 1 that 51.308(e)(1)(v)). compares this final rule to the proposal 5 In the regulatory text in our NPRM, we proposed promulgating today include an adequate margin of that was published on July 20, 2012. to incorporate by reference into the FIP two compliance to account for periods of startup and provisions of the Arizona Administrative Code, shutdown. Accordingly, as indicated by the title of Where EPA has modified our proposal R18–2–310 and R18–2–310.01, which we this provision in our proposed regulatory text to respond to comments or additional characterized as establishing an affirmative defense (‘‘Affirmative Defense for Malfunctions’’), we are information, we explain our analysis in for excess emissions due to malfunctions. However, only incorporating into the FIP the malfunction- the next section titled ‘‘EPA’s Responses those provisions also include an affirmative defense related provisions of these rules and not the startup for excess emissions due to startups and and shutdown provisions. Our final regulatory text to Comments.’’ We have fully shutdowns, which we did not intend to incorporate. clarifies this distinction and also incorporates the considered all comments on our As explained below, the emission limits that we are definition of malfunction.
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compliance deadline to April 1, 2016, MMBtu determined as an average of the When either one of the two units is not for both SO2 and PM10 in order to two units, based on a rolling 30-boiler- operating, its emissions from its own provide APS with sufficient time to operating-day average. Compared to the preceding thirty boiler-operating-days install a new wet flue gas proposed emissions limits of 0.050 on will continue to be included in the two- desulfurization (FGD) system and fabric Unit 1 and 0.080 on Unit 2, this new unit average. The final compliance date filter on this unit. limit based on a two-unit average for the two units is five years from the • Coronado Units 1 and 2: The final provides an extra margin of compliance date of publication of this final rule. emissions limit for NOX is 0.065 lb/ to account for startup and shutdown.
TABLE 1—SUMMARY OF CHANGES FROM PROPOSAL TO FINAL RULE: EMISSIONS LIMITS (LB/MMBTU) AND COMPLIANCE DATES IN SIP AND FIP
NOX PM10 SO2 Source Proposal Final Proposal Final Proposal Final
Apache Unit 1 .... 0.056, Five years 0.056, Five years 0.0075, 180 days 0.0075, 180 days 0.00064, 180 days 0.00064, 180 days. Apache Unit 2 .... 0.050, Five years 0.070 (across two 0.03, 180 days ..... 0.03, Four years 0.15, 180 days ..... 0.15, Four years. units) Apache Unit 3 .... 0.050, Five years Five years 0.03, 180 days ..... 0.03, Four years 0.15, 180 days ..... 0.15, Four years. Cholla Unit 2 ...... 0.050, Five years 0.055 (across 0.015, Jan 1, 2015 0.015, Apr 1, 2016 0.15, 180 days ..... Add 95 percent ef- three units) ficiency Apr 1, 2016. Cholla Unit 3 ...... 0.050, Five years Five years 0.015, 180 days ... 0.015, 180 days 0.15, 180 days ..... Add 95 percent ef- ficiency 1 year. Cholla Unit 4 ...... 0.050, Five years 0.015, 180 days ... 0.015, 180 days 0.15, 180 days ..... Add 95 percent ef- ficiency 1 year. Coronado Unit 1 0.050, Five years 0.065 (across two 0.03, 180 days ..... 0.03, 180 days 0.08, 180 days ..... 0.08, 180 days. units) Coronado Unit 2 0.080, June 1, Five years 0.03, 180 days ..... 0.03, 180 days 0.08, 180 days ..... 0.08, 180 days. 2014.
IV. EPA’s Responses to Comments Arizona Department of Environmental added that EPA apparently approved, We are responding to comments on Quality (ADEQ), and a consortium of without any scrutiny, ADEQ’s our proposed rule published on July 20, conservation organizations (National determination that Cholla Unit 1 is not 2012.6 We held an initial public hearing Parks Conservation Association, Sierra BART-eligible. The commenter (Earthjustice) in Phoenix, Arizona, on July 31, 2012. Club, Physicians for Social requested that EPA properly analyze the In response to concerns that more time Responsibility—Arizona Chapter, Dine’ BART-eligibility of Cholla Unit 1. was needed to analyze the proposal and Citizens Against Ruining Our Specifically, the commenter requested develop comments, we added two Environment, Grand Canyon Trust, and San Juan Citizens Alliance) represented that EPA identify which ‘‘aspects of the additional public hearings in Holbrook process by which ADEQ identified its and in Benson, Arizona, on August 14 by Earthjustice. All of the comments we received along with attached technical eligible-for-BART and subject-to-BART and 15, respectively, and extended the sources’’ it disagrees with, the basis of public comment deadline to September reports and analyses are available for 7 review in the docket. each disagreement, and whether any 18, 2012. The three public hearings such disagreement implicates Cholla were attended by hundreds of citizens, A. General Comments on ADEQ’s Unit 1. In addition, the commenter local and state government officials, Approach to BART stated that EPA’s independent analysis workers and officials from the power of this issue must be supported by the plants, and representatives from 1. ADEQ’s Identification of BART Sources following information, which is needed environmental organizations. Testimony to verify the actual date that Cholla Unit Comment: One commenter and comments from the three public 1 began operating: hearings are organized in the docket by (Earthjustice) stated that EPA must • The document entitled ‘‘Operating location and available for viewing at provide further factual support for its Notes for May 1962’’ referenced in www.epa.gov/region9/air/actions/ determination that Cholla Unit 1 is not ADEQ’s SIP; arizona.html and http:// BART-eligible. The commenter • All available 1962 operating records www.regulations.gov. indicated that the record lacks the for Cholla Unit 1; We also received a number of written requisite support for this conclusion. • All initial CAA construction and comments, including extensive Recounting the history of ADEQ’s operating permits issued to Cholla Unit comments from stakeholders and finding that Unit 1 is not BART-eligible, 1; government agencies who offered policy the commenter noted that APS claimed, • All emissions data from the year and technical analyses addressing the and ADEQ concurred, that Unit 1 is not 1962 for Cholla Unit 1; details of our proposed rule. These BART-eligible based on a 50-year-old • Notes of the meeting between stakeholders included AEPCO, APS, document entitled ‘‘Operating Notes For ADEQ and APS in August 2007 or any SRP, PacifiCorp, Arizona Utilities Group May 1962’’ which allegedly shows that other time ADEQ and APS discussed the (AUG), National Park Service (NPS), Unit 1 began operations on May 1, 1962, BART-eligibility of Cholla Unit 1; and and was thus placed into operation just • Any other documentation that 6 77 FR 42834. months before the August 7, 1962, either supports or contradicts whether 7 77 FR 45326 (July 31, 2012). BART-eligibility cut-off. The commenter Cholla Unit 1 was placed into
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commercial operation before August 7, eligibility when we take action on the control that is BART on a case-by-case 1962. remainder of the Arizona Regional Haze basis. Response: We did not specifically SIP. propose to take action on ADEQ’s a. ADEQ’s Approach to Costs of determination that Cholla Unit 1 is not 2. ADEQ’s BART Control Analyses Compliance BART-eligible and our statement that Comment: One commenter Comment: One commenter (NPS) ‘‘we do not agree with all aspects of the (PacifiCorp) states that EPA improperly agreed with EPA’s conclusions that the process by which ADEQ identified its focuses on only two factors, costs and costs of control were not calculated by eligible-for-BART and subject-to-BART visibility improvement, in rejecting the ADEQ in accordance with the BART sources’’ was not intended to apply to ADEQ’s entire NO BART Guidelines and that costs were included X for items not allowed by EPA Control this unit. Nonetheless, we agree with determination. The commenter states Cost Manual (CCM or the Manual) (e.g., the commenter that it is appropriate to that EPA inappropriately places more owner’s costs, surcharge, escalation, and give some consideration to this issue in weight on these factors. the context of today’s rulemaking Allowance for Funds Utilized During action, which covers ADEQ’s BART Response: EPA disagrees with the Construction—AFUDC), which inflates determinations for the other three units comment that we inappropriately the total cost of compliance and the cost at Cholla. focused on costs and visibility per ton of pollutant reduced. According Contrary to the commenter’s improvement in our decision to to the commenter, a review of industry assertion, the WRAP did not find Cholla disapprove ADEQ’s NOX BART data (detailed in Appendix A of the Unit 1 subject to BART. The WRAP determinations. As outlined in our commenter’s submission) indicates that document cited by the commenter proposal, we considered ADEQ’s the total capital investment (TCI) for merely indicates that ADEQ notified evaluation of the energy and non-air SCR retrofits is typically about $200/ APS on July 13, 2007 that Cholla Units quality environmental impacts of kW, while the TCI estimates for Apache 1–4 were ‘‘Potentially Subject to compliance of the control technologies, and Cholla equaled or exceeded $250/ BART.’’ 8 The WRAP’s ‘‘Arizona BART any existing pollution control kW. Eligibility TSD’’ further explains that: technology in use at each of the sources, The commenter (NPS) noted that the and the remaining useful life of each [Cholla] Unit 1 is listed as potentially date BART Guidelines recommend use of the eligible as information shows that the source, to be generally reasonable and Manual if vendor data are not available. emissions unit was in service only 2 months consistent with the RHR and the BART The commenter conducted detailed cost prior to the cut-off date. Recommend Guidelines.14 However, we also found analyses of SCR using an approach that requesting additional supporting that the costs of control were not the commenter believes is similar to that documentation for final determination.9 calculated in accordance with the BART used by EPA in its evaluation of SCR on ADEQ received this additional Guidelines, and that the visibility the Colstrip power plant—using the cost documentation from APS in August impacts were not appropriately methodologies of the Manual and 2007 in the form of a document dated evaluated and considered. These relying on EPA’s Integrated Planning May 23, 1962, and entitled ‘‘Operating findings formed part of the basis for our Model (IPM) to reflect the most recent Notes For May 1962.’’ 10 This document disapproval of ADEQ’s NOX BART cost levels. The commenter observed indicates that, ‘‘[o]n Tuesday, May 1, determinations. that most of the ADEQ SCR cost 1962, unit [#1 was] placed into Comment: Several commenters estimates were based on TCI costs that commercial operation.’’ 11 After objected to EPA’s use of non-specific were relatively high ratios of the reviewing this documentation, ADEQ and undefined parameter levels for both reported direct capital costs (DCC). The concurred that Unit 1 was not BART the ‘‘cost-effectiveness’’ and ‘‘sufficient commenter indicated that according to eligible.12 visibility improvement’’ parameters in the Manual, the ratio of TCI to DCC is Following the close of the public rejecting ADEQ’s SIP. One commenter 141 percent, while ADEQ’s estimates comment period, we requested and were as follows: (Pacificorp) further noted that states • received from APS a copy of the cannot meet EPA’s specific targets At Apache, TCI is 179 percent of ‘‘Operating Notes For May 1962’’ along unless and until those targets are clearly DCC for both units and included $6 with additional information concerning defined. million in costs for each unit not the operation of Cholla Unit 1.13 We typically allowed by EPA. Response: The RHR and the BART • have placed these materials in the At Cholla, TCI is 258 percent of Guidelines do not require the DCC for all three units and included $11 docket and, based on our initial review, development of specific thresholds, but we believe this documentation is million in costs for Units 2 and 3 (each) rather require evaluation of each BART and $15 million for Unit 4 that are not sufficient to confirm ADEQ’s determination on a case-by-case basis determination that this unit is not typically allowed by EPA. for each source.15 We have not • BART-eligible. However, because this At Coronado, data were not established a specific cost threshold that question was not addressed in our sufficient to calculate these values. makes a particular control option BART proposed rulemaking, we are not taking The commenter asserted that this based on just a dollars per ton number, final action on it at this time. We intend supports EPA’s concern that control and there is not a specific target, either to address Cholla Unit 1’s BART costs submitted by the utilities either in terms of cost-effectiveness or included costs not typically allowed by visibility improvement, for ADEQ to 8 Exhibit 17 to Earthjustice Comments, WRAP EPA or were inadequately documented. BART Clearinghouse (Oct. 24, 2008). meet. All five factors must be evaluated Response: We appreciate the 9 ‘‘Supporting Documentation on Emissions Unit and weighed to determine the level of information provided by the National Bart Eligibility Analysis’’, section 5.1.2. Park Service and are in agreement that 10 Arizona Regional Haze SIP at page 155. 14 See 77 FR 42841. ADEQ’s cost estimates of SCR are 11 Id. 15 See, e.g., BART Guidelines, 40 CFR Part 51, overestimated. As indicated in our 12 Id. Appendix Y, section IV.D.5 (‘‘a 0.3 deciview 13 Email from Sue Kidd, APS, to Colleen improvement may merit a stronger weighting in one proposal, our cost estimates for SCR McKaughan, EPA (October 10, 2012, 9:17 a.m.) and case versus another, so one ‘‘bright line’’ may not generally produced lower values than attachments. be appropriate.’’) those in the Arizona Regional Haze SIP,
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and at a level that we consider cost- relevant information for multiple NOX BART for each of the Cholla units. For effective. Although we recognize that control options, but does not provide Apache and Coronado, ADEQ NPS’s estimates produce even lower evidence that this information has been determined that the current control values than those from our proposal, we analyzed in any way. In the case of technology (hot-side ESPs) was BART have not updated our own cost Apache and Coronado, the Arizona and eliminated the most stringent estimates to reflect NPS’s comments Regional Haze SIP does not analyze this control technology (fabric filters). We since we already consider SCR to be cost information in even a qualitative note that PM emissions from EGUs cost-effective. We do note that in order manner. In the case of Cholla, the terms typically contribute only a small to address the comments from the ‘‘least expensive’’ and ‘‘most expensive’’ percentage of the modeled visibility utilities, we have performed are used, but only in the context of impact from EGUs, and that controlling supplemental cost analyses for each providing a reference for visibility their emissions results in very small facility based on the costs provided by impacts, and not in the context of an visibility benefit. For example, the utilities, and in doing so have evaluation of costs. This does not CALPUFF visibility modeling accounted for those costs not allowed by constitute ‘‘consideration,’’ as it performed by WRAP indicates that for CCM methodology. involves little more than ensuring the Apache, the maximum baseline PM10 Comment: Two commenters (ADEQ presence of cost values, with no visibility impact at the most affected and AUG) stated that EPA did not and judgment, analysis, or interpretation of Class I area (Chiricahua NM) is 0.04 cannot show that ADEQ failed to their meaning. dv.17 Assuming that a more stringent consider relevant cost information in Second, we disagree with the control technology could achieve 100 making its BART determination, the commenter’s characterization of our percent PM control and eliminate this State fully complied with its CAA disapproval as based on a ‘‘preference’’ entire visibility impact, a more stringent obligations, and EPA’s rationale is for a different format or form of PM10 BART determination would insufficient to reject ADEQ’s cost explanation for ADEQ’s BART therefore achieve, at most, a visibility determinations. AUG asserted that: determinations. As discussed in the benefit of 0.04 dv. Although ADEQ did previous paragraph, ADEQ has not not document its analysis or weighing of Arizona has expressly stated that it has considered each of the BART factors. EPA discussed its BART determination the five factors in arriving at the PM10 plainly cannot—and does not—demonstrate rationale, particularly with regard to BART determinations for Apache or that Arizona failed to take the costs of costs of compliance, in any format. Coronado, additional analysis would compliance with BART emission limits into While ADEQ’s RH SIP does include cost not have the potential to result in consideration. The state is required to do no information, it provides no explanation selection of a more stringent control more than that, and EPA cannot lawfully regarding how, or even if, this cost technology in light of the small disapprove the state’s determinations on the information was used in arriving at its potential for visibility benefit. basis that the Agency would prefer a different NO BART determinations. Although With regard to SO , ADEQ selected form of, or format for, explanation of those X 2 determinations. we agree that the RHR does provide the most stringent control technology states significant discretion in their (wet FGD) for all units at Apache, The commenters further stated that the consideration of the BART factors, Cholla, and Coronado. Although ADEQ other reason EPA rejected ADEQ’s cost AUG’s comment presupposes that these did not ‘‘take into account the most determinations is that EPA believed that costs were considered. The Arizona stringent emission control level that the ADEQ relied on inadequately Regional Haze SIP does not indicate that technology is capable of achieving,’’ documented costs. The commenters they were considered. correcting for this flaw would not have contended that there is nothing in the Comment: ADEQ noted that the same the potential to result in the selection of CAA or BART rules that requires a state principles were used for the PM10 and a more stringent control technology, to present any particular level of cost SO2 BART evaluations as were used for since wet FGD, which is the most documentation or that limits a state’s the NOX BART evaluation, yet EPA stringent control technology, was discretion in its consideration of the accepted the approach for only PM10 already selected as BART. Further cost factor in making a BART and SO2. discussion of our evaluation of ADEQ’s determination. Response: We disagree that we BART analyses for PM10 and SO2 is Response: We disagree with this accepted ADEQ’s approach for PM10 and provided below. comment. First, while Arizona may SO2. Although we did not disapprove Comment: The commenters stated have ‘‘expressly stated’’ that it ADEQ’s PM10 and SO2 BART that one of EPA’s reasons for rejecting considered each of the BART factors, it determinations, the absence of a ADEQ’s cost determinations is because must do more than ‘‘state’’ that it disapproval of these determinations the costs are inconsistent with the CCM. considered a BART factor, but must also should not be construed to represent The commenters noted that use of the provide some type of analysis acceptance of the approach by which outdated Manual is not required by the demonstrating that it considered the they were developed. We acknowledge CAA or the BART rules and provide BART factors.16 Although ADEQ has that ADEQ took a similar approach in its references in which EPA has stated that presented information relevant to each analyses for PM10 and SO2 as for NOX, the Manual is only one tool that can be of the BART factors, it has not provided and that these analyses exhibit the same used but that other cost data should also an explanation regarding how this deficiencies we have noted elsewhere be considered. information was used to develop its for the NOX BART determinations. Response: We partially agree with this BART determinations. Specifically in However, we did not disapprove the comment. We acknowledge that our the case of cost calculations, the PM10 and SO2 determinations because BART guidelines state, ‘‘In order to Arizona Regional Haze SIP includes we find that the shortcomings in these maintain and improve consistency, cost analyses did not result in unreasonable estimates should be based on the [CCM], 16 See, e.g., BART Guidelines, 40 CFR Part 51, BART determinations and therefore where possible’’ and that ‘‘[w]e believe Appendix Y, section IV.E.2. (‘‘You should provide were generally ‘‘harmless errors.’’ a justification for adopting the technology that you that the [CCM] provides a good select as the ‘best’ level of control, including an With regard to PM10, we note that explanation of the CAA factors that led you to ADEQ determined the most stringent 17 See Docket Item No. B–12, ‘‘Summary of WRAP choose that option over other control levels.’’) control technology (fabric filters) was RMC BART Modeling for Arizona.’’
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reference tool for cost calculations, but equitable BART determinations across c. ADEQ’s Approach to Degree of if there are elements or sources that are states and across sources. Visibility Improvement not addressed by the Control Cost Comment: One commenter (SRP) Comment: Several commenters Manual or there are additional cost stated that ADEQ appropriately (American Coalition for Clean Coal methods that could be used, we believe considered the ‘‘dollars-per-deciview’’ Electricity (ACCCE), AEPCO, APS, that these could serve as useful cost-effectiveness of different control AUG, Navajo Nation, PacifiCorp, SRP) 18 supplemental information.’’ The options, which is reasonable and asserted that EPA improperly dismissed Manual contains two types of entirely within the broad discretion ADEQ’s visibility impacts analyses. The information: (1) Study level cost afforded to the states under the CAA. commenters cited the BART Guidelines estimates of capital and operation and SRP stated that because BART is a (70 FR 39170, July 6, 2005) to assert that maintenance (O&M) costs for certain component of the CAA’s visibility there is no prescribed method for states specific types of pollution control program, it is more crucial to evaluate to consider and weigh visibility impacts equipment, such as SCR, and (2) a control costs in relation to the visibility and, thus, EPA has no legal grounds for broader costing methodology, known as improvements that may be expected disapproving a SIP based on the method the overnight method. We agree that the using a dollars per deciview ($/dv) the State has chosen to consider language of the BART Guidelines does metric. visibility impacts or improvements. The not require strict adherence to the study Response: The BART Guidelines commenters added that whatever EPA’s level equations and cost methods used require that cost-effectiveness be preference, it has no discretion to to estimate capital and O&M costs. calculated in terms of annualized substitute its method or its conclusion We consider the use of the broader dollars per ton of pollutant removed, or for those of the State. According to the costing methodology used by the CCM, $/ton, but also list the $/deciview ratio commenters, it is clear that the BART the overnight method, as crucial to our as an additional cost-effectiveness rules envision—or, at a minimum, ability to assess the reasonableness of measure that can be employed along allow—a visibility improvement the costs of compliance. Evaluation of with $/ton for use in a BART analysis that is focused on visibility the cost of compliance factor requires an evaluation.21 However, the $/dv metric impacts in the most impacted area. evaluation of the cost-effectiveness is only useful to the extent that it Regarding ADEQ’s BART associated with the various control reflects appropriately calculated costs determination at Coronado in particular, options considered for the facility. A and visibility benefits. As explained one commenter (SRP) noted that ADEQ proper evaluation of cost-effectiveness elsewhere in this document, we have evaluated a visibility index derived allows for a reasoned comparison not determined that ADEQ did not evaluate from an average of modeled visibility only of different control options for a costs and visibility benefits in a manner improvements at the nine Class I areas given facility, but also of the relative consistent with the RHR and the BART closest to Coronado. The commenter costs of controls for similar facilities. If Guidelines. Therefore, while ADEQ asserted that this approach was well the cost-effectiveness of a control certainly had the discretion to take $/dv within the State’s discretion to assess technology for a particular facility is into consideration as part of its BART visibility under the BART rules. outside the range for other similar analyses, the values that it relied upon Another commenter (AUG) argued this facilities, the control technology may be in doing so were not reasonable. consideration of an average visibility rejected as not cost-effective.19 In order impacts index is an even more thorough for this type of comparison to be b. ADEQ’s Approach to Energy and type of evaluation than that required by meaningful, the cost estimates for these Non-Air Quality Environmental Impacts the BART rules. One commenter (AEPCO) added that facilities must be performed in a Comment: One commenter (SRP) EPA’s proposal to disapprove ADEQ’s consistent manner. Without an ‘apples- stated that EPA inappropriately NO BART determinations was largely to-apples’ comparison of costs, it is downplayed the energy and non-air X based on its concern with ADEQ’s impossible to draw rational conclusions quality factor in its review of ADEQ’s reliance on the Western Regional Air about the reasonableness of the costs of BART analysis. Another commenter compliance for particular control Partnership (WRAP) modeling. (ADEQ) noted that because fly ash By contrast, another commenter options. Use of the CCM methodology is ammonia residues have the potential to intended to allow a fair comparison of asserted that since the facilities’ contaminate ground and surface waters, modeling results indicated that controls pollution control costs between similar ADEQ included potential environmental applications for regulatory purposes. would contribute to visibility impacts and the economics of disposing improvements in multiple Class I areas, This is why the BART guidelines the fly ash in its BART analysis. specify the use of the CCM where ADEQ should consider these benefits possible 20 and why it is reasonable for Response: We do not agree that we rather than looking at the benefits in us to insist that the CCM methodology inappropriately downplayed the energy only a single Class I area. The be observed in the cost estimate process. and non-air quality environmental commenter believes that overlooking However, we note that the overnight impacts factor in our review of ADEQ’s significant visibility benefits in this way method has been used for decades for BART analyses. ADEQ provided only considerably understates the overall regulatory control technology cost brief consideration of this factor in its benefit of controls to improved analyses, and that its use ensures BART analyses and did not explain how visibility. The commenter contended it weighed this factor against the other that the procedure followed by ADEQ is statutory factors. Because ADEQ’s 18 BART Guidelines, 40 CFR Part 51, Appendix Y, not a sufficient basis for making BART section IV.D.4.a. analysis of this factor was limited in determinations for sources with 19 See Id. section IV.D.4.f (‘‘A reasonable range [of scope, our evaluation of this factor in substantial benefits across many Class I cost-effectiveness values] would be a range that is reviewing the SIP was similarly limited. areas. consistent with the range of cost-effectiveness We discuss our analysis of this factor in Response: EPA’s proposed values used in other similar permit decisions over a period of time.’’) our FIP action below. disapproval of ADEQ’s NOx BART 20 BART Guidelines, 40 CFR Part 51, Appendix Y, determinations was not based on any section IV.D.4. 21 BART Guidelines sections IV.D.4.c and IV.E. concern with the WRAP modeling
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protocol, upon which ADEQ relied for in determining the appropriate level of BART for each BART-eligible source in its BART analyses. On the contrary, we controls, EPA does not agree that these the State that emits any air pollutant found that the modeling procedures benefits may be ignored.26 which may reasonably be anticipated to relied upon by ADEQ were ‘‘in accord While there may be no single cause or contribute to any impairment with EPA guidance.’’ 22 However, we prescribed method to consider and of visibility in any mandatory Class I noted that ADEQ’s use of the results of weigh visibility impacts, the BART Federal area.’’ 27 The BART Guidelines modeling in making BART decisions Guidelines do require that certain explain that, ‘‘[i]f the emissions from the was ‘‘problematic in several visibility impacts be included in the list of emissions units at a stationary respects.’’ 23 In other words, our concern considering and weighing. EPA source exceed a potential to emit of 250 with the visibility analysis was not with disagrees that state flexibility extends to tons per year for any visibility-impairing the technical adequacy of the modeling categorically excluding consideration of pollutant, then that collection of itself, but rather with how ADEQ visibility improvements occurring at emissions units is a BART-eligible interpreted the results of this modeling. multiple Class I areas. Considering source.’’ 28 Therefore, it is that In its BART analyses for Apache and benefits at multiple areas does not collection of units for which one must Cholla, ADEQ considered visibility necessarily require use of the make a BART determination. The improvements only at the single Class I ‘‘cumulative’’ improvement approach Guidelines state ‘‘you must conduct a area with the greatest modeled impact (i.e., the direct sum of improvements at visibility improvement determination from a facility. This neglects all the areas), but does require that for the source(s) as part of the BART improvements that would occur at other improvements at those areas be taken determination. * * *’’ 29 This requires nearby Class I areas, and in general is into account in some way. For example, consideration of the visibility not adequate for assessing the overall one could simply list visibility improvement from BART applied to the visibility benefit from candidate BART improvements at the various areas, and facility as a whole. controls. As noted by commenters, the qualitatively weigh the number of areas The RHR and the Guidelines do not BART Guidelines provide that, ‘‘[i]f the and the magnitudes of the preclude consideration of visibility highest modeled impacts are observed at improvements. However, ADEQ did not improvement from controls on the nearest Class I area, [a State] may do this for any of the sources covered individual units, but that would be in choose not to analyze the other Class I by this action. addition to considering the areas any further and additional With respect to ADEQ’s consideration improvement from the whole facility. analyses might be unwarranted.’’ 24 of visibility improvements for The BART Guidelines clearly allow for Commenters argued that this language Coronado, EPA agrees that average the consideration of technical feasibility shows that Arizona’s exclusive focus on visibility index used by ADEQ could be and cost-effectiveness on a unit-by-unit improvements at a single Class I area is acceptable in itself as part of assessing basis where appropriate, but those allowed under the BART Guidelines. multiple area impacts and considerations fall under different However, this language is not intended improvements; indeed it is a variant of factors than the assessment of the degree as an invitation for states to ignore the cumulative improvement approach. of visibility improvement, and do not significant visibility improvements at However, without any consideration of remove the obligation to consider multiple Class I areas. Rather, it is particular area improvements, the visibility improvement from BART intended to provide a way of averaging process causes especially applied to the facility as a whole. In streamlining a complex and difficult large benefits at some individual areas sum, while the State has some flexibility modeling exercise where ‘‘an analysis to be diluted or lost, effectively in choosing a specific procedure to may add a significant resource burden discounting some of the more important consider these cumulative area and to a State.’’ 25 For example, when the effects of the controls. In addition, the multiple unit benefits, when such visibility benefits at the most impacted approach is counter to ADEQ’s benefits are significant, it is not Class I area alone are sufficient to justify emphasis elsewhere in the SIP on the reasonable to ignore them altogether as the selection of the most stringent importance of considering the visibility ADEQ did. control technology as BART, then improvement at the single area having Comment: One commenter (NPS) analysis of additional areas would be the largest impact from a given facility. agrees with EPA that the ammonia unnecessary and the state could Finally, ADEQ provided no discussion background concentration assumed by conserve resources by not modeling the of how the results of the visibility index ADEQ for Cholla and Coronado may be impacts on those additional areas. Here, were weighed against the other BART too low, ranging from 1 part per billion by contrast, ADEQ did not perform its factors. (ppb) down to 0.2 ppb. According to the In addition, ADEQ considered own modeling at all, but instead relied commenter, EPA guidance recommends visibility improvements from controls on modeling performed by contractors the use of a 1 ppb ammonia background on only a single emitting unit at a time, for the facilities. This modeling for areas in the west, absent compelling despite the fact that each of the three indicated that the installation of more evidence to the contrary. sources has multiple BART-eligible stringent controls (i.e., SNCR or SCR) Other commenters (APS and AUG) units. This neglects the full would result in visibility benefits at state that the Interagency Workgroup on improvement that would result from multiple Class I areas, yet ADEQ chose Air Quality Modeling (IWAQM) controls on the facility, with the to consider the benefits only at the most recommended value of 1ppb is outdated potential for dismissing emitting unit and should not be used now that better impacted area. Where, as here, the benefits that are individually small, but benefits of controls have been modeled data have been gathered and since the that collectively could have a significant CALPUFF model was updated to allow for a number of surrounding areas and visibility benefit. The RHR requires RH consideration of these benefits is useful for monthly, rather than yearly, average SIPs to include a ‘‘determination of ammonia concentrations. APS also 22 77 FR 42841. noted that EPA Region 9 has explicitly 26 See, e.g., 76 FR 52388, 52430 (San Juan 23 Id. Generating Station); 77 FR 51620, 51631–51632 27 24 BART Guidelines, 40 CFR Part 51, Appendix Y, (Four Corners Power Plant); and 77 FR 51915, 40 CFR 51.308(e)(1)(ii). section IV.D.5. 51922–51923 (Roseton and Danskammer Generating 28 40 CFR Part 51, Appendix Y, section II.A.4. 25 See 70 FR 39126. Stations). 29 Id. section IV.D.5.
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approved the use of the same monthly- recommended by the commenter.32 APS, the amount of measured varying background ammonia Since this method accounts only for ammonium is comparable to and at concentrations, which were based on ammonium, and not remaining free times much greater than the amount of actual field measurements, in running gaseous ammonia, the total ammonia ammonia. the CALPUFF model for two other sites originally available to form visibility- New ammonia monitoring data were located close to Cholla and that were impairing compounds may actually be collected by SRP at several sites used by ADEQ in its analysis. These higher. Because of uncertainty in the between NGS and the two nearest Class values range from 1 ppb during the ‘‘back-calculation’’ method, and I areas, Capitol Reef National Park and summertime to 0.2 ppb during cold criticism of it, EPA relied on it in the Grand Canyon National Park, from winter months. EPA has also stated in FCPP FIP only as corroboration for the December 2009 through April 2010. The response to comments on the Montana IWAQM default of 1 ppb.33 monitoring report,35 cited by regional haze FIP (77 FR 57864, Nevertheless, it supports the idea that commenter APS, describes a September 18, 2012) that ‘‘it is winter ammonia levels in the Class I surprisingly high spatial variability in preferable to use ambient ammonia areas affected by emissions from sources ammonia concentrations. The two measurements when such data are in Arizona are likely substantially monitors in the Cameron area south of available rather than using default higher than 0.2 ppb. NGS (and east-southeast of the Grand background ammonia concentrations.’’ EPA agrees with commenters that it Canyon) showed consistent Another commenter (Navajo Nation) would be preferable to use actual concentration differences despite being agrees that EPA should use actual, monitoring data to determine less than five miles from each other; this recorded data wherever possible, background ammonia concentrations. may be due to relatively localized However, much of the existing data especially ammonia background values. ammonia sources. These sites also cited by the commenters is from other AUG concludes that EPA has no basis showed consistently lower states, and so is unlikely to be for rejecting the use of refined measurements than the Halls Crossing representative for evaluating visibility background ammonia concentration site, north of NGS (and southwest of impacts at Arizona’s Class I areas. values in disapproving the SIP. Capitol Reef). The range in Further, the data comprises only 30 concentrations was comparable to the Response: The IWAQM Guidance is ammonia itself, and not ammonium; or range seen between the AECOM values the only guidance available for choosing if it does include ammonium, that is not at the low end, and EPA’s back- ammonia background concentrations. cited by the commenters. Visibility- calculated values at the high end. Because of the paucity of monitoring impairing ammonium sulfate and Unfortunately, because of the variability data and the uncertainty in other ammonium nitrate are formed from and its unknown causes, the data ammonia estimation methods, EPA ammonia, SO2, and NOX. Therefore the collected did not lead to a clear picture concludes that it is appropriate to use ammonium represents part of the pool of appropriate and representative the default 1 ppb from the IWAQM of ammonia that could be available to ammonia background concentrations to Guidance. interact with the SO2 and NOX from a use with CALPUFF. As stated by the commenter, EPA did facility and contribute to visibility In any case, as mentioned above, originally accept monthly varying impacts, and should be accounted for in some nearby monitored data reported in ammonia values of 0.2 to 1.0 ppb for estimating ammonia background Sather’s paper show considerably higher BART analyses performed by AECOM concentrations. In several of the ammonia than recommended by some 34 for APS for the Four Corners Power research papers cited by commenter commenters, so it is not clear that Plant (FCPP), and by SRP for the Navajo values lower than 1 ppb should be used. 32 See, e.g., Proposed Rule: Source Specific Generating Station (NGS). However, Federal Implementation Plan for Implementing Best EPA concludes that there is not a shortly after that, the USDA Forest Available Retrofit Technology for Four Corners compelling case for using ammonia Service brought to EPA’s attention Power Plant: Navajo Nation Technical Support background concentrations other than ammonia monitored in the Four Corners Document, pages 59–61, 65–66, 68–73. the 1 ppb found in the only area showing concentrations up to 3 33 Id. at page 68. authoritative guidance document 34 31 RoMANS—Rocky Mountain Atmospheric ppb, described in a journal paper by Nitrogen & Sulfur Study, William C. Malm and available on this topic and supported by Mark Sather and others. EPA and the Jeffrey L. Collett. National Park Service, CSU–CIRA, the FLMs. Forest Service also estimated ammonia Fort Collins, CO. ISSN 0737–5352–84. October Comment: Two commenters (APS and concentrations by ‘‘back calculating’’ 2009. http://www.nature.nps.gov/air/Studies/ AUG) noted that the RHR and BART romans.cfm. Table 3.9 on p.3–38 shows ammonium the amount of ammonia needed to form comparable to or about half of ammonia, depending Guidelines are silent regarding whether the ammonium nitrate and ammonium on measurement method. It also shows that the visibility improvements should be sulfate collected at Arizona and New spring time mean and maximum ammonium are modeled on a unit-by-unit basis or a Mexico sites in the IMPROVE about 0.22 and 0.57 mg/m3, respectively, or 0.38 and plant-wide basis, and there is no legal 0.78 ppb; and the mean and maximum ammonia are monitoring network. This yielded about 0.38 and 1.0 mg/m3 or 0.51 and 1.4 ppb. The requirement that units be modeled concentrations ranging from 0.4 to 1.3 sum of these means and maxima is 0.81 and 2.2 aggregately. Given that visibility ppb, with winter values considerably ppb, respectively. Figure 4.26 on p.4–26 shows benefits are approximately additive, the higher than the AECOM 0.2 ppb daily sums of ammonium and ammonia, with commenters contend that it is values of 2.5–5 mg/m3 or 3.6–7.2 ppb occurring frequently. These are substantially higher than unreasonable for EPA to conclude that 30 Interagency Workgroup On Air Quality values cited by the commenters. ‘‘NH3 Monitoring Modeling (IWAQM) Phase 2 Summary Report And in the Upper Green River Basin, Wyoming’’, by John Kreidenweis & Jeffrey L. Collett Jr. Journal of the Air Recommendations For Modeling Long Range V. Molenar, H. James Newell, Jeffrey Collett, et al. & Waste Management Assoc. vol.54, issue 5, 2004, Transport Impacts (EPA–454/R–98–019), EPA Extended Abstract #70, A&WMA Specialty pages 585–592. DOI:10.1080/ OAQPS, December 1998, http://www.epa.gov/ Conference ‘‘Aerosol & Atmospheric Optics: Visual 10473289.2004.10470927, Table 1 p. 587 shows scram001/7thconf/calpuff/phase2.pdf. Air Quality and Radiation’’, Moab, Utah, 28 April— ammonium about four times as high as ammonia. 31 Mark E. Sather et al., ‘‘Baseline ambient 2 May 2008, p.3 Figure 1 and p.4 Figure 3 show 35 ‘‘Measurements of Ambient Background gaseous ammonia concentrations in the Four ammonium comparable to ammonia in summer and Ammonia on the Colorado Plateau and Visibility Corners area and eastern Oklahoma, USA’’. Journal far greater in winter. ‘‘Aerosol Ion Characteristics Modeling Implications’’, Salt River Project, Dr. Ivar of Environmental Monitoring, 2008, 10, 1319–1325, During the Big Bend Regional Aerosol and Visibility Tombach, Consultant, and Robert Paine, AECOM DOI: 10.1039/b807984f. Observational Study,’’ Taehyoung Lee, Sonia M. Environment, September 2010.
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ADEQ’s BART analyses failed to 3 does not comply with the RHR’s these units.37 Therefore, we proposed to consider any significant visibility effect requirements. As discussed further approve ADEQ’s determination that merely because ADEQ modeled the below, we performed a supplemental BART for PM10 at Apache Units 2 and units separately. In addition, AUG notes analysis using the version of AEPCO’s 3 is upgrades to the existing ESPs and that it is necessary to determine the cost estimate that adheres to our a PM10 emissions limit of 0.03 lb/ effects of emissions from units assumptions regarding costs that are MMBtu. individually so that projected visibility allowed by the CCM (i.e., capital costs One commenter asserted that this impacts can be considered in light of for the installation of SCR with LNB and limit is too lenient, since other coal- costs and other impacts associated with OFA of $164.9 million), and we also fired units are achieving lower limits, BART-candidate controls for that considered the fact that AEPCO is a based on test data submitted by various particular unit, and modeling units small entity under the Regulatory utilities to EPA as part of an Information together could obscure these Flexibility Act.36 Collection Request (ICR) for the Mercury comparisons. and Air Toxics (MATS) Rule.38 EPA Response: Considering the visibility b. ADEQ’s BART Analysis and disagrees with this comment. The benefits of multiple units together does Determination for PM10 MATS Rule establishes an emission not preclude a state from also Comment: One commenter (NPS) standard of 0.030 lb/MMBtu filterable considering individual unit benefits, as agreed with ADEQ and EPA that BART PM (as a surrogate for toxic non- well as individual unit costs. EPA does for PM10 at Apache Units 2 and 3 is mercury metals) as representing not agree that modeling the units upgrades to the existing electrostatic Maximum Achievable Control together obscures these other precipitators (ESPs) and a PM10 Technology (MACT) for coal-fired comparisons. Rather, the benefit of emissions limit of 0.03 lb/MMBtu. The EGUs.39 This standard derives from the controls for an entire BART-eligible commenter noted that ADEQ stated that average emission limitation achieved by source is a factor that should be PM10 emissions would be measured by the best performing 12 percent of considered along with those other conducting EPA Method 201/202 tests. existing coal-fired EGUs (taking into comparisons. In any case, whether In contrast, a second commenter account the variability in the testing considered unit by unit or all units (Earthjustice) disagreed with EPA’s results for these facilities), based upon together, visibility improvement has no proposal to approve ADEQ’s PM10 to the same test data referred to by the effect on the assessment of cost- BART determination for Apache Units 2 commenter.40 The BART Guidelines effectiveness as measured by dollars per and 3. The commenter contended that provide that, ‘‘unless there are new ton of reductions. EPA proposed to approve the BART technologies subsequent to the MACT determination despite acknowledging standards which would lead to cost- B. Comments on ADEQ’s Individual that ADEQ did not conduct a full BART effective increases in the level of BART Analyses and Determinations analysis for PM10 because it control, you may rely on the MACT 1. ADEQ’s BART Analyses and overestimated costs and failed to standards for purposes of BART.’’ 41 Determinations for Apache Unit 1 consider upgrades to the existing ESPs. Therefore, we are approving ADEQ’s determination that a PM limit of 0.03 Comment: One commenter (NPS) However, the commenter believes that 10 lower emission rates are achievable and, lb/MMBtu represents BART for these concurred with ADEQ’s and EPA’s units. proposals for BART at Apache Unit 1. as a result, that EPA should disapprove Response: We acknowledge NPS’s ADEQ’s BART determination, conduct a c. ADEQ’s BART Analysis and full five-factor BART analysis and set a concurrence. Determination for SO2 lower emission limit as BART for PM10. 2. ADEQ’s BART Analyses and According to the commenter, the Sahu Comment: One commenter Determinations for Apache Units 2 and report demonstrates that nearly 150 (Earthjustice) disagreed with EPA’s 3 EGUs across the nation with a variety of proposal to approve ADEQ’s SO2 BART PM controls achieve emission rates determination at Apache Units 2 and 3. a. ADEQ’s BART Analysis and The commenter states the approval is Determination for NOX lower than 0.03 lb/MMBtu. The commenter asserted that neither ADEQ contrary to the RHR because ADEQ’s Comment: One commenter nor EPA provided any explanation why BART determination is not supported (Earthjustice) commended EPA’s Apache Units 2 and 3 could not by a valid five-factor analysis. The commenter states that EPA cannot decision to disapprove ADEQ’s NOX similarly meet a lower emission limit. BART determination for Apache Units 2 Response: As we noted in our speculate that it would reach the same and 3. The commenter stated that EPA proposal, ADEQ’s BART analysis did conclusion as ADEQ, and it must correctly concluded that ADEQ’s BART not demonstrate that all potential undertake an independent full five- determination for NOX inflated the costs upgrades to the existing ESPs at Apache 37 of more-stringent NOX controls by Units 2 and 3 were fully evaluated or 77 FR 42847. 38 Information Collection Request For National including costs not allowed by EPA Cost that the costs were calculated in Control Manual, provided little Emission Standards For Hazardous Air Pollutants compliance with the Control Cost (NESHAP) for Coal- And Oil-Fired Electric Utility reasoning about the visibility benefits of Manual. However, we concluded that Steam Generating Units (OMB Control No. additional NOX controls, and did not this was a harmless error because of the 2060-0631). See http://www.epa.gov/ttn/atw/utility/ utilitypg.html for detailed information obtained weigh the visibility impacts at all relatively small visibility improvement nearby Class I areas. The commenter through this ICR. associated with PM10 reductions from 39 77 FR 9304, 9450, 9458 (February 16, 2012) asserted that because ADEQ’s BART (codified at 40 CFR 60.42Da(a), 60.50Da(b)(1)). analysis does not comply with the 36 As explained in our proposal, a firm primarily 40 See Memorandum from Jeffrey Cole (RTI RHR’s requirements, EPA must engaged in the generation, transmission, and/or International) to Bill Maxwell (EPA) regarding disapprove ADEQ’s BART distribution of electric energy for sale is small if, ‘‘National Emission Standards for Hazardous Air determinations for Apache Units 2 and including affiliates, the total electric output for the Pollutants (NESHAP) Maximum Achievable Control preceding fiscal year did not exceed 4 million Technology (MACT) Floor Analysis for Coal- and 3. megawatt hours. 77 FR 42867. AEPCO sold under Oil-fired Electric Utility Steam Generating Units for Response: We agree that ADEQ’s 3 million megawatt hours in 2011 and is therefore Final Rule’’ (Dec. 16, 2011). BART analysis for Apache Units 2 and a small entity. 41 40 CFR Part 51, Appendix Y, Section IV.C.
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factor BART analysis. The commenter requirement would not be appropriate pollution control practices for argues that an SO2 limit of 0.04 lb/ for these units. minimizing emissions’’ at all times. We MMBtu is achievable and cost-effective While new wet scrubbers are capable expect that this requirement will help to for Apache Units 2 and 3 according to of achieving 95 percent or better ensure that the scrubbers on Apache 42 the Sahu report. The commenter further removal of SO2, the Apache scrubbers Units 2 and 3 are properly maintained asserts that, based on this report, were manufactured in the 1970s and and operated under all conditions. scrubber upgrades can achieve SO2 designed to meet a limit of 0.8 lb/ removal efficiencies of 98 percent and MMBtu (i.e., a control efficiency of up 3. ADEQ’s BART Analyses and should have been investigated. to 70 percent).43 For such existing Determinations for Cholla Units 2, 3 and Another commenter (NPS) noted that scrubbers achieving greater than 50 4 that AEPCO’s BART reports indicate percent control, the BART Guidelines Comment: One commenter (APS) that uncontrolled SO2 emissions are (which are not mandatory for these remarked that EPA stated that APS’s 0.69 lb/MMBtu, and that the ADEQ units) do not provide a presumptive contractor did not provide supporting BART proposal would reduce SO2 limit or removal efficiency, but information for its capital cost estimate, emissions by 78 percent down to 0.15 recommend consideration of cost- such as detailed equipment lists. The lb/MMBtu. Based on the SO2 control effective scrubber upgrades designed to commenter argues that detailed data submitted by the commenter, the improve the system’s overall SO2 equipment lists are typically not commenter asserted that other BART removal efficiency.44 In August 2009, necessary for the level of accuracy upgrades are achieving higher removal AEPCO provided information to ADEQ needed for the process selection phase efficiencies and/or lower SO2 limits. concerning potential scrubber upgrades of a project and noted that its contractor 45 The commenter believes that the at Apache Units 2 and 3. AEPCO used vendor quotes for the major pieces existing scrubbers can be upgraded to noted that it was in the process of of equipment and factors for achieve better removal efficiency and upgrading its limestone grinding system construction, balance of plant, lower emission rates than the 78 percent and described other potential upgrades, electrical, owner’s costs, surcharges, and 0.15 lb/MMBtu proposed by EPA. such as improving operation of the AFUDC and contingency. The commenter cited various examples scrubber bypass damper system, Response: We do not agree with this of upgraded scrubbers achieving limits upgrading the mist eliminator wash comment. The BART Guidelines of less than 0.15 lb/MMBtu or removal system, adding another sieve tray, and provide that: rates of greater than 90 percent. modifying the flue gas inlet. The By contrast, ADEQ and AEPCO enclosed ‘‘Wet FGD Implementation You should include documentation for any expressed opposition to both a lower Plan’’ indicated that AEPCO intended to additional information you used for the cost limit and a removal efficiency proceed with upgrading the limestone calculations, including any information supplied by vendors that affects your requirement. ADEQ asserted that ‘‘the grinding system, improving operation of limits included in the state SIP assumptions regarding purchased equipment the scrubber bypass damper system, and costs, equipment life, replacement of major submittal are acceptable as BART’’ and upgrading the mist eliminator wash components, and any other element of the ‘‘imposing dual-limitations will be system, but that ‘‘[t]he remaining wet calculation that differs from the [CCM].47 unnecessary and burdensome for the FGD options were not selected on the facility.’’ AEPCO commented that ADEQ basis of low probability of successfully Thus, detailed cost documentation is necessary to the extent that cost permit conditions, which require SO2 making a significant difference in absorption systems to be operated and scrubber performance and/or high assumptions differ from the CCM. In this case, several of ADEQ’s and APS’s maintained at all times in a manner cost.’’ 46 consistent with good air pollution Based on this information, we cost assumptions for control costs at control practices for minimizing conclude that no further cost-effective Cholla differed from the CCM, but no emissions, is sufficient, and an scrubber upgrades are likely to be such documentation was provided as additional control efficiency limit is not feasible for this facility and we are part of the Arizona Regional Haze SIP. necessary. An efficiency limit would therefore deferring to ADEQ’s a. BART Analysis and Determination for also require modification to the determination that 0.15 lb/MMBtu NOX monitors to include the capability to represents BART for these units. Given measure scrubber inlet SO2 in addition the age of these scrubbers, we find that Comment: One commenter to stack emissions, which would require an additional removal efficiency (Earthjustice) commended EPA’s additional capital and O&M requirement would be unnecessarily decision to disapprove ADEQ’s NOX expenditures. burdensome. This approach is BART determination for Cholla Units 2, Response: We proposed to approve consistent with our consideration of 3 and 4. The commenter stated that EPA ADEQ’s determination that BART for AEPCO’s status as a small entity in our correctly concluded that ADEQ’s BART SO2 at Apache Units 2 and 3 is upgrades FIP determination. We note that our determination for NOX inflated the costs to the existing scrubbers with an final FIP includes a requirement to of more-stringent NOX controls by associated emission limit of 0.15 lb/ maintain and operate air pollution including costs not allowed by the MMBtu (30-day rolling average). control equipment at all units in ‘‘a Manual, and substantially However, we also solicited comment on manner consistent with good air underestimated the visibility benefits of whether an efficiency requirement additional NOX controls. The should be part of the BART 42 See BART Guidelines, 40 CFR Part 51, commenter asserted that because requirement, since Apache has the Appendix Y, section IV.E.4. ADEQ’s BART analysis does not comply ability to use coal from various sources 43 See Apache Title V Permit Technical Support with the RHR’s requirements, EPA must that have varying sulfur content. After Document (2007), Table 9; Title V Permit (2007), disapprove ADEQ’s BART reviewing the comments received on Attachment B, section II.E.1.a. determinations for Cholla Units 2, 3 and 44 See BART Guidelines, 40 CFR Part 51, our proposal, we have concluded that Appendix Y, section IV.E.4. 4. the emission limit set by ADEQ 45 Letter from Michelle Freeark, AEPCO, to Trevor appropriately reflects BART for SO2 at Baggiore, ADEQ (July 8, 2009). 47 40 CFR Part 51, Appendix Y, section IV.4.a., these units and that a removal efficiency 46 Id. note 15.
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Response: As explained in our 0.015 lb/MMBtu represents what can be analysis required by the RHR, although proposal and elsewhere in this continuously achieved with a properly EPA identified nothing in the docket to document, we agree that ADEQ’s BART operated baghouse on these units. The support its claim that a full BART analyses and determinations for NOX at fabric filters (i.e., baghouses) at Cholla analysis would have yielded the same Cholla Units 2, 3 and 4 do not comply will all be new since they are scheduled result. The commenter states that EPA with the requirements of the CAA and to be installed between 2008 and 2016. cannot speculate that it would reach the RHR. We are therefore disapproving Recent PSD BACT limits for coal-fired same conclusion as ADEQ, and it must these determinations. EGUs with new baghouses have undertake an independent full five- typically ranged from 0.01 to 0.015 lb/ b. BART Analysis and Determination for factor BART analysis. MMBtu using Method 5. The commenter further stated that PM10 As to the commenter’s position that ADEQ’s SO2 BART analysis for Cholla Comment: One commenter (NPS) bag material selection would influence Units 2, 3 and 4 is also flawed because agreed with EPA’s proposal to approve the level of PM that could be achieved, ADEQ failed to analyze controls and ADEQ’s BART determination for Cholla EPA notes that there are a number of upgrades that would result in emission Units 2, 3 and 4 of an emission limit of factors that influence a utility’s rates lower than the BART Guidelines’ 0.015 lb/MMBtu for PM10 based on the selection of proper bag material such as presumptive BART limits. According to use of fabric filters, the most stringent bag life, compatibility with exhaust gas the commenter, EPA has recognized control technology available. In stream and control of other pollutants multiple times that the presumptive contrast, a second commenter such as mercury (Hg) or sulfuric acid BART limits are merely the starting (Earthjustice) disagreed with EPA’s mist (H2SO4). In addition, it should be point for the BART determination, not proposal to approve ADEQ’s PM BART noted that the latest revision to the EGU the ending point. Moreover, the determination for Cholla Units 2, 3 and NSPS requires modified units to meet a commenter asserted that the 4. The commenter contended that EPA 48 PM limit of 0.015 lb/MMBtu. Also, as presumptive limits are often outdated proposed to approve the BART noted above, the recent EGU MATS rule with the result that appropriate determination despite acknowledging sets a PM emissions standard of 0.03 lb/ consideration of the five statutory BART that ADEQ did not conduct a full BART MMBtu, and the BART Guidelines factors can result in far lower emission analysis for PM because fabric filters are provide that, ‘‘unless there are new rates than presumptive BART. The the most stringent PM control technologies subsequent to the MACT commenter cited statements by EPA technology available and ADEQ’s 0.015 standards which would lead to cost- Region 6 (76 FR 64186, 64203, October lb/MMBtu emission limit is effective increases in the level of ‘‘consistent’’ with other EGUs 17, 2011, regarding proposed actions on control, you may rely on the MACT Arkansas’ RH SIP) and EPA Region 9 (77 employing fabric filters (citing 77 FR standards for purposes of BART.’’ 49 42849). However, the commenter FR 51633 regarding the final RH FIP for Therefore, we are finalizing our the Four Corners Power Plant). believes that lower emission rates are proposed approval of ADEQ’s BART achievable with fabric filters and, as a Earthjustice also presented determination for PM10 at Cholla Units documentation that the commenter result, that EPA should disapprove 2, 3 and 4. ADEQ’s BART determination, conduct a believes to show that lower SO2 full five-factor BART analysis and set a c. ADEQ’s BART Analysis and emission limits are achievable and cost- lower emission limit as BART for PM10. Determination for SO2 effective at Cholla Units 2, 3 and 4. According to the commenter, the BART Comment: Citing various examples of According to the commenter, a report Guidelines’ exemption from a full five- submitted with the comments (the lower SO2 limits at other coal-fired 50 factor analysis for the most stringent units, one commenter argued that the ‘‘Stamper report’’) shows that a control technology is not applicable in existing scrubbers at Cholla can be proper BART determination for Cholla
this case because improvements to the upgraded to achieve lower emission would have found that 98 percent SO2 fabric filters are possible and a lower rates than the 0.15 lb/MMBtu proposed control efficiency achieving a 0.04 lb/ MMBtu emission limit is BART for the emission rate is thus achievable. by EPA. Based on the SO2 control data The latter commenter (Earthjustice) submitted by the commenter, the units, and that even with the less- stated that had EPA conducted the PM10 commenter asserted that other BART stringent 95 percent SO2 control BART analysis required by the RHR, it upgrades are achieving higher removal efficiency that is the basis of ADEQ’s would show that an emission rate lower BART determinations, ADEQ should efficiencies and/or lower SO2 limits. than 0.015 lb/MMBtu is BART for Another commenter (Earthjustice) have required an SO2 emission limit of Cholla. According to the commenter, an disagreed with EPA’s proposal to 0.10 lb/MMBtu because 0.15 lb/MMBtu limit does not reflect 95 percent SO2 expert report accompanying the approve ADEQ’s SO2 BART commenter’s submission (the ‘‘Sahu determination for Cholla Units 2, 3 and removal. report’’) demonstrates that upgrades to 4. The commenter states the approval is Another commenter (APS) noted that the fabric filters can achieve a lower contrary to the RHR because ADEQ’s the SO2 content of the coal source for emission limit and, moreover, that BART determination is not supported the Cholla plant is up to 3.0 lbs/MMBtu, nearly 100 EGUs across the nation with by a valid five-factor analysis, which the and the maximum rate of removal that a variety of PM controls achieve commenter believes had flaws in its cost will be continuously achievable after emission rates lower than 0.015 lb/ and visibility improvement analyses. the plant upgrades its scrubbers is 95 MMBtu. The commenter asserted that The commenter alleged that EPA percent. Therefore, the commenter neither ADEQ nor EPA provided any proposed to approve the SO2 BART asserts that 0.15 lb/MMBtu is the explanation why Cholla Units 2, 3 and determinations based on unsupported 4 could not similarly meet a lower speculation that the outcome would be 50 Attachment 1 to Earthjustice Comments, emission limit. the same if EPA performed the BART Technical Support Document to Comments of Response: We are finalizing our Conservation Organizations, Proposed Arizona Regional Haze Partial SIP Approval and Partial FIP approval of ADEQ’s PM10 BART 48 77 FR 9450 (February 16, 2012) (codified at 40 SO2 and NOX BART Determinations for Cholla determination at Cholla Units 2, 3 and CFR 60.42Da). Units 2, 3 and 4 (September 17, 2012), prepared by 4. We find that an emission limit of 49 40 CFR Part 51, Appendix Y, Section IV.C. Victoria Stamper.
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maximum achievable SO2 emissions As noted by APS, this limit would costs of compliance for the various limit. require a removal efficiency of 95 control options. Response: A number of commenters percent when these units are burning Similarly, another commenter indicated that lower emission levels are this ‘‘worst-case’’ (highest-sulfur) coal (Earthjustice) supported EPA’s being achieved at other sources with (i.e., 3.0 lb/MMBtu). Therefore, we are disapproval of ADEQ’s NOX BART wet FGDs and western coal. However, finalizing our approval of ADEQ’s BART determination for Coronado Units 1 and none of these examples are based on limit of 0.15 lb/MMBtu of SO2 for these 2. For the reasons discussed by the coal with as high a potential SO2 level units. commenter above for Cholla Units 2, 3 as the coal that is currently burned at However, we remain concerned that and 4, the commenter agreed with what Cholla. APS historically burned coal this worst case coal is not representative the commenter said was EPA’s from the McKinley mine located on the of the typical coal that APS will receive conclusion that all of ADEQ’s BART Navajo Reservation at the Cholla units. from the El Segundo and Lee Ranch determinations are fatally flawed in Following the closure of this mine, APS mines. APS’s current contract for this numerous respects (e.g., inflated costs obtained coal from various sources until coal indicates that the minimum sulfur and underestimated visibility benefits). the company signed a long-term content is equivalent to 1.88 lb/MMBtu Specific to Coronado, the commenter contract for coal from the El Segundo of SO2 for the El Segundo coal and 1.64 agreed that ADEQ failed to provide and Lee Ranch mines in New Mexico.51 lb/MMBtu of SO2 for the Lee Ranch detailed and verifiable cost information The sulfur content of coal from these Coal.57 When burning this lower-sulfur and to properly consider the costs of two mines is substantially higher than coal, the units would only need to compliance for each control option in Powder River Basin (PRB) coal and also achieve 90 to 92 percent control in order its BART analysis (citing 77 FR 42851). much higher than coal from the former to meet the BART limit of 0.15 lb/ In addition, the commenter indicated source, the McKinley mine.52 The MMBtu of SO2. While APS has stated that ADEQ failed to properly evaluate current coal contract for these units that the scrubbers on Cholla Units 2, 3 the visibility benefits of more-stringent indicates that the typical sulfur content and 4 will be able to continuously NOX controls at Coronado, used a novel of this coal is equivalent to 2.4 lb/ achieve a removal efficiency of 95 and unapproved metric to measure percent, the Arizona Regional Haze SIP visibility benefits, failed to consider MMBtu SO2 and can be as high as 3.0 lb/MMBtu.53 Given that the transition to does not include a requirement or cumulative visibility benefits across all this coal has already occurred and that procedures to ensure that the scrubbers affected Class I areas, and used incorrect company has entered into a contract to are operated and maintained to achieve background ammonia concentrations in continue purchasing this coal until this level of control. Therefore, in order its modeling. The commenter added that 2024, we consider emissions based on to ensure that these scrubbers are ADEQ also failed to explain how it this coal supply to ‘‘represent a realistic properly operated and maintained, evaluated the five statutory BART depiction of anticipated annual consistent with 40 CFR 51.308(e)(1)(v), factors and selected BART based on the emissions for the source.’’ 54 The RHR we are finalizing a removal efficiency factors. The commenter asserted that and the BART Guidelines do not require requirement for SO2 of 95 percent on a because ADEQ’s BART analysis does states to restrict or alter a facility’s 30-day rolling basis for Cholla Units 2, not comply with the RHR’s selection of the coal supply in order to 3 and 4. This requirement is explained requirements, EPA properly meet a specific limit. further under ‘‘Comments on disapproved ADEQ’s NOX BART APS’s comments on the proposal Enforceability Requirements in EPA’s determinations for Coronado. indicate that the company intends to BART FIP.’’ Response: We agree that ADEQ’s BART analysis for NOX at Coronado upgrade the existing SO2 controls at 4. ADEQ’s BART Analyses and Units 1 and 2 did not comply with the Unit 2 to a new wet flue gas Determinations for Coronado Units 1 desulfurization (FGD) system, identical requirements of the CAA and RHR. and 2 Comment: One commenter (SRP) to those already installed on Units 3 and a. ADEQ’s BART Analysis and stated that EPA must accept ADEQ’s 4.55 APS further explained that: Determination for NOX BART determination for NOX because it The coal source for [Cholla] is El Segundo Comment: One commenter (NPS) was a complete and thorough five-factor and Lee Ranch coal with an SO content of 2 agreed with EPA that ADEQ’s BART analysis conducted in accordance with up to 3.0 lbs/mmBtu.The maximum rate of the BART Guidelines and resulted in a removal that will be continuously achievable selection of LNB with OFA for after the scrubber upgrades * * * are Coronado is not adequately supported reasonable and appropriate performed is 95 percent. If compliance is for the following reasons: determination of NOX BART for determined on a 30-day rolling average basis, • ADEQ did not consider the typical Coronado. the maximum SO2 emission limit achievable visibility metrics of benefit at the area Response: We do not agree with this at Cholla on a continuous basis is, therefore, with maximum impact, nor benefits comment. As explained in the NPRM 0.15 lb/mmBtu. 56 summed over the areas. and elsewhere in this document, Given this information, EPA finds that • Using the default 1 ppb ammonia ADEQ’s BART determinations for NOX the ADEQ BART limit of 0.15 lb/MMBtu background concentration would have did not comply with the requirements of the RHR or the BART Guidelines. represents BART for SO2 at these units. increased estimated impacts and control benefits. Therefore, we are finalizing our 51 See ‘‘Additional APS Cholla BART response’’, • There is no weighing of the disapproval of these NOX BART Appendix B. visibility benefits and visibility cost- determinations, including the 52 See, e.g., ‘‘APS Cholla Unit 2 BART report’’, effectiveness for the various candidate determinations at Coronado Units 1 and Table 2–2. controls and the various Class I areas. 2. 53 See ‘‘Additional APS Cholla BART response’’, • ADEQ does not indicate whether it Appendix B, Section 6.2. b. ADEQ’s BART Analysis and 54 considered any cost thresholds to be BART Guidelines, 40 CFR Part 51, Appendix Y, Determination for PM10 section IV.D.4.d. reasonable or expensive in analyzing the 55 ‘‘Comments of Arizona Public Service Comment: One commenter (NPS) Company’’, page 27. 57 See ‘‘Additional APS Cholla BART response’’, agreed with EPA’s proposal to approve 56 Id. page 63. Appendix B, Section 6.2. ADEQ’s PM10 BART determination for
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Coronado Units 1 and 2, noting that that than 0.03 lb/MMBtu. The commenter EPA’s request for comment on whether emissions of PM10 from Coronado Units asserted that neither ADEQ nor EPA a lower emission limit may be 1 and 2 are currently controlled by hot- provided any explanation why achievable when the units are burning side ESPs and that, in terms of the Coronado Units 1 and 2 could not a lower-sulfur coal, the commenter consent decree, SRP is required to similarly meet a lower emission limit. responded that it is inappropriate for optimize its ESPs to achieve a PM10 Response: EPA acknowledges that EPA to establish a BART limit that emission rate of 0.030 lb/MMBtu. ADEQ did not perform a rigorous five- would be premised on any restriction of Another commenter (SRP) stated that factor BART analysis for PM10 at SRP’s fuel supply. According to the EPA’s approval of the Arizona BART Coronado. However, a full five-factor commenter, this type of restriction determination for PM is reasonable 10 analysis would be very unlikely to would increase unit operating costs and and appropriate, believing it to be result in a change of control technology reduce operational flexibility, and EPA consistent with the CAA and supported for PM Modeling of visibility impacts 10. provides no technical record to support by the technical record in this from direct PM emissions has shown 10 consideration of this emissions rulemaking. The commenter does not very small impairment for EGU PM10 believe any upgrades to the ESPs are emissions in comparison to visibility reduction option. warranted as part of the BART impairment resulting from SO2 and NOX Another commenter (Earthjustice) determination, as SRP has in place a emissions. The existing hotside ESPs at disagreed with EPA’s proposal to plan to optimize performance of the Coronado Units 1 and 2 control PM10 by approve ADEQ’s SO2 BART existing equipment. The commenter greater than 98 percent. In addition, SRP determination. The commenter states noted that as part of the consent decree is required under a Consent Decree to the approval is contrary to the RHR between SRP and EPA for Coronado, optimize the performance of these ESPs because ADEQ’s BART analyses are not SRP is required to operate the ESPs ‘‘at and to meet a PM limit of 0.030 lb/ supported by a valid five-factor analysis. all times when the Unit it serves is in MMBtu as measured by Method 5.58 The The commenter states that EPA cannot operation to maximize PM emission consent decree also requires Coronado speculate that it would reach the same reductions, provided that such to install and conduct performance conclusion as ADEQ, and it must operation of the ESP is consistent with specification testing of a particulate the technological limitations, undertake an independent full five- matter CEMS (PMCEMS). factor BART analysis, which the manufacturers’ specifications, and good Installing the best control, a baghouse, commenter believes would result in a engineering and maintenance practices would result in a cost exceeding SO2 BART limit of 0.04 lb/MMBtu based for the ESP,’’ and this requirement also $100,000/ton of additional PM removed. on a 30-day rolling average. Earthjustice is reflected in Coronado’s current Title From a cost and visibility improvement V operating permit. standpoint, it is not justifiable to require further asserted that, according to the The commenter also noted that the replacement of controls that can achieve Sahu report, WFGD can achieve SO2 PM10 limit in the recently promulgated a reasonably low emission level on a removal efficiencies of 98 percent and MATS Rule will be more stringent than continuous basis. As noted previously, the use of low-sulfur coals, which can the PM10 limit proposed as BART. The 0.030 lb/MMBtu is the limit for further reduce SO2 emissions, also commenter indicated that it makes filterable PM in the recently issued EGU should have been investigated. sense for BACT to be more stringent MATS rule. Therefore, we are finalizing Response: EPA does not agree that we than BART, and it likewise is our approval of ADEQ’s BART should disapprove the ADEQ BART appropriate for the MATS requirements determination for PM at these units. to impose more stringent compliance 10 determination and set an emission limit obligations on utilities than a BART c. ADEQ’s BART Analysis and as low as 0.04 lb/MMBtu for SO2. EPA determination since MATS is intended Determination for SO2 does acknowledge that while burning some coals, such as from PRB, these to protect the public health from Comment: One commenter (NPS) limits can be achieved at new units hazardous air pollutants, while BART is noted that the consent decree between (though only achieved continuously aimed at aesthetic concerns that EPA and SRP requires installation of Congress intended the states to address wet flue gas desulfurization (WFGD) over longer than 30-day averages), but very gradually. systems on both Coronado units to EPA does not find that this limit would In contrast, a third commenter be consistently achievable at Coronado. achieve a 30-day rolling average SO2 (Earthjustice) disagreed with EPA’s removal efficiency of at least 95 percent Coronado receives its coal supply by rail proposal to approve ADEQ’s PM10 or a 30-day rolling average SO2 line and has access to various sources of BART determination for Coronado Units emissions rate of no greater than 0.080 coal including PRB, Colorado and New 1 and 2. The commenter contended that lb/MMBtu. The commenter added that Mexico coals. As mentioned previously, EPA proposed to approve the BART EPA proposed to approve ADEQ’s BART the RHR and the BART Guidelines do determination despite acknowledging SO emission limit of 0.08 lb/MMBtu not require emission limits to be set at that ADEQ did not conduct a full BART 2 (30-day rolling average) for Coronado a level that would restrict the flexibility analysis for PM because EGUs with 10 Units 1 and 2, which the commenter of EGUs to use available coals with ESPs elsewhere have BART limits of indicated would be consistent with the varying sulfur content. 0.03 lb/MMBtu. However, the more stringent limits on WFGD commenter believes that lower emission The consent decree between EPA and upgrades that the commenter has seen. SRP described in our proposal requires rates are achievable and, as a result, that One commenter (SRP) stated that installation of wet flue gas EPA should disapprove ADEQ’s BART EPA’s approval of ADEQ’s BART determination, conduct a full five-factor desulfurization (WFGD) systems (i.e., determination for SO is reasonable and BART analysis and set a lower emission 2 appropriate, believing it to be supported new scrubbers) at both units at limit as BART for PM 10. According to by the technical record. In response to Coronado by January 1, 2013. These the commenter, the Sahu report scrubbers are required to achieve either demonstrates that nearly 150 EGUs 58 Consent Decree in United States v. Salt River 0.080 lb/MMBtu of SO2 or 95 percent across the nation with a variety of PM Project, CV 08–1479–PHX–JAT (entered Dec. 19, reduction of SO2 across the FGD, both controls achieve emission rates lower 2008).
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over a rolling 30-day basis.59 ADEQ has emissions based upon actual emissions from anticipated future emissions, we selected 0.08 lb/MMBtu as the BART a baseline period.62 updated the baseline period for each emission limit for these units. We find This provision is consistent with the unit to ensure that it reflected these that this is an appropriate limit for these statutory requirement that each BART changes.67 units and are finalizing our approval of determination take into consideration With respect to Coronado Unit 2, we this determination. ‘‘any existing pollution control also took into account the federally- We also note that the recently technology in use at the source.’’ 63 enforceable emissions limits set by a promulgated EGU MATS rule, which While the Guidelines do not specify Consent Decree between the United uses an SO2 limit as an acceptable particular dates for this ‘‘baseline States and SRP, which was entered in surrogate for limiting the emissions of period’’ for BART analyses, in order to 2008.68 Again, this is consistent with hazardous acid gases, has set the limit ‘‘represent a realistic depiction of the BART Guidelines, which provide at 0.20 lb/MMBtu of SO2 for existing anticipated annual emissions for the that: 60 EGUs like Coronado Units 1 and 2. source’’ the baseline can account for When you project that future operating controls already installed on the source, C. General Comments on EPA’s BART parameters (e.g., limited hours of operation or, where appropriate, controls which or capacity utilization, type of fuel, raw FIP Analyses and Determinations are required to be installed in the near materials or product mix or type) will differ 1. Selection of Baseline Period future. from past practice, and if this projection has a deciding effect in the BART determination, Comment: Several commenters In many instances, the 2000–2004 time frame was used as a baseline then you must make these parameters or expressed disagreement with our assumptions into enforceable limitations. In general approach to the selection of period for BART determinations because this time frame reflected the absence of enforceable limitations, you baseline periods. One commenter (NPS) calculate baseline emissions based upon stated a general preference for the use of existing controls in use at BART sources continuation of past practice.69 a baseline period that represents pre- at the time BART analyses were performed, following the issuance of the Consistent with this provision, for control emissions, as advised in the Coronado we used the consent decree- BART Guidelines, to estimate baseline final BART Guidelines in 2005. In Arizona’s case, the initial BART mandated NOX emission limit of 0.08 emissions for the purpose of calculating lb/MMBtu in order to ensure that the the average cost-effectiveness of the analyses were performed in 2007, using baseline periods that varied by source: baseline emissions rate would represent complete control system (e.g., a realistic depiction of anticipated combustion controls plus SCR). The 2002–2007 for Apache; 2001–2003 for Cholla; and 2001–2003 for Coronado.64 annual emissions for Unit 2. commenter believes that this avoids any We note that such an ‘‘updated biasing of the calculations by sources These periods appear to reflect controls in existence at the time that these BART baseline’’ might not be appropriate in all that install combustion controls during analyses were performed. Our proposed instances. For instance, if it appeared the BART evaluation process. NPCA disapproval of certain aspects of that controls had been installed early in asserted that the ‘‘proper’’ baseline for Arizona’s BART determinations was not order to avoid a more stringent BART BART determinations is 2001–2004. based on any flaw in the choice of determination, it would presumably not ADEQ asserted EPA violated the RHR baseline period. be appropriate to use a baseline provision in 51.308(d)(2)(i), which However, having proposed to representing these new controls. We specifies the period for establishing disapprove Arizona’s BART find no evidence of such intent here. baseline visibility conditions as 2000– determinations for NO on other Rather, with respect to Coronado, the 2004, by using the period between 2008 X grounds, we were obligated to conduct installation of new NOX and SO2 and 2011 as a baseline period for EPA’s our own five-factor BART analyses for controls was required by a consent BART analyses. NO for these sources. At the time we decree. With respect to Cholla, the Response: We disagree that our use of X conducted our analysis in 2011 and installation of newly installed NOX and updated baseline periods for BART 2012, several of these units had been SO2 controls coincided with increases determinations is inappropriate or retrofitted with additional NOX controls in potential emissions of these inconsistent with the CAA or the RHR. that were not in place between 2000 and pollutants resulting from a change in While the RHR specifies 2000–2004 as 2004. In particular, Cholla had installed coal supply.70 Therefore, the more the baseline for purposes of measuring LNB on Units 2, 3 and 4 in 2008 to recent baseline is likely to be more reasonable progress at Class I areas 2009, and Coronado had installed LNB representative of future operating during the first implementation at Unit 1 in 2009.65 In addition, during conditions at these units. 61 period, neither the RHR nor the BART this time period, Cholla completed its Contrary to the assertions of some Guidelines require that this particular transition to a different coal with much commenters, use of updated baselines timeframe be used as the baseline for 66 higher potential NOX emissions. Thus, did not unfairly penalize those sources BART determinations at individual in order to take into account existing that reduced their NOX emissions in sources. Rather, the Guidelines provide controls and to ensure that the baseline advance of a final BART determination. that, for purposes of calculating the period accurately represented Rather, the updated baseline effectively costs of compliance: lowered the baseline visibility impacts The baseline emissions rate should 62 BART Guidelines, 40 CFR Part 51, Appendix Y, from these sources by reducing the represent a realistic depiction of anticipated section IV.D.4.d.1 baseline emissions. As a result, the annual emissions for the source. In general, 63 CAA 169A(g)(2), 42 U.S.C. 7491(g)(2); see also projected benefits of additional controls for the existing sources subject to BART, you 40 CFR 52.308(e)(ii)(A). 64 See, e.g., SIP Appendix D at 4; Apache Unit 2 will estimate the anticipated annual 67 BART analysis at 2–2; Cholla. 77 FR 42861. 65 68 77 FR 42859, 42861. Although no new NOX Consent Decree in United States v. Salt River 59 Consent Decree in United States v. Salt River controls were installed at Apache during this Project, CV 08–1479–PHX–JAT (entered December Project, CV 08–1479–PHX–JAT (entered Dec. 19, timeframe, we determined that more recent 19, 2008). 2008). emissions data (2008–2011 rather than 2005–2007) 69 BART Guidelines, 40 CFR Part 51, Appendix Y, 60 77 FR 9490 (February 16, 2012), codified in were more likely to represent future emissions. 77 section IV.D.4.d.2. Table 2 to Subpart UUUUU of 40 CFR Part 63. FR 42856. 70 See Docket Item B–09, ‘‘Additional APS Cholla 61 See 40 CFR 51.308(d)(2)(i). 66 77 FR 42856, 42859, 42861. BART response’’, Appendix B, Section 6.2.
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were less than if we had used the the plan will take into consideration all limit of 0.065 lb/MMbtu. For each of the original baseline. This approach is emissions reductions achieved during three sources, we have established the consistent with the RHR and the BART the first implementation period, compliance determination method such Guidelines because it accurately reflects consistent with the requirements of the that when one unit is not operating, the controls in place at the time we CAA and the RHR. emissions from its own preceding thirty boiler-operating-days will continue to performed our BART analysis. 2. Control Efficiencies and Emission be included in the 30-day rolling Nonetheless, in order to address Reductions for Alternative Controls commenters’ concerns about the effect average. In the case of Coronado, for of the updated baselines on our Comment: One commenter (NPS) example, during periods when only one proposed determinations, we have also concurred with EPA’s reliance on an unit operates, this method allows the taken into account the original baseline SCR level of performance of 0.05 lb/ one operating unit to average out short- periods considered by ADEQ, as part of MMBtu. The commenter noted that this term emission spikes by using the most the supplemental cost analyses level is consistent with EPA’s recent thirty boiler-operating-day value described below. determination for the San Juan from the non-operating unit. Otherwise, Finally, we note that the use of a more Generating Station in New Mexico and averaging across units would not be recent baseline for purposes of our EPA’s assumptions for the Colstrip and possible during such periods, since the BART analyses does not alter the Corette power plants in Montana. emissions value from the non-operating baseline used for purposes of measuring Response: We acknowledge the unit would be zero since it is not reasonable progress. As noted by several commenter’s concurrence. As described operating. commenters, the RHR specifies that, for further below, information received in Comment: One commenter purposes of setting RPGs and measuring comments on our proposal continues to (Earthjustice), based on a report progress: support the use of an SCR level of submitted with the comments (the performance of 0.05 lb/MMBtu on an ‘‘Sahu report’’), stated that SCR can The period for establishing baseline annual average basis. Accordingly, we achieve greater NOX reductions and visibility conditions is 2000 to 2004. Baseline have retained the use of 0.05 lb/MMBtu visibility conditions must be calculated, visibility benefits at less cost than EPA’s using available monitoring data, by in our cost calculations (which are calculations. According to the establishing the average degree of visibility based on annual emissions). However, commenter, while SCR systems are impairment for the most and least impaired in setting emission limits on a 30-day capable of achieving 90 percent or days for each calendar year from 2000 to rolling average basis, it is necessary to greater removal, EPA’s proposed NOX 2004. The baseline visibility conditions are account for startup and shutdown emission limit of 0.05 lb/MMBtu 71 the average of these annual values. events, which raise the average emission represents control levels of less than 90 In its Regional Haze SIP, Arizona used rates over this shorter period of time. percent at each of the Apache, Cholla IMPROVE monitoring data from 2000– Therefore, we have revised our and Coronado units. Accordingly, the 2004 to calculate baseline visibility for proposed emission limits for SCR at commenter believes that EPA should the best and worst visibility days for each of the sources. As explained below, have analyzed SCR with an emission each Class I Area.72 Since these baseline we have also taken into account other limit of 0.04 lb/MMBtu because this visibility conditions are calculated site-specific factors in revising the level is achievable at 90 percent based on monitored conditions at Class emissions limits. In the case of Apache removal. I areas, they reflect actual emissions that Units 2 and 3, we have performed a The commenter (Earthjustice), based occurred during the 2000–2004 time supplemental analysis using AEPCO’s on a separate report submitted with the frame, rather than any subsequently cost estimates that are allowed by the comments (the ‘‘Stamper report’’), stated implemented controls. CCM (capital costs for the installation of that SCR systems are capable of In developing its long-term strategy, a SCR with LNB and OFA of $164.9 achieving 90 percent or greater removal state must consider inter alia million). We also considered comments, and EGUs elsewhere are subject to NOX ‘‘[e]missions limitations and schedules the size of the Apache facility, AEPCO’s emission limits as low as 0.03 lb/ for compliance to achieve the classification as a small entity, the MMBtu. The commenter cited several reasonable progress goal’’ and the economic effects of requiring the use of Prevention of Significant Deterioration ‘‘anticipated net effect on visibility due SCR on Apache Units 2 and 3, and (PSD) permit limits based on BACT to projected changes in point, area, and AEPCO’s arguments regarding an SCR determinations, including a 0.03 lb/ mobile source emissions over the next emissions limit of 0.07 lb/MMBtu. As MMbtu limit at Plant Washington, 10 years.’’ 73 This would include any discussed below in this preamble, we issued by Georgia Environmental reductions in emissions from BART have concluded that in this case it is Protection Division, and 0.035 lb/ sources that are implemented prior to a appropriate to revise the 30-day rolling MMBtu for Desert Rock, issued by EPA final BART determination, as well as average SCR limit to 0.070 lb/MMBtu, Region 9. Accordingly, the commenter any reductions resulting from such a with a ‘‘bubble’’ across Apache Units 2 believes that EPA should have analyzed determination. Thus, in setting its RPGs and 3. In the case of Cholla, we have SCR with an emission limit of 0.04 lb/ for 2018, a state may receive ‘‘credit’’ for taken into account the need to MMBtu because this level is achievable any reductions achieved during the first accommodate startup and shutdown at 90 percent control for each of the implementation period, regardless of events in the 30-day rolling average and units. whether or not those reductions are have revised the limit to 0.055 lb/ Response: We agree with the reflected in the ‘‘baseline’’ emissions for MMBtu, with a bubble across Units 2, 3 information provided by the a particular BART source. and 4. Finally, in the case of Coronado, commenters that SCR technology has EPA has not yet proposed action on we have taken into account both the the potential to achieve 90 percent and Arizona’s RPGs or long-term strategy. need to accommodate startup and greater rates of removal, as well as Our ultimate action on these elements of shutdown events, as well as the existing achieve emission rates of less than 0.05 consent decree, which sets an emission lb/MMBtu. However, we disagree with 71 40 CFR 51.308(d)(2)(i). limit of 0.080 lb/MMBtu for Unit 2. the commenter’s assertion that emission 72 AZ Regional Haze SIP at page 39. Based on these considerations, we have limits associated with BART must meet 73 40 CFR 51.308(d)(3)(v)(G). set a two-unit 30-day rolling average the lowest emission rate achieved with
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that technology at any coal-fired power averaging time, including startup and in this context, constrain) the plant. The RHR provides that: shutdown periods). determination of what the most • The determination of BART must be based These units are based on new appropriate BART limit representative on an analysis of the best system of construction, which can be designed to of a given technology is for a given continuous emission control technology optimize NOX reduction in other aspects facility. The emission limit set to reflect available and associated emission reductions of combustion (i.e., pulverizer design, BART must be determined based on a achievable for each BART-eligible source that boiler height, etc.). consideration and weighing of the is subject to BART * * * 74 • There is inadequate data available statutory BART factors. Although there Additionally, the BART Guidelines state to confirm the long-term achievability of are some similarities between the top- that: ‘‘[i]n assessing the capability of the the limits because the units have not down BACT determination process and control alternative, latitude exists to begun operation or only recently the five-step BART determination consider special circumstances became operational. process, we note that a BACT pertinent to the specific source under Other commenters note that, as part of determination is based almost review, or regarding the prior the Cross State Air Pollution Rule exclusively on cost-effectiveness, and application of the control alternative’’ 75 (CSAPR), EPA concluded that a NOX does not, for example, take visibility and that ‘‘[t]o complete the BART limit below 0.06 lb/MMBtu is not improvement at Class I areas into process, you must establish enforceable achievable through retrofit of SCR on account.78 emission limits that reflect the BART coal-fired electric generating units.77 One of the commenters noted that in requirements * * *’’.76 The five-factor AEPCO and APS also note that based on IPM modeling performed in support of BART analysis described in the data from the RACT/BACT/LAER the CSAPR rulemaking, we used an SCR Guidelines is a case-by-case analysis Clearinghouse, new coal-fired EGUs emission rate of 0.06 lb/MMBtu for that considers site-specific factors in with SCR are only required to achieve certain retrofit coal-fired EGUs, stating assessing the best technology for 0.05 lb/MMBtu averaged over 12 that this was the most stringent continuous emission controls. After a months, and it is not appropriate to emission rate assumed achievable for technology is determined as BART, the assume that a retrofit coal-fired unit can retrofit units. It is important to note that BART Guidelines require establishment achieve this limit averaged over 30 days. IPM is a tool that operates using a large of an emission limit that reflects the SRP notes that the proposed limit for number of variables with values BART requirements, but does not Coronado Unit 1 is more stringent than determined based upon a wide variety specify that the emission limit must the recently promulgated NSPS for of assumptions. These assumptions, and represent the maximum level of control electric utility steam generating units the values upon which they are based, achieved by the technology selected as constructed after May 3, 2011 (40 CFR will necessarily change based upon the BART. While the BART Guidelines and part 60, subpart Da), which establishes needs and context of the project or the RHR do not preclude selection of the a limit of 0.70 lb/MWh (0.077 lb/ rulemaking for which IPM is used. It is maximum level of control achieved by MMBtu) for new units, and 1.1 lb/MWh therefore not appropriate to a given technology as BART, the (0.11 lb/MMbtu) for modified units. automatically consider a particular emission limit set to reflect BART must APS also provided a report, originally assumption or variable value (in this be determined based on a consideration prepared by RMB Consulting & case, SCR emission rate) used in one and weighting of the five statutory Research, Inc. (RMB) for comment on application of IPM to represent a BART factors. Therefore, limits set as the Regional Haze FIP for San Juan uniform standard or constraint against BACT during PSD review (e.g., Desert Generating Station, suggesting that the which all other uses of IPM should be Rock), or emission rates achieved from Subpart Da limits represent the most compared. the operation of individual facilities stringent level of available control. The In the case of the CSAPR rulemaking under an emissions trading program RMB report states that EPA’s Guidelines cited by the commenter, IPM was used (e.g., Clean Air Act Interstate Rule indicate that state regulatory agencies to set state-wide budgets for NOX based (CAIR)) may provide important should consider NSPS limits in the on assumptions that would be information, but should not be BART evaluation except in cases where minimally achievable to a broad array of construed to automatically represent the the NSPS might be considered outdated covered sources. The emission data and most appropriate BART limit for a given (e.g., ‘‘technology determinations from constraints fed into IPM therefore technology. the 1970s or early 1980s’’), which is not represented sector-wide modeling Comment: Several commenters (APS, the case for the recently promulgated assumptions, which is a much different AEPCO, SRP, AUG, Pacificorp) note that NSPS Subpart Da. use and context than a BART the proposed NOX emission rate, as Response: We do not agree that our determination, which must ‘‘take into based on SCR technology, is more consideration of a NOX emission limit of account the most stringent emission stringent than many other EPA actions. 0.050 lb/MMBtu was inappropriate. We control level’’ in order to establish a In its comments, SRP provided a note that, in its submitted comments, source-specific emission limit. As a contractor’s report that found that the Earthjustice identified several recently result, we disagree that the 0.06 lb/ proposed limit is inconsistent with issued permits that establish emission MMBtu assumption used in the CSAPR BACT determinations that EPA has limits for SCR that are more stringent rulemaking should be construed to approved for new coal-fired units in the than our proposal. While limits set as following ways: BACT during PSD review may provide • 78 We note that a Class I area impact analysis Although there have been several important information about the must be performed by certain PSD projects as part units permitted with similar emissions capabilities of various control of the permit application process. However, the limits, none of these limits are directly technologies, they should not be visibility results are not used in the BACT equivalent (same numeric limit and determination, which is typically determined prior construed to automatically represent (or to performing the visibility modeling, and are not used to determine the appropriate level of control 74 40 CFR 51.308(e)(1)(ii)(A). 77 Citing 76 FR 1109, 1115, January 7, 2011; EPA, except in those cases where the visibility impact is 75 BART Guidelines, 40 CFR Part 51, Appendix Y, Transport Rule Engineering Feasibility Response to sufficiently high to warrant mitigation measures section IV.D.3. Comments, Docket ID No. EPA–HQ–OAR–2009– that end up involving additional emission 76 Id. section V. 0491–4529, at 13, July 6, 2011. reductions.
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represent the most stringent emission commenters asserted that EPA cannot facility. For each source, we considered control level for SCR. ignore presumptive BART limits combustion controls as a potential Similarly, we also disagree that the because, as part of the BART option for BART.86 recently promulgated NSPS Subpart Da Guidelines, they are binding regulatory We also disagree with commenters’ represents the most stringent emission presumptions that should only be assertions that our selection of non- control level for SCR. First, we deviated from based on a careful presumptive BART technology as BART acknowledge that while the BART consideration of the BART factors (70 is flawed or presumptively incorrect. In Guidelines state that ‘‘EPA no longer FR 39171). the BART Guidelines EPA explained concludes that the NSPS level of EPA’s Proposed Rule, however, does that: controls automatically represents ‘the not reflect any such consideration. 79 For coal-fired EGUs greater than 200 MW best these sources can install’ ’’ this Indeed, EPA’s Proposed Rule never even located at greater than 750 MW power plants was written in the context of older mentions the presumptive limits except and operating without post-combustion NSPS subparts with technology to note that Arizona considered them. controls (i.e. SCR or SNCR), we have evaluations that could potentially be (77 FR 42847). The nature of and basis provided presumptive NOX limits, outdated and not representative of for EPA-established presumptive NOX differentiated by boiler design and type of current pollution control technology BART limits for the relevant units at coal burned. You may determine that an performance. We also acknowledge that, Apache, Cholla, and Coronado show alternative control level is appropriate based while the BART Guidelines provide for that EPA’s determination in its on a careful consideration of the statutory ‘‘situations where NSPS standards do proposed FIP that SCR—a much more factors. For coal-fired EGUs greater than 200 MW located at power plants 750 MW or less not require the most stringent level of costly, post-combustion technology— in size and operating without post- available control for all sources within represents BART at these facilities is, at combustion controls, you should likewise a category’’ and cite NSPS Subpart GG least, presumptively incorrect. Because presume that these same levels are cost- (stationary gas turbines) as a subpart EPA failed to consider the presumptive effective. You should require such utility that does not consider post-combustion limits in developing its proposed FIP’s boilers to meet the following NOX emission 80 controls, the recently promulgated BART limits for NOX, the Proposed Rule limits, unless you determine that an NSPS Subpart Da does consider post- is flawed and must be withdrawn. alternative control level is justified based on combustion controls such as SCR.81 The commenters also note that the consideration of the statutory factors.87 Despite this language, however, we RHR also established presumptive Therefore, the presumptive emission disagree with the commenter’s assertion BART emission limits for NOX limits in the BART Guidelines are that NSPS Subpart Da represents the emissions from fossil fuel-fired units rebuttable, and the five statutory factors most stringent emission control level for through notice-and-comment enumerated in the BART Guidelines SCR, or that an NSPS Subpart, even a rulemaking. The presumptive NOX provide the mechanism for establishing recently promulgated one, should be emissions limits for coal-fired EGUs different requirements. Specifically, as treated as a ‘‘floor’’ for establishing vary according to individual source explained in the preamble to the BART BART emission limits. While the BART characteristics, including fuel firing Guidelines: Guidelines provide that, ‘‘you may rely configuration (tangential/wall-fired, on MACT standards for purposes of opposed wall-fired, cyclone) and type of If, upon examination of an individual EGU, 82 a State determines that a different emission BART,’’ they do not indicate that the fuel burned (bituminous, sub- limit is appropriate based upon its analysis same is true for the NSPS standards. An bituminous, lignite, etc.). Commenters of the five factors, then the State may apply NSPS standard must establish an also argued that, because EPA shifted a more or less stringent limit.88 emission rate that is appropriate for all the baseline for BART, it did not the units within its category,83 which in include combustion controls, such as Thus, the establishment of presumptive the case of Subpart Da includes a variety LNB, in its analysis, and only BART limits, and the corresponding of boiler types, coal types, and baseline considered higher cost post-combustion technology upon which those limits are emission rates that may not be controls (SNCR and SCR). based, does not preclude states or EPA representative of the Apache, Cholla, Response: We disagree with the from setting limits that differ from those and Coronado units. Specifically in the commenters’ assertions that we ignored presumptions. The five-factor analysis we performed for these facilities case of the RMB report, which was the presumptive BART NOX limits. prepared for the San Juan Generating Because Apache, Cholla and Coronado demonstrates that, taking into Station, the assertion that the Subpart all have access to and have historically consideration the expected remaining Da standards represent the most burned both bituminous and sub- useful life and the existing controls stringent level of available control is bituminous coal,84 there is no single present at the facilities, SCR is cost- effective, results in the most visibility undermined by the report’s findings that presumptive NOX limit that applies to emission modeling indicates that the any of these units.85 Therefore, rather improvement of all feasible control San Juan units could achieve NOX than rely upon the numerical values of technologies, and that these factors are not outweighed by SCR’s potential emission rates in the range of 0.047 to the presumptive NOX limits listed in the 0.068 lb/MMBtu, which are emission BART Guidelines, we have considered energy and non-air quality rates lower than the Subpart Da the technological basis for presumptive environmental impacts. As a result, regardless of the appropriateness of SCR standards. NOX BART limits, such as the use of Comment: Multiple commenters combustion control technology, boiler (AUG, APS, SRP) stated that EPA must type, and coal type, as part of the five- 86 At Apache Units 2 and 3, we considered consider presumptive BART limits. The combustion controls (LNB plus OFA) as one of the factor analysis we performed for each control scenarios. At Cholla and Coronado, combustion controls were considered as part of the 79 BART Guidelines, 40 CFR Part 51, Appendix Y, 84 See, e.g., Final Report, Apache Unit 2 BART baseline emission rate and were a potential BART section IV.D.1, n. 13. Analysis, Table 3–1 (December 2007); Cholla Unit option in the event that the five-factor analysis 80 Id. section IV.D.1. 2 BART Report, page ES–2; SRP Comments on indicated that no additional controls beyond the 81 40 CFR Part 60, Subpart Da. Proposed Rule (September 2012), RMB Technical baseline were justified. 82 Id. section IV.C. Memorandum, page 3. 87 BART Guidelines, 40 CFR Part 51, Appendix Y, 83 Or subcategories, which Subpart Da does not 85 See BART Guidelines, 40 CFR Part 51, section IV.E.5. establish except for ‘‘new’’ and ‘‘modified’’ units. Appendix Y, Table 1. 88 70 FR 39132.
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as a control technology for most units manually placing them into a use of such information. The on a national scale, our five-factor spreadsheet that calculated the capital commenters also note that the RHR analyses establish that NOX BART limits and O&M costs associated with explicitly provides that the cost analysis more stringent than the presumptive pollution control options. While we should take into account any site- limits are appropriate for these units. relied upon the results of these specific information that affect the costs spreadsheet calculations, we did not of a particular BART technology option, 3. Costs of Compliance then use those results to run IPM, as the and the Corn Growers court explained Comment: Several commenters stated type of information generated by an that BART determinations must be that EPA inappropriately conducted its actual IPM model run (e.g., generation made on a source-specific basis. cost analysis using generalized data and dispatch decisions, capacity decisions) Response: While we agree that BART a regional model, whereas the CAA is not relevant to our action. We determinations must be made on a requires a BART determination to be documented our use of the equations source-specific basis, we do not agree based, in part, on a site-specific cost from IPM’s air pollution control that site-specific information is required evaluation. One commenter (Navajo technology cost component by placing for all aspects of a BART analysis. Nation) stated that EPA should justify the raw cost calculation spreadsheet in Nonetheless, in order to address its use of the IPM and explain why it the docket for our proposal.89 This commenters’ concerns that our proposal did not use or request line item costs spreadsheet contained the IPM was based on cost information that was from the facilities to make its analysis equations, corresponding variable insufficiently site-specific and that the more site-specific. This commenter also values, selected notes regarding costs of the SCR with LNB and OFA stated that EPA’s reliance on the IPM is assumptions and variable ranges as well control option, in particular, are not misplaced because the model integrates as selected tables from IPM Base Case representative of actual installation health-based regulations and not the v4.10 documentation. Since we did not costs at these facilities, we have RHR. perform an actual IPM model run, the performed a supplemental cost analysis. Another commenter (SRP) added that spreadsheet and contractor’s report in The supplemental cost analyses for each the proposed rule and the TSD say the docket for our proposal sufficiently facility are described in Section IV.D of almost nothing about how IPM was used document our use of the cost this document, and incorporate much of to calculate costs, instead directing the methodologies from the IPM air the cost information provided by the public to an EPA contractor report for pollution control cost component. facilities in their comments. In more information. The commenter We disagree with commenters’ performing this supplemental cost asserted that no contractor report in the characterization of the cost development analysis, we have adopted a ‘‘hybrid’’ docket for the rulemaking supplies methodology contained in IPM as approach that relies on cost estimates additional detail on precisely how IPM generalized or outdated. As noted in the provided by the facilities for certain line was used. The commenter believes that documentation for IPM’s cost items, but still retains the use of the this failing renders EPA’s proposed rule development methodology for SCR, the CCM methodology as described in the inconsistent with the CAA’s public cost estimate methodology is based following response. notice requirements. upon two databases of actual SCR Comment: Several commenters stated Response: As described in our projects.90 These databases include that EPA’s cost estimating techniques proposal, the IPM is a multi-regional 2004 and 2006 industry cost estimates are flawed and its reliance on the linear programming model of the U.S. prepared for the Midwestern Ozone outdated EPA CCM led to electric power sector. IPM relies upon a Group (MOG), and a proprietary in- underestimates of costs. Several of these very large number of data inputs and house database maintained by commenters noted that EPA claimed provides forecasts of least-cost capacity engineering firm Sargent & Lundy (S&L). that owner’s costs, surcharges and expansion, electricity dispatch, and The MOG information was cross- Allowance for Funds Used During emission control strategies for meeting referenced with actual 2009 projects, Construction (AFUDC) are not allowed energy demand and environmental, and escalated accordingly. S&L then by EPA’s CCM and refute that these transmission, dispatch, and reliability used the information in these databases costs are not allowed by the Manual. constraints. EPA has used IPM to to develop the equations described in The commenters state that while the evaluate the cost and emissions impacts the cost component taking into account Manual does not have specific line of proposed policies, such as the recent the pre-control NOX emission level, items for owner’s costs and surcharges, Mercury and Air Toxics Standard degree of reduction, coal type, facility it discusses some of the items that roll (MATS) to limit pollutant emissions size, and numerous other unit-specific up into these categories. APS, for from the electric power sector. factors. While a costly engineering example, states that: We wish to clarify that, for our evaluation that included site visits proposed action on Arizona’s Regional would potentially produce a more Owner’s costs are home office and plant support costs that are charged directly to Haze SIP, we did not actually run IPM. refined cost estimate that could be Rather, we used one component of IPM, specific projects. These would include costs considered more site-specific than our related to project management, engineering, specifically, the component that own, we disagree that our approach has construction support, start-up, training, etc. develops the costs of air pollution produced cost estimates that are either Surcharges are home office costs associated control technologies. Broadly speaking, ‘‘generic’’ or ‘‘generalized.’’ with a project that may not be charged IPM relies upon numerous components Comment: Several commenters directly to that project. These costs would be and sub-components to specify contended that where specific related to overhead loads, procurement, constraints and variable values that feed knowledge is available, the CCM is accounting, finance, etc.91 into the model algorithms used during oriented to allow and provide for the APS also notes that there is a line item an actual IPM model run. The air for AFUDC in the Manual but provides pollution control cost development 89 Document ID: EPA–R09–OAR–2012–0021– that it is assumed to be zero percent, but component is just one of these 0008, File name: G–15_MODELING_ that in its experience AFUDC is a real FILES_EGU_BART_Costs_Apache_ numerous components. We relied upon Cholla_Coronado_FINAL2. cost and is never zero percent. In the cost information and equations 90 http://www.epa.gov/airmarkets/progsregs/epa- contained in this component by ipm/docs/v410/Appendix52A.pdf. 91 APS comments, page 12.
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addition, the commenters state neither interest and return on equity that would costs associated with fly ash ammonia the CAA nor the BART Guidelines accrue over the construction period and removal in selecting BART. Further, require the Manual to be used to adds them to the rate base when additional problems during disposal of determine the costs of compliance. construction is completed and the assets fly ash may cause environmental Response: With regard to owner’s are used. Although it is included in damage and should not be discounted. costs and surcharges, we agree with capital costs, AFUDC primarily Response: EPA disagrees with this commenters’ assertions that the CCM represents a tool for utilities to capture comment. First, we note that ammonia does discuss some of the items that roll their cost of borrowing and return on adsorption in the fly ash is expected to up into these line items as they have equity during construction periods. be minimal from SCR because excess described in comments. For the control AFUDC is not allowed as a capitalized ammonia would likely react with option of SCR with LNB and OFA, for cost associated with a pollution control sulfuric acid to form particulate example, the CCM does provide for device under CCM’s overnight costing ammonium sulfate or ammonium ‘‘Engineering and Home Office Fees’’ 92 methodology, and is specifically bisulfate, which would not pose the that could potentially include some of disallowed for SCRs (i.e., set to zero) in same odor problem in fly ash reuse as the home office and plant support costs the CCM.93 Therefore, in reviewing adsorbed ammonia. Second, the described in comments. These types of other BART determinations, EPA has facilities’ own BART analyses did not costs are often included in estimates consistently excluded AFUDC.94 include costs of fly ash disposal or under some type of engineering/ Comment: The ACCCE notes that the ammonia removal in the cost estimates procurement/project services line item. Manual specifically states that it does for SCR, which indicates that they do In the case of the cost estimates not directly address the controls needed not consider these potential costs to be provided by the utilities (both those to control air pollution at EGUs, citing significant. Finally, we note that the submitted to ADEQ as part of the the following quote from the Control Arizona Department of Transportation original BART analysis, and those Cost Manual: has designated fly ash from each of the 96 submitted to us in comments on our * * * this Manual does not directly three sources as approved material. As proposal), we note that their cost address the controls needed to control air explained in our proposed rulemaking estimates are not organized to list line pollution at electrical generating units and the accompanying TSD, the item(s) that clearly correspond to (EGUs) because of the differences in presence of ammonia does not impact ‘‘Engineering and Home Office Fees,’’ accounting for utility sources. Electrical the integrity of the use of fly ash in and do not provide information utilities generally employ the EPRI Technical concrete.97 Therefore, we have no indicating where these costs may be Assistance Guidance (TAG) as the basis for their cost estimation processes. information that suggests that included. As a result, while owner’s installation of SCR would result in a costs and surcharge are not line items Response: We disagree with the change to the facilities’ current fly ash included in the CCM, in this instance, commenter’s assertion that the CCM disposal and re-use practices. as a conservative assumption, we have does not address control costs needed to Comment: One commenter (SRP) included the portion of owner’s costs/ control air pollution at EGUs. The quote stated that EPA downplayed the energy surcharge in the total cost, up to the cited by the commenter contains a and non-air quality factor its revised value specified for ‘‘Engineering and footnote that reads as follows: BART determination in the proposed Home Office Fees’’ indicated by the This does not mean that this Manual is an FIP, presenting the narrow conclusion CCM. inappropriate resource for utilities. In fact, that potential energy and non-air quality We disagree with commenters’ many power plant permit applications use impacts do not warrant elimination of assertions that AFUDC is a cost that the Manual to develop their costs. However, any of the otherwise feasible control should be incorporated into our cost comparisons between utilities and across the options for NO at any of the sources. industry generally employ a process called X analysis, as it is inconsistent with CCM The commenter asserted that this methodology. The utility industry uses ‘‘levelized costing’’ that is different from the methodology used here.95 narrow consideration of this factor is a method known as ‘‘levelized costing’’ not tenable because this factor must be The quote is merely a factual to conduct its internal comparisons, weighed and considered in conjunction observation that electric utilities, in which is different from the methods with the other BART factors in the their planning and cost estimating for specified by the CCM. Utilities use overall assessment of what control their own purposes, use a different ‘‘levelized costing’’ to allow them to option constitutes BART for a particular accounting method than required by the recover project costs over a period of source. The commenter believes that CCM. The footnote clarifies that the several years and, as a result, realize a EPA’s approach minimizes the role of CCM is appropriate for utilities for reasonable return on their investment. this factor in a BART analysis, which is regulatory purposes. The CCM uses an approach sometimes beyond EPA’s authority.98 referred to as overnight costing, which 4. Energy and Non-Air Environmental Response: EPA does not agree with treats the costs of a project as if the Impacts this comment. The RHR and the BART project were completed ‘‘overnight’’, Guidelines allow the reviewing with no construction period and no Comment: One commenter (ADEQ) stated that EPA should consider the authority (State, Tribe, or EPA) the interest accrual. Since assets under discretion to determine how to weigh construction do not provide service to 93 CCM (Tables 1.4 and 2.5 show AFUDC value and in what order to evaluate the current customers, utilities cannot as zero). charge the interest and allowed return 94 See, e.g., 77 FR 20894, 20916–17 (Apr. 6, 2012) 96 Approved Materials Source List, Fly Ash, on equity associated with these assets to (explaining in support of the North Dakota Regional Natural Pozzolan, and Lime, Revised July 10, 2012, customers while under construction. Haze FIP, ‘‘we maintain that following the available at http://www.azdot.gov/Highways/ Under the ‘‘levelized costing’’ overnight method ensures equitable BART Materials/. determinations * * *.’’); 76 FR 52388, 52399–400 97 See 77 FR 42853–4284, TSD at 38. methodology, AFUDC capitalizes the (August 22, 2011) (explaining in the New Mexico 98 Citing Corn Growers, 291 F.3d at 6–7 (finding Regional Haze FIP that the Manual does not allow that EPA’s original 1999 regional haze rules had 92 As described in Table 2–5 of the CCM, AFUDC). improperly divorced consideration of the BART Engineering and Home Office Fees represent 10 95 EPA Air Pollution Cost Control Manual, Sixth visibility benefits factor from the other BART percent of purchased equipment costs. Edition page 1–3. factors).
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statutory factors (cost of compliance, the provides a supplemental measure that would be to simply list visibility energy and non-air quality combines information on the number of improvements at the various areas, and environmental impacts of compliance, areas and on individual area qualitatively weigh the number of areas any existing pollution control improvement. and the magnitudes of the technology in use at the source, the In contrast, several commenters improvements. The cumulative sum is remaining useful life of the source, and (ADEQ, AEPCO, APS and AUG) simply an easily understood and the degree of improvement in visibility disagreed that EPA’s new visibility objective way of weighing cumulative which may reasonably be anticipated to metric, ‘‘cumulative visibility visibility improvement, as part of the result from the use of such technology), improvement,’’ is an appropriate metric, overall BART decision. as long as the reviewing authority asserting that this metric incorrectly Comment: One commenter performed justifies its selection of the ‘‘best’’ level inflates the estimated visibility NO2 modeling by scaling tropospheric of control and explains the CAA factors improvements of various control column NO2 derived from satellite that led the reviewing authority to options and should not be used. The measurements, as portrayed in imagery choose that option over other control commenters further stated that this from the Institute of Environmental levels.99 In this case, having metric does not appear anywhere in the Physics, University of Bremen, disapproved the state’s BART CAA, RHR or BART Guidelines, and Germany. The commenter states that determinations for NOX at several units, that these rules and guidelines SCR would reduce NO2 closer to ‘‘all of the rights and duties that would specifically give discretion to states to background levels. otherwise fall to the State accrue instead determine how to take into account Response: While the facilities to EPA.’’ 100 This includes a significant visibility impacts in a BART evaluation. considered for BART control are not the degree of discretion in deciding how to In addition, the RHR (at 70 CFR 39170) only NOX sources in the area, the weigh the five factors, so long as that supports identifying the single Class I commenter’s scaling of the weighing is accompanied by reasoned area that would have the greatest concentrations in the satellite images explanation for adopting the technology visibility effects from emission controls according to the reductions expected selected as BART, based on the five and does not support adding from SCR can give a rough idea of its factors, and in accordance with the improvements from multiple Class I NO2 benefit. However, to assess BART Guidelines. EPA has provided a areas in determining visibility effects. visibility impacts, the model used must detailed explanation of our BART The commenters affirmed that EPA account for the formation of visibility- evaluation process and five-factor should use a change in deciview at the impairing ammonium nitrate particles. analyses in our proposal, TSD and Class I area with the highest impact as Under the BART Guidelines, CALPUFF elsewhere in this document. We have its visibility metric, consistent with is the recommended model that weighed the potential energy and EPA’s RHR and the method used by incorporates this nitrate chemistry. non-air environmental quality impacts other EPA regions and states. Alternative models could potentially be of the various control options along The commenters further stated that to used if they had the ability to handle with the other statutory factors in our be relevant to the environmental effect this and other chemical transformations BART analyses and have concluded that that the regional haze program and had undergone a rigorous impacts do not warrant elimination of addresses, the metric by which visibility performance evaluation. any of the otherwise feasible control improvement is determined for Comment: One commenter (NPS) 101 options for NOX at any of the sources. purposes of assessing BART for a commended EPA for the thoroughness particular facility must reflect actual of its visibility modeling analyses and 5. Remaining Useful Life of the Source human perception of visibility. The the methodologies used. The commenter Comment: One commenter (APS) did commenters added that the cumulative noted that EPA used CALPUFF methods not dispute EPA’s assumption of a impact approach used by EPA has no tie 6 and 8 and modeled against annual twenty-year useful life of the emission to human perception and can only average and 20 percent best natural control equipment in its annualized cost distort a BART analysis. The background conditions. The commenter calculations. commenters believe that this approach also pointed out that EPA modeled all Response: EPA agrees with the arbitrarily magnifies the benefit that pollutants while varying NOX emissions commenter that this is an appropriate might be associated with emission to evaluate the effects of changing this assumption for these sources. limitations at a single source. one pollutant. Response: EPA agrees with NPS on Response: EPA acknowledges the 6. Degree of Improvement in Visibility the need to consider visibility comment. It was our intention to Comment: One commenter (NPS) improvements at all the nearby Class I estimate visibility impacts accurately agreed with EPA that a more complete areas as part of a comprehensive and transparently so that one could assessment of visibility improvement for assessment of the degree of visibility more easily compare results to earlier candidate BART controls would include improvement due to BART controls. applications of CALPUFF and clearly consideration of the number of areas EPA disagrees with some other understand the effect of old versus affected and the degree of improvement commenters that cumulative revised IMROVE equations (methods 6 expected at all Class I areas rather than improvement over multiple areas is an and 8) as well as alternative natural focusing on a single area. The inappropriate metric, or that examining background conditions. We modeled all commenter commended EPA for its a single Class I area is sufficient. The pollutants together in order to account reliance on deciview improvement and cumulative improvement metric (i.e., for chemical interactions among the the number of areas showing the simple sum of impacts or various pollutants and also the improvement, plus its consideration of improvements over all the Class I areas) nonlinear dependence of deciviews cumulative improvement, which is not intended to correspond to a single upon extinction. human’s perception at a given time and Comment: One commenter (APS) 99 See BART Guidelines, 40 CFR Part 51, place. The approach is simply one way stated that EPA’s proposal noted that it appendix Y, section IV.E.2. 100 Central Arizona Water Conservation Dist. v. of assessing improvements at multiple is appropriate to use Method 6a, 6b, 8a EPA, 990 F.2d 1531, 1541 (9th Cir. 1993). areas, for consideration along with other or 8b in CALPOST within the CALPUFF 101 See 77 FR 42853–4284, TSD at 38. visibility metrics. Another approach model, yet EPA inappropriately rejected
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ADEQ’s use of Method 6a in its own benchmark for average cost- assessment of visibility impacts. The analysis and instead used Method 8b, effectiveness, we note that the BART commenters made the following which yielded higher predicted Guidelines do not require the arguments to support their contention visibility improvements in Class I areas. development of a specific threshold. that EPA’s modeling overestimates the Response: EPA did not reject ADEQ’s The BART Guidelines, however, require visibility benefits associated with BART use of visibility method 6a, which that cost-effectiveness be calculated in control options. First, EPA used an remains a viable method for past terms of annualized dollars per ton of outdated version of the CALPUFF visibility modeling work under an pollutant removed, or $/ton.103 We model (version 5.8) that over-predicts agreed upon protocol. Method 6a considered cost of controls by visibility benefits. Based on citations comprises CALPOST Method 6, the old discussing the total capital costs, annual provided by the commenters, CALPUFF IMPROVE equation for translating costs, $/ton, and incremental $/ton, and version 6.42 has been shown to provide pollutant concentration into visibility considered the degree of visibility better agreement with observed levels of impacts, and annual average (the ‘‘a’’) improvement by discussing the nitrates. The commenters provided natural background concentrations. individual and cumulative deciview modeling results using CALPUFF However, for new visibility modeling, improvement resulting from the various version 6.42 for EPA’s consideration. such as EPA performed for the FIP, control technology options, as well as Second, EPA’s outdated use of constant method 8b is preferable. Method 8b the percent change in improvement. Our ammonia background concentration of comprises CALPOST Method 8, the consideration of other metrics in 1.0 ppb over-predicts visibility benefits revised IMPROVE equation, and best 20 addition to $/dv in no way relegates and fails to account for known monthly percent of days (the ‘‘b’’) natural visibility improvement to a secondary or seasonal variations. EPA backgrounds. The revised IMPROVE role. Finally, we note that the FLMs’ inappropriately rejected ADEQ’s use of equation has superior performance for recommended ‘‘benchmarks’’ for dollars variable background concentrations, assessing visibility, and is per deciview are for average dollars per which was well within the state’s recommended by the Federal Land deciview not incremental dollars per discretion. Several of these commenters Managers for regional haze assessments deciview.104 Neither the BART also noted that a case study 107 by performed for New Source Review Guidelines nor the FLMs recommend Terhorst and Berkman based on the 102 permitting. EPA believes that using consideration of incremental dollars per 2005 closure of the Mohave Generating the best 20 percent of days as a basis for deciview. Station found virtually no evidence that background concentrations is desirable Comment: One commenter (NPS) closure resulted in improved visibility since visibility impacts due to emissions cautioned against any implication in at the Grand Canyon. In addition, SRP from facilities are most noticeable on EPA’s analyses that visibility stated that EPA must consider visibility the best days, that is, most visible to improvement must exceed 0.5 dv to be benefits from NOX controls within the visitors of Class I areas. EPA assessed significant. The commenter believes that context of nitrate contributions to the results of both methods (and also the such an approach would be contrary to regional haze. Studies of visibility ‘‘6b’’ and ‘‘8a’’ combinations), but the BART Guidelines. impairment on the Colorado plateau primarily relied on 8b as the most Response: EPA agrees that the 0.5 dv show that nitrate aerosols contribute appropriate method in the BART threshold for ‘‘contribute to visibility only two to five percent to haze. context. impairment’’ is only for the initial Response: EPA disagrees with the Comment: One commenter (APS) Subject-to-BART screening test and it is commenters that any new CALPUFF objected to EPA shifting the CAA’s a maximum even for that purpose, version should be used for the BART mandate to compare costs and benefits according to the BART Guidelines.105 determination. EPA relied on version under the BART program to an Smaller improvements from controls 5.8 of CALPUFF because it is EPA- assessment of ‘‘cost-effectiveness’’ ($/ approved version in accordance with ton) without specifying the threshold should be considered in BART determinations, since they can be the Guideline on Air Quality Models level of what is cost-effective. APS also (‘‘GAQM’’, 40 CFR 51, Appendix W, noted that in the absence of a specific beneficial in considering effects from controls on multiple sources.106 We section 6.2.1.e). EPA updated the threshold for cost-effectiveness, the specific version to be used for regulatory FLMs have referred to a benchmark of have used the 0.5 dv level simply as one purposes on June 29, 2007, including $20 million per deciview as the upper point of comparison, a ‘‘benchmark’’ or minor revisions as of that date. The limit. The commenter also presented ‘‘yardstick,’’ to gauge the magnitude of approved CALPUFF modeling system data showing the incremental costs of impacts under various control scenarios. includes CALPUFF version 5.8, level going from LNB/OFA to SNCR or SCR Comment: Several commenters (APS, 070623, and CALMET version 5.8 level to be over $20 million per deciview for AUG, Navajo Nation, PacifiCorp and 070623. CALPUFF version 5.8 has been Cholla. SRP) asserted that EPA’s proposed NOX Response: The commenter is correct BART determination rests on a flawed thoroughly tested and evaluated, and that the BART Guidelines list the $/ has been shown to perform consistently deciview ratio as an additional cost- 103 BART Guidelines section IV.D.4.c. with the initial 2003 version in the 104 effectiveness metric that can be See, e.g. National Park Service Comments on analytical situations for which Best Available Retrofit Technology for Apache, CALPUFF has been approved. Any employed along with $/ton for use in a Cholla, and Coronado Power Plants in Arizona BART evaluation, and we have included (September 17, 2012) at 6. other version, and especially one with this information in our proposal. While 105 BART Guidelines, 40 CFR Part 51, Appendix such fundamental differences in its the FLMs have indicated that they Y, section III.A.1 (‘‘As a general matter, any handling of chemistry, would be threshold that you use for determining whether a consider $20 million/dv to be a considered an ‘‘alternative model’’, source ‘‘contributes’’ to visibility impairment subject to the provisions of GAQM should not be higher than 0.5 deciviews.’’) 102 Federal Land Managers’ Air Quality Related 106 See, e.g. 70 FR 39129 (‘‘Even though the section 3.2.2(b), requiring full model Values Work Group (FLAG) Phase I Report— visibility improvement from an individual source Revised (2010), U.S. Forest Service, National Park may not be perceptible, it should still be considered 107 Terhorst, Jonathan and Berkman, Mark, ‘‘Effect Service, U.S. Fish and Wildlife Service, October in setting BART because the contribution to haze of Coal-fired Power Generation on Visibility in a 2010. http://www.nature.nps.gov/air/Pubs/pdf/flag/ may be significant relative to other source Nearby National Park’’, Atmospheric Environment FLAG_2010.pdf. contributions in the Class I area.’’) 44, 2524, 2530 (Apr. 2010).
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documentation, peer-review, and this comprehensive evaluation process from wildfires, garbage burning along performance evaluation. No such and remains EPA-approved version, and the Mexico/US border, and dust storms. information for the later CALPUFF is thus the appropriate version for EPA’s Response: We do not agree that we are versions that meet the requirements of BART determinations of these facilities. front-loading emission reductions or section 3.2.2(b) has been submitted to or The ammonia issue has already been that we have lost sight of the ‘‘end approved by EPA. Experience has addressed above. EPA believes that goal.’’ While the goal of the regional shown that when the full evaluation there is no compelling alternative to the haze program is to achieve natural procedure is not followed, errors that use of the default 1 ppb background visibility conditions in all mandatory are not immediately apparent can be concentration. Class I Federal areas by 2064, the introduced along with new model The Terhorst & Berkman study cited requirement for states to implement features. For example, changes by the commenter is worthy of BART applies only during the first introduced to CALMET to improve consideration as the Regional Haze planning period ending in 2018.109 simulation of over-water convective program evolves, but one study does not Where a State has not met the RHR mixing heights caused their periodic invalidate CALPUFF, which has had requirements related to BART, EPA is collapse to zero, even over land, so that multiple performance evaluations and obligated to disapprove that portion of CALPUFF concentration estimates were has gone through public comment and the State’s submittal. And, as explained no longer reliable.108 rulemaking. It also does not remove the elsewhere in this document, because the The change from CALPUFF version legal requirement to perform BART FIP clock has already expired for the 5.8 to CALPUFF 6.4 is not a simple determinations for eligible facilities. Arizona Regional Haze plan, we are model update to address minor issues, While nitrate appears to be a smaller required to promulgate a FIP for any but a significant change in the model contributor to visibility impairment disapproved portion of the SIP. Our science that requires its own rulemaking than some other compounds, section action fulfills part of this duty. with public notice and comment before 169A of the Clean Air Act requires We agree that there are various other it can be relied on for regulatory BART determinations on BART-eligible factors that contribute to haze at purposes. EGUs regardless of ambient visibility Arizona’s Class I areas. However, these Furthermore, it should be noted that conditions. Application of BART is one other factors are not relevant to the the US Forest Service and EPA review BART requirements, which govern of CALPUFF version 6.4 results for a means by which we can ensure the continuation of downward emission and today’s action. Under the RHR, causes of limited set of BART applications haze other than BART sources are showed that differences in its results visibility impairment trends. Modeling shows maximum visibility impacts of addressed under separate requirements from those of version 5.8 are driven by for reasonable progress and a long-term two input assumptions not associated 1.2 to 4.5 deciviews depending on the facility, which are not negligible strategy. We will address the remaining with the chemistry changes in 6.4. Use requirements of the RHR for the first of the so-called ‘‘full’’ ammonia limiting contributions to visibility impairment. Even if an individual pollutant or implementation period in Arizona, method and finer horizontal grid including requirements for reasonable resolution are the primary drivers in the source category appears small to some commenters, the many segments of the progress toward the 2064 goal, in a predicted differences in modeled separate rulemaking action. visibility impacts between the model emissions inventory taken together do versions. These input assumptions have cause visibility impairment, and each D. Source-Specific Comments on EPA’s been previously reviewed by EPA and must be addressed in order to make BART Analyses and Determinations progress towards the national goal of the FLMs and have been rejected based 1. EPA’s BART Analysis and on lack of documentation, inadequate remedying visibility impairment from Determination for NO at Apache Units peer review, and lack of technical man-made pollution. EPA identifies X 2 and 3 justification and validation. stationary sources as an important Introducing a new regulatory model is category to evaluate under the Regional a. Control Efficiencies Haze program, including a BART a long process. EPA intends to conduct Comment: Various commenters analysis. a comprehensive evaluation of the latest (ADEQ, AEPCO and AUG) asserted that Comment: Several commenters argued CALPUFF version along with other EPA’s proposed BART determination for that the proposed FIP is inconsistent ‘‘chemistry’’ air quality models, Apache Units 2 and 3 was premised on with the goal of the RHR, which is to including a full statistical performance the assumption that SCR can achieve an make progress toward natural visibility evaluation, verification of its scientific emission limit of 0.050 lb/MMBtu conditions by the year 2064. Another basis, and determination of whether the continuously on a 30-day rolling commenter added that Arizona’s energy underlying science has been average, including periods of startup, providers have already invested time incorporated into the modeling system shutdown and equipment malfunctions, and money (hundreds of millions of correctly. To accommodate such a but that this limit has not been shown dollars) in order to reach the long-term model, there would have to be an to be feasible. They argued that EPA had goal of achieving natural background evaluation of the effect on the regulatory failed to support either its proposed visibility by 2064, and that the framework for its use, including in New BART determination or its reliance on accelerated timeline proposed by the Source Review permitting, and also this limit in its BART analysis. In rule would result in astronomical costs. changes to the Guideline on Air Quality addition, AEPCO and AUG stated that Another commenter stated that EPA is Models and other modeling guidance, in EPA inappropriately relied on vendor front-loading as many emission consultation with the FLMs. CALPUFF information to support an emission rate reductions as possible in the first five version 5.8 has already gone through of 0.050 lb/MMBtu using SCR. AEPCO years of this program, while ignoring also noted that it considered this 108 ‘‘CALPUFF Regulatory Update’’, Roger W. other causes of visibility impairment, support anecdotal and stated that it Brode, Presentation at Regional/State/Local such as fires, in its FIP. Other Modelers Workshop, June 10–12, 2008; http:// www.cleanairinfo.com/ commenters suggested that Arizona’s 109 See 40 CFR 51.308(f) (future Regional Haze regionalstatelocalmodelingworkshop/archive/2008/ haze is produced by a number of plans must address reasonable progress and long- agenda.htm. environmental factors, like pollution term strategy, but not BART).
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cannot form the basis for a BART MMBtu on a rolling 30-day average and type to which Apache has access, we determination, as BACT rules expressly could only achieve in the range of 0.053 also note that AEPCO meets the provide that EPA does ‘‘not consider a to 0.072 lb/MMBtu.111 We have definition of ‘‘small entity’’ as vendor guarantee alone to be sufficient reviewed the analyses provided by SRP established for electric utility justification that a control option will and note that while the results of SRP’s companies by the U.S. Small Business work.’’ AEPCO requested that if EPA analysis indicate that Coronado could Administration.114 We considered retains the SCR limits, that they be set meet a 0.050 lb/MMBtu limit on an AEPCO’s small entity status 115 and how at 0.07 lb/MMBtu due to the annual average basis,112 we agree that to provide AEPCO with operational infeasibility of complying with a lower the Coronado units cannot achieve an flexibility consistent with application of limit at the Apache station. Also, due to SCR emission rate of 0.050 lb/MMBtu the five-factor BART analysis. Based on the load-following and cycling nature of on rolling 30-day average. As a result, these considerations, we have decided the units and the need to accommodate we conclude that 0.050 lb/MMBtu is to raise the rolling 30-day average startups and shutdowns, AEPCO appropriate as annual average design emission limit from the proposed level requested that any lower limits be set as value, but not as 30-day rolling average of 0.050 lb/MMBtu to 0.070 lb/MMBtu. an annual average limit. emission limit at the Coronado units. A rolling 30-day average of 0.070 lb/ Response: We partially agree with this While we acknowledge that Apache 2 MMBtu represents an upward revision comment. In our proposal, our analysis and 3 are not identical to the Coronado of 40 percent from an annual average was based on an SCR annual average units, we do note the following design value of 0.050 lb/MMBtu and design value of 0.050 lb/MMBtu, which similarities: corresponds to the upper end of the was subsequently proposed as a rolling • Both the Apache and Coronado range of lb/MMBtu values considered 30-day average emission limit. We units are of the same boiler type (Riley achievable by SRP’s analysis. We disagree that our use of 0.050 lb/MMBtu turbo). consider this magnitude of upward as an annual average design value is • Both the Apache and Coronado revision appropriate to accommodate merely anecdotally supported or based units were constructed and placed into emissions from startup and shutdown on vendor literature/guarantees alone. operation at approximately the same events, as well to provide AEPCO a As discussed in our proposal, the ability time. Construction commenced on the sufficient measure of operational of SCR to achieve control efficiencies in Apache units in 1976, and they were flexibility as a small entity. In addition, the range of 80 to 90 percent is well placed into operation in 1979. The in response to comments requesting that established. Although the information Coronado units were placed into emission limits be established across operation in 1979 and 1980. units,116 consistent with the BART included in our proposal did include • vendor estimates, it also included Both the Apache and Coronado Guidelines,117 we have decided to set summaries of SCR control efficiencies units have access to, and could the emission limit as a ‘‘bubble’’ limit that were achieved in practice. We have potentially use, a bituminous and sub- across Apache Units 2 and 3. We are 113 further supplemented the record to bituminous coal blend. therefore finalizing a 30-day rolling • Although the historical operating include more recent examples average BART emission limit of 0.070 profiles of the Apache and Coronado illustrating that SCR, as a technology, is lb/MMBtu for Apache Units 2 and 3 as units are not identical, both the Apache capable of achieving control efficiencies a ‘‘bubble’’ across these two units. and Coronado units are cycling units in the range of 80 to 90 percent. For the Comment: One commenter (AEPCO) that exhibit a greater number of startup Apache units, an annual average requested that if EPA establishes an and shutdown events than baseload emission rate of 0.050 lb/MMBtu units. 114 represents 87 to 89 percent control. As noted in our NPRM (77 FR 42867). Based on these similarities, we 115 See EPA’s Action Development Process, Final While these values represent the upper similarly conclude that the Apache Guidance for EPA Rulewriters: Regulatory range of SCR control and are more units cannot achieve an SCR emission Flexibility Act as amended by the Small Business Regulatory Enforcement Fairness Act, November stringent than the control efficiencies rate of 0.050 lb/MMBtu on a rolling 30- used in the BART analyses prepared by 2006, at 3. This EPA guidance document states that day average, but that use of 0.050 lb/ prior to the enactment of the Small Business 110 AEPCO, we reaffirm that these values MMBtu as an annual average design Regulatory Enforcement Fairness Act, EPA are appropriate, given that they are still value is appropriate. We agree that exceeded the requirements of the Regulatory within the range of what is achievable Flexibility Act (RFA) by preparing a regulatory when establishing a rolling 30-day flexibility analysis for every rule that would have with SCR and that the Apache units are BART emission limit that is based upon any impact on any number of small entities. In view among the highest baseline NOX an annual average design value, it is of the changes made by SBREFA, however, EPA emission rate units considered in our appropriate to provide a compliance decided to implement the RFA as written—a proposal. We agree with the commenter regulatory flexibility analysis as specified by the margin for periods of startup and RFA is not required simply because the rule has that, when establishing a 30-day rolling shutdown. In addition to considering some impact on some number of small entities: average BART emission limit that would the boiler type, age of the units, and coal ‘‘Instead, such analysis will be required only in apply at all times, it is appropriate to cases where we will not certify that the rule will not have significant economic impact on a accommodate emissions associated with 111 As discussed in further detail in the responses substantial number of small entities’’, but ‘‘It startup and shutdown events in on Coronado, this range of values corresponds to an remains EPA policy that program offices should developing the emission limit. SRP SCR unit designed to operate during all periods of assess the direct adverse impact of every rule on raised similar concerns in comments on normal operation and loading conditions. small entities and minimize any adverse impact to 112 As discussed in further detail in the responses the extent feasible, regardless of the magnitude of Coronado 1 and 2. As discussed in more on Coronado, this is specifically in regards to the impact or the number of small entities affected.’’ detail in our responses on Coronado, Coronado Unit 1. 116 Although AEPCO did not specifically request SRP submitted information suggesting 113 The Apache units have access to a number of this, this comment was made in comments that the Coronado units cannot achieve bituminous and sub-bituminous coal blends. See, submitted by Arizona Utility Group on behalf of all e.g., Final Report, Apache Unit 2 BART Analysis, of the utilities. As a result, we are also establishing an SCR emission rate of 0.050 lb/ Table 3–1 (December 2007). While the Coronado bubble limits for the Apache units. units currently burn 100 percent sub-bituminous 117 BART Guidelines, 40 CFR Part 51, Appendix 110 See Docket Items B–03 and B–04, Appendix A. Powder River Basin coal, they have historically Y, section V (‘‘You should consider allowing AEPCO’s calculations are based on 83–85 percent burned a mixture of PRB with bituminous coal. See sources to ‘‘average’’ emissions across any set of SCR control efficiency, and 24-hour average SRP Comments on Proposed Rule (September BART-eligible emission units within a fenceline emission rates of 0.07 lb/MMBtu. 2012), RMB Technical Memorandum, page 3. * * *).
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SNCR limit, that the limits for Apache not provide any information in its for the Coronado units in evaluating Units 2 and 3 be set at 0.23 lb/MMBtu. comments documenting how or to what SNCR performance and an appropriate The commenter notes that while there extent these issues justify a 0.23 lb/ SNCR emission limit for the Apache are some differences in past utilization, MMBtu emission limit (rolling 30-day units. As noted in our responses to the units are functionally identical and average). We note that AEPCO’s original comments on Coronado, SRP submitted that, based on the best information BART analysis also identified an SNCR a conceptual design estimate for SNCR available, a limit of 0.23 lb/MMBtu is emission estimate of 0.23 lb/MMBtu, for Coronado 1 that included a vendor likely the best consistently achievable but did not discuss the extent to which estimate of 25 percent control efficiency limit given the load-following, unit- startup, shutdown, and malfunction from LNB emission rates. As noted in cycling and startup and shutdown events are accounted for in this our responses for Coronado, while this issues that must be addressed as part of emission rate. is less stringent than the 30 percent unit operation. We note, however, that SRP also Response: Although AEPCO stated in provided information in its comments SNCR control efficiency used by our comments that ‘‘based on the best regarding SNCR performance at contractor, we consider it a reasonable information available, a limit of 0.23 lb/ Coronado Unit 1. Again, because of the estimate. Based upon 25 percent control MMBtu is likely the best achievable similarities between the Apache units efficiency, annual average emission limit’’ and cited unit cycling and and the Coronado units, we consider it rates for the SNCR with LNB and OFA startup/shutdown issues, AEPCO did useful to examine information provided option are presented in Table 2.
TABLE 2—APACHE: SNCR EMISSION RATE ESTIMATE [Annual average]
Control Average Control technology efficiency Apache 2 Apache 3 (lb/MMBtu) (lb/MMBtu) across units (percent) 1 (lb/MMBtu)
OFA ...... 0.37 0.44 0.40 LNB+OFA ...... 30 0.26 0.31 0.28 SNCR+LNB+OFA ...... 25 0.19 0.23 0.21 1 This represents the incremental control efficiency from the previous control option, not the overall control efficiency from the baseline case of OFA.
If we were to establish a BART For the purposes of our cost $2,275/ton to $2,908/ton, which EPA emission limit corresponding to the use calculations or visibility modeling, considers cost-effective. According to of SNCR technology, we would use the however, we have retained the use of Earthjustice, when the cost-effectiveness annual average SNCR emission rates our original SNCR emission rates. A less of SCR is calculated using more accurate presented in Table 2 as our basis, rather stringent SNCR emission rate would, by costs and proper baselines, the result is than our original estimates based on 30 itself, primarily serve to make the next a cost-effective SCR investment that percent SNCR control efficiency. As most stringent control option, SCR, reduces NOX at a cost of $2,640/ton at noted in a separate response, when appear to remove a greater amount of Unit 2 and $2,275/ton at Unit 3. using an annual average design emissions. This in turn would make the Response: Based upon a review of the emission rate to establish a rolling 30- SCR control option appear more commenters’ calculations, we recognize day limit that will apply during periods incrementally cost-effective (i.e., by that there are certain aspects of cost of startup, shutdown, and malfunction, removing a greater amount of emissions, calculations that would result in lower we consider it appropriate to provide relative to SNCR, for the same cost). As $/ton values under different some type of measure that provides a discussed in our proposal and in other assumptions. As noted in our proposal, compliance margin for such events. responses to comments, we already we already consider the SCR with LNB First, we would set the SNCR emission consider SCR to be cost-effective, and it and OFA control option to be cost- limit as a ‘‘bubble’’ limit across Apache is not determinative to our decision to effective at $/ton values that are 2 and 3. As seen in Table 2, the annual find that SCR is ‘‘even more’’ somewhat higher than those calculated average SNCR emission rate, averaged incrementally cost-effective. by the commenters. As a result, we across both units, is 0.21 lb/MMBtu. A b. Costs of Compliance decline to modify our estimates of cost- 0.23 lb/MMBtu emission limit, as effectiveness to reflect these comments, requested by AEPCO, established on a Comment: Two commenters (NPS and as it is not in any way determinative to rolling 30-day average represents an Earthjustice) conducted their own our decision to find that SCR is ‘‘even approximate 10 percent increase from analyses of the cost and cost- more’’ cost-effective or that the the 0.21 lb/MMBtu annual average effectiveness of SCR with LNB and OFA incremental cost-effectiveness value emission rate. We would consider this for reducing emissions of NOX at between SCR and SNCR is ‘‘even more’’ magnitude of upward revision Apache Units 2 and 3. NPS used the incrementally cost-effective. appropriate to accommodate startup, cost methodologies of the CCM, relied Comment: One commenter (AEPCO) shutdown, and malfunction events as on the IPM to reflect the most recent stated EPA underestimated the site- well as the unit cycling nature of the SCR cost levels, and submitted the specific costs for installing SCR at Apache units. As a result, if established, detailed calculations as Appendix B to Apache, due principally to EPA’s we would consider the BART emission its comments. The commenter’s analysis substitution of general data used in the limit corresponding to the SNCR with yielded cost-effectiveness values of IPM model for the site-specific data LNB and OFA option to be 0.23 lb/ $2,392/ton to $3,144/ton. The used by ADEQ. The commenter stated MMBtu, established as a bubble across commenter noted that EPA’s analysis that EPA needs to reevaluate its both units. yielded cost-effectiveness values of numbers in light of AEPCO’s site-
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specific analysis. For operation and EPA did not include contractor indirect each unit, while the annualized costs of maintenance costs, AEPCO estimates costs and contingency with the capital, LNB and OFA estimated by ADEQ are total costs of $1,760,000, which is engineering and construction costs, nor only about $533,000 per unit. In slightly lower than EPA’s estimate of did EPA include any owner’s costs or addition, the commenter notes that the $1,822,463, with the main difference allowance for funds during marginal improvement in visibility with due to EPA’s higher allowance for construction, including interest during SCR over LNB and OFA would be less maintenance. For the base unit costs, construction. AEPCO does not believe than 1 deciview. EPA used a 25 percent reduction factor EPA should disallow these costs. Response: We disagree with for ‘‘low dust’’ for Unit 3. AEPCO’s AEPCO’s estimates with these costs are commenters’ assertions that we vendors do not believe there will be any $85,666,000, compared with EPA’s substantial reduction in cost based on estimate of $33,279,000. underestimated the costs of SCR, or that ‘‘low dust,’’ and estimates that installed The commenter stated that based on the cost of SCR is disproportional to its costs will be approximately $39,094,000 AEPCO’s estimated installed costs of benefits. In developing our proposed compared to EPA’s estimate of SCR, the cost burden is disproportional action for Apache Units 2 and 3, we $33,279,000 for this unit. AEPCO to the benefits. Adding the costs of SCR examined the cost estimates for the SCR estimates that the bare module cost will to EPA’s estimate for LNB and OFA, the with LNB and OFA control option be near $48,119,000, rather than the annualized cost is $3,508 per ton and contained in AEPCO’s original BART $25,599,000 that EPA estimates, because $13.9 million per deciview. analysis.118 By comparison, the SCR EPA only included costs for induced Another commenter (ACCCE) stated with LNB and OFA cost estimates we draft (ID) fan upgrades and did not that EPA’s proposal to require SCR at developed for our proposed action 119 account for the additional costs of Apache Units 2 and 3 must be do not differ significantly. A upgrading existing or running new abandoned due to the high costs of SCR. comparison of capital cost, total annual electrical service to support the The commenter notes that according to cost, and cost-effectiveness for these two additional electrical loads required by EPA’s estimates, costs of SCR with LNB estimates are summarized in Tables 3 SCR. The commenter also stated that and OFA would be about $6 million for and 4.
TABLE 3—APACHE UNIT 2: COST COMPARISON OF SCR WITH LNB AND OFA
Total annual Emissions Average cost- Capital cost cost removed effectiveness ($) ($/yr) (tpy) ($/ton)
EPA estimate ...... $44,779,657 $5,869,299 2,019 $2,908 AEPCO original estimate ...... 48,740,300 6,102,740 3,250 1,878
TABLE 4—APACHE UNIT 3: COST COMPARISON OF SCR WITH LNB AND OFA
Total annual Emissions Average cost- Capital cost cost removed effectiveness ($) ($/yr) (tpy) ($/ton)
EPA estimate ...... $43,812,028 $6,103,078 2,683 $2,275 AEPCO original estimate ...... 48,740,300 6,062,302 2,778 2,182
We note that while we used a different McDonnell.120 AEPCO provided two compared to a 25 percent cost reduction cost estimation methodology than sets of revisions: one in which it used in our estimate); AEPCO, our estimates of capital cost retained our assumptions regarding • Use of higher capacity factor (0.85 and total annual cost are very similar to costs not included in the CCM, such as for both units, compared to 0.62 and the company’s original estimates and AFUDC and owner’s costs, and another 0.71); differ, for example, by only 8 percent set in which it included those costs. In • Lower SCR NOX removal efficiency and 4 percent (respectively) at Apache both cases, these analyses also (based on an SCR emission rate of 0.07 Unit 2. More importantly, we note that contained revisions in order to reflect lb/MMBtu, compared to 0.05 lb/ AEPCO’s original estimates for Apache capital costs and O&M costs that AEPCO MMBtu); Units 2 and 3 actually show lower $/ton considered more representative and • Inclusion of an additional 15 values than our own, meaning that appropriate for the Apache units. These percent engineering, procurement, AEPCO’s original estimate indicates that revisions included the following: contracting fee (not included in our cost SCR with LNB and OFA is cost- • Higher bare module SCR costs, estimate); and • effective. involving the inclusion and upward And certain other different revision of specific constituent cost assumptions regarding O&M costs that In submitted comments, AEPCO result in similar total O&M costs. provided multiple analyses comparing items (e.g., concrete and piling, ductwork); AEPCO then included our estimate of our SCR (stand alone) cost estimate with LNB and OFA costs with its SCR revised estimates prepared by • Use of lower cost reduction for the (standalone) costs to arrive at its overall engineering firm Burns and low-dust SCR design as reflected in bare module cost (10 percent cost reduction, cost estimate for the SCR with LNB and OFA control option. As discussed 118 Docket Item No. B–01, Arizona Regional Haze 120 The analysis was included in Attachment 1 to elsewhere in this preamble, we have SIP, Appendix D, page 49. AEPCO’s Comments on the page titled ‘‘SCR Capital decided to finalize a 30-day rolling 119 See 77 FR 42856, Table 16. Cost Comparison.’’ average BART emission limit of 0.070
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lb/MMBtu for Apache Units 2 and 3, items noted above, such as bare module 5, this results in revised SCR with LNB and a ‘‘bubble’’ across these two units SCR costs, we are willing to defer to and OFA cost-effectiveness values of to provide AEPCO an adequate margin AEPCO’s judgment on these issues in $3,450/ton and $2,973/ton for Apache 2 for compliance. Although this 30-day order to address AEPCO’s concerns that and 3, respectively, that are still within limit accommodates the possibility of our cost estimate was insufficiently site- a range that we consider cost-effective multiple startups in a given 30-day specific. As a supplemental cost when considered in conjunction with period, we expect such spikes to be estimate, we have used the version of the visibility improvement associated smoothed out over the course of a year, AEPCO’s cost estimate that adheres to with SCR. so that the annual average remains our assumptions regarding costs that are closer to 0.05 lb/MMBtu. For the other allowed by the CCM. As shown in Table
TABLE 5—APACHE 2 AND 3: COST ESTIMATE OF SUPPLEMENTAL SCR WITH LNB AND OFA
Parameter Apache 2 Apache 3 Notes
SCR Capital Cost ($) ...... 71,938,250 71,938,250 1 LNB+OFA Capital Cost ($) ...... 10,543,189 10,543,189 2 SCR+LNB+OFA Capital Cost ($) ...... 82,481,439 82,481,439 ...... Interest Rate (percent) ...... 7.0 7.0 ...... Equipment Lifetime (years) ...... 20 20 ...... Capital Recovery Factor ...... 0.094 0.094 2 Annualized Capital Cost ($/yr) ...... 7,785,664 7,785,664 ...... Fixed O&M ($/yr) ...... 466,000 466,000 1 Variable O&M ($/yr) ...... 1,294,600 1,294,600 1 Total Annual O&M ($/yr) ...... 1,760,600 1,760,600 ......
Total Annual Cost ($/yr) ...... 9,546,264 9,546,264 ...... Heat Rate (MMBtu/hr) ...... 2,316 2,223 2 Baseline Emission Rate (annual average lb/MMBtu) ...... 0.371 0.438 ...... SCR Emission Rate (annual average lb/MMBtu)) ...... 0.050 0.050 2 SCR Control Efficiency (percent) ...... 87 89 ...... Annual Capacity Factor ...... 0.85 0.85 1 Baseline Emissions (tpy) ...... 3,198 3,625 ...... SCR Emissions (tpy) ...... 431 414 ...... Emissions Removed (tpy) ...... 2,767 3,211 ...... Annual Cost ($/yr) ...... 9,546,264 9,546,264 ...... Emissions Removed (tpy) ...... 2,767 3,211 ......
Average Cost-Effectiveness ($/ton) ...... 3,450 2,973 ......
Comment: One commenter (AEPCO) Comment: One commenter (AEPCO) limitations in obtaining funding for stated that according to EPA’s estimates stated that the Appendix Y BART capital improvements. As a single of SNCR costs, the incremental costs of Guidelines (40 CFR 51, App. Y, section generating station, with multiple units SNCR with LNB and OFA compared to IV.E.3.2) provide that the State and EPA subject to BART requirements, the LNB and OFA are $3.3 million with a must consider the economic effects of cooperative is unable to spread costs maximum incremental improvement of BART determinations. AEPCO estimates over unaffected units, other facilities or 0.47 dv at Chiricahua Wilderness Area. that to install and operate SCR with a large system of units and ratepayers. The commenter stated that this LNB and OFA, rates would need to rise Also, as a cooperative, AEPCO is owned improvement in deciviews is by more than 17.5 percent. Further, the by its members and cannot sell stock or insignificant compared with cost. units could have to shut down if the other equities to raise funding, and must cost of power from those units is out of seek long-term financing from the Rural Response: As described above, EPA is line with the cost of power in the open Utilities Service, which has a limited not limited to considering incremental market. Moreover, due to contract budget and is being asked to fund efforts costs and benefits in comparing BART expirations, AEPCO has no certainty for other cooperatives and rural utilities alternatives. The visibility benefits of that even its existing 147,643 meters to meet CAIR, CSAPR, other SIP SNCR at Chiricahua are a full 1 will be available to defray costs. AEPCO initiatives, and the upcoming EGU deciview with an annual cost of $6.6 asserted that these factors are exactly MACT. In addition, the terms of million and a cost-effectiveness of the types of circumstances that were AEPCO’s mortgage agreement would $2,056 $/ton averaged over the two designed to be acknowledged in the necessitate a rate increase of more than emitting units. In this case, even the BART Guidelines. 16 percent to accommodate SCR, and it incremental cost-effectiveness of $2,837 One commenter (AEPCO) stated that is not certain whether the Arizona $/ton is well within the range that we EPA failed to follow the requirements of Corporation Commission (ACC) would consider cost-effective. The incremental CAA section 51.308 and Appendix Y in grant such a rate increase or what the visibility benefit of 0.47 dv is also its cost analysis by failing to review the long term impact would be on AEPCO’s substantial, and additional benefits affordability of the final cost on AEPCO working and patronage capital. would occur at multiple Class I areas. as a single facility cooperative, but AEPCO also stated that the operating Considered as a contribution to rather examined only the cost per ton and financing costs are unreasonable for visibility impairment, EPA disagrees and the cost per deciview. EPA should the Apache plant. EPA estimates the that this improvement from SNCR is also consider the implications of SCR system alone will have operating insignificant. AEPCO’s cooperative status and its and maintenance costs of $3.3 million,
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which is 35 percent of AEPCO’s total for the SCR system, and the current that this is reasonable, as average annual net revenue of $9.5 million for 2010 and equity capital of $94 million in 2011 increases have been up to 3 times as more than the net revenue of $1.9 would cover the entire cost of high as this increase, and this rate will million for 2011. AEPCO estimates that installation. The report also shows that likely be offset by a settlement award of it will need to increase rates by $22.5 AEPCO will receive refunds from a $63 million. The commenter also noted million a year over the O&M costs just settlement with two railroads totaling that while the incomes of its customer to finance SCR with LNB and OFA on $63 million. The commenter further base are relatively low, the cost of living Units 2 and 3. This combined cost is 14 refuted that AEPCO may not be able to in the area is also lower than the times AEPCO’s net revenues in 2011 borrow sufficient funds for SCR. The national average. The commenter and 2.8 times 2010 net revenues. This commenter stated that RUS loan funds further noted that utilities in similarly cost does not include other are not raised or subsidized by economically disadvantaged areas have expenditures that will be required for taxpayers, and the RUS does not successfully installed modern pollution Units 1, 2 and 3 for BART. With only anticipate any shortage in funding. In controls costing significantly more than 147,643 metered customers and with addition, the commenter claimed that the cost of SCR at Apache. the National Rural Utility Cooperative many of these customers in low income Response: It is not EPA’s intention to Finance Corporation (NRUCFC) is areas, rate increases for these customers endanger the economic viability of financed by private investors, and are not trivial. The commenter also Apache Generating Station or to place AEPCO should not have any difficulty stated that SNCR also is not affordable an undue burden on AEPCO’s borrowing from the NRUCFC, if due to the operating costs. AEPCO customers. EPA has considered the estimates SNCR with LNB and OFA necessary. Another commenter (ACCCE) stated comments on these issues very operating costs to be $6.8 million, carefully. Regarding the legal basis for which is three times AEPCO’s net that the large costs of SCR may adversely impact AEPCO and its our decision, neither the CAA nor the revenue 2011 and over two-thirds of net RHR requires states or EPA to consider revenues in 2010. customers due to AEPCO’s small size, the low income profiles of AEPCO’s the affordability of controls or ratepayer Another commenter (Earthjustice) service area, and AEPCO’s ability to impacts as part of a BART analysis. stated that SCR costs will not threaten obtain financing. The commenter urges Rather, the CAA and RHR require AEPCO’s continued viability or have a EPA to give full consideration to consideration of ‘‘the costs of severe impact on its operations, which AEPCO’s comments submitted June 29, compliance, the energy and non-air are the only two affordability conditions 2012, on these issues. quality environmental impacts of allowed to be considered under the Commenters from AEPCO’s member compliance, any existing pollution BART Guidelines (Appendix Y, Section cooperatives stressed the unique control technology in use at the source, IV.E.3.). The commenter noted that economic and engineering challenges the remaining useful life of the source, guidance and case law on Reasonably they face—low population density, the and the degree of improvement in Available Control Technology (RACT) demands of servicing vast remote areas visibility which may reasonably be and BACT determinations, which make with rugged topography, and anticipated to result from the use of clear that affordability issues are given transmission grid capacity limitations such technology.’’ 121 relatively little weight, are instructive that make it difficult to import power. The BART Guidelines do allow for for BART determinations due to the They noted that the majority of their (but do not require) the consideration of similar analysis. For RACT and BACT, power comes from the Apache ‘‘affordability’’ as part of the ‘‘costs of the commenter explained that Congress Generating Station, so the cost impact of compliance’’ under certain intended that all sources in a source SCR installation would be especially circumstances, noting that: category bear similar costs for pollution acute, resulting in rate increases ranging reduction and that sources should not from an estimated 15 percent to 30 1. Even if the control technology is cost effective, there may be cases where the be able to avoid cost-effective controls percent. The commenters pointed out installation of controls would affect the due to poor financial position, as this that their customer base has average would reward inefficient or poorly- viability of continued plant operations. incomes well below the national and 2. There may be unusual circumstances managed sources. The commenter cited Arizona averages, and would be that justify taking into consideration the two cases regarding RACT and BACT especially hard hit by large rate conditions of the plant and the economic economic feasibility (Michigan v. increases; many customers struggle to effects of requiring the use of a given control Thomas, 805 F.2d 176, 180 (6th Cir. pay their power bills as it is. The technology. These effects would include 1986), Nat’l Steel Corp., Great Lakes commenters stated that AEPCO and the effects on product prices, the market share, Steel Div. v. Gorsuch, 700 F.2d 314, 324 associated cooperatives cannot finance and profitability of the source. Where there (6th Cir. 1983)). The commenter also or absorb the costs of SCR at the Apache are such unusual circumstances that are noted that detailed economic data is Generating Station. The commenters judged to affect plant operations, you may required for sources to raise indicated that closure of the large, load- take into consideration the conditions of the affordability issues under RACT and following coal-fired units would plant and the economic effects of requiring BACT, and the detailed economic threaten the reliability of the electrical the use of a control technology. Where these analysis called for in the BART system, particularly with the limited effects are judged to have a severe impact on plant operations you may consider them in Guidelines should be similarly robust capacity of the local grid to import where EPA considers affordability the selection process, but you may wish to power from other areas. provide an economic analysis that issues for ‘‘unusual circumstances.’’ The Another commenter (Earthjustice) demonstrates, in sufficient detail for public commenter also stated that Apache’s cited a report by Paul Chernick at review, the specific economic effects, continued viability is not threatened, Resource Insight Inc., which estimates parameters, and reasoning * * * Any based on a report by Paul Chernick at that any rate increases at Apache would analysis may also consider whether other Resource Insight Inc., which shows that be limited to a 2 percent to 5 percent competing plants in the same industry have AEPCO’s average operating margin over increase at most, resulting in an average the last four years would cover 185 extra cost of $3.28 per month on 121 CAA section 169A(g)(2), 42 U.S.C. 7491(g)(2); percent of the annual debt repayment customer bills. The commenter stated 40 CFR 51.308(e)(1)(ii)(A).
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been required to install BART controls if this AEPCO’s annual sales. We noted in the magnitude lower than the SCR costs information is available.122 NPRM that the projected costs of SCR described elsewhere in this document. We interpret the question of with LNB and OFA are approximately Therefore, even if we were to take them affordability as a specific question of $12 million per year, and that this into account, they would not whether the viability of continued plant exceeds AEPCO’s net margins of $9.5 substantially affect our analyses. operations will be affected by the million in 2010 and $1.9 million in Regarding the comment that the cost pollution control technology in 2011,125 although the report by Paul of SCR with LNB and OFA at Apache question. Although one commenter Chernick at Resource Insight Inc., could be covered with funds from asserted that the costs of SCR with LNB submitted by Earthjustice, notes that AEPCO’s operating margins or legal and OFA could cause a shutdown of AEPCO’s margin in 2008 was $17.4 settlements, while Apache Generating Apache Units 2 and 3 if it causes power million. Station does have annual operating costs from those units to be out of line In addition to conducting this initial margins that vary according to various with the cost of power on the open economic impact assessment, we conditions, it is not necessarily true that market, the commenter did not provide requested information from AEPCO on AEPCO can cover the costs of pollution evidence or analysis that supports this the economics of operating Apache control equipment exclusively from assertion. We agree that the terms of Generating Station and what impact the these funds, or from the settlement AEPCO’s mortgage require AEPCO to installation of SCR may have on the agreement mentioned in the comment. have sufficient revenue to meet the economics of operating Apache Because AEPCO is a member-owned financial metrics of Times Interest Generating Station. We received a utility, operating margins and other Earned Ratio and Debt Service Coverage description of plant conditions and surplus funds may be earmarked to be ratio. But AEPCO is eligible to finance potential economic effects before the returned to its member cooperatives on additional debt related to air pollution NPRM was published,126 and received a rotating basis. While some of these controls, and it has not shown that such additional information during the funds may be available for capital financing is unavailable to it. Securing comment period. We noted in the expenditures such as pollution controls, a rate increase from ACC may be time NPRM that if our analysis of this we have assumed for the purpose of our consuming, and thus supports our information indicated that installation analysis that financing will be necessary decision to grant AEPCO five years for of SCR would have a severe impact on to achieve the pollution reductions installation of such controls. However, the economics of operating Apache required by our action. the information provided to us does not Generating Station, we would For electric utilities, EPA has not show that installation of SCR would incorporate such considerations in our customarily analyzed or considered affect the viability of continued plant selection of BART. ratepayer impacts in BART determinations.129 operations. AEPCO is not being treated The BART cost figures provided in Nevertheless, we also differently from other competing plants this final action do not include other analyzed ratepayer impacts in an effort in its industry: many other electric expenditures that will be required for to assess the potential effects of our utilities, including other rural electric Apache Units 1, 2 and 3 to meet the action on AEPCO as a small entity. EPA cooperatives, are also being required to BART emission limits included in requested an electricity rate analysis install BART controls. Arizona’s Regional Haze SIP. Under the through our contractor, EC/R Inc., to Nonetheless, we performed additional CAA, EPA is not permitted to consider assist us in evaluating the possible analysis to understand better the economic feasibility when taking action electricity rate increases discussed in impacts of the proposed pollution the comments above. Our contractor on a SIP.127 To the extent these costs are controls on AEPCO as a small entity. As noted that AEPCO’s analysis appears to relevant to our FIP action, we note that we explained in our proposal, the U.S. place the entire burden of the AEPCO did not provide any cost Small Business Administration (SBA) incremental capital and O&M costs on estimates for the required upgrades to defines an electric utility company as its Member Co-ops and their retail the existing ESPs and scrubbers at small if, including its affiliates, it is customers. However, the analysis Apache Units 2 and 3 and estimated primarily engaged in the generation, should account for a share of the SCR that the total first year annualized cost transmission and/or distribution of cost going to off-system sales volumes of the required controls at Apache Unit electric energy for sale and its total and not only allocated to member rates. 1 (LNB and FGR) would be $0.552 electric output for the preceding fiscal The contractor’s Incremental Cost million.128 These costs are two orders of year did not exceed 4 million megawatt Model calculated an increment in hours (MWh).123 In 2011, AEPCO 125 See Docket Item H–1 Arizona Electric Power revenue requirements for AEPCO’s member cooperatives sold 2,453,272 Cooperative, Inc. Annual Report Electric for Year member cooperatives of 12.7 percent 124 MWh of electricity. As explained in Ending December 31, 2011 submitted to Arizona under the scenario that spreads the the proposal, we conducted an initial Corporation Commission Utilities Division, incremental SCR cost across all kWh assessment of the potential adverse available at http://www.azcc.gov/Divisions/Utilities/ Annualpercent20Reports/2011/Electric/ produced at Apache, both Member Co- impacts on AEPCO of requiring SCR Arizona_Electric_Power_Cooperative_Inc.pdf. ops and off-system or non-Member with LNB and OFA. Using publicly 126 Docket Item C–16, Letter from Michelle sales. Under the alternative scenario available information, EPA estimated Freeark (AEPCO) to Deborah Jordan (EPA), that the incremental cost for SCR is that the annualized cost of requiring AEPCO’s Comments on BART for Apache covered exclusively by member Generating Station, June 29, 2012. SCR in Units 1 and 2 would likely be cooperatives, the incremental revenue in the range of 3 percent of AEPCO’s 127 Union Electric Co., v. EPA, 427 U.S. 246, 255– 66 (1976); 42 U.S.C. 7410(a) (2). assets and between 6 and 7 percent of 128 Arizona Regional Haze SIP, Appendix D, calculations and thus the cost-effectiveness of the Table 10.3; see also Comments of Arizona Electric various control options considered. See 77 FR 4284. 122 BART Guidelines, 40 CFR Part 51, Appendix Power Cooperative, Inc., Proposed Disapproval of 129 Exceptions include EPA’s Regional Haze FIP Y, section IV.E.3. AZ RH SIP and EPA’s Proposed RH BART FIP for Hawaii, where we analyzed potential rate 123 77 FR 42866–42867; see also 13 CFR 121.201, (September 18, 2012) page 9. In our proposal, we impacts due to the unique energy situation in footnote 1. noted that these control cost calculations include Hawaii, 77 FR 61478, 61488, and EPA’s BART FIP 124 Annual Report for year ending December 31, costs that are disallowed by EPA’s Control Cost for Four Corners Power Plant, where we examined 2011, from AEPCO to Arizona Corporation Manual, such as owner’s costs and AFUDC. Both of potential rate impacts as part of tribal consultation, Commission. these elements have the effect of inflating cost 77 FR 51620, 51625–51626.
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requirement was 15.4 percent.130 As estimate was based on the capital cost mentioned above. The potential rate explained in the preceding responses, estimates originally published in our increases for residential users in 2019, this analysis is based on a capital cost NPRM. the first full year of incremental capital for the installation of SCR with LNB and AEPCO sells electricity through its expenditures for pollution controls OFA of $164.9 million, which matches member cooperatives, and not directly installed in 2017 (and the year with the the costs claimed by AEPCO in their to residential and business customers, largest incremental cost impact), range comment letter minus certain charges but EC/R also analyzed the impact of an from 4.5 percent, or $5.75 per month excluded by EPA CCM. This difference increase in the cost of electricity over 2011 rates, to 10.6 percent, or in the estimated capital cost for SCR generation on the monthly bills of $10.75 per month over 2011 rates.131 also accounts for much of the electricity users serviced by AEPCO’s EC/R noted that the assumptions it discrepancy between AEPCO’s and Member Co-ops. Table 6 indicates the made in constructing its model may Earthjustice’s estimates of electricity incremental retail costs of electricity to cause the impact to rates to be rate increases, since Earthjustice’s end users under the two scenarios conservatively overstated.
TABLE 6—INCREMENTAL RETAIL COSTS DUE TO SCR [As 2019 costs would impact 2011 retail rates]
Residential class only Combined residential, commercial & industrial Scenario Range of Percent Average $ per Average $ per Percent Average $ per Average $ per outcomes Increase year per month per Increase year per month per (percent) customer customer (percent) customer customer
A: Members Pay all Low ...... 5.4 $83 $6.92 5.8 $125 $10.42 SCR Costs. High ...... 10.6 129 10.75 12.0 220 18.33 B: Members Pay Portion Low ...... 4.5 69 5.75 4.8 103 8.58 of SCR Costs. High ...... 8.8 107 8.92 9.9 182 15.17
While these projected rate increases household income levels in the areas analyses conducted by EPA and the are not trivial, they are comparable to served by AEPCO’s Class A member commenters attempted to project the average historical rate increases for cooperatives to average household revenue requirements and possible rate AEPCO, Arizona, and U.S. incomes in the United States. In 2011 increases that would be required if SCR ratepayers.132 They are also projected to the median income for U.S. households with LNB and OFA are required at occur seven years in the future. Again, was $50,502. Using the supplemental Apache, BART and other environmental in discussing the limitations of this information provided by AEPCO, we regulatory requirements form only one retail rate analysis, EC/R noted that the calculated that the median income for part of the complex business conditions results of the retail rate assessment AEPCO’s Member Co-ops’ ratepayers under which utility rate decisions take should be considered conservative by was $49,303. In addition, we aggregated place, especially over extended time design. the data on median household income periods. It is the responsibility of utility Regarding the comment that utilities by zip code into four incomes ranges. in similarly economically disadvantaged companies to work with the appropriate Seventy-one percent of the median areas have successfully installed regulatory agencies to implement any household incomes by zip code were in modern pollution controls costing necessary rate changes in a manageable the $40,000 and above income ranges significantly more than the cost of SCR fashion. and twenty-nine percent were in the at Apache, we note that none of the Accordingly, because neither these median household income range of installed controls listed in Earthjustice’s projected rate increases nor any comment letter were installed under the $20,000 to $39,999. We found that the household incomes in AEPCO’s Member submitted information or analysis RHR. Accordingly, EPA cannot rely on indicate that a requirement to install them as precedents for the Apache Co-ops’ service area are in the same range as average U.S. household SCR with LNB and OFA will affect the Generating Station BART analysis. viability of Apache Generating Station, Regarding the comment on the income, so an increase in AEPCO’s EPA is finalizing its determination that economic vulnerability of AEPCO’s electricity rates should not cause greater this level of control represents BART. ratepayer population, EPA reviewed the hardship than a similar increase 133 However, we are also taking into supplemental information on per capita elsewhere in the country. EPA’s and median household incomes. responsibility under the CAA and the account AEPCO’s status as a small Because electric utility bills are likely RHR is to implement BART at Apache entity as part of our determination. In paid at the household and not Generating Station. As discussed particular, in its comments on our individual, or per capita, level, we elsewhere in this document, the five- proposal, AEPCO requested that ‘‘EPA believe that median household income factor analysis indicates SCR with LNB set the final BART limits in terms of lb/ is an appropriate metric for assessment. and OFA represents BART for NOX at MMBtu only and not as a specified We used census data to compare Apache Units 2 and 3. While the technology’’ to provide AEPCO with
130 Apache Plant: Report on SCR Incremental Cost 132 Energy Information Administration (EIA) State 133 Arizona Regional Haze SIP, BART Assessment. Prepared by Energy Strategies, LLC for Historical Tables for 2011, Released: October 1, Determination for Apache Generating Station, EC/R, Inc. (November 2012). 2012. Average Price by State by Provider, 1990– Supplemental Economic Analysis. Memorandum 131 Id. 2011. http://www.eia.gov/electricity/data/state/ from Larry Sorrels and Robin Langdon, EPA Office avgprice_annual.xls, last accessed November 5, of Air Quality Planning and Standards (November 2012. 5, 2012).
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‘‘maximum flexibility.’’ 134 AEPCO also AEPCO’s ability to use multiple fuels. on any population, including any requested that if EPA decided to finalize However, the BART emissions limit we minority or low-income population emission limits consistent with SCR that are establishing for Apache Units 2 and from our final action. Disadvantaged the limits be set at 0.07 lb/MMBtu.135 3 will still allow AEPCO a choice of populations also will be able to enjoy Given the unusual status of AEPCO as using multiple fuels across the units at the visibility improvements in Class I a small entity and a rural electric the Apache facility. areas anticipated from the emissions cooperative, we believe that it is b. Visibility Improvement reductions required by this final consistent with EPA policy to minimize rulemaking. adverse impact to this small entity to Comment: One commenter (NPS) EPA took several steps to ensure the extent that such action is feasible agreed with EPA’s analysis of the transparency and meaningful and consistent with our BART analysis. visibility impacts of the alternative NOX participation in the rule development To allow this small entity the maximum control options for Apache Units 2 and process for this BART FIP. In response flexibility that is consistent with our 3 at the various impacted Class I areas, to numerous requests, we extended the analysis of the five factors, we have as presented in EPA’s TSD, including public comment period on our proposal determined that it is appropriate to set EPA’s conclusions that ‘‘the and increased the number of public the BART limit as a 30-day rolling improvements from SCR are hearings in Arizona from one to three. average 0.070 lb/MMBtu limit, with a substantially greater than for the other In addition, all three hearings had five year compliance deadline. As candidate controls’’ and that ‘‘the Spanish language interpretation services AEPCO noted, this approach may allow modeled degree of visibility and the hearing on August 14 in minor changes in configuration of the improvement supports SCR as BART for Holbrook, Arizona, also offered optimal system to allow AEPCO’s Apache.’’ The commenter also indicated interpretation in Dine´. compliance at somewhat lower cost. that it compiled BART analyses data We disagree that Executive Order This 30-day rolling average 0.070 lb/ from across the United States, which 12898 requires EPA to consider the MMBtu limit is also applied as a revealed that the average cost per economic effects of our proposed action ‘‘bubble’’ across Units 2 and 3. This deciview proposed by either a state or on disadvantaged populations. As EPA’s approach allows for short term emission a BART source is $14 to $18 million. Environmental Appeals Board (EAB) spikes from startups and provides this The commenter pointed out that for all has explained: small entity with additional operational of the NOX control options at the Apache plant, including SCR, both the Executive Order 12898 instructs federal flexibility within the constraints of the agencies to address, as appropriate, BART emissions limit. $/max deciview and the $/cumulative ‘‘disproportionately high and adverse human Comment: One commenter (AEPCO) deciview are well below this range. health or environmental effects of [their] stated that EPA should not consider fuel Response: We acknowledge the programs, policies, and activities on minority switching from the current mix to all commenter’s agreement with our and low-income populations * * *.’’ The natural gas at Apache Unit 1 to be analysis. Our supplemental analysis, Executive Order, thus, speaks to human costless. AEPCO states that if it loses the discussed in more detail above, was health and environmental effects; it does not ability to use multiple fuels, its conducted using a capital cost for the require federal agencies to consider issues negotiating leverage with natural gas installation of SCR with LNB and OFA regarding cost or rate changes.136 suppliers will be greatly reduced, and it of $164.9 million. For the 0.070 limit on Therefore, Executive Order 12898 does will not be able to obtain gas at Apache Units 2 and 3 that we are not require us to consider potential reasonably competitive rates. AEPCO finalizing in this action, this economic effects. Nonetheless, as argued that this cost at Apache Unit 1 supplemental analysis found an average explained elsewhere in this document, should be considered by EPA in its cost per deciview ($/max deciview) of in consideration of AEPCO’s status as a overall evaluation of the affordability of $12.7 million and a cumulative average small entity and consistent with EPA controls at Apache. cost per deciview ($/cumulative policy encouraging consideration of the Response: EPA is approving ADEQ’s deciview) of $3.1 million. potential social and economic impacts emissions limit for Apache Unit 1. As 137 c. Other Comments of EPA actions, we have conducted noted by the commenter, Tables 6 and an analysis of the affordability of 7 of our proposed action (77 FR 42844) Comment: One commenter noted that installing SCR at Apache Units 2 and 3. listed ‘‘fuel switch to PNG’’ as a control EPA is required by the Executive Order This analysis indicates that installation option in the context of the PM10 and on Environmental Justice to consider all of SCR would not affect the viability of SO2 BART analyses, in addition to ‘‘fuel potential economic and environmental continued plant operations at Apache switch to low-sulfur fuel oil.’’ The impacts on minorities and low-income and would result in an average rate annualized costs for both options were populations that its decisions on BART, increase for residential member utility listed as zero in both analyses. The in this case, will have on AEPCO and its customers of (at most) $11 per month in information contained in Tables 6 and customers. The commenter stated that 2019 compared to 2011 rates. 7 does not represent our analysis for over four in ten of AEPCO’s customers Comment: One commenter indicated Apache Unit 1, but reflects the are minorities. In similar remarks, that because AEPCO is a small electric information contained in ADEQ’s PM10 another commenter cautioned EPA that cooperative, EPA is required by the and SO2 BART analyses. ADEQ’s BART such increases would impact at-risk Regulatory Flexibility Act to prepare a analyses for Apache 1 eliminated more populations. regulatory flexibility analysis for this stringent control technologies such as Response: In establishing BART rulemaking. fabric filters and wet FGD, and requirements for the facilities in this determined that a fuel switch to natural final rulemaking, EPA is increasing the 136 In re: Upper Blackstone Water Pollution gas was BART. Natural gas is a level of environmental protection for all Abatement District, Order Denying Review In Part commodity, and its price fluctuates due affected populations by requiring and Remanding In Part, NPDES Appeal Nos. 08–11 to 08–18 & 09–06. (May 28, 2010) slip op at 105. substantial NOX emission reductions. to factors beyond the constraints on (internal citation omitted). Thus, EPA does not expect any 137 See, e.g., Interim Guidance on Considering 134 AEPCO Comments page 18. disproportionately high and adverse Environmental Justice During the Development of 135 Id. human health or environmental effects an Action page 4, footnote 4.
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Response: We agree that AEPCO is remained 2001–2006, LNB and OFA b. Control Efficiencies considered small entity for purposes of would also have been considered in the Comment: In arguing against the the Regulatory Flexibility Act (RFA). analysis. APS noted that EPA concurred achievability of EPA’s proposed limit, However, the RFA does not require a with ADEQ’s BART determination for one commenter (APS) noted that regulatory flexibility analysis when a SO2 and PM10 emissions for these same according to the study that EPA placed rule has an impact on only one small units using a baseline of 2001–2006. In in the docket (IPM Model—Revisions to entity (as opposed to a significant addition, one commenter (Earthjustice) Cost and Performance for APC impact on a substantial number of small asserted the baseline period (2008– Technologies, 2010, Sargent & Lundy), entities). Nonetheless, EPA policy is to 2011) understates NOX emissions the Agency’s minimum emissions limit assess the direct adverse impact of every reductions compared to the baseline of 0.05 lb/MMBtu is specific to Powder rule on small entities and minimize any period of 2001–2004. River Basin coal and the minimum level adverse impact to the extent feasible, In contrast, one commenter (NPS) for bituminous coal is 0.07 lb/MMBtu. regardless of the magnitude of the concurred with EPA’s use of 2011 as the The commenter also stated that because impact or number of small entities baseline period for Cholla units 2, 3 and this is a minimum emissions level, it is affected. Therefore, we gave AEPCO 4 since it represents the first complete probably too aggressive even for a BART additional opportunities to participate calendar year at which it is certain that determination based on bituminous in the rulemaking process. Specifically, the Cholla plant operated using the full coal. The commenter also stated that prior to issuing our proposed rule, we quantity of a higher NOX-emitting coal these rates may be appropriate for new informed AEPCO that our proposed that the plant is committed to purchase units under ideal conditions as BACT action would address BART under its current coal contract. The are not appropriate for BART. requirements for units at AEPCO’s commenter submitted a graph of annual Another commenter (AUG) stated that Apache facility. We also requested NOX emission rates for the units at the EPA’s record in support of the putative information from AEPCO on the Cholla plant, which the commenter achievability of a 0.050 lb/MMBtu economics of operating Apache believes to show the impact of recently emission limit at Apache, Cholla, and Generating Station and what impact the added combustion controls and higher- Coronado is extremely thin and installation of SCR may have on the NOX coal. unpersuasive. AUG states that EPA has economics of operating Apache Response: As explained in a previous not, for instance, demonstrated through Generating Station. We have considered response, we do not agree that use of the the development of an SCR conceptual the comments we received concerning updated baseline for Cholla was design or some other, similar site AEPCO’s status as a small entity and the incorrect or inappropriate. Moreover, specific analysis that SCR can achieve potential economic impact of our updating the baseline did not eliminate this emission rate at any of these proposed action on AEPCO. Our LNB and OFA from consideration as particular facilities, and that EPA must discussion of affordability above BART, since existing controls can affirmatively establish that its selected includes our response to these constitute BART if additional controls BART rate is in fact achievable at these comments and delineates the changes are not warranted based on the five- facilities. we made from our initial proposal in factor analysis. For example, EPA In addition, AUG asserted that EPA’s order to give AEPCO flexibility as a recently approved a determination by proposed limit of 0.050 lb/MMBtu is small entity. We have also taken into Colorado that existing LNB at Comanche inconsistent with the following EPA consideration the potential impact of Units 1 and 2 constituted BART where actions: the reporting, recordkeeping, and other ‘‘the State determined that the added • As part of CSAPR, EPA concluded compliance requirements of this rule, as expense of achieving lower limits that a NOX limit below 0.06 lb/MMBtu set forth in the regulatory text. Because through different controls was not is not achievable through retrofit of SCR AEPCO is an electric utility that is reasonable based on the high cost- on coal-fired electric generating already subject to reporting, effectiveness [$9,900/ton] coupled with units.140 recordkeeping and other compliance the low visibility improvement (under • In EPA’s proposed rule for North requirements under the CAA, AEPCO 0.2 dv) afforded.’’ 138 In this case, by Dakota, EPA based its BART analysis on already has access to the professional contrast, the cost-effectiveness of post a 0.05 lb/MMBtu emission rate, but then skills necessary for the preparation of combustion controls is reasonable and proposed to adopt a 0.07 lb/MMBtu the reports and records necessary for the expected visibility improvements limit because EPA concluded the more compliance with the FIP. are substantial, as explained below. stringent rate would not allow a sufficient margin of compliance (citing 2. Cholla Units 2, 3 and 4 Nonetheless, in order to address the commenter’s concerns that we did not 76 FR 58570, 58610, September 21, a. Selection of Baseline Period properly consider LNB and OFA as a 2011). • Comment: Several commenters potential control option and therefore In its final rule for South Dakota, asserted that EPA incorrectly and precluded a BART determination of EPA set a NOX limit of 0.10 lb/MMBtu inappropriately changed the control LNB and OFA, we have used a baseline for an electric generating plant to allow baseline period in its NOX BART period of 2001–2003, which for an adequate margin of compliance analysis for Cholla. APS and PacifiCorp corresponds to the period used in APS’s (citing 77 FR 24845, 24848, 24849, April 26, 2012). contend that the 2011 NOX emissions original BART analysis. Our • were already controlled by LNB and supplemental cost analysis for Cholla is In Colorado’s recently approved OFA at Cholla Units 2, 3 and 4, which summarized in Table 10.139 regional haze SIP, the NOX BART for penalized APS and PacifiCorp for their Craig Station is an emission rate of 0.27 lb/MMBtu based on SNCR and SCR for voluntary use of these controls. In 138 77 FR 18052, 18066 (March 15, 2012) addition, since LNB and OFA were (Proposed Rule); pre-publication version of Final their units and the NOX BART for already in use, EPA inappropriately Rule, signed September 10, 2012, available at: http://www.epa.gov/region8/air/FinalActionOn 140 Citing 76 FR 1109, 1115, January 7, 2011; EPA, only considered higher cost post- ColoradoRegionalHazePlanSep2012.pdf. Transport Rule Engineering Feasibility Response to combustion controls (SCR and SNCR) in 139 A spreadsheet titled ‘‘Supplemental Cost Comments, Docket ID No. its BART analysis. If the baseline Analysis 2012–11–15.xls’’ is in the docket. EPA-HQ-OAR-2009-0491-4529, at 13, July 6, 2011.
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Hayden Station is an emission rate of most stringent emission control level that the In our proposal, we explained that 0.07 lb/MMBtu for one unit and 0.08 lb/ technology is capable of achieving. You SCR, as a technology, can achieve a MMBtu at another unit based on SCR. should consider recent regulatory decisions level of performance between 80 to 90 and performance data (e.g., manufacturer’s Response: We disagree that the SCR percent reduction, even on a retrofit emission rate for the Cholla units data, engineering estimates and the experience of other sources) when basis, and especially when combined should be established at 0.07 lb/MMBtu identifying an emissions performance level with LNB and OFA. Although the per IPM guidance for bituminous coal. or levels to evaluate. commenters indicate that they do not Based on the coal information provided In assessing the capability of the control consider our support for this position 141 in the original Cholla BART analyses, alternative, latitude exists to consider special persuasive, they have not specifically the Lee Ranch/El Segundo Mine coal circumstances pertinent to the specific disputed the claim that SCR can, as a being used at Cholla does exhibit some source under review, or regarding the prior technology, achieve this level of properties that would fall in the range application of the control alternative. performance. We have included of bituminous coal (nitrogen and However, you should explain the basis for moisture content), but also exhibits choosing the alternate level (or range) of additional documents, including vendor properties that fall in the range of sub- control in the BART analysis. Without a experience lists of SCR projects, which showing of differences between the source bituminous coal (fixed carbon, heat indicate that SCR has been capable of and other sources that have achieved more achieving this level of performance.143 value). As a result, we do not agree that stringent emissions limits, you should the Lee Ranch/El Segundo coal can In determining whether special conclude that the level being achieved by circumstances exist at the Cholla units clearly be classified as a bituminous those other sources is representative of the coal. achievable level for the source being that may justify using a different range More broadly, we disagree with analyzed.142 of control, we examined the Clean Air commenters’ assertion that 0.05 lb/ We therefore disagree with commenters’ Markets Database (CAMD) for tangential MMBtu (rolling 30-day average) is an assertion that the BART Guidelines coal-fired units operating with SCR, inappropriate SCR emission limit for the require a SCR conceptual design or either stand alone or in conjunction Cholla units. Although BART other site specific engineering analysis with LNB and OFA, and on a retrofit determinations are performed on a site- in order to demonstrate a level of basis. We identified the 10 best such specific basis, the process for performance. The BART Guidelines performing units, and have listed them establishing the technical feasibility of a indicate that one should take into in Table 7. In addition, we have listed control technology and its associated account the most stringent emission their best-performing annual average emission performance level are control level that the technology is emission rate as well as the percent described in the BART Guidelines as capable of achieving and then document reduction associated with that emission follows: any special circumstances for selecting rate by comparing it to annual average It is important, however, that in analyzing an alternate level or range of control in emission rates from its pre-SCR period the technology you take into account the the BART analysis. of operation.144
TABLE 7—BEST PERFORMING TANGENTIAL COAL-FIRED EGUS WITH RETROFIT SCRS
SCR Emission rate Control State Facility name Unit ID efficiency Control technology (lb/MMBtu) Year (percent)
TX ...... W A Parish ...... WAP7 0.038 2007 73 SCR 1 TX ...... W A Parish ...... WAP8 0.038 2006 77 SCR 1 VA ...... Chesterfield Power Station ...... 6 0.041 2009 89 SCR+LNB+COFA/SOFA NC ...... Marshall ...... 3 0.045 2011 85 SCR+LNB+SOFA TN ...... Kingston ...... 6 0.051 2009 88 SCR+LNB+SOFA TN ...... Kingston ...... 8 0.052 2009 88 SCR+LNB+SOFA TN ...... Kingston ...... 9 0.052 2009 89 SCR TN ...... Kingston ...... 7 0.054 2009 88 SCR+LNB+SOFA MN ...... Boswell Energy Center ...... 3 0.054 2009 86 SCR+LNB+SOFA TX ...... Sandow ...... 4 0.059 2011 83 SCR+LNB+SOFA 1 In the case of the Parish units, we note that their <80 percent control efficiency is the result of low pre-SCR emission rates.
In the case of the Cholla units, which a 24-hour average basis.145 Although the of APS’s own BART analyses for the are also tangential coal-fired EGUs, our commenters have stated that they Cholla units are based upon control estimate of the level of performance of disagree with this level of control efficiencies in a similar range. The the SCR with LNB and OFA control efficiency and the emission rate original BART analyses performed by option corresponds to 80 to 85 percent associated with it, they have not APS and submitted to ADEQ included control efficiency, which is in the low- submitted information for the Cholla visibility modeling indicating that SCR to mid-range of SCR performance. We units documenting special with LNB and OFA can achieve in the used these control efficiencies in our circumstances that would justify a lower range of 83 to 86 percent control cost calculations on an annual average effective range of control efficiency for efficiency for Cholla Units 2, 3 and 4. basis, and in our visibility modeling on SCR. In fact, we note that certain aspects APS calculated these control
141 143 ‘‘Additional APS Cholla BART response’’, Kurtides, Ted ‘‘Lessons Learned from SCR Reduction Control of NOX emissions from Fossil Appendix B. Reactor Retrofit’’, Presented at COAL–GEN (August Fuel-fired Electric Power Plants’’ (May 2009). 142 BART Guidelines, 40 CFR Part 51, Appendix 6–8, 2003); Hitachi SCR/NOX catalyst experience 144 ‘‘Tangentially-fired coal unit SCR retrofit (February 2010); Haldor Topsoe SCR catalyst Y, section IV.D.3. emission data.’’ reference list (October 2009); Institute of Clean Air Companies, ‘‘White Paper—Selective Catalytic 145 See 77 FR 42859, Table 18.
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efficiencies based upon the difference 2003 baseline period and a 24-hour MMBtu. This information is between the highest 24-hour average average SCR emission rate of 0.07 lb/ summarized in Table 8. emission rate observed over a 2001–
TABLE 8—SCR WITH LNB AND OFA CONTROL EFFICIENCY ESTIMATE [APS estimate]
Baseline NOX emissions SCR+LNB+OFA (24-hour average) Emission rate Unit Control (lb/MMBtu) 1 Control tech Period (lb/MMBtu) efficiency 2 (percent)
Cholla 2 ...... 0.503 CCOFA 2001–03 0.07 86 Cholla 3 ...... 0.410 CCOFA 2001–03 0.07 83 Cholla 4 ...... 0.415 CCOFA 2001–03 0.07 83 1 Per Table 2–1 of the original BART analysis for each unit, Docket Items B–06 through B–08. 2 Per Appendix A of the original BART analysis for each unit, Docket Items B–06 through B–08.
APS submitted updated visibility use SCR emission rates consistent with the Cholla units can achieve the values modeling to us as part of comments on these control efficiencies in other in Table 9. These values are consistent our proposal, and with the exception of aspects of its BART analysis, such as on with our own estimates of SCR with Cholla Unit 2, the baseline emissions an annual average basis in cost LNB and OFA performance, and support and associated SCR control efficiencies calculations. If the control efficiencies the use of a 0.05 lb/MMBtu emission do not differ from the original calculated by APS are applied to rate, on an annual average basis, in our analysis.146 We note that APS did not baseline annual average emission rates, cost calculations.147
TABLE 9—SCR WITH LNB AND OFA EMISSION RATE [Per APS Control Efficiency Estimate]
Baseline NOX emissions SCR+LNB+OFA (Annual ave) emission rate Unit Control (lb/MMBtu) Ctrl tech Period efficiency (lb/MMBtu) (percent)
Cholla 2 ...... 0.326 CCOFA 2001–03 86 0.045 Cholla 3 ...... 0.304 CCOFA 2001–03 83 0.052 Cholla 4 ...... 0.296 CCOFA 2001–03 83 0.050
With regard to establishing the BART SIP that established a BART emission to be ‘‘smoothed out.’’ 149 Since the limit emission limit of 0.05 lb/MMBtu on a limit of 0.10 lb/MMBtu (30-day rolling) was established on a shorter averaging rolling 30-day average, the commenters for Big Stone I, based on the use of SCR period than the design basis (from 365 note that in the proposed Regional Haze technology, also citing a need for days to 30 days), there are fewer days FIP for North Dakota, we stated the compliance margin for BART limits that (i.e., data values) with which such following for the Milton R Young must apply at all times including short-term spikes can be ‘‘smoothed Station Unit 1, a coal-fired boiler for startup, shutdown, and malfunction (77 out.’’ In the instances noted by the which we also proposed a NOX BART FR 24849). We agree with the commenter, a less stringent value (from determination based on the use of SCR commenter that it is appropriate to 0.05 to 0.07 for MR Young 1) was technology: accommodate startup and shutdown established for the shorter averaging In proposing a BART emission limit of 0.07 events when establishing a rolling 30- period. lb/MMBtu, we adjusted the annual design day BART emission limit. Since these In order to accommodate emissions rate of 0.05 lb/MMBtu upwards to allow for events, particularly startup, generate from startup and shutdown events, we a sufficient margin of compliance for a 30- elevated levels of emissions, the are finalizing two revisions to our day rolling average limit that would apply at particular day during which such an all times, including startup, shutdown, and proposed emission limit of 0.050 lb/ malfunction.148 event occurs will appear as a short-term MMBtu (rolling 30-day average). First, ‘‘spike.’’ On an annual average basis, we are finalizing the limit as a ‘‘bubble’’ The commenter also notes that we such short-term spikes can be averaged limit across Cholla Units 2, 3 and 4. By approved South Dakota’s Regional Haze with 365 other values that allow them establishing the rolling 30-day limit
146 In the visibility modeling submitted a part of 147 In addition, APS’s comments also included an 148 76 FR 58610. their comments, APS apparently identified a higher SNCR design estimate based upon LNB 149 The precise method by which such short term maximum 24-hour average value from the 2001– performance of 0.22 lb/MMBtu. Achieving an SCR spikes will be ‘smoothed out’ over the period of a 2003 baseline period than the one identified in emission rate of 0.05 lb/MMBtu from this emission year will vary based upon the precise compliance Table 8 for Cholla Unit 2. This results in an rate would represent only 77 percent control determination methodology. The suggestion that it estimated SCR with LNB and OFA control efficiency. This is well within the range of what would be averaged with the other 364 days’ values SCR can achieve, even with a lower inlet NOX is just a generic description of one type of averaging efficiency of 87 percent. emission rate. process.
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across all three units, this allows the visibility estimates must be updated to construction of utility-scale air quality spike in emissions associated with a reflect these levels. control systems. startup/shutdown event at one unit to Response: We partially agree with this Response: We disagree with the be smoothed with the emission values comment. In submitted comments, APS commenter’s assertion that we have not from the other operating units. Second, provided a conceptual design estimate provided sufficient information we are also finalizing a less stringent for SNCR which was based upon 25 regarding our cost calculations. In the value in order to establish an emission percent control efficiency (incremental docket for our proposal, we included limit that accommodates the startup and from LNB) and a resulting emission rate the raw cost calculation spreadsheets shutdown events associated with the of 0.17 lb/MMBtu. While this control that contain the cost calculation operating profile of the Cholla units. In efficiency is less than the 30 percent equations, corresponding variable determining what magnitude of revision control efficiency used by our values, selected notes regarding is appropriate, we examined the contractor, we consider it to be a assumptions and variable ranges, as emissions of the Cholla units, as reasonable estimate based upon the well as selected tables from the IPM 154 reported to CAMD, over a 2001–2003 vendor quotes provided by APS.152 Base Case v4.10. In addition, web 150 baseline period. We calculated We disagree with the use of an LNB links were also provided (both in the annual average emission rates and 30- emission rate of 0.22 lb/MMBtu, as the raw cost calculation spreadsheet and in day rolling average emission rates using Cholla units have not demonstrated a our proposal) to the location on the a calculation methodology consistent ability to operate at this publicly available EPA Web site that corresponding to a bubble limit across emission rate under the current coal contains full IPM documentation. We 151 note that both SRP and AEPCO were all three units. Based on this contract for Lee Ranch/El Segundo coal. able to locate this spreadsheet, as both methodology, we determined that the Based upon a review of CAMD emission utilities submitted control cost estimates maximum annual average emission rate data since the installation of LNB, we as part of their comments that revised for these units was approximately 0.32 acknowledge that the Cholla units have, certain variable values and assumptions lb/MMBtu, while the maximum 30-day to varying degrees, operated with LNB in our contractor’s raw calculation rolling average emission rate was at emission rates consistent with APS’s spreadsheet. This information was approximately 0.35 lb/MMBtu. This assertion of 0.22 lb/MMBtu during this initially developed by EPA represents an 8 percent difference period. However, as noted in our contractors 155 and was reviewed by between the highest rates observed on proposal, calendar year 2011 an annual and 30-day rolling average. EPA staff. Following the close of the represented the first year at which the public comment period on our proposed We recognize that this variability Cholla plant operated at the ‘‘full’’ between annual average and 24-hour rulemaking, APS provided additional minimum purchase quantity under its information concerning its own cost average emission rates is based on new contract for Lee Ranch/El Segundo operation of the Cholla units with LNB estimates. We have placed this coal, which is a higher NOX-emitting and OFA, and may not be directly information to the docket and taken it coal than what was previously used. into account as part of this final representative of the variability Since the beginning of 2011 to associated with operation of SCR. We rulemaking, as explained below. September 2012, Cholla Units 3 and 4 Comment: One commenter (APS) are therefore finalizing an emission rate have operated at or below an emission of 0.055 lb/MMBtu as a bubble limit stated that EPA’s cost-effectiveness rate of 0.22 lb/MMBtu for only five to numbers in the proposed FIP are across Cholla Units 2, 3 and 4, which six months of this 21 month period, and represents a 10 percent upward revision incorrect. The commenter stated that Cholla Unit 2 has not operated at or EPA used a capital recovery factor of 9.4 from the annual average design value. below this emission rate in any month When combined with the 3-unit bubble, percent, assuming an interest rate of 7 during this period.153 Therefore, an LNB percent, but APS states that a capital this represents an emission limit that we emission rate of 0.22 lb/MMBtu is not consider appropriate to ensure design recovery factor of 13.4 percent should supported by the actual recent operation be used to account for income and and operation of the emission control of the Cholla units, so it is unlikely to system to provide the best available property taxes and the cost of capital be an appropriate representation of authorized by ACC in the last rate case. retrofit control. anticipated future emissions. Comment: EPA based LNB/SOFA The commenter also stated that EPA analysis uses emissions factors for SCR emission rates on 2011 NOX emissions c. Costs of Compliance rates, which is not an accurate that are not appropriate for the type of Comment: One commenter (APS) assessment of the capability of the coal used, the units, or the averaging stated that, for EPA’s capital costs installed LNB and SOFA. Arizona set period. In addition, APS noted the cost estimate, no back-up material was the BART limit for Cholla Units 2, 3 and values used in the IPM model and EPA’s provided, even when directly requested 4 at 0.22 lb/MMBtu. All three units were CCM may be outdated, which may also by APS. This lack of information makes able to meet this limit in their lead to underestimation of the true it impossible for APS to comment on the acceptance test after LNB and SOFA costs. APS estimates cost-effectiveness validity of EPA’s cost estimates. The were retrofitted, and APS believes they ranging from $7,719/ton to $8,894/ton, commenter also stated that EPA has not can meet it long term. In addition, an with incremental costs ranging from established its contractor or SNCR design study performed by Black subcontractor responsible for the costs 154 and Veatch indicated that an SNCR Document ID: EPA–R09–OAR–2012–0021– estimates as experienced in the 0008, File name: G–15_MODELING_FILES_EGU_ system could obtain a control efficiency _ _ _ _ _ engineering, procurement and BART Costs Apache Cholla Coronado FINAL2 of approximately 25 percent, which 155 Specifically, the initial cost estimates were would correspond to an emission rate of developed by Jim Staudt of Andover Technology 152 0.17 lb/MMBtu. EPA’s cost and Black and Veatch’s report cites lower inlet Partners. While there is no requirement for EPA to NOX concentrations to the SNCR system. A lower establish that its contractors are ‘‘experienced in the inlet NOX emission rate makes it more difficult to engineering, procurement, and construction of 150 ‘‘Cholla CAMD emission data (daily) 2001–03’’ reduce NOX emissions, which makes a lower utility-scale air quality control systems,’’ Dr. Staudt 151 Please consult the regulatory language in our removal efficiency reasonable. has extensive expertise and experience in the field 153 final action for the NOX compliance determination ‘‘Cholla CAMD emission data (monthly) 2010– of air pollution control at power plants. See: methodology associated with the bubble limit. 12.’’ www.andovertechnology.com/staudt.html.
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$8,759/ton to $10,329/ton compared to were incorrect, we have performed a well as AFUDC, which is inconsistent EPA’s estimates of $3,115/ton to $3,473/ supplemental analysis using portions of with CCM methodology. ton, with incremental costs ranging from the updated cost estimates provided by • Use of a 7 percent interest rate: We $3,257/ton to $3,813/ton. APS included APS in its comments. In this have retained the use of a 7 percent costs for surcharges, current AFUDC supplemental analysis, we have interest rate in calculating the capital and fixed charge rates, and emissions generally relied upon APS’s estimates of recovery factor, and disagree with APS’s factors based on the capability of the capital costs and operating costs. While assertion that a 13.4 percent interest rate existing LNB and OFA at the plant, we do not find that these estimates were typical SNCR removal rates, and sufficiently supported with detailed is appropriate. For cost analyses related minimum SCR emissions for site-specific information in all to government regulations, an bituminous coal. instances, we are using them as a appropriate ‘‘social’’ interest (discount) In contrast, one commenter conservative assumption (i.e., an rate should be used. EPA calculated (Earthjustice) stated that SCR at Cholla assumption that would tend to capital recoveries using 3 percent and 7 is more cost-effective than EPA’s overestimate rather underestimate the percent interest rates in determining calculations suggest, in that EPA annualized cost of controls). As cost-effectiveness for the Regulatory overestimated the costs by (1) using an discussed in a previous response, we Impact Analysis (RIA) for the BART unjustifiably high 7 percent interest consider it appropriate to observe the Guidelines.157 158 We consider our use of rate; (2) amortizing costs over a 20-year broader cost methodology used in EPA’s an interest rate of 7 percent to calculate life of the SCR system, rather than a CCM, and have adjusted or eliminated capital recovery to be a conservative more realistic life of 30 years or more; certain cost items not allowed by the approach. and (3) overestimating the costs of the CCM. A line-by-line comparison of • Use of original baseline period: As SCR catalyst, reagent, auxiliary power APS’s cost estimate and our revisions discussed elsewhere in our responses, and property taxes and insurance. In can be found in the docket for this we consider our use of a more recent addition, the commenter asserted that rulemaking action.156 A summary of baseline as consistent with BART EPA baseline period understates NOX cost estimates based on this Guidelines. However, in order to emissions reductions compared to the supplemental analysis is in Table 10, baseline period of 2001–2004. and includes the following: address commenter’s concerns that we According to the commenter, when the • Inclusion of APS’s updated cost did not properly consider LNB and OFA cost-effectiveness of SCR is calculated estimates: We have adopted a ‘hybrid’ as a potential control option and using more accurate costs, proper approach in which we have used APS’s therefore precluded a BART baselines and appropriate emission capital cost and O&M cost estimates, determination of LNB and OFA, we rates, the result is an even more cost- while excluding those cost items not have used a baseline period of 2001– effective SCR investment that reduces allowed by CCM methodology. As 2003, which corresponds to the period NOX at a cost of $1,901/ton at Unit 2, discussed in a previous comment, we used in APS’s original BART analysis. $1,940/ton at Unit 3 and $2,076/ton at have included owner’s costs up to the This represents a time period prior to Unit 4. amount provided for ‘‘Engineering and the installation of LNB, during which Response: Although we do not agree Home Office Fees’’ as described by the the control technology in place on the that our cost-effectiveness estimates CCM. We have excluded surcharge as Cholla units was only OFA.
TABLE 10—CHOLLA CONTROL COST ESTIMATES (PER APS COMMENTS, WITH EPA REVISIONS)
Annualized Annual Total annual Control options Capital cost capital cost O&M cost cost ($) ($/yr) ($/yr) ($/yr)
Cholla 2: LNB+OFA ...... $4,482,254 $423,093 $120,000 $543,093 SNCR w/LNB+OFA ...... 16,617,408 1,568,566 1,254,500 2,823,066 SCR w/LNB+OFA ...... 87,713,386 8,279,523 1,626,683 9,906,206 Cholla 3: LNB+OFA ...... 3,848,807 363,300 120,000 483,300 SNCR w/LNB+OFA ...... 19,238,125 1,815,943 1,254,500 3,070,443 SCR w/LNB+OFA ...... 83,461,195 7,878,146 1,570,766 9,448,912 Cholla 4: LNB+OFA ...... 5,334,618 503,550 170,000 673,550 SNCR w/LNB+OFA ...... 24,885,052 2,348,973 1,737,393 4,086,366 SCR w/LNB+OFA ...... 119,083,832 11,240,671 2,350,182 13,590,853
A summary of emission rates and We note that while APS has provided control cost estimates are based on an emission reductions associated with emission estimates for this baseline annual average ($/year), we have each control option is in Table 11. As period, the values provided, both in the calculated annual emission rates for the noted previously, these emission original BART analysis and in OFA baseline using the annual average estimates are based on a 2001–2003 submitted comments, appear to emission data reported to CAMD over baseline period, during which the represent the highest 24-hour average this 2001–2003 baseline period. Cholla units operated only with OFA. value for modeling purposes. Since Comparing a baseline value on a 24-
156 Docket ID No. EPA–R09–OAR–2012–0021. Available Retrofit Technology (BART) 158 A 7 percent interest rate is recommended by 157 Regulatory Impact Analysis for the Final Clean Determinations Under the Regional Haze Office of Management and Budget, Circular A–4, Air Visibility Rule or the Guidelines for Best Regulations, EPA–0452/R–05–004 (June 2005). Regulatory Analysis, http://www.whitehouse.gov/ omb/circulars-a004-a-4/.
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hour average basis (as provided by APS) apples’’ comparison, as some portion of differences between moving from a 24- to a control option value on an annual the emission reduction in such a hour average to an annual average basis. average basis is not an ‘‘apples-to- comparison would be attributable to the
TABLE 11—CHOLLA EMISSION ESTIMATES
Emission Annual Emission rate Emissions Control options factor Heat rate capacity removed (lb/MMBtu) (MMBtu/hr) factor (lb/hr) (tpy) (tpy)
Cholla 2: OFA (only) ...... 0.326 3,022 0.91 985 3,927 ...... LNB+OFA ...... 0.295 3,022 0.91 892 3,554 373 SNCR w/LNB+OFA...... 0.207 3,022 0.91 624 2,488 1,440 SCR w/LNB+OFA ...... 0.050 3,022 0.91 151 602 3,325 Cholla 3: OFA (only) ...... 0.304 3,480 0.86 1058 3,985 ...... LNB+OFA ...... 0.254 3,480 0.86 885 3,335 650 SNCR w/LNB+OFA...... 0.178 3,480 0.86 620 2,334 1,651 SCR w/LNB+OFA ...... 0.050 3,480 0.86 174 655 3,330 Cholla 4: OFA (only) ...... 0.296 4,399 0.93 1302 5,304 ...... LNB+OFA ...... 0.260 4,399 0.93 1144 4,661 643 SNCR w/LNB+OFA...... 0.182 4,399 0.93 801 3,263 2,042 SCR w/LNB+OFA ...... 0.050 4,399 0.93 220 896 4,408
Cost-effectiveness values for each and annual emissions removed listed in control technology are summarized in the previous tables. Table 12, based on the total annual costs
TABLE 12—CHOLLA CONTROL OPTION COST-EFFECTIVENESS
Cost-effectiveness Total annual Emissions ($/ton) Control options cost ($/yr) removed (tpy) Average Increment
Cholla 2: OFA (only) ...... LNB+OFA ...... 543,093 373 1,454 ...... SNCR w/LNB+OFA ...... 2,823,066 1,440 1,961 2,138 SCR w/LNB+OFA ...... 9,906,206 3,325 2,979 3,757 Cholla 3: OFA (only) ...... LNB+OFA ...... 483,300 650 743 ...... SNCR w/LNB+OFA ...... 3,070,443 1,651 1,860 2,586 SCR w/LNB+OFA ...... 9,448,912 3,330 2,838 3,799 Cholla 4: OFA (only) ...... LNB+OFA ...... 673,550 643 1,047 ...... SNCR w/LNB+OFA ...... 4,086,366 2,042 2,001 2,441 SCR w/LNB+OFA ...... 13,590,853 4,408 3,083 4,016
Even based on cost estimates revised two control options, the SNCR- and visibility impacts of the alternative NOX to use APS’s capital and O&M cost SCR-based systems. As discussed in our control options for Cholla Units 2, 3 and estimates, we still consider the cost- proposed action, and in other responses 4 at the various impacted Class I areas, effectiveness values of SCR, on an in this document, we have not as presented in EPA’s TSD. The average ($2,838 to $3,083/ton) and identified any energy or non-air quality commenter also indicated that its incremental ($3,757 to $4,016/ton) impacts that warrant eliminating SCR estimates of the two $/deciview basis, to not be cost-prohibitive. We from consideration for the Cholla units. measures of cost-effectiveness were consider these results supportive of our Combined with the modeled visibility similar to those of EPA. Specifically, the proposed determination that SCR with improvement associated with this commenter’s analysis yielded values of LNB and OFA is cost-effective. We note control option, these cost estimates $19.9 million for the ‘‘$/max deciview’’ that while the LNB and OFA option is continue to support the selection of SCR metric and $3.7 million for ‘‘$/ cumulative deciview.’’ the least expensive (i.e., lowest annual with LNB and OFA as BART for NOX at cost) and is the most cost-effective of the the Cholla units. Response: We acknowledge the comment. control technologies (i.e., has the lowest d. Visibility Improvement $/ton value), it is also the least effective Comment: One commenter (APS) control option. It removes substantially Comment: One commenter (NPS) hired a contractor to perform modeling fewer emissions than either of the other agreed with EPA’s analysis of the with CALPUFF version 5.8 and the
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updated version of 6.42 to measure the benefits. The BART Guidelines weighted average of the individual sensitivity of various emission control recommend consideration of both stacks’ absolute exit temperatures. EPA scenarios at Cholla Units 2, 3 and 4 average and incremental cost- found that impacts and improvements including two different background effectiveness,162 but do not expressly decreased by some 11 percent when ammonia concentrations. The contractor require or recommend consideration of merged stacks are used. The found that regardless of which model incremental visibility improvement. improvement from SCR at Petrified version or background ammonia value Rather, they provide for consideration of Forest remains over 1.0 dv, with was used, the highest predicted net visibility improvement (i.e., ‘‘the continued substantial benefit at Grand visibility improvement of SNCR or SCR, visibility improvement based on the Canyon. A merged stack for Units 2 and compared to LNB and OFA, is lower modeled change in visibility impacts for 3 was also assumed in additional than the threshold for human the pre-control and post-control modeling EPA performed to address perceptibility of 1.0 deciview. emission scenarios’’ as opposed to the H2SO4 emissions for Cholla, as Moreover, retrofitting SNCR or SCR at change between different control described below. Cholla will not lead to any perceptible scenarios).163 EPA’s Guideline on Air Quality improvement in visibility at any of the Comment: One commenter (APS) Models (40 CFR part 51, Appendix W) 13 Class I areas within 300 km of the noted that Cholla Units 2 and 3 have at section 6.2.2 requires that facilities be Cholla facility. separate flues but share a single stack, modeled using a stack height consistent Response: EPA disagrees with the which EPA failed to recognize in its with GEP, rather than a higher actual ammonia concentration and CALPUFF visibility modeling. The commenter also stack height, in order to prohibit ‘‘stack model version used by the commenter noted that EPA failed to use the height credit’’ from being used in for reasons discussed above. Further, we appropriate Good Engineering Practice developing emission limits.166 By do not agree that the consideration of (GEP) stack height correction required building very tall stacks instead of visibility improvement must directly by EPA’s own rules for modeling. applying emission controls, facilities reflect human perception. The CAA and Because these errors result in visibility could avoid violating the NAAQS the RHR require, as part of each BART impacts in opposite directions, the net locally, but would contribute to higher analysis, consideration of ‘‘the degree of effect is less than 5 percent, based on levels of emissions regionally, and cause improvement in visibility which may modeling that APS has conducted. higher total pollutant levels downwind. reasonably be anticipated to result from Response: If the commenter is correct In short, the requirement to use GEP the use of such technology.’’ 159 The that there were two errors that nearly stack height generally results in regulations do not require that the cancel out, then this would appear to conservative modeling, thereby improvement anticipated to result from have little effect on EPA’s decision. The removing the incentive to build a particular technology at a particular maximum area benefit of SCR was artificially tall stacks to evade controls. source be perceptible by a single human modeled by EPA to be 1.34 dv at Choosing a stack height or taking credit being in order to be relevant as part of Petrified Forest National Park, and 1.06 for a stack height increase is not at issue a BART determination. As EPA dv at Grand Canyon National Park; a 5 in a BART determination. The visibility explained in the preamble to the BART percent reduction in these would still impacts and improvements shown in Guidelines: result in substantial visibility benefits. EPA’s BART modeling are closer to the EPA’s modeling was based on stack actual values if actual stack heights are Even though the visibility improvement parameters provided by APS in a used. Insofar as GEP is relevant, using from an individual source may not be 164 perceptible, it should still be considered in letter that did not mention the shorter GEP heights would tend to setting BART because the contribution to merged stack, although it was increase both pre- and post-control haze may be significant relative to other mentioned in APS’s BART analysis 165 impacts, and to scale up the estimated source contributions in the Class I area. Thus, submitted to ADEQ. Stack parameters visibility improvements. The overall we disagree that the degree of improvement for Unit 4 provided in the commenter’s effect would be to strengthen the case should be contingent upon perceptibility.160 modeling do not match either of those for EPA’s proposed controls. Thus, in our visibility improvement documents (exit velocity of 77.1 feet/ Comment: Based on a report analysis, we have not considered second versus 52 feet/second in APS’s submitted with the comments, one perceptibility as a threshold criterion for letter). In addition, it is unclear how commenter (Earthjustice) stated that had considering improvements in visibility. parameters for the merged stack in the EPA’s BART analysis included lower Rather, we have considered visibility commenter’s modeling were derived emission rates and proper baselines, the improvement in a holistic manner, (except that the area of the merged stack visibility benefits of SCR at Cholla Units taking into account all reasonably used is equal to the sum of the areas of 2, 3 and 4 would be even greater than anticipated improvements in visibility the individual stacks cited in the APS the 7.21 dv cumulative visibility benefit expected to result at all Class I areas letter). Nevertheless EPA acknowledges discussed in the proposed rule. within 300 kilometers of each source. that Units 2 and 3 should have been Response: As explained in the general Improvements smaller than 0.5 dv may modeled together as a single stack. EPA discussion regarding selection of be warranted considering the number of conducted additional modeling to assess baseline periods above, we do not agree Class I areas involved, and the fact that this affect, assuming the same total stack that we used an improper baseline. in the aggregate, small improvements exit area and volume flow rate as for the However, we agree that higher baselines from controls on multiple BART and individual stacks, and a volume- and lower post-control emissions would other sources will contribute to show greater benefits than our modeling visibility progress.161 162 BART Guidelines, 40 CFR Part 51, Appendix showed, and would further support our In addition, EPA is not obligated to Y, Section IV.d.4.b. proposal for SCR. focus on incremental costs and benefits 163 Id. Section IV.D.5. 164 to the exclusion of absolute costs and ‘‘Request for Information Relating to Cholla 166 Guideline on Air Quality Models 6.2.2.a. ‘‘The Power Plant’’, letter from Sue Kidd, Director, use of stack height credit in excess of Good Corporate Environmental Policy and Programs, to Engineering Practice (GEP) stack height or credit 159 CAA section 169A(g)(2), 40 CFR Francisco Don˜ ez, EPA, (February 3, 2012). resulting from any other dispersion technique is 51.308(e)(1)(ii)(A). 165 ‘‘BART Analysis for Cholla Unit 2,’’ Prepared prohibited in the development of emission 160 70 FR 39129. for APS by CH2MHill (January 2008). limitations by 40 CFR 51.118 and 40 CFR 51.164.’’
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Comment: One commenter (APS) projected sulfuric acid emissions after modeling; the maximum area base case stated that EPA incorrectly applied installation and operation of SCR using impact is 3.51 dv at Petrified Forest H2SO4 mitigation factors from an the EPRI methodology is dependent on compared to 4.53 dv previously. But for Electric Power Institute (EPRI) report 167 future decisions made by the facility on some areas the impacts from controls in reaching its conclusion that H2SO4 the type of SCR catalyst and number of declined more than the impacts from production is not a problem with SCR layers used, as well as numerous the base case, leading to the somewhat at Cholla. The commenter stated that assumptions about loss to downstream surprising result that the improvement this factor is actually 90 percent rather components (i.e., air preheaters and due to controls actually increased than 99 percent in the report, but that baghouses), the true values of which are relative to the original modeling. The this factor only applies to sub- currently not yet defined or known for maximum area benefit of SCR in the bituminous coal because of the high Cholla. An increase in sulfuric acid new modeling is 1.55 dv compared to calcium content in the ash of these emissions from the installation of SCR 1.34 dv in the original. The cumulative coals. The commenter stated that testing may trigger major modification PSD area benefit decreased very slightly to at the Four Corners Power Plant (FCPP), permit requirements at a low threshold 7.19 dv compared to 7.21 in the original. which has similar coal ash calcium of seven tons per year.168 Based on this improved estimate of content to that at Cholla, indicates that Preconstruction permitting review may sulfate emission based on the EPRI 15 percent removal by the fabric filters also be triggered from significant method, the case for SCR appears to be would be likely. The commenter stated emissions increases of PM2.5 from SCR strengthened, since the maximum that the H2SO4 emissions created by the installation at Cholla. If one of these visibility improvement is larger than SCR will exceed the NSR significance pollutants triggers PSD, the permitting originally estimated. authority must provide an Additional level, will result in costs associated with e. Other Comments the H2SO4 emissions, and will reduce Impact Analysis under the PSD the improvement in visibility program. The PSD program also requires Comment: One commenter (NPS) anticipated by the retrofitting with SCR. the permitting authority to determine agreed with EPA’s conclusions on Another commenter (ADEQ) also BACT for pollutants that triggered PSD. Cholla that the visibility improvement stated that EPA discounts the impact of For these reasons, Region 9 has associated with the most stringent sulfuric acid mist that will be generated determined that for Cholla, emission option (SCR with LNB and OFA) is by SCR and overestimates the acid mist limits and monitoring requirements for substantial; that SCR with LNB and removal rate. The commenter indicated sulfuric acid are more appropriately OFA is cost-effective on an average basis that testing at another facility shows reviewed in the preconstruction as well as on an incremental basis when compared to the next most stringent H2SO4 removal to be closer to 57 permitting process. percent rather than EPA’s assumed 99 Nevertheless, EPA conducted option (SNCR with LNB and OFA); and percent removal. The commenter noted additional CALPUFF modeling to assess that NOX BART for Cholla Units 2, 3 that if H SO emissions increase above the visibility effect of increased sulfuric and 4 is SCR with LNB and OFA, with 2 4 an associated emission limit for NO on the PSD significance threshold, a PSD acid due to the SCR catalyst. One X each of the units of 0.050 lb/MMBtu, permit and BACT analysis would be scenario used the existing modeling for based on a rolling 30-boiler-operating- required. EPA’s BART analysis fails to Cholla, but added in SCR sulfate calculated by the method in the EPRI day average. consider the costs associated with likely Response: We acknowledge the BACT requirements of low oxidation document. Since the existing modeling used sulfate calculated using PM comment. catalyst, fuel additives or sorbent Comment: One commenter (APS) injection with a polishing baghouse. speciation spreadsheets provided by the National Park Service, this scenario estimated that EPA’s proposed controls Response: EPA’s decision to discount on Cholla Units 2 and 3 will cost $248 the increase of H SO caused by mixes two calculation methods and may 2 4 not be reliable. The sulfate in the million and $103 million, respectively, oxidation from the SCR catalyst was and increase the costs of electricity from actually based on the 90 percent control existing modeling is so large that the additional SCR sulfate from the EPRI those units by over 25 percent. The figure; we erroneously wrote 99 percent commenter stated that given the current (which applies to ammonia reduction method increases total sulfate by only about 5 percent. Visibility benefits only market price for natural gas, the from a wet scrubber). This figure is from proposed BART requirements, expected the 0.10 percent penetration for decreased by about three percent at Petrified Forest, and by an even smaller coal ash regulations, and potential baghouses, the only one available for fraction at other areas. To assess the future carbon legislation could baghouses in the EPRI report. It is not SCR sulfate effect in a more consistent jeopardize the long-term economic clear that results from the testing at manner, EPA calculated sulfate using viability of the entire plant. The FCPP referenced by the commenter may the EPRI method throughout the base commenter also stated that EPA did not be applied directly to Cholla given the case for SCNR, and for SCR. All cases consider the impacts of requiring SCR differences between the facilities. In used a merged stack for Units 2 and 3 on ratepayers’ monthly bills, which addition, the full test results were not and consistent speciation for all units would be about 2 percent to provided, so we cannot rely on the (formerly the speciation for Unit 2 accommodate SCR alone. In addition, commenter’s figures. differed from the others). The sulfate the commenter is concerned about In any case, EPA does not believe that emissions from the EPRI method are potential impacts on the transmission BART is the appropriate context for much lower than from the NPS grid in Arizona, the local economy due addressing this issue. Actual spreadsheets, but SCR increases that to lost jobs, and a reduced diversity in measurements of baseline sulfuric acid amount by a factor of six (even with the APS’s fuel mix if Cholla was to close. emissions have not yet been determined increase the total is still far lower than Response: It is not EPA’s intention to at Cholla. Moreover, the calculation of used in the original modeling). The endanger the economic viability of visibility impacts for all cases are Cholla or to place an undue burden on 167 Estimating Total Sulfuric Acid Emissions from Stationary Power Plants, Version 2010a, 1020636, substantially lower than in the former APS’s customers. Neither the CAA nor Technical Update, Electric Power Research the RHR requires states or EPA to Institute, April 2010). 168 See 40 CFR 52.21(b)(23)(i). consider the affordability of controls,
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ratepayer impacts or potential job losses review, the specific economic effects, year. Under Title II of UMRA, EPA has as part of a BART analysis. Rather, they parameters, and reasoning.173 determined that this rule does not require consideration of ‘‘the costs of Thus, only under ‘‘unusual contain a Federal mandate that may compliance, the energy and non-air circumstances’’ where a potential result in expenditures that exceed the quality environmental impacts of control option is expected to have a inflation-adjusted UMRA threshold of compliance, any existing pollution ‘‘severe impact on plant operations’’ or $100 million (in 1996 dollars) by State, control technology in use at the source, ‘‘result in significant economic local, or Tribal governments or the the remaining useful life of the source, disruption or unemployment’’ can we private sector in any one year. Even and the degree of improvement in consider economic effects as part of a using the higher cost estimates in our visibility which may reasonably be BART determination. In this case, APS supplemental analysis for the FIP we are anticipated to result from the use of has provided no evidence to support its finalizing today, we estimate that the such technology.’’ 169 assertions that our proposed FIP would total annual costs in the aggregate will APS’s comments appear to be based result in significant rate increases, not exceed $65 million.174 Finally, this in part on a misunderstanding that an jeopardize the plant’s operations, or rule is not subject to Executive Order analysis of ‘‘non-air quality result in any other economic effects. In 13211 (66 FR 28355 (May 22, 2001)), environmental impacts’’ must include the absence of such evidence, APS’s because it is not a significant regulatory economic effects. In fact, the plain assertions regarding plant shutdown, action under Executive Order 12866. language of the statute, as well as the rate increases and job losses are Comment: One commenter (APS) RHR, makes clear that this factor is speculative, and we cannot consider disagreed with EPA’s conclusion that limited to non-air quality environmental them as part of our BART the use of anhydrous ammonia does not impacts.170 The BART Guidelines note determination. pose significant additional safety that examples of such impacts would Comment: One commenter concerns compared to aqueous include ‘‘solid or hazardous waste (PacifiCorp) stated that because the ammonia and urea. The commenter generation and discharges of polluted regional haze actions in Arizona, contends that while anhydrous water from a control device.’’ 171 Wyoming, Colorado and elsewhere will ammonia would be transported by rail, The BART Guidelines do allow for have an impact of $100 million or more safety concerns are not eliminated (but do not require) the consideration of on the company and its customers, EPA because the severity of damage in an ‘‘significant economic disruption or must conduct the regulatory analyses accident can be much greater, if less unemployment’’ as part of ‘‘energy required by the Unfunded Mandates frequent than truck accidents, and impacts.’’ Specifically, the Guidelines Reform Act (UMRA) and Actions constitutes a much higher risk after provide that: Concerning Regulations That delivery. Due to the hazards of moving and storing anhydrous ammonia, the * * * the energy impacts analysis may Significantly Affect Energy Supply, consider * * * whether a given alternative Distribution, or Use (Executive Order Department of Homeland Security and would result in significant economic 13211) before reaching conclusions EPA have additional requirements for disruption or unemployment. For example, regarding BART controls or imposing a anhydrous ammonia that result in where two options are equally cost effective regional haze FIP. additional costs to use it. Urea costs and achieve equivalent or similar emissions Response: The commenter is more than anhydrous ammonia, but it is reductions, one option may be preferred if combining separate regulatory actions. safer and less expensive to use and the other alternative results in significant The commenter is not correct in store. Due to these factors the 172 disruption or unemployment. aggregating the potential private sector commenter stated that SNCR and SCR The Guidelines also allow for mandate of separate rules to evaluate costs should include the use of urea consideration of ‘‘affordability’’ as part whether UMRA applies. UMRA defines rather than anhydrous ammonia. of the ‘‘costs of compliance’’ under the term ‘Federal private sector Response: The BART analyses certain circumstances: mandate’ to mean any provision in submitted by APS indicate that the annualized cost of urea at each of the 1. Even if the control technology is cost regulation that would impose an effective, there may be cases where the enforceable duty upon the private Cholla units would be less than the installation of controls would affect the sector. Under UMRA, the term annualized cost of anhydrous viability of continued plant operations. ‘‘regulation’’ or ‘‘rule’’ means any rule ammonia.175 In addition, the cost 2. There may be unusual circumstances for which the agency publishes a estimates provided by APS in comments that justify taking into consideration the general notice of proposed rulemaking. are based on the use of urea as a reagent. conditions of the plant and the economic The rule being finalized today is limited Accordingly, we have used the cost for effects of requiring the use of a given control to addressing the obligations of three urea in our supplemental cost analysis. technology. These effects would include facilities in Arizona and does not Comment: One commenter (APS) effects on product prices, the market share, noted that Cholla has a long history of and profitability of the source. Where there include other regional haze actions are such unusual circumstances that are occurring in separate rulemakings, such installing pollution control equipment, judged to affect plant operations, you may as for Wyoming and Colorado. take into consideration the conditions of the Under section 202 of UMRA, before 174 Using total annual costs from our plant and the economic effects of requiring promulgating any final rule for which a supplemental analysis, annual aggregate cost equals $64,378,422. This amount consists of: $9,906,206 the use of a control technology. Where these general notice of proposed rulemaking for Cholla Unit 2, $9,448,912 for Cholla Unit 3, and effects are judged to have a severe impact on was published, EPA must prepare a $13,590,853 for Cholla Unit 4 (See Table 10 of this plant operations you may consider them in written statement, including a cost- NFRM); $12,103,941 for Coronado Unit 1 and the selection process, but you may wish to benefit analysis, if that rule includes $235,982 for Coronado Unit 2 (See Tables 15 and 13 of this NFRM); and $9,546,264 for each of provide an economic analysis that any ‘‘Federal mandates’’ that may result demonstrates, in sufficient detail for public Apache Units 2 and 3 (See Table 5 of this NFRM). in expenditures to State, local, and 175 See BART Analysis for Cholla Unit 2, Tribal governments, in the aggregate, or Appendix A, Economic Analysis, Input 169 CAA section 169A(g)(2), 42 U.S.C. 7491(g)(2); to the private sector, of $100 million or Calculations; BART Analysis for Cholla Unit 3, 40 CFR 51.308(e)(1)(ii)(A). Appendix A, Economic Analysis, Input 170 Id. more (adjusted for inflation) in any 1 Calculations; BART Analysis for Cholla Unit 4, 171 BART Guidelines section IV.D.4.h Appendix A, Economic Analysis, Input 172 Id. section IV.E.2. 173 Id. section IV.E.3. Calculations.
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has participated in a voluntary for Coronado, and that EPA’s failure to analysis for Coronado is summarized in emissions reduction project, and has consider these controls in its BART Table 15.179 spent over $473 million to reduce assessment makes the proposed rule b. Control Efficiencies emissions. While Unit 1 at Cholla is not invalid. The commenter added that BART-eligible, it is equipped with a emission reductions already achieved at Comment: One commenter (SRP) wet-tray absorber to control SO2, a fabric the facility using LNB with OFA should stated that the SNCR NOX emission rate filter to control particulates, and LNB not be ignored in EPA’s analysis simply evaluated by EPA is incorrect. The with OFA to control NOX emissions. because EPA delayed review of ADEQ’s commenter cited an SNCR conceptual Unit 2 is BART-eligible and has a SIP until 2012. The commenter design estimate prepared by S&L mechanical dust collector for particulate concluded that EPA should give (attached to the submission) asserting control, a wet flooded-disk venturi deference to the baseline emissions that, based on an initial review of SNCR scrubber and absorbers to control SO2, period selected by the State in its SIP implementation at Coronado, the additional particulate controls, and LNB analysis and fully consider LNB with expected NOX reductions would be 25 with OFA to control NOX emissions. OFA as an appropriate basis for BART percent and notes that additional Units 3 and 4 have wet open-spray FGD emission limitations for Coronado. studies would be needed to guarantee absorber to control SO2, fabric filters to Another commenter (NPS) preferred this performance. According to the control particulates, and LNB with OFA the use of a baseline period before the commenter, this estimate also was to control NOX emissions. Unit 2 is installation of LNB with OFA instead of verified by an independent vendor, scheduled to upgrade its SO2 and the post-installation period (May 16, FuelTech, whose assessment was also particulate controls to be identical to 2009 to December 31, 2010) used by attached to the submission. Units 3 and 4 by January 1, 2016. EPA. For Unit 2, the commenter stated The commenter (SRP) assumed that Response: We appreciate that APS has that the federally enforceable limit of EPA evaluated an emission limit that is installed various controls on the Cholla 0.080 lb/MMBtu is a realistic depiction based on a higher reduction efficiency units over the last several years and we of future emissions even though the (i.e., 30 percent) applied to a starting have taken these existing controls into required SCR system has not yet been NOX emission limit of 0.30 lb/MMBtu. account as part of our BART analysis for installed. According to the commenter, given 176 NOX. However, we note that, even Response: As explained in the general Coronado’s current NOX emissions limit with all of these new controls, discussion regarding selection of of 0.320 lb/MMBtu following the emissions from Cholla still cause baseline periods above, we disagree that installation of LNB with OFA on each visibility impairment at nine Class I our use of updated baseline periods for of the units and an SNCR control areas and contribute to impairment at an BART determinations is inappropriate efficiency of 25 percent, the appropriate additional two areas.177 or inconsistent with the CAA or the NOX emission rate to use in the BART Comment: One commenter (APS) RHR. Moreover, updating the baseline analysis would be 0.24 lb/MMBtu, requested that EPA allow the flexibility did not eliminate LNB with OFA from rather than EPA’s assumed value of 0.21 of averaging NOX emissions across all consideration as BART for Coronado lb/MMBtu. The commenter contended the BART-eligible units at the plant. The Unit 1, since existing controls can that this NOX emission rate (i.e., 0.24 lb/ commenter stated that allowing for this constitute BART, if additional controls MMBtu) represents a level that can flexibility would make no difference are not warranted based on the five- likely be achieved on a consistent basis from a visibility improvement factor analysis. For example, EPA based on input from SRP’s vendors who perspective. recently approved a determination by have specific SNCR implementation Response: We agree with the Colorado that existing LNB at Comanche experience. commenter, and have finalized a single Units 1 and 2 constituted BART where Response: We partially agree with this NOX emission limit across Cholla Units ‘‘the State determined that the added comment. Coronado Unit 1 currently 2, 3 and 4. expense of achieving lower limits operates with a federally-enforceable NO emission limit of 0.320 lb/ 3. Comments on Coronado Units 1 and through different controls was not X MMBtu.180 A review of recent emission 2 reasonable based on the high cost- effectiveness [$9,900/ton] coupled with data in CAMD indicates NOX emission a. Selection of Baseline Period the low visibility improvement (under levels below this limit. As noted in our Comment: Two commenters (ADEQ 0.2 dv) afforded.’’ 178 In the case of response to SRP’s comments regarding and SRP) stated that EPA’s selected Coronado, by contrast, the cost- SCR, we agree that when using an baseline emissions period effectiveness of post combustion annual average design emission rate to inappropriately eliminated controls is reasonable and the expected establish a rolling 30-day limit that will consideration of LNB with OFA as a visibility improvements are substantial, apply during periods of startup, viable BART control strategy. SRP as explained below. Nonetheless, in shutdown, and malfunction events, it is asserted that EPA’s decision to include order to address the commenter’s appropriate to include some type of LNB with OFA in its baseline NOX concerns that we did not properly measure that provides a compliance emissions estimate cannot, consistent consider LNB with OFA as a potential margin. with the BART rules, foreclose control option, and therefore precluded In submitted comments, SRP consideration of those controls as BART a BART determination of LNB with provided a conceptual design estimate OFA, we have used a baseline period of for SNCR which was based upon 25 176 77 FR 42854, July 20, 2012 (noting that ‘‘[t]he 2001–2003, which corresponds to the percent control efficiency (incremental baseline emissions used by EPA reflect current fuels period used in SRP’s original BART from LNB) and a resulting emission rate and control technologies in place at the facilities, of 0.24 lb/MMBtu. While this control as well as regulatory requirements the facilities will analysis. Our supplemental cost be required to meet independent of EPA’s BART efficiency is less than the 30 percent determination.’’). 178 77 FR 18052, 18066 (March 15, 2012) 177 See 77 FR 42861, July 20, 2012, Table 20 (Proposed Rule); pre-publication version of Final 179 A spreadsheet titled ‘‘Supplemental Cost (showing baseline impacts from Cholla of over 1 dv Rule, signed September 10, 2012, available at: Analysis 2012–11–15.xls’’ is in the docket. at nine Class I areas, and impacts of over 0.5 dv at http://www.epa.gov/region8/air/FinalActionOn 180 See Coronado Title V Permit, Attachment B, eleven areas). ColoradoRegionalHazePlanSep2012.pdf. section II.E.1.a.ii.
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control efficiency used by our OFA and a corresponding emission Coronado, and the recent PSD consent contractor, we consider it to be a limit of 0.320 lb/MMBtu, making Units decree should, pursuant to the BART reasonable estimate based upon the 1 and 2 currently subject to a 0.320 lb/ Guidelines, be deemed to satisfy BART. vendor quotes provided by SRP.181 MMBtu NOX limit. The commenter Response: We do not agree that we When using a control efficiency of 25 added that Unit 2 will be subject to a improperly ignored the existing consent percent and our baseline period of LNB 0.080 lb/MMBtu NOX emission limit as decree in our proposed BART performance for Coronado Unit 1, we soon as the SCR for that unit is installed determination for NOX at Coronado, estimate an annual average SNCR and operational (i.e., by June 1, 2014), since we specifically took the consent emission rate of 0.22 lb/MMBtu. pursuant to the consent decree, a limit decree into account throughout our NOX For the purposes of our cost that is significantly more stringent than BART analysis.182 We also do not agree calculations and visibility modeling, what the state determined to be BART that the Coronado consent decree however, we have retained the use of for Coronado. represents BACT or BART for NOX. our original SNCR emission rate (0.21 The commenter (SRP) asserted that While the consent decree concerned lb/MMBtu). A less stringent SNCR the consent decree controls are better alleged violations of the PSD provisions emission rate, by itself, would primarily than BART. The commenter pointed out of the CAA, it does not indicate that its make the next most stringent control that once SCR is installed on Unit 2, the provisions represent either BACT or option, SCR, appear to remove a greater facility will be subject to a plant-wide BART. Rather, it specifically provides amount of emissions. This in turn emission limit of 7,300 tons of NOX per that: year under the consent decree which, would make the SCR control option Compliance with the terms of this Consent appear more incrementally cost- according to the commenter, translates Decree does not guarantee compliance with effective by removing a greater amount to an effective emission rate of 0.20 lb/ all applicable federal, state, or local laws or of emissions, relative to SNCR, for the MMBtu for Coronado as a whole, and is regulations. The emission rates and removal same cost. As discussed in our proposal more stringent than the state’s NOX efficiencies set forth herein do not relieve and in response to comments, we BART determination and EPA’s SRP from any obligation to comply with already consider SCR to be cost- presumptive NOX limits. other state and federal requirements under 183 effective. It is not determinative to our The commenter (SRP) also contended the Clean Air Act * * * decision to find that SCR is ‘‘even that EPA’s BART rules support the While the BART Guidelines provide more’’ incrementally cost-effective. conclusion that the existing and that NSR/PSD settlement agreements In the context of establishing a BART currently planned controls are better may represent BART in some instances, emission limit consistent with the use of than NOX BART because those controls they do not establish a presumption that SNCR technology, however, we would and emission rates were agreed to by such settlements represent BART, nor use the annual average SNCR emission SRP and EPA to resolve allegations of do they indicate that a BART analysis is rate of 0.22 lb/MMBtu as our basis, violations of certain requirements of the unnecessary where such a settlement rather than our original estimate based PSD program for both units. According exists.184 In Coronado’s case, we do not on 30 percent SNCR control efficiency. to the commenter, those limits are agree that the consent decree represents intended to reflect compliance with the As noted in a separate response, when BART for NOX for either unit or for the using an annual average design PSD program’s BACT requirements. The facility as a whole. Nonetheless, we are emission rate to establish a rolling 30- commenter noted that BACT, by taking the consent decree into account definition, reflects the maximum degree day limit that would apply during in our BART determination for NOX at periods of startup, shutdown, and of control for new facilities or existing Coronado, as described below. malfunction, we consider it appropriate facilities undergoing a major Comment: In arguing against the to provide some type of measure that modification while BART is to apply to achievability of EPA’s proposed limit, unmodified existing sources. So BACT provides a compliance margin for such two commenters (AUG and SRP) cited a would be expected to be more stringent, events. A 0.24 lb/MMBtu emission report prepared by RMB Consulting & and certainly not less stringent, than limit, as requested by SRP, established Research, Inc. (RMB) for the San Juan BART. The commenter quoted a recent on a rolling 30-day average represents Generating Station in New Mexico, EPA statement about the Four Corners about a 10 percent increase from the which reportedly states that the 0.05 lb/ Power Plant indicating that BART need 0.22 lb/MMBtu annual average emission MMBtu limit imposed on that facility not be equivalent to BACT (citing 77 FR rate. We would consider this magnitude does not represent a consistently 51620, 51636, August 24, 2012). of upward revision appropriate to The commenter (SRP) asserted that achievable level of emissions for the accommodate startup, shutdown, and the BART rules reflect this units at the facility. In addition, SRP malfunction events as well as the unit understanding, providing that PSD contracted with RMB and Sargent and cycling nature of Coronado Unit 1. As settlement agreements generally satisfy Lundy (S&L) to review the ability of the a result, we would consider the BART BART requirements (citing 70 FR Coronado units to achieve the 0.050 lb/ emission limit corresponding to the 39164). According to the commenter, MMBtu emission limit proposed by EPA SNCR with LNB and OFA option to be EPA recently recognized this principle 182 0.24 lb/MMBtu. in its final regional haze rule for North See 77 FR 42849–42850, July 20, 2012, Comment: One commenter (SRP) (summarizing terms of consent decree), 42861– Dakota in which EPA concluded that it 42862 (describing consideration of consent decree stated that EPA improperly ignored the was appropriate to rely on North requirements in baseline for Coronado analyses), Coronado consent decree in its selection Dakota’s BACT determination for the 42863 (noting potential effect of consent decree of the proposed BART controls for NOX. two units at the Milton R. Young Station activities on cost analysis), 42864 (proposing The commenter noted that ADEQ emission limit of 0.080 lb/MMBtu and compliance (0.36 lb/MMBtu and 0.35 lb/MMBtu) to deadline of June 1, 2014 at Coronado Unit 2, determined that NOX BART for satisfy BART because emissions control consistent with the emission limit in the consent Coronado Units 1 and 2 is LNB with technology had not changed appreciably decree). since that BACT determination (citing 183 Consent Decree in United States v. Salt River 181 Project, CV 08–1479–PHX–JAT (entered December Although the report cites lower NOX 77 FR 20897, April 6, 2012). The concentrations, due to the lower inlet NOX emission 19, 2008). rate, removal efficiency is also reduced making it commenter stated that a similar 184 BART Guidelines, 40 CFR Part 51, Appendix more difficult to reduce NOX emissions. situation is present in the case of Y, section IV.C.
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using SCR control technology. Their Finally, both AUG and SRP noted that examined both Coronado Units 1 and 2, reports were submitted as attachments the BART Guidelines authorize included the following assumptions: to the commenter’s submission. application of BART emission limits on • Five to six startups (1 cold/ According to the commenter, both a plant-wide basis, rather than a unit-by- remainder warm) per month (which is consultants concluded that a NOX BART unit basis, and that use of plant-wide the maximum observed based on 2001 limit of 0.050 lb/MMBtu is not limits would not affect the expected to 2011 historical performance); achievable at Coronado on a 30-day visibility benefits of controls. Therefore, • Startup emissions based on the rolling average that includes periods of they requested that EPA allow for plant- maximum value observed during that startup, shutdown, and malfunction. wide averaging at Coronado. startup period; The commenter made the following Response: We partially agree with this • Non-startup periods of operation arguments against the achievability of a comment. As noted by the commenters, based on historical load operation, limit of 0.050 lb/MMBtu relying first on the BART Guidelines recommend that which consists of a mixture of low load RMB’s analysis and then on S&L’s states ‘‘consider allowing sources to and high-load cycling operation; analysis. ‘average’ emissions across any set of • Inclusion of a low load temperature RMB’s analysis stated that EPA did BART-eligible emission units within a control system; and not adequately consider the impact of fenceline * * *’’ 185 Given that such a • Maintaining the catalyst guarantee startup and shutdown emissions or the ‘‘bubbling’’ approach would not of 0.04 lb/MMBtu during full load, ability to measure such emissions in its diminish the visibility benefits of steady-state operations over the life of BART determination. RMB examined controls, we have decided to finalize a the catalyst. operating data from 2001 to 2011 in single plant-wide limit across the two The analysis performed by S&L order to identify the number of startup Coronado units. examined only Coronado Unit 2, and events (both ‘‘cold’’ and ‘‘warm’’ starts) In analyzing what emission limit was one element of S&L’s broader and shutdown events associated with would represent BART for NOX on a analysis examining the ability of each unit. RMB’s analysis shows that plant-wide basis, we have taken a Coronado Unit 2 to meet a limit more the average number of startup/shutdown number of factors into consideration. In stringent than the 0.080 lb/MMBtu limit events for Coronado Units 1 and 2 is one our proposal, we used an annual in the consent decree. The analysis per month (each), and that the average design value for SCR of 0.050 performed by S&L was based on the maximum number of startup/shutdown lb/MMBtu at Coronado Unit 1 and following assumptions: events is five per month (Coronado Unit proposed an emission limit for this • One to three startup events per 1) and six per month (Coronado Unit 2). same value on a rolling 30-day average. month; RMB then developed a computer model At Coronado Unit 2, we proposed an • Non-startup periods of operation to estimate the 30-day rolling average emission limit of 0.080 lb/MMBtu, but based entirely on low load cycling the Coronado units could achieve based solicited comment on whether a more scenario (40–100 percent gross load upon the emissions profile of these stringent limit would be feasible and cycling); startup/shutdown events, the maximum cost-effective for Unit 2. SRP submitted • Inclusion of a low load temperature number of startup/shutdown events, comments stating that an emission rate control system; 187 and and an assumption of a NOX emission of 0.05 lb/MMBtu was not achievable by • Maintaining the catalyst guarantee rate of 0.04 lb/MMBtu over the life of either unit, due to the startup/shutdown of 0.04 lb/MMBtu during full load, the catalyst. RMB’s analysis indicates operating profile of the Coronado units. steady-state operations over the life of that the maximum 30-day average the As noted in other responses, BART the catalyst. units could achieve is well above 0.050 limits apply at all times including The results of both of these analyses lb/MMBtu. periods of startup, shutdown, and indicates that the Coronado units could S&L’s analysis focused on the ability malfunction. As a result, we agree with achieve a rolling 30-day emission rate in of Coronado Unit 2, which has been commenters that when establishing a the range of 0.053 to 0.072 lb/MMBtu designed to achieve a 0.08 lb/MMBtu rolling 30-day BART emission limit that based on all the assumptions listed emission rate, to achieve a lower 0.05 is based upon an annual average design above. We acknowledge that different lb/MMBtu emission rate. S&L’s analysis value, it is appropriate to provide a assumptions, such as using fewer considered multiple design changes and compliance margin for periods of startups per month, or using a load examined their potential impact on startup and shutdown. Therefore, we operating profile during non-startup reducing the design emission rate, as have taken into consideration the periods that corresponded to a greater well as the costs and design/ startup/shutdown operating profile of fraction of high-load cycling operations, construction time associated with these the Coronado units. could produce a lower range of emission options. S&L concluded that, at a In submitted comments, SRP included values. However, we find that the minimum, SRP would be required to reports prepared by S&L and RMB assumptions used in both analyses are install a low load temperature control Consulting summarizing an analysis reasonable based on the historic system designed to increase flue gas performed to determine the rolling 30- performance data supplied by SRP and temperatures at the SCR inlet during day emission rates the units could its consultants. Therefore, we have periods of low load cycling to achieve achieve when accounting for startup concluded that a 0.050 lb/MMBtu any additional reduction in average and shutdown events, as well as the emission rate is not achievable on a NOX emissions. S&L’s analysis load cycling operating profile of the 186 rolling 30-day average at either of the concluded that even with a low-load plant. The analyses in the two reports Coronado units.188 Nonetheless, we note temperature control system, Unit 2 were based on slightly different could not consistently achieve the assumptions. RMB’s analysis, which 187 S&L’s analysis also included emission proposed limit when periods of low- modeling of Coronado Unit 2 without the low load load cycling, startup and shutdown are 185 BART Guidelines, 40 CFR Part 51, Appendix temperature control system, which, as discussed in Y, section V. further detail below, is not part of the current SCR taken into account, and could only 186 In addition to the final reports, SRP provided design. achieve within the range of 0.053 to certain supporting spreadsheets upon request. We 188 Nonetheless, we note that the emission 0.072 lb/MMBtu. have placed these spreadsheets in the docket. modeling results (particularly those produced by
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that the results of these analyses whether the SCR system for Unit 2 system during periods of low load.190 (particularly those produced by the could achieve an emission rate more Without this control system, the RMB report) indicate that Coronado stringent than the 0.080 lb/MMBtu limit Coronado Unit 2 SCR system will not Unit 1 could meet a 0.050 lb/MMBtu in the consent decree for which the SCR operate during periods of low load. limit on an annual average basis. As a was designed, S&L examined a number Under EPA’s visibility regulations, result, we conclude that 0.050 lb/ of different potential measures. One of ‘‘BART means an emission limitation MMBtu is appropriate as an annual these measures was the installation of a based on the degree of reduction average design value, but not as 30-day low load temperature control system, achievable through the application of rolling average emission limit at the which the current SCR design for Unit the best system of continuous emission Coronado units. 2 does not include. reduction * * *’’191 While SCR With respect to Coronado Unit 2, we As described in the S&L report, represents the most stringent technology have also taken into account the fact periods of low load operation generally that Unit 2 is already subject to a consist of operation between loads of for NOX control, an SCR system that is consent decree limit of 0.080 lb/MMBtu 138 MW to 270 MW (operation above designed not to function during a period with a compliance deadline of June 1, 270 MW can be considered ‘‘high’’ of operation that represents a substantial 2014. We consider the SCR system that load). Broadly speaking, the temperature fraction of the unit’s overall operating SRP has designed to meet this limit to in the SCR system will fall below 599 profile cannot be considered constitute ‘‘pollution control equipment degrees F during these periods of low continuous. In examining the in use at the source.’’ Therefore, load operation, which is the minimum installation of a low load temperature consistent with the BART Guidelines, temperature required for effective NOX control system as an upgrade option to we have considered various ways in control. A low load temperature control Coronado Unit 2, we note that the S&L which the performance of the current system increases the temperature at the report estimated the costs for the low SCR design for Unit 2 could be SCR inlet in order to maintain 599 load temperature control system as improved.189 In its analysis examining degrees F, allowing operation of the SCR shown in Table 13.
TABLE 13—S&L’S COST ESTIMATES FOR LOW LOAD TEMPERATURE CONTROL SYSTEM
Annualized Annual O&M Total annual Capital cost 1 Measure capital cost 2 costs costs ($) ($/yr) ($/yr) ($/yr)
Low load temperature control system ...... $2,500,000 $235,982 ...... $235,982 1 Represents the mid-range value of S&L’s estimate of capital costs. 2 Capital costs annualized using a 7 percent interest rate over a 20 year lifetime.
Although it is not clear what annual disagree. Specifically, SRP bases this result, although equipped with an SCR average emission rate can be achieved comment on the visibility improvement system, the maximum 24-hour average by Coronado Unit 2 with installation of associated with a 0.080 lb/MMBtu limit emission rate for Coronado is more a low load temperature control system, and a lower value such as 0.07 or 0.05. accurately represented by an emission the upper range of rolling 30-day Visibility modeling, however, is based rate corresponding to LNB and OFA, emission rates modeled for Coronado on the highest emission rate observed and not SCR. Unit 2 is 0.072 lb/MMBtu. We consider on a 24-hour average, not on a 30-day We consider this distinction crucial. this a conservative estimate (i.e., a high or annual average basis. Since Coronado In our base case modeling runs, the estimate in this case, as the annual Unit 2 is not equipped with a low load maximum 24-hour average emission rate average number will certainly be lower temperature controller and therefore modeled for Coronado Unit 2 was than the 30-day value), and have used cannot operate the SCR during periods represented by a NOX emission rate of this emission rate with the cost of low load operation, emissions from 0.08 lb/MMBtu, corresponding to the information contained in the S&L Coronado Unit 2 during these periods emission limit for SCR in the consent report, to calculate the cost-effectiveness correspond to operation of LNB with decree. However, the highest 24-hour value shown in Table 14. Installation of OFA. A review of Coronado Unit 2’s average emission rate is more accurately a low load temperature controller operating history since June 2011, represented by a 24-hour period of low results in a cost-effectiveness of $1,900/ which is approximately when LNB was load operation, where the SCR system ton, which is in a range that we consider installed, indicates several instances in would not be operating. Based on Acid cost-effective. which it operates at low load for periods Rain Program data reported to CAMD, In addition, SRP stated that it that can exceed a 24-hour calendar day. this corresponds to a NOX emission rate considered the incremental visibility Based on the Acid Rain Program data of 0.23 lb/MMBtu and 13,684 lb/day.193 benefit of an emission limit more provided by SRP and included in By allowing the SCR system to run stringent than 0.080 lb/MMBtu to be CAMD, the longest such period of during all loading periods, the insignificant. In relation to installation continuous low load operation extended installation of a low load temperature of a low load temperature controller, we from May 20 to May 22, 2012.192 As a control system would result in a
the RMB report) indicate that Coronado Unit 1 systems. If SCR were to be installed on Coronado 193 This represents the emission rate on April 1, could meet a 0.050 lb/MMBtu limit on an annual 1, for example, the information SRP has provided 2012, which is the highest emitting day that average basis. As a result, we conclude that the use indicates that such a system would include a low consisted of 24 consecutive hours of low-load of a 0.050 lb/MMBtu as annual average design value load temperature control system. operation, as identified in ‘‘SRP 2 NOX analysis in our proposal was appropriate. 191 40 CFR 51.301. (EPA edits).xls’’ and ‘‘Coronado 2 2011–12Q3 NOX 189 BART Guidelines, 40 CFR Part 51, Appendix 192 We have identified these dates in both sets of Emission Data (daily).xls’’. Y, section IV.D.3. data, per ‘‘SRP 2 NOX analysis (EPA edits).xls’’ and 190 We note that this is not an unusual control ‘‘Coronado 2 2011–12Q3 NOX Emission Data system, and is commonly included in typical SCR (daily).xls’’.
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decrease in the maximum 24-hour affected Class I area is 0.52 (Gila visibility improvement substantial, average emission rate from 0.21 lb/ Wilderness). Cumulatively, across all of especially when taking into MMBtu to 0.080 lb/MMBtu. The the affected Class I areas, this results in consideration the cost-effectiveness of visibility improvement associated with visibility improvement of 2.64 installing a low load temperature this emission decrease at the single most deciviews. We consider this degree of control system.
TABLE 14—CORONADO UNIT 2: COST-EFFECTIVENESS
Emission Emission rate 1 Cost- factor Removed Annual cost effectiveness (lb/MMBtu) (lb/hr) (tpy) (tpy) ($/yr) ($/ton)
SCR+LNB+OFA (no low load temp ctrl sys) ...... 0.080 319 1,242 ...... SCR+LNB+OFA (with low load temp ctrl sys) ...... 0.072 287 1,118 124 235,982 1,900 1 Emissions calculated based on 3,984 MMBtu/hr and 0.89 capacity factor, as used in the TSD for our proposal.
In recognition of the work already Comment: While supporting EPA’s provide no source-specific data performed by SRP to meet the consent determination that SCR is BART for explaining why SCR at Unit 1 could not decree emission limit of 0.080 lb/ Coronado Unit 1, one commenter achieve a 0.05 lb/MMBtu NOX emission MMBtu for Unit 2, and to avoid (Earthjustice) stated that lower NOX limit. The commenter asserted that, in interfering with SRP’s ability to meet emission limits are cost-effective and contrast, the Sahu report explains why that requirement by the deadline of June achievable. For Unit 1, the commenter an even lower 0.04 lb/MMBtu emission 1, 2014, we have decided not to require made the following two points based on limit is achievable at Unit 1. a BART emission limit for Coronado 2 a report (the ‘‘Sahu report’’) submitted Accordingly, the commenter believes more stringent than 0.080 lb/MMBtu. with the comments. First, SCR can that EPA should not weaken its BART Instead, we are finalizing a plant-wide achieve even greater NOX reductions at proposal as SRP requested. NOX emission limit for Coronado of less cost than EPA’s calculations. EPA Response: We disagree with the 0.065 lb/MMBtu on a rolling 30-day failed to analyze whether an emission commenter’s assertion that our BART average, which will provide a sufficient limit lower than 0.05 lb/MMBtu is analysis should have examined the compliance margin for startup and achievable and cost-effective with SCR potential for lower ‘‘boiler-out’’ NOX shutdown events. We are also at Unit 1 as required under the BART emission rates.196 The commenter cites structuring the compliance Guidelines. Second, the NOX emissions several examples of other coal-fired determination method so that, when one exiting Coronado Unit 1’s boiler could boilers using PRB coal achieving boiler- of the two units is not operating, its be reduced significantly from the out NOX emission rates in the range of emissions from the preceding thirty current rate of approximately 0.3 lb/ 0.096 to 0.154 lb/MMBtu, and points to boiler-operating-days will continue to MMBtu to a rate of 0.15 to 0.20 lb/ these examples as evidence that the be included in the two-unit average. We MMBtu, which would result in a lower Apache and Coronado units could attain expect that SRP can meet this limit by achievable emission rate. Neither ADEQ lower emission rates through the use of installing a low load temperature nor EPA analyzed the various methods combustion controls. We note that the control system on Unit 2 and an SCR of reducing these NOX emissions. best performing units on this list are system including a low load The commenter (Earthjustice) noted primarily tangential- or wall-fired units, temperature control system on Unit 1. that SRP submitted comments to EPA and that none of the units appear to be We are setting a compliance deadline shortly before EPA issued the proposed Riley turbo-fired boilers. Particularly in for achieving this limit of five years rule arguing that SCR with a 0.05 lb/ the case of the Apache and Coronado from publication of this final rule, MMBtu NOX emission limit is units, which are turbo-fired boilers, we which will ensure that SRP has unachievable at Unit 1 (and Unit 2).195 consider this distinction crucial when adequate time to design and install According to the commenter, SRP determining the appropriate units with these controls without interfering with argued that EPA’s proposal is not which to compare emission the consent decree deadline of June 1, achievable by pointing to BART performance. The Riley-turbo boiler is a 2014 for operation of SCR on Unit 2. proposals in other states that required unique wall-fired boiler design that is Finally, we are including in the SCR with an emission limit less characterized by a venturi-shaped lower regulatory text of the FIP a requirement stringent than 0.05 lb/MMBtu. The section (often described as a ‘‘pinch’’ in that pollution control equipment be commenter countered that these BART the boiler wall) with burners located on designed and capable of operating determinations for other sources in the underside of the pinched wall, tilted properly to minimize emissions during other states do not show that EPA’s slightly downwards.197 It is a relatively all expected operating conditions, BART proposal is unachievable at uncommon design, with only two dozen consistent with the regulatory definition Coronado Unit 1, as BART such units currently in operation.198 of BART as ‘‘an emission limitation determinations are source-specific. The based on the degree of reduction commenter added that SRP’s comments 196 As described by the commenter, the ‘‘boiler- achievable through the application of out’’ NOX emission rate refers to the emission rate the best system of continuous emission ‘‘a requirement established by the State or the after including the effects of combustion controls reduction for each pollutant which is Administrator which limits the quantity, rate, or such as low NOX burners, over-fire air, neural concentration of emissions of air pollutants on a networks, adaptive controls, etc. emitted by an existing stationary continuous basis, including any requirement 197 See ‘‘Design and Operation of Coal-fired 194 facility.’’ relating to the operation or maintenance of a source TURBO furnaces for NOX control’’, Riley Stoker to assure continuous emission reduction * * *’’). Corporation, November 1978. 194 40 CFR 51.301. See also, CAA section 302(k), 195 Citing Docket Item C–16 (SRP Letter to 198 Acid Rain Program data indicates 22 turbo 42 U.S.C. 7602 (defining ‘‘emission limitation’’ as DJordan 06–26–2012). units were in operation in 2011.
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The turbo boiler was developed in the emission rate at full load, steady state emission limit (or a 0.04 lb/MMBtu 1960s and, unlike many other wall-fired conditions, and that SRP’s analysis limit). The commenter noted that EPA boilers, was generally able to meet the indicates Coronado Unit 1 could requested information concerning NOX emission limits contained in the achieve 0.050 lb/MMBtu on an annual whether the amount and management of 1971 New Source Performance average basis, we do not consider this catalyst could be altered to meet a 0.05 Standards for fossil fuel fired steam emission rate achievable as a rolling 30- lb/MMBtu NOX limit at Unit 2, but generators.199 While Babcock Power, day limit based on the number of according to the commenter SRP did not which acquired Riley Stoker, has startup and shutdown events associated provide any such information. As a developed new burner upgrades to meet with its operating profile. result, the commenter urged EPA to more stringent NOX emission standards, Comment: While supporting EPA’s revise its BART determination to require the combustion control designs determination that SCR is BART for SCR with an emission limit lower than available for turbo-fired boilers have not Coronado Unit 2, one commenter 0.08 lb/MMBtu. been through the same number of design (Earthjustice) stated that lower NOX iterations, and are therefore not as emission limits are cost-effective and Response: We disagree with the effective as those for other boiler achievable. For Unit 2, the commenter commenter’s assertion that it is types.200 We therefore do not consider made four major points. First, the NSR appropriate to consider lower ‘‘boiler- it appropriate to compare the ‘‘boiler- consent decree does not exempt out’’ NOX emissions for Coronado Unit out’’ emission rates of the Riley turbo Coronado Unit 2 from a NOX BART 2, for the same reasons we noted in the design with those achieved by determination based on a valid five- previous response for Coronado Unit 1 tangential and more traditional wall- factor BART analysis. Second, contrary on this issue. We also disagree with the fired units. to the argument that the 0.08 lb/MMBtu commenter’s assertion that 0.04 lb/ More specifically, combustion limit on Coronado Unit 2 under the MMBtu is an appropriate SCR emission controls on Coronado 1 (LNB) were consent decree was developed to rate to consider for Coronado Unit 2, installed in 2009, and the commenter address BACT obligations, that emission also for the same reasons we noted in has not indicated any design limit is not BACT, which requires a top- the previous response for Coronado Unit improvements or upgrades that would down analysis that selects the 1 on this issue. achieve improved performance. We note ‘‘maximum degree of reduction.’’ There We agree with the commenter’s that the baseline period for our analysis is no BACT analysis in the consent assertions that the consent decree is not represented the use of combustion decree and no explanation of how the a replacement for a five-factor BART controls (in the form of LNB with OFA) 0.08 lb/MMBtu emission limit was analysis. We also agree that while the and that our emission estimate of LNB selected. In addition, while BACT is based on past actual emission data, as requires case-by-case analysis, the consent decree resolved NSR/PSD reported to CAMD, over the baseline consent decree limit was not specific to obligations such as BACT, a ‘‘top-down’’ period. As part of the supplemental cost Unit 2; it simply required installation of BACT analysis was not performed as analysis we performed, we used a SCR on one of the two units. Third, the part of the consent decree negotiations. baseline period that predated negotiated limit contained in the NSR Based on our review of SRP’s August 24, installation of LNB, and consisted of consent decree cannot replace the 2012 letter and submitted comments, we emission rates corresponding to OFA required five-factor BART analysis for do not consider the SCR system for only.201 Comparing annual average Coronado Unit 2 because BART is more Coronado Unit 2, as currently designed, emission rates during the periods prior stringent than the consent decree’s to constitute BART. As noted in the to and following LNB installation, we emission limit. The Sahu report shows analysis contained in our response to note that Coronado Unit 1 has achieved that an emissions limit lower than 0.08 SRP’s comments, we consider the approximately 25 percent reduction lb/MMBtu is cost-effective and installation of a low-load temperature from installing LNB at an emission rate achievable at Unit 2. Fourth, the NOX controller to be both cost-effective and of approximately 0.30 lb/MMBtu. We emissions exiting Coronado Unit 2’s to result in substantial visibility consider these values reasonable, as it is boiler could be reduced significantly improvement. We are not, however, supported by actual emission data and from the current rate of approximately finalizing a more stringent emission represents a control efficiency similar to 0.33 lb/MMBtu to a rate of 0.15 to 0.20 limit for Coronado Unit 2. Instead, we the 30 percent control efficiency lb/MMBtu, which would result in a are finalizing a requirement that assumed by our contractor. lower achievable emission rate. Neither pollution control equipment be In addition, we disagree with the ADEQ nor EPA analyzed the various designed and capable of operating commenter’s assertion that 0.04 lb/ methods of reducing these NOX properly to minimize emissions during MMBtu is an appropriate SCR emission emissions. SCR with a 0.04 lb/MMBtu all expected operating conditions, limit to consider for Coronado Unit 1. emission limit at Coronado Unit 2 is consistent with the regulatory definition As discussed in the previous response achievable with various control of BART as ‘‘an emission limitation to SRP’s comments, we have examined methods and is even more cost-effective based on the degree of reduction the analysis performed by SRP and than EPA‘s calculations suggest. achievable through the application of determined that a 0.050 lb/MMBtu Because of this, the commenter the best system of continuous emission emission rate is not achievable by requested that EPA revise its BART reduction for each pollutant which is Coronado Unit 1 on a rolling 30-day determination to reflect this lower level. emitted by an existing stationary average. Although we note that SRP’s The commenter (Earthjustice) stated facility.’’ 202 analysis is based on a 0.04 lb/MMBtu that SRP has claimed that a NOX emission limit of 0.05 lb/MMBtu is 202 40 CFR 51.301. See also, CAA section 302(k), 199 ‘‘An Overview of Riley Stoker’s Burner unachievable based on its progress in 42 U.S.C. 7602 (defining ‘‘emission limitation’’ as Development Efforts for NOX Control’’, Riley Stoker constructing the SCR unit required by ‘‘a requirement established by the State or the Corporation, April 7, 1983. Administrator which limits the quantity, rate, or 200 the NSR consent decree, but does not ‘‘Low NOX Combustion System Solutions for concentration of emissions of air pollutants on a Wall Fired,T-Fired, and Turbo Fired Boilers.’’ explain how construction progress to continuous basis, including any requirement Babcock Power, August 28–31, 2006. date would prevent it from calibrating relating to the operation or maintenance of a source 201 Supplemental Cost Analysis 2012–11–15.xls. the SCR to achieve a 0.05 lb/MMBtu to assure continuous emission reduction * * *’’).
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c. Costs of Compliance costs. The commenter asserted that EPA on actual costs experienced for Unit 2 Comment: One commenter (NPS) improperly ignored site-specific cost for which SCR has been designed to agreed with EPA that SRP did not estimates for Coronado BART control achieve an emission limit of 0.080 lb/ provide ADEQ with control cost options by substituting its own MMBtu, rather than the 0.050 lb/MMBtu calculations at a level of detail that estimates, and ignored the fact that assumed by EPA for Unit 1. According allowed for a comprehensive review. Arizona has ‘‘the lead role in designing to the commenter, there could be The commenter conducted analysis of and implementing [its] regional haze additional costs for Unit 1 of as much the cost and cost-effectiveness of adding program’’ and ‘‘broad authority over as $117 million for additional catalyst BART determinations’’ (citing Corn and an increased ammonia emission SCR to reduce emissions of NOX at Coronado Unit 1 using the cost Growers, 291 F.3d at 3, 8). The rate, a dry sorbent injection control commenter stated that ADEQ fully system to address increased sulfuric methodologies of the CCM and relying complied with the BART Guidelines acid mist and condensable PM on the IPM to reflect the most recent and was justified in any deviation from emissions, and a fabric filter baghouse SCR cost levels, and submitted the the specific terms of the CCM because and induced draft fans to address detailed calculations as Appendix E to ADEQ engaged in a reasoned, site- increased filterable PM emissions. The its comments. The commenter’s analysis specific cost analysis. The commenter commenter stated that even without yielded a cost-effectiveness value of added that ADEQ has discretion to these additional costs, the site-specific $2,540/ton. The commenter noted that conduct and document its cost cost estimate for an SCR system on Unit EPA’s analysis yielded a cost- assessment at a level that it deems 1 is almost twice the value used by EPA effectiveness value of $2,405/ton, which appropriate, and that the documentation in its BART determination, and for the EPA considers cost-effective. Another that supports ADEQ’s BART SCR system on Unit 2, the actual cost commenter (Earthjustice) also asserted determination is reasonable by any incurred by SRP is likewise almost that SCR at Coronado 1 is cost-effective. objective standard. twice the value used by EPA in its When calculated based on an SCR The commenter (SRP) asserted that BART determination. The commenter emission rate of 0.04 lb/MMBtu, and EPA improperly ignored site-specific concluded that this documentation when accurate cost figures and proper cost estimates for Coronado BART demonstrates the importance of using baselines are used, the commenter control options, instead using the IPM available site-specific cost estimates asserts that SCR would reduce NOX to calculate the capital costs and annual when conducting a BART determination emissions at a cost of just $2,024/ton of operating costs associated with the for Coronado. NO removed. X various NOX control options that EPA Response: We disagree with the NPS commented that it was not able considered. Moreover, the commenter commenter’s assertion that the cost to conduct a cost analysis for Coronado added that no cost estimate derived calculations SRP provided to ADEQ as Unit 2, on which SRP is installing SCR from a model designed to produce part of the original BART analysis, or in to meet an emission limit of 0.080 lb/ generalized information about utilities the subsequent response to ADEQ’s MMBtu under a consent decree with throughout the nation could satisfy the information request, were supported by EPA. However, the commenter used the CAA requirement that BART be sufficient documentation. For example, CCM to evaluate the differences determined based on a site-specific the annual O&M costs associated with between an SCR on this unit at 0.050 lb/ analysis. SRP provided adjusted inputs an SCR system will involve such costs MMBtu versus 0.080 lb/MMBtu. for use in IPM for unit size, gross heat as reagent usage, catalyst replacement According to the commenter, an SCR rate, NOX removal factor, NOX removal costs, and labor costs, among others. meeting the more stringent limit would efficiency, ammonia cost, operating SRP provided no breakdown of annual have essentially the same footprint as labor rate, bare module costs, urea costs O&M costs beyond the total annual the less effective unit, but would require and property taxes and insurance. SRP O&M value. Similarly, SRP’s capital cost an additional layer of catalyst and asserted that when these values are used estimates consist of only a total value, would be seven feet taller. The in the model, the IPM outputs validate accompanied by a capital recovery commenter presented basic design the site-specific costs provided by SRP factor to determine the corresponding parameters for SCR units achieving the (based on detailed SCR and SNCR cost annualized cost. This level of detail two levels of control. comparisons provided in the does not allow us, and could not have Response: We agree with NPS’s comments), although the adjusted IPM allowed ADEQ, to evaluate the assertion that SRP’s cost figures, as results still under-predict the costs reasonableness of SRP’s cost estimates provided in their original BART based on site-specific considerations. for Coronado. As noted in a previous analysis and in the subsequent response The commenter (SRP) stated that its response, we have identified several to ADEQ’s information request, were not site-specific costs for SCR are based on issues with the cost calculations sufficiently documented. While we also the actual cost projections associated performed for the Apache and Cholla agree with the commenters’ assertion with the current SCR installation at Unit units that are inconsistent with the that SCR with LNB and OFA is cost- 2. The commenter stated that SRP has methodology established by EPA’s CCM. effective, we decline to modify our already made substantial progress on SRP’s cost estimates do not provide estimates of cost- effectiveness to reflect the Unit 2 SCR installation with more sufficient detail for us to evaluate if they the cost items noted in these comments, than 40 percent of the project already are consistent with CCM methodology. as it is not in any way determinative to complete, with the engineering design Although we do not agree that our our decision to find that SCR is ‘‘even effort more than 90 percent complete, cost-effectiveness estimates were more’’ cost-effective, or that the and the overall procurement efforts incorrect, we have performed a incremental cost-effectiveness value more than 75 percent complete. As supplemental analysis for Coronado 1 between SCR and SNCR is ‘‘even more’’ such, the commenter believes that the using portions of the updated cost incrementally cost-effective. site-specific costs are appropriate for estimates provided by SRP in its Comment: One commenter (SRP) use in any evaluation of BART controls. comments. Our use of these cost argued that EPA’s cost of compliance In addition, the commenter (SRP) estimates in this supplemental analysis analysis for Coronado is flawed and indicated that its cost estimates for Unit should not be construed to represent an must be replaced with site-specific 1 are conservative since they are based acceptance of SRP’s revision to our IPM
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assumptions. Rather, this supplemental of its comments. This estimate has did not properly consider LNB and OFA analysis represents a conservative excluded cost items not allowed by the as a potential control option and estimate of costs (i.e., an assumption CCM, such as AFUDC, escalation, and therefore precluded a BART that would tend to overestimate rather owner’s costs, and have been included determination of LNB and OFA, we than underestimate the annualized cost in the supplemental analysis. have used a baseline period of 2001– of controls). A summary of cost • Original baseline period: As 2003, which corresponds to the period estimates based on this supplemental discussed elsewhere in our responses, used in SRP’s original BART analysis. analysis is displayed in Table 15. we consider our use of a more recent This represents a time period prior to • SRP’s revised SNCR cost estimates: baseline as consistent with BART the installation of LNB, during which SRP also submitted a conceptual capital Guidelines. However, in order to the control technology in place on cost estimate for an SNCR system as part address commenter’s concerns that we Coronado 1 was OFA-only.
TABLE 15—CORONADO UNIT 1: CONTROL COST ESTIMATES [Per SRP with EPA revisions]
Annualized Annual O&M Total annual Coronado 1 Capital cost capital cost cost cost control technology ($) ($/yr) ($/yr) ($/yr)
LNB+OFA ...... $6,500,000 $613,554 $0 $613,554 SNCR w/LNB+OFA ...... 14,164,000 1,336,981 5,829,800 7,166,781 SCR w/LNB+OFA ...... 80,633,219 7,611,205 4,492,736 12,103,941
Regarding SRP’s concern that its own average emission limit of 0.050 lb/ considered part of the cost of costs for Coronado Unit 1 are MMBtu will involve greater costs than compliance for the purposes of a BART conservative (i.e., underestimated in a system designed to meet 0.080 lb/ determination. EPA cannot anticipate this context) because they are based on MMBtu, we disagree that the costs for what control technology might be a Coronado Unit 2 design that achieves Coronado Unit 1 are of the magnitude of required in the future for sulfuric acid 0.080 lb/MMBtu instead of 0.050 lb/ those described above for Coronado mist under PSD or minor NSR. The MMBtu, we partially agree. For Unit 2. Based on SRP’s comments, we BART Guidelines do not require the Coronado Unit 2, SRP identified certain note that the SCR reactor box for Unit inclusion of potential future costs that additional costs that would be 2 has been designed for a ‘‘3+1’’ might be associated with permit associated with design changes configuration (i.e., an initial three requirements as part of the cost necessary to meet an emission rate more catalyst layers, with space for a fourth estimates for a BART determination. stringent than the consent decree limit layer to be added later in the system’s of 0.080 lb/MMBtu. The two most Therefore, while we acknowledge that lifetime to maintain the same level of there are costs associated with important changes would be increased effectiveness) and has perhaps already levels of ammonia injection and additional catalyst and increased been fabricated. As a result, ammonia injection, they represent a additional SCR catalyst (in the form of accommodating additional catalyst an additional fourth catalyst layer at the small fraction ($4 million) of the $117 cannot be achieved by increasing the time of initial catalyst fill). The SCR million total identified by SRP. We have volume of the initial three layers, but catalyst is responsible for a certain used certain elements from SRP’s must be achieved by including the amount of SO2 to SO3 conversion, estimates in preparing our supplemental fourth catalyst layer (or some portion of which can then form sulfuric acid cost analysis for Unit 1, but we have not it) during the initial fill. Since each (H2SO4). SRP notes that the additional adjusted SRP’s estimates to reflect these catalyst layer is designed for a certain fourth catalyst layer can be expected to factors since the cost estimates provided amount of SO to SO conversion, result in a collateral increase in sulfuric 2 3 by SRP do not include a level of detail inclusion of an additional layer acid (H2SO4) emissions. A dry sorbent that would allow us to properly make unavoidably results in an increase in the injection (DSI) system may be needed to such adjustments. address this increase in sulfuric acid, overall conversion rate. However, since which itself has the potential to increase an SCR system for Coronado Unit 1 has A summary of emission rates and filterable particulate emissions. not been designed, we consider it emission reductions associated with Addressing this increase in filterable feasible for SRP to specify a design at each control option is in Table 16. As particulate emissions may in turn the outset that accommodates additional noted previously, these emission require installation of a fabric filter volume in the initial catalyst layers, estimates are based on a 2001–2003 baghouse. Of the $117 million in capital thereby achieving a more stringent baseline period, during which the costs identified by SRP, the majority of emission rate without the higher SO2 to Coronado units operated only with these costs ($113 million) are associated SO3 conversion rate associated with a OFA. We have calculated annual with construction of the DSI and fabric fourth catalyst layer. Moreover, even if emission rates for the OFA baseline filter. SRP were required to install a DSI using the annual average emission data While we agree that designing system or DSI and a fabric filter, EPA (lb/MMBtu) reported to CAMD over this Coronado Unit 1 to meet an annual does not agree that these costs should be 2001–2003 baseline period.
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TABLE 16—CORONADO 1: ANNUAL EMISSION ESTIMATES
Emission Heat rate Annual Emission rate Emissions Coronado 1 control technology factor (MMBtu/hr) capacity removed (lb/MMBtu) 1 factor (lb/hr) (tpy) (tpy)
OFA (only)...... 0.407 4,316 0.84 1,756 6,462 ...... LNB+OFA ...... 0.303 4,316 0.84 1,308 4,811 1,651 SNCR w/LNB+OFA...... 0.212 4,316 0.84 915 3,368 3,095 SCR w/LNB+OFA ...... 0.050 4,316 0.84 216 794 5,669 1 Annual average basis.
Cost-effectiveness values for each annual costs and annual emissions control technology are summarized in removed listed in the previous tables. Table 17, and are based on the total
TABLE 17—CORONADO 1: CONTROL OPTION COST-EFFECTIVENESS
Total annual Emissions Cost-effectiveness Coronado 1 control technology cost removed ($/ton) ($/yr) (tpy) Avg. Incr.
OFA (only) ...... LNB+OFA ...... $613,554 1,651 $372 SNCR w/LNB+OFA...... 7,166,781 3,095 2,316 4,540 SCR w/LNB+OFA ...... 12,103,941 5,669 2,135 1,918
Based on SRP’s capital and O&M cost commenter added that this failing proper NOX BART assessment, the estimates, we still consider the cost- renders EPA’s proposed rule proposed rule lacks an adequate effectiveness values of SCR, on an inconsistent with the CAA’s public foundation. The commenter stated that average ($2,135/ton) and incremental notice requirements. the high incremental costs of post- ($1,918/ton) basis, to not be cost- Response: We disagree with the combustion NOX control technologies prohibitive. We consider these results commenter’s assertion that we have not when compared to combustion control supportive of our proposed provided sufficient information technologies reinforces the conclusion determination that SCR with LNB and regarding our cost calculations. In the e- that post-combustion control OFA is cost-effective. We note that docket for our proposal, we included technologies cannot be the basis for while the LNB and OFA option is the the raw cost calculation spreadsheets BART for the units at Coronado. least expensive (i.e., lowest annual cost) from our contractor that contain the IPM Response: We disagree with the and is the most cost-effective of the equations, corresponding variable commenter’s assertion that we did not control technologies (i.e., has the lowest values, selected notes regarding perform a sufficient incremental cost $/ton value), it is also the least effective assumptions and variable ranges, as analysis for the Coronado units. In our control option (i.e., removes smallest well as selected tables from the IPM control cost summaries (Table 22 in the Base Case v4.10.203 quantity of NOX). It removes In addition, Web proposed rule and Table 32 in the TSD), substantially fewer emissions than links were provided (both in the raw the column labeled ‘‘incremental cost- either of the other two control options, cost calculation spreadsheet and in our effectiveness’’ represents the $/ton of the SNCR- and SCR-based systems. As proposal) to the location on the publicly the control option when compared to discussed in our proposed action, and available EPA Web site that contains the preceding control option. The in other responses in this document, we full IPM documentation. column labeled ‘‘average cost- Comment: One commenter (SRP) have not identified any energy or non- effectiveness’’, represents the $/ton of stated that EPA failed to follow the air quality impacts that warrant the control option when compared to BART Guidelines by not conducting an eliminating SCR from consideration for the baseline control. In the case of incremental cost analysis for Coronado. Coronado Unit 1. Combined with the Coronado Unit 1, we considered two According to the commenter, the modeled visibility improvement control options beyond the baseline: proposed rule and TSD both provide a associated with the SCR control option, SNCR with LNB and OFA, and SCR single entry for incremental costs for SRP’s cost estimates continue to support with LNB and OFA. The ‘‘single entry each of the Coronado units that reflect the selection of SCR with LNB and OFA for incremental costs’’, as described in the incremental cost of the most as BART for Coronado 1. the comment, represents the stringent NO BART control option Comment: One commenter (SRP) X incremental cost between the SNCR- compared to the baseline. The stated that the proposed rule and the and SCR-based options. An incremental commenter asserted that this is not a TSD say almost nothing about how IPM cost value was not calculated between complete incremental analysis because was used to calculate costs, instead LNB with OFA (which is the option it ignores incremental comparisons directing the public to an EPA preceding the SNCR-based option) and between identified control options. SRP contractor report for more information. SNCR because LNB with OFA contended that in the absence of a The commenter asserted that no represented the baseline control in our contractor report in the docket for the 203 Document ID: EPA–R09–OAR–2012–0021– analysis. The cost-effectiveness of rulemaking supplies additional detail 0008, File name: G–15_MODELING_FILES_EGU moving from LNB with OFA to SNCR on precisely how IPM was used. The _BART_Costs_Apache_Cholla_Coronado_FINAL2. with LNB and OFA is therefore
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adequately captured in the ‘‘average proposed FIP, one commenter (SRP) requirements to eliminate unnecessary cost-effectiveness’’ column. We do note performed and submitted an assessment and unreasonable compliance burdens. that, in our supplemental cost analysis, of the critical components of a BART • The commenter supports and we have used OFA as the baseline analysis for Coronado, including control appreciates the use of the monitoring control, and have therefore calculated costs and the visibility improvements system certification and quality an incremental cost-effectiveness value associated with the control options. The assurance (QA) procedures in 40 CFR for moving from LNB with OFA to commenter indicated that this analysis Part 75. However, EPA’s proposed SNCR with LNB and OFA. These results shows that even without considering definition of ‘‘valid’’ data is broader are described in a previous comment other energy and non-air quality than 40 CFR Part 75, and EPA also and, as noted in that comment, we environmental impacts associated with should make clear that the ‘‘bias’’ disagree with the commenter’s assertion the implementation of SNCR or SCR, it adjustment procedures in 40 CFR Part that the incremental cost of post- is clear that the visibility benefits 75 do not apply to data used to calculate combustion controls is cost-prohibitive. realized from implementation of post- the 30-day rolling averages. combustion controls are not justified by • The commenter objects to the d. Visibility Improvement the cost. The commenter also submitted proposed additional relative accuracy Comment: One commenter (SRP) the results of this analysis using requirements. Imposing additional asserted that EPA is without basis for CALPUFF version 6.42 in place of relative accuracy test audit (RATA) establishing in the proposed rule a 0.5 version 5.8. The commenter stated that specifications will not increase the deciview comparison threshold as a this analysis provides even stronger accuracy of any monitoring system, but touchstone for analyzing impacts from evidence that selection of post- would increase the difficulty and cost of Coronado BART controls, citing the combustion controls as BART for testing. It also could result in additional BART Guidelines and associated Coronado is inappropriate. missing data if tests must be repeated to preamble. According to the commenter, Response: We disagree with this meet the specifications. To proceed with even if EPA could impose a 0.5 comment. As noted in a separate combined RATA specifications, EPA deciview comparison threshold, it is response, we have performed a also would need to either propose (and only by substituting its own preferred supplemental cost analysis that relies solicit comment on) alternative low- modeling methodology (which the upon many elements of the cost analysis emitter combined specifications that commenters argued is something EPA provided by the commenter. Even with have been demonstrated to be cannot lawfully do) that EPA can project the higher cost estimates provided by consistently achievable, or exempt units that requiring SCR at Unit 1 would the commenter, we consider the costs of meeting any of the applicable 40 CFR barely yield a projected improvement of post-combustion controls such as SNCR Part 75 low-emitter thresholds from more than 0.5 deciview at one area. The and SCR to be cost-effective on a $/ton those specifications. commenter also noted that 0.5 deciview basis. In addition, as noted in a separate • The commenter stated that the is below the level of human response, we disagree with several proposed data availability requirements perceptibility. assumptions used in the commenter’s are unnecessary and too stringent. Response: As explained above, we visibility modeling, such as the use of Source owners and operators already have not used 0.5 dv as a threshold, but an unapproved CALPUFF model have sufficient incentive to obtain valid as one point of comparison such as a version and treatment of ammonia data in order to avoid the increasingly ‘‘benchmark’’ or ‘‘yardstick’’ to gauge background concentrations. We conservative (and ultimately punitive) the magnitude of impacts under various therefore disagree that the visibility missing data substitution procedures control scenarios. benefits modeled by the commenter are that apply under 40 CFR Part 75. representative of the benefits that will Regarding stringency, if a unit has a e. Other Comments accrue with the use of post-combustion significant missing data event during a Comment: The commenter (NPS) controls. The modeling results calendar quarter in which it also has a agreed with EPA’s determination that performed in support of our proposal significant period of unit downtime NOX BART for Coronado Units 1 and 2 indicate substantial visibility benefits, (e.g., as a result of an outage), the is SCR with LNB and OFA. The especially with the SCR control option. percent of operating hours during the commenter noted that EPA proposed on As a result, we do not consider it quarter with valid data could easily be Unit 1 an emission limit for NOX of appropriate to eliminate either of the less than 90 percent. It is in part for this 0.050 lb/MMBtu, based on a rolling 30- post-combustion controls from reason that 40 CFR Part 75 measures boiler-operating-day average, and on consideration as BART. Although SCR data availability over each 8,760- Unit 2 an emission limit of 0.080 lb/ is the most stringent control option, its operating-hour period. EPA should MMBtu, which is consistent with the associated visibility benefits and cost- either eliminate the unnecessary emission limit in the consent decree. effectiveness justify this technology as requirement or provide data to justify its The commenter stated that EPA BART. proposed requirement that take into acknowledged that the emission limit account the differences described above. for Unit 2 established in the consent E. Comments on Enforceability • EPA must modify the quarterly decree was not the result of a BART Requirements in EPA’s BART FIP reporting requirements to be consistent five-factor analysis, and that the consent Comment: One commenter (SRP) with existing requirements. decree does not indicate that SCR at made the following points concerning • EPA must modify the notification 0.080 lb/MMBtu represents BART. The the proposed enforceability requirements in the proposed rule commenter commended EPA for requirements: because they are overly broad and soliciting additional information on the • EPA must modify the monitoring overly prescriptive. First, EPA should feasibility of achieving a more stringent requirements to be consistent with clarify the proposed provision by limit. existing requirements. If EPA proceeds requiring notice only of new controls Response: We acknowledge the to impose additional controls at that will be required to meet the FIP or comment. Coronado beyond those specified in the regional haze SIP. Second, because Comment: In response to EPA’s consent decree and already included in installation of controls is a complex proposed BART determination in the the Coronado permit, it must align these process, and the point at which that
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process is ‘‘complete’’ may not be of the CEMS required by Part 75 and Method 5 or 5e are appropriate where immediately clear, EPA must revise the used for the compliance demonstrations SCR is used. ADEQ suggested Method 5 requirement to use a more objective for this action obtain 90 percent valid or 5e where SCR is used, and states that term and allow sufficient time for data (per Part 75 specifications) for each any collateral increase in acid mist owners and operators to comply. Third, unit over each calendar year. In should be addressed through a because the proposed requirement addition, the rule will require the permitting process. SRP stated that wet duplicates reporting already required for affected units to conduct RATA scrubbers also render Methods 201 and a new add-on NOX emission control evaluations and calculate the quarterly 201A inapplicable, and requested that under 40 CFR Part 75, EPA should rely valid data hours for NOX lb/hour and EPA specify the use of Method 5, 5B, 5I on (and if necessary refer to) the notice heat input. EPA will not finalize the or an approved alternative. required under Part 75. minimum data requirements in the One commenter (NPS) pointed out Response: We partially agree with this proposal, but will require these data to that use of SCR at these units is comment and are adjusting the be calculated (all data for determining expected to result in increased enforceability requirements of the final the relative accuracy in these units are condensable particulate matter in the FIP accordingly. EPA agrees that the available when Part 75 RATAs are form of sulfuric acid mist (H2SO4), Part 75 bias adjustment should not be performed) and reported to both EPA which would have the effect of making applied to the compliance data for the and ADEQ to determine if these data are the emission limit more stringent than BART rules in this action and is making capable of meeting more rigorous QA/ intended by ADEQ, and likely not be changes to the final rule to address this QC requirements in the future. We also achievable in practice. To address EPA’s comment. However, EPA does not agree note that the final rule will add QA/QC request for comment on whether to that only the incentives under the Acid and minimum valid data requirements allow compliance with the PM10 limit to Rain Part 75 rules are sufficient to for the inlet SO2 CEMS that are needed be demonstrated using test methods that assure adequate valid data for this rule. to calculate the SO2 removal efficiencies do not capture condensable particulate Part 75 relies on progressively punitive for the Cholla EGUs. Finally, EPA agrees matter, namely EPA Methods 1 through data substitution procedures to promote that semiannual reporting will be 4 and Method 5 or Method 5e, the good valid data availability for its sufficient for this rule, and the final rule commenter conducted and submitted an program. Our rule does not substitute will reflect this. analysis of H2SO4 emissions. According data, so the incentives of the Part 75 Comment: One commenter (AEPCO) to the commenter, H SO emissions will rules do not exist. Therefore, EPA is requested that EPA clarify that AEPCO 2 4 not be significant, contributing less than requiring that each unit subject to this has longer than 180 days to comply with 10 percent to the PM limit. The rule obtain 90 percent valid data, as the non-SCR limits. The commenter is 10 commenter suggested that the 0.030 lb/ determined under Part 75, for each particularly concerned about the time MMBtu limit proposed by ADEQ for the calendar year. needed for the ESP and scrubber Apache and Coronado units be adjusted It should be noted that the commenter upgrades and believes a five-year period to 0.033 lb/MMBtu to reflect the did not submit any data specific to its for all BART implementation would be increase in total PM attributable to EGUs indicating the difficulty of appropriate. ADEQ also commented that 10 SCR, and that PM emissions would be meeting the proposed valid data the facility will need more than 180 10 measured by conducting EPA Method availability requirements. Also, the days to complete the upgrades needed 201A/202 tests consistent with the other two utility companies affected by to meet the SO2 BART limits, and stated this rule did not make any objection to that a five-year compliance time frame ADEQ’s SIP. the proposed data requirements. from the time the BART limit is In contrast to the previous However, EPA, as a result of this finalized, as specified in RHR Appendix commenters, one commenter comment, has reconsidered the Y, is most appropriate. (Earthjustice) stated that EPA should additional quality assurance and valid Response: EPA agrees that AEPCO approve the test methods in the ADEQ data requirements from the proposal. As would need more than the 180 days in RH SIP (i.e., EPA Methods 201 and 202) indicated by the commenter, the proposed rule. However, we do not and ensure that the BART limit includes measurement and QA requirements for agree that five years is necessary to both filterable and condensable PM NOX lb/hour are not currently required perform the necessary upgrades. The fractions. The commenter asserted that by Part 75. In addition, EPA recognizes final rule will require AEPCO’s two if EPA allows or requires a test method that the calculation of heat input units to meet the SO2 and PM10 limits other than Method 201 and 202, the requires the combination of the flow within four years of the effective date of PM10 BART emission limit would and diluent (O2 or CO2) CEMS along this rule. This time frame will allow effectively be less stringent because it with measurements of temperature and AEPCO to perform the upgrades to the would only apply to filterable PM, and estimation of moisture. In addition in two units during regularly scheduled not total PM. The commenter indicated the final rule, EPA is providing for a maintenance outages. that requiring different test methods multi-unit determination of compliance. Comment: Several commenters would in effect be proposing an even This would compound the valid data (ADEQ, AEPCO, APS, EarthJustice, NPS, less-stringent PM10 BART limit, which concerns of the commenter. EPA SRP) provided feedback on test would require EPA to undertake an requires monitoring data used for methods. AEPCO supported independent BART analysis that compliance determinations to be of maintaining the use of EPA Method demonstrates that the less-stringent known quality as demonstrated through 201A to comply with the proposed emission limit is BART. Consequently, Quality Assurance/Quality Control (QA/ BART PM10 limits. In contrast, ADEQ according to the commenter, if EPA QC) procedures.204 In place of the and APS only supported the use of requires or allows a different test requirement to validate through RATA Methods 201A and 202 if SCR controls method, it must lower the emission testing of the NOX lb/hour measurement are not used. These commenters stated limit to reflect only the filterable PM10 and heat input, EPA will require that all that SCR causes an increase in sulfuric fraction. The commenter added that in acid aerosol mist, which results in an this case, EPA should ensure that 204 See, e.g., 40 CFR 60.13(a) and 40 CFR increase in condensable particulate compliance with the filterable PM10 Appendix F. matter. APS suggested Methods 1–4 and limit is demonstrated with use of CEMS
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for filterable PM, which is currently EPA is finalizing a decision to allow to do the necessary upgrades for Unit 2. available. either Method 5 or Methods 201A and This unit will require scrubber upgrades Response: ADEQ selected test 202 for demonstrating compliance with that need to be done concurrent with methods 201 and 202 for determining the BART PM10 limits set by ADEQ. the fabric filter installation to compliance with this limit. EPA noted As noted above, the addition of the accommodate the increase in pressure in the proposal that the proposed SCR to these EGUs for NOX control will drop that a new fabric filter will impose. addition of SCR for NOX control would likely increase the condensable PM that ADEQ also stated a compliance date of likely increase the quantity of PM will be measured by Method 202. By April 1, 2016, would be more collected as condensable PM by method offering the option of Method 5 or appropriate than January 1, 2015, for 202 due to an increase in H2SO4 from Methods 201A and 202, the facilities both the PM10 and SO2 limits at Cholla the oxidation of SO2 to SO3. EPA can determine which methods are Unit 2. requested comment on changing the test compatible with their units’ stack Response: EPA agrees with this method from methods 201 and 202 to conditions and will best demonstrate comment and has changed the EPA Method 5 which measures only the the proper operation of their PM compliance date in the final rule to filterable PM. Method 5 measures all controls. Any significant increase in April 1, 2016.209 In addition, as sizes of filterable PM which results in a H2SO4 and the appropriate control of explained above, in order to ensure that higher filterable PM value than Methods this visibility impairing pollutant will the wet FGD (i.e. scrubbers) on all three 201 or Method 201A, which only be addressed through the PSD units at Cholla are properly operated measure filterable PM10. permitting process with a BACT and maintained, consistent with 40 CFR In its comments concerning the determination for H2SO4 control. The 51.308(e)(1)(v), we are finalizing a proposal for Coronado, SRP noted that significance level that triggers removal efficiency requirement for SO2 Method 201A cannot be used in a wet permitting for H2SO4 is an increase of of 95 percent on a 30-day rolling basis exhaust gas stream. We agree with this seven tons per year of this pollutant.208 for Cholla Units 2, 3 and 4. Compliance comment. In promulgating amendments Coronado has already received a PSD with the efficiency requirement will be to Method 201A and Method 202 in permit for H2SO4 that is likely to result determined by SO2 continuous emission 2010, EPA explained that: from the increase in H2SO4 resulting monitoring systems (CEMS) operated at Method 201A cannot be used to measure from the SCR required under the the inlets and outlets of the scrubbers. emissions from stacks that have entrained consent decree. Units 3 and 4 already have SO2 and CO2 moisture droplets (e.g., from a wet scrubber EPA’s AP–42 indicates that CEMS installed after the scrubbers, and approximately one third of the filterable stack) since these stacks may have water Unit 2 has SO2 and CO2 CEMS installed droplets that are larger than the cut size of PM emissions from EGUs are larger than 210 before the scrubbers. Therefore, SO2 the PM10 sizing device. The presence of PM10. This means that the change from and diluent CEMS will need to be moisture would prevent an accurate Method 201 (or 201A) to Method 5 as installed at the inlets to the scrubbers on measurement of total PM10 since any PM10 the compliance method will result in Units 3 and 4. We estimate that the total dissolved in larger water droplets would not this increased measurement of PM. This be collected by the sizing device and would annualized cost for this installation consequently be excluded in determining is offset by the elimination of the (including ongoing operation and total PM10 mass. To measure PM10 in stacks condensable measurement of Method maintenance costs) will be where water droplets are known to exist, 202 and as noted above, the utilities will approximately $51,000 per unit.211 We EPA’s Technical Information Document 09 have the option of using either testing also note that this efficiency (Methods 201 and 201A in Presence of Water approach. requirement will probably result in a Droplets) recommends use of Method 5 of Comment: One commenter (APS) slight increase in operation and appendix A–3 to 40 CFR part 60 (or a requests that EPA change the comparable method) and consideration of the maintenance costs in the form of compliance date for the PM10 limit at 205 total particulate catch as PM10 emissions. additional limestone and scrubber waste Cholla Unit 2 to January 1, 2016, rather disposal expenses. Even considered It is also true that the rarely used than January 1, 2015. The commenter collectively, these additional costs are Method 201 cannot be used in a wet explained that EPA misunderstood the de minimis in comparison to the exhaust stream (also known as a ‘‘wet language of the ADEQ SIP, which refers 206 annualized cost of SCR (i.e., $9,906,206 stack’’). to APS’s commitment to install a fabric to $13,590,853 per unit at Cholla, At this time, the three facilities filter by 2015, to mean installment and according to our supplemental cost subject to this BART rule have a mix of operation by the first of the year, analysis) or the total cost of installing a wet and dry stacks. EPA anticipates that whereas this commitment actually new wet FGD system, which APS has the SO BART limits set by ADEQ will 2 meant by the end of 2015, or December estimated to be $67.0 to $70.9 result in 100 percent of the exhaust gas 31, 2015. The commenter further million.212 In order to allow sufficient undergoing SO2 scrubbing. Neither requested that this date be extended to ADEQ nor EPA is requiring reheat of the April 16, 2016, if the ADEQ approves 209 Although APS requested a deadline of April exhaust gas stream. Therefore, it is APS’s request for a one-year extension 16, 2016, this request was contingent upon ADEQ’s likely that all of the coal-fired units to comply with the Mercury and Air approval of APS’s August 7, 2012 request for a one- covered by this action will have wet Toxics Standards (MATS) before EPA year extension to comply with the MATS. ADEQ’s stacks. So it is doubtful that any finalizes this BART determination. comments indicate that April 1, 2016 is the appropriate deadline for this requirement, so we filterable PM10 method would work as The commenter also requested that have modified the final compliance deadline to 207 the compliance method. Therefore, EPA change the compliance date with April 1, 2016. the 0.15 lb/MMBtu SO2 emissions 210 See Cholla Title V Permit (2012), Table C–3: 205 75 FR 80118, 80121. standard from 180 days after Continuous Emission Monitors. 206 See EPA’s Technical Information Document promulgation to January 1, 2016, or 211 We used EPA’s CEMS Cost Model (available 09, ‘‘Methods 201 and 201A in Presence of Water at http://www.epa.gov/ttn/emc/cem.html) to Droplets’’ (September 9, 1991). April 16, 2016, to allow sufficient time estimate the total annualized cost of adding inlet 207 See, e.g. 75 FR 80126 (‘‘Monitoring the CEMS for SO2 and CO2. See ‘‘CEMS Cost emission of PM10 or PM2.5 from a wet gas stream A consensus method to provide this information Calculation.’’ is a challenging problem that has not been has not emerged.’’) 212 APS Comments, Table 3–8. No annualized addressed successfully despite considerable effort. 208 See 40 CFR 52.21(b)(23)(i). cost was provided.
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time for installation of the CEMS, the Comment: One commenter 11-1302, slip op. at 42 (D.C. Cir. Aug. compliance deadline for this removal (Earthjustice) stated that EPA should set 21, 2012) (‘‘CSAPR decision’’); efficiency requirement at these units BART limits for PM2.5 and PM10, rather Luminant Generation Co. v. EPA, 675 will be one year after publication of this than just PM10. The commenter F.3d 917, 921 (5th Cir. 2012); and State final rule for Units 3 and 4. The removal indicated that the BART Guidelines of Texas, et al., v EPA. 690 F.3d 670 (5th efficiency compliance deadline for Unit specify that BART should be evaluated Cir. 2012). 2 will coincide with the compliance and defined for both PM2.5 and PM10 Several commenters stated that EPA date for the lb/MMBtu SO2 emission (citing 40 CFR part 51, Appendix Y, made no finding that Arizona failed to limit for this unit (i.e., April 1, 2016). section II.A.3). satisfy its statutory obligation to Comment: Two commenters requested Response: The BART Guidelines do consider and weigh the BART factors, that EPA implement SCR installation in not require states to set BART limits for and asserted that EPA conceded that the three rather than five years. Earthjustice PM2.5 in addition to limits for PM10. The state had done so in its FIP proposal claimed that the proposed five-year portions of the BART Guidelines cited (citing 77 FR 42851). Some commenters compliance deadline is unreasonable by commenters (i.e. sections II.A.3 and (AEPCO, SRP) stated that EPA proposed and inconsistent with the CAA and RHR III.A.2) pertain to the identification of to disapprove the SIP, in part, because requirements, noting that compliance sources that are BART-eligible and it is not consistent with BART decisions before the ‘‘outside date’’ is required sources that are subject-to-BART, not that other states have made (citing 77 FR whenever earlier compliance is the actual five-factor analysis or 42836), and contended that this finding possible. This commenter contended determination of BART for a given is irrelevant to the approvability of that average SCR installations have source, which is described in section IV ADEQ’s SIP. One commenter (SRP) required 37 to 43 months to implement, of the Guidelines. With respect to the added that ADEQ’s BART and EPA has provided no site-specific five-factor analysis, the Guidelines determinations are entirely legal and factors for these plants to require a provide that, ‘‘[m]odeling should be reasonable and, to the extent that other longer-than-average installation time. conducted for SO2, NOX and direct PM states’ BART determinations may be 213 The commenter notes that ADEQ has an emissions (PM2.5 and/or PM10).’’ The relevant, consistent not only with the ‘‘accelerated permit processing’’ Guidelines thus provide states with the action of other states, but with action program, so that any PSD permits flexibility to consider either PM2.5 or that EPA has approved or proposed to needed to address sulfuric acid mist PM10 emissions or both, as part of their approve for those states (i.e., increases should not require an five-factor analysis. Likewise, the combustion controls as BART for NOX). extension of the compliance deadline to Guidelines do not require that the Two commenters added that EPA five years. The commenter also emission limits reflecting BART should purported to defer to ADEQ’s BART requested that EPA obtain and post to include separate limits for PM2.5 and determinations by indicating that it 214 the docket the outage schedule for these PM10. Thus, we are not required by would prefer to act on a SIP revised to plants, which may provide additional the RHR to set separate BART limits for address the deficiencies perceived by justification for a compliance deadline PM2.5. EPA (citing 77 FR 42839), but the shorter than five years. In contrast, SRP commenters asserted that it is not commented that, if EPA finalizes a F. Comments on Legal Issues deference to invite the State to submit requirement for SCR at Unit 1 ‘‘a Comment: A number of commenters a SIP that conforms to EPA’s policy five-year compliance period is certainly asserted that EPA has acted in a manner choices. The commenters contended warranted.’’ SRP noted that it estimated contrary to the CAA, under which states that in any case, with the court ordered it would require 48 months to install are to play the lead role in designing deadline of November 15, 2012, for EPA SCR at Coronado Unit 2, and that and implementing the regional haze to finalize the proposed FIP, it would be installing SCR on Unit 1 would be even program. These commenters typically impossible for Arizona to prepare and more complicated due to the reduced indicated that EPA is required to defer adopt a revised SIP in time. amount of space following the to the states’ judgment regarding BART Response: We do not agree that our installation on Unit 2. where the state has considered the five partial disapproval of the Arizona Response: We are finalizing a statutory BART factors, and has no Regional Haze SIP is contrary to the compliance deadline of five years from authority to override a state’s BART CAA. As noted by several commenters, final publication of this notice for all determination simply because it States have the lead role in determining SCR-based emission limits. As disagrees with the state’s conclusions. BART for individual sources through explained in our proposal, five years is The commenters often stated that the SIPs. However, EPA also has a crucial a reasonable time frame for SCR design states are empowered by the CAA to role in reviewing SIPs for compliance and installation, particularly where determine how best to weigh each of the with the requirements of the CAA and retrofits of multiple units at a single statutory BART factors and that EPA’s its implementing regulations. Pursuant facility are required. Granting the full only legal role in SIP review is to to CAA section 110, States must submit five years for SCR design and determine whether the state’s plan is SIPs to EPA for review and EPA must installation will allow the facilities to consistent with the CAA. The review SIPs for consistency with the tie in the SCR systems during routinely commenters generally stated the belief Act’s requirements and disapprove any scheduled maintenance outages, which that ADEQ’s BART determinations fully SIP revision that ‘‘would interfere with are typically scheduled for every three complied with the CAA, the Regional any applicable requirement’’ of the years. With respect to Coronado in Haze Rule and the BART Guidelines. Act.215 The CAA also empowers EPA to particular, the five-year compliance The commenters frequently cited call for SIP revisions ‘‘[w]henever [EPA] schedule will allow SRP sufficient time American Corn Growers Ass’n. v. EPA, finds that the applicable to design and install the SCR system on 291 F.3d (D.C. Cir. 2002); EME Homer implementation plan for any area is Unit 1 and to design and install a low- City Generation, L.P. v. EPA, No. substantially inadequate to * * * load temperature controller on Unit 2, comply with any requirement of this which likely must be done in the period 213 BART Guidelines, 40 CFR Part 51, Appendix after the SCR for Unit 2 is placed into Y, section IV.D.5. 215 CAA section 110(a)(1), (k)(3) and (l), 42 U.S.C. operation (June 1, 2014). 214 Id. Section V. 7410(a)(1), (k)(3) and (l).
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chapter,’’ and impose sanctions when Guidelines).222 Thus, the statute from State to State.’’’ 226 By contrast, EPA determines they are ‘‘reasonable provides EPA a key oversight role in Regional Haze SIPs and BART and appropriate for the purpose of reviewing SIPs for compliance with the determinations are subject to detailed ensuring that the requirements [of the RHR and BART requirements. requirements set forth in CAA sections Act] * * * are met.’’ 216 Furthermore, The cases cited by commenters do not 169A, the RHR and the BART the Act mandates that EPA promulgate support an argument that EPA’s role as Guidelines. While in Luminant and a FIP when EPA finds that a State has a reviewer is any less critical in the Texas, the Fifth Circuit found that EPA failed to submit a required SIP to the regional haze context than it is in had failed to tie its disapproval to any Agency, failed to submit a complete SIP, reviewing other SIP components. In requirement of the CAA or EPA’s or where EPA disapproves a SIP.217 American Corn Growers v. EPA, the implementing regulations,227 in this Thus, the CAA provides EPA with a petitioners challenged the original RHR case our disapproval is based on the critical oversight role in ensuring that because, among other things, the RHR SIP’s failure to comply with CAA SIPs meet the requirements of the CAA. treated one of the five statutory factors sections 110(a)(2) and 169A(b)(2)(A), as Nothing in the CAA indicates that differently than the others by requiring implemented through the RHR and the EPA’s role is less important in the States to consider the degree of visibility BART Guidelines. context of the Regional Haze program improvement from imposing BART on a As noted above, CAA section than under other CAA programs. On the group of sources rather than on a 110(a)(2)(J) requires all SIPs to ‘‘meet contrary, CAA section 110(a)(2)(J) source-specific basis.223 The court the applicable requirements’’ of Part C explicitly requires that SIPs ‘‘meet the concluded that such a requirement of Title I of the CAA, including the applicable requirements’’ of Part C of could force States to apply BART requirement that each source found Title I of the CAA including the controls at sources without evidence subject-to-BART, ‘‘procure, install, and requirements for visibility protection set that the individual sources contributed operate, as expeditiously as practicable forth in sections 169A and 169B.218 to visibility impairment at a Class I area, (and maintain thereafter) the best Pursuant to section 169A(b), EPA is which encroached on States’ primary available retrofit technology * * *’’ 228 required to promulgate visibility authority under the regional haze Section 169A(g)(2) further provides that: protection regulations that apply to provisions to determine which In determining best available retrofit ‘‘each applicable implementation plan’’ individual sources are subject to BART technology the State (or the Administrator in (i.e., each SIP or FIP) 219 for each State and what BART controls are appropriate determining emission limitations which containing one or more Class I areas and for each source.224 Therefore, the court reflect such technology) shall take into each State ‘‘emissions from which may vacated the visibility improvement part consideration the costs of compliance, the reasonably be anticipated to cause or of the original RHR as contrary to the energy and nonair quality environmental 225 impacts of compliance, any existing contribute to any impairment of statute. Contrary to some pollution control technology in use at the 220 visibility in any [Class I area].’’ The commenters’ suggestions, however, the source, the remaining useful life of the CAA specifies that these regulations American Corn Growers decision did source, and the degree of improvement in (including the RHR) must require each not address EPA’s authority to reject a visibility which may reasonably be such SIP or FIP to ‘‘contain such State’s BART determinations for failure anticipated to result from the use of such emission limits, schedules of to conform to the CAA, the RHR or the technology.229 compliance and other measures as may BART Guidelines. Similarly, the RHR provides that: be necessary to make reasonable Commenters also cite Luminant progress toward meeting the national Generation v. EPA, 675 F.3d 917, 921 The determination of BART must be based goal,’’ including implementation of (5th Cir. 2012) and Texas v. EPA, 690 on an analysis of the best system of continuous emission control technology BART, as determined by the State (or by F.3d 670 (5th Cir. 2012). Neither of available and associated emission reductions 221 EPA in the case of a FIP). Moreover, these cases involves BART or the CAA’s achievable for each BART-eligible source that the CAA requires that BART for each regional haze provisions at all. Rather, is subject to BART within the State. In this ‘‘fossil-fuel fired generating power plant they involved EPA’s disapprovals of SIP analysis, the State must take into having a total generating capacity in revisions involving Texas’s minor new consideration the technology available, the excess of 750 megawatts’’ must be source review (NSR) program. As noted costs of compliance, the energy and nonair determined pursuant to the guidelines by the Luminant court, ‘‘because ‘the quality environmental impacts of promulgated by EPA (i.e., the BART Act includes no specifics regarding the compliance, any pollution control equipment in use at the source, the remaining useful life structure or functioning of minor NSR of the source, and the degree of improvement 216 See id. 42 U.S.C. 7410(k)(5), (m). programs’ and because the in visibility which may reasonably be 217 See id. section 7410(c)(1). implementing regulations are ‘very anticipated to result from the use of such 218 CAA sections 110(a)(2)(J), 169A and 169B 42 general [,] * * * SIP-approved minor technology.230 U.S.C. 7410(a)(2)(J), 7491 and 7492. NSR programs can vary quite widely 219 Under the CAA, ‘‘applicable implementation ADEQ’s BART determinations for NOX plan’’ is defined as ‘‘the portion (or portions) of the at Apache Units 2 and 3, Cholla Units 222 implementation plan, or most recent revision Id. In this case, Cholla and Coronado each 2, 3 and 4 and Coronado Units 1 and 2 thereof, which has been approved under [CAA have a total generating capacity in excess of 750 section 110], or promulgated under [CAA section megawatts, while Apache has a total plant-wide fall short of these requirements in 110](c) * * * and which implements the relevant generating capacity of 560 megawatts. Thus, the several respects. requirements of [the CAA].’’ CAA section 302(q), 42 BART Guidelines are mandatory for BART First, ADEQ did not analyze the ‘‘best U.S.C. 7602(q). In other words, an ‘‘applicable determinations at Cholla and Coronado and serve system of continuous emission control implementation plan’’ is an EPA-approved SIP or as non-binding guidance with respect to Apache. Tribal Implementation Plan, or an EPA- 223 291 F.3d at 5–9. 226 promulgated FIP. 224 Id. at 7–8. 675 F.3d at 922 (citing 74 FR 51418, 51421 (Oct. 6, 2009). 220 42 U.S.C. 7491(b)(2). In promulgating the RHR, 225 EPA revised the RHR to address the court’s 227 EPA determined that ‘‘all States contain sources decision in American Corn Growers at the same 675 F.3d at 924, 929; 690 F.3d at 679, 682, whose emissions are reasonably anticipated to time as we promulgated the BART Guidelines. 70 686. contribute to regional haze in a Class I area and, FR 39104 (July 6, 2005). The revised RHR and the 228 CAA section 169A(b)(2)(A)., 42 U.S.C. therefore, must submit regional haze SIPs.’’ 64 FR Guidelines were upheld by the D.C. Circuit in 7491(b)(2)(A). 35720; see also 40 CFR 51.300(b)(3). Utility Air Regulatory Group v. EPA, 471 F.3d 1333 229 42 U.S.C. 7491(g)(2). 221 42 U.S.C. 7491(b)(2). (D.C. Cir. 2006). 230 40 CFR 51.308(e)(1)(ii)(A).
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technology available and associated visibility impairment at all Class I • A requirement that each source subject emission reductions achievable.’’ Rather areas.232 Thus ADEQ’s BART to BART maintain the control equipment required by this subpart and establish it accepted the source’s own assertions determinations for NOX at Apache Units procedures to ensure such equipment is about what emissions reductions were 2 and 3, Cholla Units 2, 3 and 4 and properly operated and maintained. achievable with various control Coronado Units 1 and 2 do not meet the technologies. For example, in response requirements of CAA section 169A(g)(2) These two requirements are mandatory to comments from the FLMs arguing or 40 CFR 51.308(e)(1)(ii)(A). elements of the RHR and are necessary that SCR could achieve lower rates on In addition, 40 CFR 51.308(e)(1)(ii)(B) to ensure that BART is procured, 30-day-rolling average, ADEQ stated provides that: installed and operated, as expeditiously that: as practicable and maintained The determination of BART for fossil-fuel thereafter, as required under CAA ADEQ’s BART evaluations were based on fired power plants having a total generating section 169A(b)(2)(A). Moreover, CAA site-specific information provided by the capacity greater than 750 megawatts must be section 110(a)(2) requires that emissions applicants. It is the Department’s made pursuant to the guidelines in appendix understanding that such information was Y of this part (Guidelines for BART limits such as BART be ‘‘enforceable’’ based partially on feedback received from Determinations under the Regional Haze and section 302(k) requires emissions vendors and plant personnel who are Rule). limits to be met on a continuous basis. intimately familiar with the specific Arizona’s Regional Haze SIP lacks equipment that is being considered. In that Cholla and Coronado each have a requirements for monitoring, regard, the Department based its BART generating capacity greater than 750 recordkeeping and reporting sufficient computations on the emission rates proposed megawatts. Therefore, the BART to ensure that the BART limits are by the applicant for the different control determinations for these BART sources enforceable and are met on a continuous 231 technology options. must be made pursuant to the BART basis. While it is certainly reasonable to Guidelines. However, ADEQ’s BART Therefore, Arizona’s BART consider site-specific information determinations for these sources did not determinations for Apache, Cholla and provided by the sources as part of a fully comply with the BART Guidelines. Coronado do not meet several BART analysis, it is not reasonable to In particular, as explained more fully requirements of the CAA, the RHR and assume, with no independent analysis, above, contrary to the Guidelines’ the BART Guidelines. Accordingly, we that the sources have appropriately direction that ‘‘cost estimates should be are compelled to partially disapprove identified the emissions reductions based on the OAQPS Control Cost Arizona’s Regional Haze SIP. achievable with the best available Manual, where possible,’’ the control Finally, several commenters cited controls. ADEQ provided no evidence cost calculations supplied by the EME Homer City Generation v. EPA, No. that the sources’ estimates were based utilities and relied upon by ADEQ 11–1302 (D.C. Cir. Aug. 21, 2012). In on legitimate site-specific included line item costs not allowed by EME Homer City Generation, the D.C. considerations or that ADEQ undertook the Control Cost Manual, such as Circuit vacated EPA’s ‘‘Transport Rule’’ any verification of these estimates. owner’s costs, surcharge, and AFUDC. (also known as the ‘‘Cross-State Air Therefore, ADEQ has not demonstrated Thus, ADEQ’s consideration of the ‘‘cost Pollution Rule’’ or ‘‘CSAPR’’), which that its BART determinations were of compliance’’ for these units was not was promulgated by EPA to address ‘‘based on an analysis of the best system consistent with the Guidelines. interstate transport of SO2 and NOX of continuous emission control Furthermore, as explained above, under CAA section 110(a)(2)(D). The technology available and associated ADEQ’s consideration of visibility court found that the Transport Rule emission reductions achievable.’’ benefits was inconsistent with the exceeded EPA’s authority under section Second, ADEQ has not demonstrated Guidelines because the State did not 110(a)(2)(D) because the rule had the that it actually took into consideration consider benefits at multiple Class I potential to require upwind States to the BART factors in making its areas and multiple BART-eligible units reduce emissions by more than their determinations. In particular, while at each source. In addition, ADEQ failed own significant contributions to ADEQ provided information regarding to provide ‘‘a justification for adopting downwind nonattainment and because each of the factors, it gave no the technology [the State selected] as the EPA had not given states an opportunity explanation or rationale for how it ‘best’ level of control, including an to submit SIPs after it quantified their reached a determination based on that explanation of the CAA factors that led obligations for emissions reductions to information. [the State] to choose that option over address transport. Commenters here Finally, ADEQ did not appropriately other control levels.’’ 233 Therefore, point to the D.C. Circuit’s statements consider the ‘‘degree of improvement in ADEQ’s BART determinations for NOX concerning state and federal roles under visibility which may reasonably be at Cholla and Coronado do not comply the CAA and argue that EPA has anticipated’’ from installation of BART with 40 CFR 51.308(e)(1)(ii)(B). exceeded its statutorily mandated role because it did not consider visibility Finally, for all pollutants at all units in proposing to disapprove portions of benefits at all of the affected Class I covered by today’s action, ADEQ’s Arizona’s Regional Haze SIP and areas, nor did it consider the total Regional Haze SIP does not meet the promulgate a FIP. visibility benefit expected to result from requirements of 40 CFR 51.308(e)(1)(iii) While we agree that the general the entire BART-eligible source. and (iv) because it lacks the following principles concerning state and federal Overlooking significant visibility elements: roles under Title I of the CAA apply to benefits at additional areas and from • our action here, we do not agree that our A requirement that each source subject action here is inconsistent with those multiple BART-eligible units to BART be required to install and operate considerably understates the overall BART as expeditiously as practicable, but in principles. In this action, we are benefit of controls to improve visibility no event later than 5 years after approval of fulfilling our statutory duty to review and is contrary to the very purpose of the implementation plan revision. Arizona’s Regional Haze SIP, including BART, i.e., ‘‘eliminating or reducing’’ its BART determinations, for 232 CAA section 169A(b)(2)(A). compliance with the applicable 231 Arizona Regional Haze SIP, Appendix E, 233 BART Guidelines, 40 CFR Part 51, Appendix requirements of the CAA and the RHR, ‘‘Responsiveness Summary’’ at 13. Y, section IV.E.2. and to disapprove any portions of the
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plan that do not meet those consistency is particularly relevant for the plan revision in part. The plan requirements. Based on our review of BART determinations at fossil-fuel fired revision shall not be treated as meeting the SIP, we proposed to determine that power plants having a capacity in the requirements of this chapter until certain elements of Arizona’s Regional excess of 750 megawatts, which must be the Administrator approves the entire Haze SIP did meet the requirements of made pursuant to the BART plan revision as complying with the the CAA and the RHR, and we proposed Guidelines.237 To the extent a BART applicable requirements of this to approve those elements. However, for determination for such a power plant is chapter.238 the reasons explained in detail in our plainly inconsistent with EPA-approved Some commenters have read this proposal and elsewhere in this determinations for similar sources, it is provision as requiring that EPA act on document, we have concluded that more likely to be inconsistent with the Arizona’s Regional Haze SIP as a whole. Arizona’s BART determinations for NOX RHR and the BART Guidelines and We disagree that this language addresses at several units did not comply with the therefore to warrant greater scrutiny for the question of whether EPA may requirements of the CAA and the RHR. compliance with the applicable consider different elements of a State’s Based on these findings, we are required requirements. plan in separate notice and comment to disapprove these portions of Comment: Several commenters rulemakings. However, even assuming Arizona’s Regional Haze SIP. (ACCCE, ADEQ, APS, SRP) asserted that that this provision of the Clean Air Act In some instances, we expressed our it is contrary to the CAA for EPA to did limit EPA’s ability to act findings of non-compliance with the propose action on only the portions of sequentially on portions of a SIP relevant requirements in terms of ADEQ’s SIP that address the three submission, the requirement to act on a ‘‘disagreement’’ with the state’s power plants that are the subject of the submittal ‘‘as a whole’’ applies only if analysis. These statements were not proposed FIP. One commenter (APS) the submittal meets all of the applicable intended to suggest that our proposed stated that EPA may not ignore all other requirements of the CAA. As explained partial disapproval was simply based on sources of visibility-impairing in our proposal and elsewhere in this policy disagreements with the state. pollutants in the state (nor may it ignore document, we have determined that the Rather we used the term ‘‘disagree’’ as the other categories of visibility- Arizona Regional Haze SIP does not a short hand for our findings that impairing pollutants by focusing only meet all of the applicable requirements specific elements of Arizona’s analyses on nitrates, sulfates and PM) and of the CAA. Specifically, we have did not meet the requirements of the establish BART limitations for the three determined that the submittal as a CAA and the RHR. For example, we affected power plants outside the whole does not meet the requirements noted that, ‘‘[w]e disagree with several context of the long-term strategy and of CAA section 169A(b)(2)(A), as aspects of the NOX BART analysis for larger reasonable progress requirements implemented through the RHR and the Apache Units 2 and 3.’’ 234 We then of the regional haze program. BART Guidelines. Under these went on to list the specific deficiencies Commenters ACCCE, ADEQ and SRP circumstances, we are clearly not in the state’s analysis, and concluded contended that CAA section 110(k)(3) obligated to act on the plan as a whole, that ‘‘we are proposing to disapprove requires EPA either to approve a SIP but are given discretion to act on ADEQ’s BART determination for NOX at submittal ‘‘as a whole’’ or to approve distinct portions of the plan.239 Apache Units 2 and 3, since it does not that SIP submittal in part and While we agree that, as a matter of comply with 40 CFR disapprove it in part in a single policy, it is generally preferable to act 51.308(e)(1)(ii)(A).’’ 235 We made similar rulemaking that addresses in its entirety on plan submissions as a whole, we are findings with respect to ADEQ’s BART ‘‘the plan revision.’’ The commenters currently subject to a court-ordered determination for NOX at Cholla Units indicated that this requirement of the deadline of November 15, 2012 to act on 2, 3 and 4 and Coronado Units 1 and CAA is sensible because it is the plan the BART determinations for Apache 2.236 We have also described in detail, as a whole, with all its elements Generating Station, Cholla Power Plant both in our proposal and in this working together, that must ensure that and Coronado Generating Station.240 document, the other aspects of the the CAA’s regional haze-related goals Although these BART determinations state’s BART determinations that do not are being reached; any other approach to are part of the overall Regional Haze comply with the CAA and the RHR. SIP review and approval would fail to plan for Arizona, they are also severable Finally, some commenters appear to take into account the full array of from that plan, since BART have misunderstood our statement that regulatory choices that Arizona has determinations are made on a source-by- ADEQ’s ‘‘NOX BART determinations for made to address regional haze. source basis and are not dependent the coal-fired units are neither Response: We do not agree that we are upon other elements of the plan.241 consistent with the requirements of the required to act on Arizona’s Regional Act nor with BART decisions that other Haze SIP as a whole. As noted by some 238 42 U.S.C. 7410(k)(3). states have made.’’ As noted by several commenters, our action on Arizona’s 239 See Hall v. EPA, 273 F.3d 1146, 1159 (9th Cir. commenters, the CAA and the RHR Regional Haze SIP is governed by inter 2001) (section 110(k)(3) ‘‘permits the EPA to issue provide states with considerable alia, CAA section 110(k)(3), which ‘partial approvals,’ that is, to approve the States’ SIP discretion in deciding how to weigh the provides that in the case of any revisions in piecemeal fashion’’). 240 EPA agreed to this deadline after concluding statutory factors as a part of a BART submittal on which the Administrator is that litigation would most likely result in a shorter analysis. However, this discretion must required to act under section 110(k)(2), schedule than that to which Plaintiffs had agreed be reasonably exercised in compliance the Administrator shall approve such in negotiation. See Sierra Club v. Johnson, 444 with the applicable requirements. submittal as a whole if it meets all of the F.Supp.2d 46, 58 (D.D.C. 2006) (‘‘this case devolves to a single issue: whether defendant has met the Consistency with other EPA-approved applicable requirements of this chapter. ‘heavy burden’ of demonstrating that it would be BART determinations is one marker of If a portion of the plan revision meets impossible to comply with plaintiff’s proposed reasonableness, as well as compliance all the applicable requirements of this * * *’’). with the requirements of the RHR. Such chapter, the Administrator may approve 241 See 40 CFR 51.308(e)(1)(ii)(A)(‘‘[t]he determination of BART must be based on an the plan revision in part and disapprove analysis of the best system of continuous emission 234 77 FR 42846. control technology available and associated 235 Id. 237 CAA section 169A(b) and 40 CFR emission reductions achievable for each BART- 236 77 FR 42849, 42851. 51.308(e)(1)(ii)(B). Continued
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Therefore, we are taking action on these to the general requirements of section Federal Register.250 No party filed such BART determinations first and we will 308, EPA also adopted specific a petition. act on the remainder of the Arizona provisions that gave a handful of states, At the time of the 2009 Finding, EPA Regional plan in accordance with the including Arizona, the option of anticipated that ADEQ would submit a court-ordered deadlines for that action. submitting a regional haze SIP based on SIP revision covering 309(d)(4) and Comment: One commenter (ADEQ) the recommendations of the Grand 309(g), which would enable EPA to fully asserts that EPA does not have the Canyon Visibility Transport approve ADEQ’s 309 SIP as meeting all authority to adopt a FIP because none of Commission (GCVTC). Under the RHR, of the requirements of the Regional Haze the three triggering events for a FIP a SIP approved by EPA as meeting all Rule, thus ending the FIP clock. under CAA section 110(c)(1) has of the requirements of section 309 However, ADEQ did not submit a 309 occurred. Specifically, the commenter would be ‘‘deemed to comply with the SIP revision to address these two states that: requirements for reasonable progress elements, but instead decided to * * * for EPA to have authority to with respect to the 16 Class I areas [on develop a 308 SIP, which it submitted promulgate a regional haze FIP in Arizona, the Colorado Plateau] for the period to EPA in February 2011. one of three events must have occurred: (1) from approval of the plan through In January 2011, EPA received a a finding of failure to submit a regional haze 2018.’’ 244 notice of intent to sue covering dozens SIP, (2) a finding of failure to satisfy the Arizona made two submittals under of states, including Arizona, stating that minimum criteria for a complete regional section 309 in 2003 and 2004, but never we had not met the statutory deadline haze SIP under section 110(k)(1)(A) or (3) submitted a complete 309 SIP.245 for promulgating Regional Haze FIPs disapproval of a regional haze SIP submitted Rather, on December 24, 2008, ADEQ and/or approving Regional Haze SIPs. by Arizona. None of these three events has This notice was followed by a lawsuit occurred. sent a letter to EPA re-submitting its prior 309 SIP submissions and filed by several advocacy groups 251 With respect to EPA’s January 2009 acknowledging that the submittal did (Plaintiffs) in August 2011. In order finding of failure to submit, the not include provisions to address the to resolve this lawsuit and avoid commenter argues that: requirements of 309(d)(4) or 309(g).246 litigation, EPA entered into a Consent Section 110(c)(1) * * * does not allow These were not minor omissions: Decree with the Plaintiffs, which sets EPA to treat the omission of elements from 309(d)(4) required the submission of deadlines for action for all of the states a SIP submission as a failure to submit a SIP. ‘‘better than BART’’ milestones and a covered by the lawsuit, including Section 110(c)(1) is quite specific. If EPA trading program for SO , as well as Arizona. This decree was entered and believes SIP omissions render a SIP 2 BART requirements for stationary later amended by the Federal District incomplete, the agency may make a finding Court for the District of Columbia over source PM and NOX emissions, and under section 110(k)(1)(A) within the time 252 309(g) required implementation of any the opposition of Arizona. period required by section 110(k)(1)(B) and In opposing the entry of the consent additional measures necessary to start the FIP clock under the second clause decree, Arizona argued that the 2009 of section 110(c)(1)(A). If EPA cannot make demonstrate reasonable progress for the Finding did not give EPA authority to such a finding or, as in this case, fails to do additional Class I areas, in compliance promulgate a Regional Haze FIP for so, the agency may disapprove the SIP, and with the provisions of § 51.308(d)(1) Arizona. The court rejected this start the FIP clock under section 110(c)(1)(B). through (4).247 Thus, as of 2008, ADEQ’s argument, explaining that: By treating the alleged omission of elements Regional Haze SIP, by its own from a SIP as the failure to make a required admission, did not include provisions Arizona contends that the Finding did not submission under the first clause of section constitute a disapproval of the SIPs that had 110(c)(1)(A), EPA is circumventing these addressing BART (or for an alternative to BART) for NO , PM or SO . On previously been submitted because it only procedures. X 2 notes that Arizona did not submit two of January 15, 2009 EPA found that 37 The commenter adds that if EPA did Section 309’s required elements. Ariz. Opp. states, including Arizona, had failed to have the authority to promulgate a [Dkt. # 24] at 6. The Court does not read the make all or part of the required SIP regional haze FIP, it would only have 2009 Finding so narrowly. In the Court’s submissions to address regional haze.248 view, the 2009 Finding reaches a conclusion the authority to address those elements We explained that: that Arizona ‘has failed to make a required of the SIP that EPA identified as having submission or finds that the plan or plan not been submitted, and EPA has never This finding starts the two year clock for revision submitted by the State does not found that Arizona failed to submit a the promulgation by EPA of a FIP. EPA is not satisfy the minimum criteria.’ 42 U.S.C. SIP establishing BART. required to promulgate a FIP if the state 7410(c)(1). Under the CAA, this triggers the Response: We do not agree that we makes the required SIP submittal and EPA EPA’s statutory obligation to promulgate a takes final action to approve the submittal FIP.253 lack authority to issue a FIP addressing within two years of EPA’s finding.249 BART requirements for the three Under the terms of the Consent Decree, sources covered by today’s action. The Under the CAA, any party seeking as amended, EPA is currently subject to commenter’s arguments in this regard judicial review of EPA’s finding of two sets of deadlines for taking action appear to be based on a failure to submit (‘‘2009 Finding’’) was on Arizona’s Regional Haze SIP. misunderstanding of the requirements required to file a petition for review Specifically, the CD requires that: with the appropriate United States of the CAA and the RHR in relation to By the ‘‘Proposed Promulgation Deadlines’’ Arizona’s Regional Haze submittals. Circuit Court of Appeals within 60 days set forth in Table A below EPA shall sign a EPA promulgated the original RHR in of publication of the Finding in the notice(s) of proposed rulemaking in which it 1999.242 As relevant here, section 308 of the RHR requires states to submit SIPs 245 We have included a more detailed history of 250 CAA section 307(b). 42 U.S.C. 7607(b). that establish reasonable progress goals Arizona’s submissions under 309 in the docket for 251 National Parks Conservation Association v. and long-term strategies for achieving this action (Docket No. EPA–R09–OAR–2012– Jackson (D.D.C. Case 1:11–cv–01548). 0021). 252 National Parks Conservation Association v. those goals and provide for 246 Letter from Stephen A. Owens, ADEQ, to Jackson (D.D.C. Case 1:11–cv–01548), Memorandum 243 implementation of BART. In addition Wayne Nastri, EPA (Dec. 14, 2008). Order and Opinion (May 25, 2012) and Minute 247 40 CFR 51.309(d)(4)(i) and (vii), (g)(2). Order (July 2, 2012). eligible source that is subject to BART within the 248 74 FR 2392. 253 See NPCA v. EPA, (D.D.C. Case 1:11–cv– State.’’ 249 Id. at 2393 01548). Dkt # 35, at 3, n. 1.
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proposes approval of a SIP, promulgation of state has not submitted a SIP or when on February 28, 2011, and the SIP was a FIP, partial approval of a SIP and EPA has made a final determination that deemed complete by operation of law promulgation of a partial FIP, or approval of a submitted SIP is not approvable (citing on August 28, 2011, pursuant to CAA a SIP or promulgation of a FIP in the Train v. NRDC, 421 U.S. 60, 79 (1975)). section 110(k)(1)(B).256 This, in turn, alternative, for each State therein, that The commenters believe this principle triggered a deadline of August 28, 2012, collectively meet the regional haze implementation plan requirements that were is confirmed by CAA sections for us to take final action on the SIP, 257 due by December 17, 2007 under EPA’s 307(d)(1)(B), (3) and (6) because EPA pursuant to CAA section 110(k)(1)(B). regional haze regulations. cannot present the relevant factual, We acknowledge that this deadline has By the ‘‘Final Promulgation Deadlines’’ set legal, and policy information and now passed and we intend to act as forth in Table A below, EPA shall sign a rationale necessary to justify a proposed quickly as possible to fulfill our duty to notice(s) of final rulemaking promulgating a or final FIP rule until it has properly act on those portions of the SIP not FIP for each State therein to meet the regional taken final action on any relevant SIP addressed in today’s action. However, haze implementation plan requirements that before it. the fact that we have not acted on the were due by December 17, 2007 under EPA’s One commenter (EEI) also states that entirety of the SIP submittal does not regional haze regulations, except where, by EPA’s assertion that it was compelled to remove or otherwise alter our legal such deadline EPA has for a State therein signed a notice of final rulemaking propose a FIP at the same time that it obligation to promulgate a FIP under unconditionally approving a SIP, or disapproved a portion of the Arizona CAA section 110(c). Our FIP duty does promulgating a partial FIP and unconditional SIP, due to a two-year FIP clock that not terminate until we have actually approval of a portion of a SIP, that started with EPA’s 2009 Finding of approved the submitted SIP. As collectively meet the regional haze Failure to Submit, is inconsistent with explained in our NPRM, TSD and implementation plan requirements that were the CSAPR decision. The commenter elsewhere in this document, we cannot due by December 17, 2007 under EPA’s stated that EPA did not provide approve the State’s BART regional haze regulations. sufficient notice of the problems with determinations for NOX at Apache, Table A, as revised, sets a proposal the SIP to enable Arizona to remedy Cholla and Coronado, nor can we deadline for BART determinations for them, which is precisely the same approve the compliance-related Apache Generating Station, Cholla problem identified by the CSAPR court. requirements that were omitted from the Power Plant and Coronado Generating The commenter adds that EPA must Arizona Regional Haze SIP. Therefore, Station of July 2, 2012 and the final provide the state a realistic opportunity we are obligated to promulgate a FIP to action deadline for these three BART to avoid being pulled into a FIP. Given address these requirements, and we are determinations of November 15, 2012. that EPA has consent decree obligations doing so in today’s action. The deadline for EPA to propose action to finalize BART requirements for the Furthermore, while we agree that the on the remainder of the Arizona EGUs addressed by the proposed SIP by procedural requirements for Regional Haze SIP is December 8, 2012, November 15, 2012, and EPA did not promulgation of a FIP under 110(c) are and the deadline for final action is July propose disapproval of the SIP until set forth in CAA section 307(d),258 we 15, 2013.254 July 20, 2012, a reasonable opportunity do not agree that our action violates that Thus, pursuant to CAA section to develop and receive approval of a provision in any way. Consistent with 110(c)(1) and the court’s orders entering revised SIP was not offered to the state. the requirements of that section, our and amending the Consent Decree, we Response: We do not agree that we are proposal included a summary of the are not only authorized, but are required required to take final action on factual data on which our proposed FIP to issue a FIP for any portion of the Arizona’s Regional Haze SIP before was based, as well as the methodology Arizona SIP that we cannot approve. For promulgating a FIP. Commenters’ used in obtaining the data and in the reasons stated in our proposal and arguments to this effect appear to analyzing the data and the major legal elsewhere in this document, we have conflate the procedural requirements for interpretations and policy determined that we cannot approve the EPA’s issuance of a FIP with procedural considerations underlying the proposed 259 state’s BART determinations for NOX at requirements for action on a SIP. In fact, FIP. In addition, we provided a Apache, Cholla and Coronado, nor can these are two actions are governed by detailed evaluation of Arizona’s BART we approve the compliance-related different provisions of the CAA. analyses for the relevant units, which requirements that were omitted from the As explained in the previous formed the basis for our proposed action Arizona Regional Haze SIP. Therefore, response, EPA’s 2009 finding that on those portions of the Arizona we are obligated to promulgate a FIP to Arizona failed to submit a complete Regional Haze SIP.260 This final address these requirements. Regional Haze SIP triggered a ‘‘FIP rulemaking includes similar information Comment: Several commenters (AUG, clock’’ under CAA section 110(c).255 with respect to the SIP and the FIP, as EEI, PacifiCorp, SRP) stated that EPA This FIP clock could only have been well as ‘‘an explanation of the reasons cannot propose or finalize a NOX BART stopped if Arizona had submitted, and for any major changes in the FIP for these Arizona plants until it has EPA had fully approved a Regional Haze promulgated rule from the proposed taken final action (following notice-and- SIP, before January 15, 2011. Neither of rule’’ and ‘‘a response to each of the comment rulemaking) on ADEQ’s these two things occurred. Therefore, Regional Haze SIP. According to the EPA remains subject to this ‘‘FIP duty.’’ 256 42 U.S.C. 7410(k)(1)(B). commenters, EPA’s authority to propose Our action today fulfills part of that 257 42 U.S.C. 7410(k)(2). duty. 258 See CAA section 307(d)(1)(B), 42 U.S.C. and then take final action to promulgate 7607(d)(1)(B), (‘‘This subsection applies to * * * a FIP comes into existence only when a As several commenters noted, the promulgation or revision of an implementation Arizona submitted a Regional Haze SIP plan by the Administrator under [CAA section 254 On November 13, 2012, the D.C. District Court 110](c)’’] granted a motion by EPA to modify the Consent 255 42 U.S.C. 7410(c). See also Train, 421 U.S. at 259 See CAA section 307(d)(3), 42 U.S.C. Decree to extend the deadlines for promulgation of 64, 79 (explaining that the 1970 CAA Amendments 7607(d)(3). a FIP for any remaining elements of the SIP that are ‘‘sharply increased federal authority and 260 The SIP portion of our action is subject to the disapproved. Under the revised deadlines, EPA will responsibility in the continuing effort to combat air procedural requirements of section 553(b) of propose any necessary FIP elements by March 8, pollution,’’ including giving EPA authority to Administrative Procedure Act (APA), 5 U.S.C. 2013, and finalize such elements by October 15, devise a FIP if the State’s plan fails to satisfy the 553(b), rather than the requirements of CAA 2013. standards of section 7410(a)(2)). subsection 307(d), 42 U.S.C. 7607(d).
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significant comments, criticisms, and 2006).267 As explained in our proposal action to approve, in part or in whole, new data submitted in written or oral and elsewhere in this document, the many of these SIPs.272 This stands in presentations during the comment BART Guidelines provide detailed contrast to the situation in EME Homer period.’’ 261 Therefore, our action instructions to states on how to City Generation, where, the court noted complies with the applicable procedural determine which sources are subject to that, ‘‘every Transport Rule State that requirements of the CAA. BART and how to analyze the five submitted a good neighbor SIP for the Finally, we do not agree with statutory factors in order to set 2006 24-hour PM2.5 NAAQS was commenters’ assertions that the D.C. emissions limits representing BART for disapproved.’’ 273 Thus, it is clear that Circuit’s decision in EME Homer City each subject-to-BART source.268 In states had ample opportunity to submit Generation precludes us from 2006, responding to specific questions approvable Regional Haze SIPs before promulgating a partial FIP concurrently from various States and Regional EPA was obligated to promulgate with our partial disapproval of Planning Organizations (RPOs), EPA Regional Haze FIPs under CAA section Arizona’s Regional Haze SIP. In EME issued further guidance to help States 110(c). Homer City Generation, the court found implement the RHR and BART With respect to Arizona’s Regional that EPA had acted improperly in Guidelines.269 Haze SIP in particular, we note that issuing the Transport Rule because we As noted in prior responses, EPA Arizona first made public its proposed simultaneously defined states’ ‘‘good issued a finding of failure to submit for 308 SIP during a comment period neighbor obligations’’ under CAA Regional Haze SIPs on January 15, 2009, beginning on October 28, 2010.274 At section 110(a)(2)(D)(i)(I) and issued FIPs thus triggering a FIP clock under CAA that time, EPA, the National Park to address those obligations.262 The section 110(c).270 By this time, states Service (NPS) (in consultation with the court explained that: had already had more than three years Fish and Wildlife Service) and the U.S. since issuance of the final BART Forest Service all submitted comments * * * the triggers for a FIP are EPA’s finding Guidelines (and more than two years expressing concern about the proposed that the SIP fails to contain a ‘‘required submission’’ or EPA’s disapproving a SIP since the final revisions to the RHR and SIP’s compliance with the CAA, the 275 because of a ‘‘deficiency.’’ But logically, a SIP the issuance of further guidance on the RHR and the BART Guidelines. cannot be deemed to lack a required RHR and BART) to develop their Among other things, EPA noted that the submission or be deemed deficient for failing Regional Haze SIPs. By the time the FIP SIP, ‘‘does not provide a sufficient level to implement the good neighbor obligation clock actually ran out in January 2011, of information and analysis to support until after EPA has defined the State’s good EPA had received Regional Haze SIPs its conclusions.’’ 276 NPS provided neighbor obligation. Once it defines the from nearly every state. EPA has since extensive comments on the proposed obligation, then States may be forced to proposed to approve, in part or in SIP, including detailed evaluations of revise SIPs under Section 110(k)(5) or to whole, the vast majority of these ADEQ’s BART analyses for each of the submit new SIPs under Section 110(a)(1). SIPs.271 We have also has taken final three sources at issue in today’s Only if that revised or new SIP is properly 277 deemed to lack a required submission or is action. In each instance, NPS 267 properly deemed deficient may EPA resort to In response to another D.C. Circuit decision, concluded that ADEQ had not Center for Energy and Economic Development v. conducted a valid BART analysis for a FIP for the State’s good neighbor EPA, 398 F.3d 653 (D.C. Cir. 2005), EPA revised the 263 278 obligation. RHR’s provisions governing alternatives to source- NOX. The Forest Service concurred with the initial comments provided by In essence, the D.C. Circuit found that specific BART determinations on October 13, 2006. These revisions did not alter the requirements for NPS on Arizona’s BART exclusion EPA’s findings of failure to submit and source-specific BART determinations that apply to process and ‘‘strongly disagree[d] with disapprovals of state transport SIPs did Arizona’s BART determinations at issue here. the adequacy of the Arizona reasonable 268 40 CFR Part 51, Appendix Y. While the not trigger FIP obligations under CAA progress analysis.’’ 279 Therefore, ADEQ section 110(c) because these actions Guidelines are only mandatory for fossil fuel-fired electric generating plants with a total generating had the benefit not only of the generally occurred ‘‘before [EPA] told the States capacity in excess of 750 megawatts, States are applicable requirements of the RHR, the what emissions reductions their SIPs encouraged to follow the BART Guidelines in making BART determinations for other types of were supposed to achieve under the 272 sources. Id. section I.H. The Guidelines also set See, e.g., 76 FR 34608 (California); 76 FR good neighbor provision.’’ 264 42557 (Delaware); 76 FR 80754 (Kansas); 77 FR 19 specific presumptive limits for SO2 and NOX for In this case, by contrast, EPA defined these large power plants, but allow states to apply (New Jersey); 77 FR 5191 (District of Columbia); 77 states’ obligations under the RHR and more or less stringent limits based upon source- FR 14604 (Arkansas); 77 FR 17334 (Nevada); 77 FR specific five-factor analyses. 70 FR 39131–39132. 24845 (South Dakota); 77 FR 40150 (Nebraska); 77 the BART Guidelines well in advance of FR 51915 (New York). 269 Memo from Joseph W. Paise Regarding its findings of failure to submit and 273 Regional Haze Regulations and Guidelines for Slip op. at 57. 274 subsequent SIP disapprovals. EPA BART (July 19, 2006); Additional Regional Haze Arizona Regional Haze SIP, Appendix E, promulgated the original RHR on July 1, Questions (Guidance) (Sept. 27 2006). In addition, Public Process. Approximately 60 days prior to the 265 EPA issued final ‘‘Guidance for Setting Reasonable public comment period, ADEQ sent a draft of the 1999. Following the D.C. Circuit’s SIP to the National Park Service and U.S. Forest decision in American Corn Growers, Progress Goals Under the Regional Haze Program’’ on June 1, 2007, but this Guidance is not directly Service. EPA revised the RHR and issued the relevant for individual BART determinations. 275 Id. final BART Guidelines on July 6, 270 74 FR 2392. 276 Id. Letter from Colleen McKaughan, EPA, to 2005.266 The revised RHR and the 271 See, e.g., 76 FR 36450 (Nevada); 77 FR 24794 Eric Massey, ADEQ (Dec. 2, 2010). 277 Guidelines were upheld by the DC (New York); 76 FR 13944 (California); 77 FR 11798 Id. NPS Initial Comments Arizona Draft (Rhode Island); 76 FR 27973 (Delaware); 77 FR Section 308 Regional Haze SIP (Nov. 29, 2010); NPS Circuit in Utility Air Regulatory Group 12770 (Nebraska); 77 FR 18052 (Colorado); 76 FR General BART Comments on ADEQ BART Analyses v. EPA, 471 F.3d 1333 (D.C. Cir. 16168 (Oklahoma); 77 FR 11914 (Vermont); 77 FR (Nov. 29, 2010); NPS Comments AEPCO—Apache 11928 (Wisconsin); 76 FR 52604 (Kansas); 76 FR Generating Station BART Analysis and Determination (Nov. 29, 2010); NPS Comments APS 261 CAA section 307(d)(6)(A) & (B), 42 U.S.C. 64186 (Arkansas); 77 FR 11839 (Maryland); 76 FR Cholla Generating Station BART Analysis and 7607(d)(6)(A) & (B). 58570 (North Dakota); 77 FR 3966 (Illinois); 76 FR 76646 (South Dakota). EPA proposed limited Determination (Nov. 29, 2010); NPS Comments 262 EME Homer City Generation, slip op. at 7. approval and limited disapproval of the Regional SRP’s Coronado Generating Station BART Analysis 263 Id. at 46. Haze SIPs of states covered by the Clean Air and Determination (Nov. 29, 2010); NPS Comments 264 Id. at 47 (emphasis in original). Interstate Rule (CAIR), due to the remand of CAIR on ADEQ BART Exemptions, (Dec. 1, 2010). 265 64 FR 35714. by the D.C. Circuit. See, e.g. 77 FR 3691 (Jan. 25, 278 Id. 266 70 FR 39104. This finding covered 37 states, 2012) (proposing limited approval and limited 279 U.S. Forest Service Specific Comments: the District of Columbia and the Virgin Islands. disapproval of Virginia’s Regional Haze SIP). Arizona Regional Haze SIP (Nov. 29, 2010).
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BART Guidelines and EPA Guidance, Response: We agree that the CAA, the prepared by the Clean Air Task Force, but also specific guidance from EPA and RHR and the BART Guidelines set out the commenter asserted that Cholla, the FLMs pointing out shortcomings in specific requirements that Regional Coronado and Apache collectively cause its Regional Haze SIP. Following receipt Haze SIPs must meet in order to be approximately 41 deaths, 63 heart of these comments, Arizona had the approved by EPA. Our action today attacks and 747 asthma attacks opportunity to revise its SIP to address addresses these requirements as they annually.282 Several other commenters the deficiencies identified by the apply to ADEQ’s BART determinations provided similar comments concerning commenters, but in most instances it for Apache, Cholla and Coronado, but health effects. chose not to do so.280 does not address the requirements as Response: We acknowledge the Finally, while we agree that, in the they apply to the remainder of Arizona’s commenters’ concerns regarding the absence of an expired statutory duty and Regional Haze SIP (e.g., the reasonable adverse health impacts of haze-causing a court-ordered deadline to issue a FIP, progress goals set by the state). EPA will emissions. We agree that the same PM2.5 it would be preferable for us to give propose action on these aspects of the emissions that cause visibility Arizona additional time to revise its SIP shortly and take final action after impairment can cause respiratory Regional Haze SIP prior to promulgation receiving comments. As explained in problems, decreased lung function, of a FIP, we simply do not have this the preceding responses, because of our aggravated asthma, bronchitis, and option under these circumstances. As prior finding of failure to submit, we are premature death. We also agree that the explained in our response to the required to issue a FIP for any portion same NOX emissions that cause previous comment, we are obligated to of the SIP that we cannot approve. Thus, visibility impairment also contribute to issue a FIP to address any gaps left by we are promulgating a FIP for those the formation of ground-level ozone, partial disapprovals of Arizona’s aspects of ADEQ’s BART determinations which has been linked with respiratory Regional Haze SIP. Nonetheless, we for Apache, Cholla and Coronado that problems, aggravated asthma, and even encourage ADEQ to submit a revised SIP we are not approving at this time. permanent lung damage. Finally, we also agree that SO emissions that cause to replace the FIP and will work with G. Other Comments 2 ADEQ to develop such a revised plan to visibility impairment also contribute to meet the requirements of the CAA and 1. Comment on Public Health and increased asthma symptoms, lead to the RHR. Ecosystem Impacts increased hospital visits, and can form particulates that aggravate respiratory Comment: One commenter Comment: A number of commenters and heart diseases and cause premature (Earthjustice) stated that the CAA’s provided comments on the potential death. Thus, to the extent that this FIP Regional Haze program establishes a health effects of our proposal. A number will lead to reductions in these national regulatory floor and requires of other commenters stated that the pollutants, there will be co-benefits for states to develop RH SIPs at least as Regional Haze program’s sole focus is public health. However, for purposes of stringent as this floor (citing 40 CFR the improvement of visibility in Class I this action, we are not authorized to 51.308). According to the commenter, areas, and is not a health-based or consider these benefits and we have not ADEQ’s SIP is legally and technically emissions reduction program. In relation to the Regional Haze program, done so. inadequate because it does not require In our NPRM, while discussing adequate BART emission limits, does any EPA emphasis on health and emissions reduction is inappropriate. Executive Order 13045 (Protection of not achieve ‘‘reasonable progress’’ are Children from Environmental Health required by the RHR and would fail to One commenter (SRP) stated that EPA’s assertion of health benefits is Risks and Safety Risks), we stated that, achieve natural visibility goals by 2064. to the extent the proposed rule will The commenter believes that the unsubstantiated by the proposed rule. A few commenters noted that the air limit emissions of NOX, SO2 and PM10, Arizona RH SIP fails to establish a the rule will have a beneficial effect on program that is at least as stringent as quality in Arizona varies from city to city, and stated that EPA should focus children’s health by reducing air the national floor and that therefore EPA pollution. In this action, while has a legal obligation to disapprove the on the areas with the poorest air quality first, such as Phoenix. discussing Executive Order 13045 SIP and to issue a FIP in its place under (Protection of Children from CAA section 110(c)(1).281 In contrast, one commenter (Earthjustice) stated that the same Environmental Health Risks and Safety pollutants that reduce visibility also Risks), we conclude that this action 280 For example, in response to detailed does not have a disproportionate effect comments from NPS regarding the efficiency and cause significant public health impacts. on children, but again note that to the cost of SCR, ADEQ stated that: The commenter noted that NOX is a ADEQ has determined that the cost computations precursor to ground level ozone, which extent this final action will limit presented by the facilities in support of their BART is associated with respiratory diseases, emissions of NOX, SO2 and PM10, the applications are reasonable. Many of the asthma attacks and decreased lung rule will have a beneficial effect on computations are based on vendor data and site- children’s health by reducing air specific conditions. The Department does not agree function, and that NOX reacts with other that the computations over-estimate the costs of substances to form particulates that can pollution that causes or exacerbates retrofit technologies and under-estimate the cause and worsen respiratory diseases, childhood asthma and other respiratory associated emission decreases and visibility aggravate heart disease, and lead to issues. However, we do not believe it is improvement. necessary or appropriate to quantify the 281 The commenter cited Alaska Dep‘t of Envtl. premature death. The commenter extent of this beneficial effect because Conservation v. EPA, 540 U.S. 461, 470, 484 (2004); indicated that SO2 increases asthma Mont. Sulphur & Chem. Co. v. EPA, 666 F.3d 1174, symptoms, leads to increased hospital we are not relying upon health effects in 1181 (9th Cir. 2012) to support the contention that visits, and can form particulates that the promulgation of this rule. Congress structured the CAA to provide expansive Comment: One commenter EPA oversight to ensure SIPs comply with the CAA. aggravate respiratory and heart diseases The commenter cited 42 U.S.C. 7410(c), (k); EME and cause premature death, and that PM (Earthjustice) stated that the RHR rule Homer City Generation, L.P. v. EPA, No. 11–1302, can penetrate deep into the lungs and llF.3dll, 2012 WL 3570721, at *17 (DC Cir. 282 The commenter cited Clean Air Task Force, Aug. 21, 2012) to support the principle that EPA cause health problems such as Death and Disease From Power Plants, http:// must issue a FIP when it determines that a SIP does aggravated asthma, chronic bronchitis, www.catf.us/fossil/problems/power_plants/existing/ not comply with the CAA. and heart attacks. Based on a report map.php?state=Arizona.
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provides important environmental in electric power rates would do to their have a ‘‘severe impact on plant benefits to plants and animals, soil programs in this time of declining state operations’’ or ‘‘result in significant health and entire ecosystems. The support, and one representative of a economic disruption or commenter noted that NOX and SO2 are local, nonprofit hospital similarly unemployment.’’ None of the the primary causes of acid rain, which voiced the difficulty his facility would commenters have provided any acidifies lakes and streams, can damage have in absorbing large rate increases. evidence that our action today would certain types of trees and soils and One commenter discussed the result in the closure of any of the accelerates the decay of building multiplier effect by which loss of affected units. We discuss many of the materials and paints, including income from any job losses or the potential economic impacts raised as irreplaceable buildings and statues that reduction in disposable income due to concerns here in the context of our are part of our nation’s cultural heritage. increased power bills would ripple analysis of affordability of controls to The commenter added that nitrogen through the local economies and affect AEPCO, above. Finally, we acknowledge deposition, caused by wet and dry local businesses and employment. A that today’s action may have positive deposition of nitrates derived from NOX few commenters discussed the impact economic impacts, as described by emissions, causes well-known adverse on Arizona’s water rates, and advised Earthjustice. However, we have not impacts on ecological systems. The EPA to consider how these rate taken potential economic benefits into commenter also noted that NOX is a increases would affect Arizona’s account in our action. precursor to ozone, which impacts economy. A few commenters asserted 3. Comments From Tribal plants and ecosystems by interfering that the proposed rule is intended to Representatives and Members with plants’ ability to produce food and eliminate coal as a cheap and reliable increasing their susceptibility to disease energy source. Comment: One commenter (Navajo and insects, and also contributes to By contrast, one commenter Nation) stated that comments on our wildfires and bark beetle outbreaks in (Earthjustice) stated that the RHR proposed actions were provided the West by depressing plant water provides substantial economic benefits, pursuant to its government-to- levels and growth. which far outweigh the costs of government relationship with EPA. The Response: We appreciate the pollution control technologies such as commenter stated that this EPA commenter’s concerns regarding the SCR. The commenter noted that EPA rulemaking has adverse implications for negative ecosystem impacts of has valued the RHR’s health benefits at a pending BART FIP for Navajo emissions from the units at issue. We $8.4 to $9.8 billion annually. The Generating Station, which is on Navajo agree that both NOX and SO2 cause acid commenter further asserted that Nation land and burns Navajo coal. The rain and can have negative impacts on requiring power plants to invest in commenter also stated that this rule ecosystems, damaging plants, trees, and pollution controls creates short-term could impact BART decisions for Four other vegetation (including crop yields), construction jobs as well as permanent Corners Power Plant, and San Juan which could have a negative effect on operations and management positions. Generating Station. species diversity in our ecosystems. In addition, the commenter indicated The commenter states that EPA has an However, for purposes of this Regional that the national parks and wilderness obligation to consult with Navajo Nation Haze action, we are not authorized to areas protected by the RHR serve as on a government-to-government basis consider these ecosystem impacts. engines for sustainable local capital, for EPA actions and decisions that may Therefore, while we note the potential with national park visitors contributing affect the Navajo Nation’s interests, and for co-benefits to ecosystem health approximately $30 billion to local reminds EPA that it must defer to tribal resulting from our action today, we have economies and supporting 300,000 jobs government policy decisions, just as it not taken these potential benefits into nationwide. Regarding Arizona would a state, when promulgating a FIP account in this action. specifically, the commenter stated that on tribal lands. over 4.3 million people visited the The commenter further states that 2. Comments on Economic Impacts Grand Canyon in 2010, and this EPA has failed to analyze the Comment: Many commenters, supported over 6,800 jobs and resulted cumulative effects of this rulemaking including state officials, private citizens in over $428 million in visitor spending, and the planned and proposed EPA and representatives of local while tourism at Petrified Forest actions on Navajo Generating Station, governments, schools, and business National Park, Saguaro National Park Four Corners Power Plant, and San Juan groups, expressed concern over and Chiricahua National Monument in Generating Station, including both potential economic effects resulting 2010 supported over 1,100 jobs and visibility improvement and potential from EPA’s proposed BART resulted in over $74 million in visitor regional economic impacts. The determinations, asserting that EPA’s spending. The commenter contended commenter noted that the fossil fuel action would result in rate increases and that studies show that national park economy is vitally important to the Four possibly closures of one or more power visitors highly value clean air, readily Corners region and the Navajo Nation, plants. Some commenters cautioned perceive haze and are willing to cut with many jobs and coal royalties at EPA that rate increases would impact at- short visits to national parks based on stake from loss of the area’s coal fired risk populations, such as seniors on their perception of air quality.283 power plants and their associated fixed incomes. The commenters Response: As explained in our prior mines. The commenter states that EPA emphasized that the three plants have a responses regarding economic issues, must consider these impacts, as well as large financial impact on the the BART Guidelines permit the impacts of utility rate increases, in communities where they are located consideration of economic impacts only this BART decision for NOX. (i.e., they provide jobs and tax revenue) under ‘‘unusual circumstances’’ where a The commenter observed that it is and expressed their concern over the potential control option is expected to possible to go forward without imposing three plants’ economic viability if the a FIP in Arizona, as evidenced by the plants are forced to install SCR to 283 The commenter cited and submitted as Exhibit renewed consideration being given to reduce NO emissions. Several 11 Abt Assocs. Inc., Out of Sight: The Science and the New Mexico regional haze SIP X Economics of Visibility Impairment, at ES–7 (2000), representatives of local school districts available at http://www.abtassociates.com/reports/ under the current stay on the proposed discussed the harm that large increases ES-clear.pdf. FIP for that state. The commenter stated
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that the Navajo Nation, where two effects of today’s rulemaking together governing the power sector. power plants that are undergoing EPA with rulemaking actions on other BART Nevertheless, as discussed elsewhere in BART determinations are located, determinations as part of our action this document, as part of our shares the concerns of Arizona and New today. As noted above, under the CAA, consideration of the affordability of Mexico regarding the economic impacts the RHR and the BART Guidelines, controls on AEPCO, a small entity, we of requiring SCR. The commenter noted BART determinations are made on a have analyzed the potential rate that the BART decision is not based source-by-basis, taking into account the increases associated with our proposal only on the most effective control five statutory factors. The cumulative for Apache Units 2 and 3. Given the measures, but is to be based on an improvements from the various SIPs, uncertainty inherent in such an analysis of five factors which include FIPs, and BART determinations are analysis, we have used conservative non-air quality impacts such as addressed in analyses under the RHR assumptions in an effort to guard against economic impacts. requirements for Reasonable Progress, understating the potential rate impacts. The commenter also asserted that real Long Term Strategies and future updates Regarding the comment that EPA data should underpin EPA’s decisions, to the SIP, which are separate from should not rely on modeling alone, it is rather than modeling alone. The BART analyses. These cumulative extremely difficult in observational commenter also contended that a public improvements will be influenced by analyses to sufficiently control for all health baseline is needed in order to changes in hundreds or thousands of factors, including emissions from other chart any public health improvements emission sources, so are more sources, to be able to isolate the impacts that result from such emission controls. appropriately addressed through use of of closure of a facility. A model such as Response: EPA appreciates the a grid model, such as CAMx or CMAQ, CALPUFF essentially holds constant a comments provided by the Navajo rather than the CALPUFF model number of factors in order to isolate the Nation on our proposed action pursuant recommended in the BART Guidelines, impacts of a single source. As discussed to its government-to-government which is geared to a far lower number elsewhere in this document, EPA relationship with EPA. As part of of sources, and lacks the detailed affirms that the regulatory version of separate rulemakings, EPA has engaged chemistry of the grid models. CALPUFF is the correct model to use for in consultation with Navajo Nation With regard to the economic concerns these BART determinations. regarding the Four Corners Power raised by the commenter, we are Assessing human exposure and Plant 284 and San Juan Generating required by the CAA and the federal quantifying health benefits are outside Station. EPA is currently engaged in regulations implementing the CAA’s the scope of the requirements of the active consultation with the Navajo BART provisions to evaluate (1) cost of Regional Haze Rule. EPA sets National Nation and other affected tribes on the compliance, (2) the energy and non-air Ambient Air Quality Standards Navajo Generating Station. quality environmental impacts of (NAAQS) to establish levels of air Today’s rule approves Arizona’s SIP compliance, (3) any existing pollution quality that are protective of public (in part) and implements a FIP (in part) control technology in use at the source, health, including the health of sensitive for Apache Units 2 and 3; Cholla Units (4) remaining useful life of source, and populations, for a number of pollutants 2, 3 and 4; and Coronado Units 1 and (5) degree of improvement in visibility including particulate matter. These 2. This action has no retroactive effect which may reasonably be anticipated to ‘‘sensitive’’ populations include on final BART determinations for other result from the use of such technology. asthmatics, children, and the elderly. At facilities. We disagree that this action As explained in our prior responses this time the Navajo Nation is not has a nexus to the BART determination regarding economic issues, the BART identified as out of attainment with any for Navajo Generating Station, because Guidelines permit consideration of of the NAAQS. However, EPA BART analyses, whether performed by economic impacts only under ‘‘unusual recognizes that there are significant the states or EPA, are conducted on a circumstances’’ where a potential concerns about risk and exposure to air source-by-source basis, applying all five control option is expected to have a pollutants on the Navajo Nation and statutory factors to a facility on an ‘‘severe impact on plant operations’’ or EPA will continue discussions with the individual basis. While there are certain ‘‘result in significant economic Navajo Nation and will involve other commonalities among the sources disruption or unemployment.’’ None of federal agencies, as appropriate, to help mentioned by the commenter (e.g., all the commenters have provided any address these concerns. are coal-fired power plants), there are evidence that our action today would Comment: Various other also significant differences that result in the closure of any of the representatives and members of the necessarily affect the case-by-case BART affected units or result in significant Hopi and Navajo Tribes provided oral testimony and/or submitted written analysis. For example, the unit size, unit economic disruption. We also note that comments at one or more of the public age, boiler type, existing controls, type none of the sources affected by today’s hearings. Most tribal community of coal burned and proximity to Class I rulemaking currently purchase coal members supported the proposed FIP areas vary significantly among these from a mine that operates on the Navajo and stated their belief that it will sources. All of these differences have a Nation. improve air quality and human health bearing on at least one of the BART We take our duty to estimate the cost in Arizona. Several commenters factors and thus on the ultimate BART of controls very seriously, and make every attempt to make a thoughtful and recounted their personal experiences determination. Given these various well informed determination. However, with the deterioration of visibility in the distinguishing factors, we do not agree we do not consider a potential increase rural areas in which they live, declining that this rule will affect our BART in electricity rates to be the most water supplies due to water use in determination for Navajo Generating appropriate type of analysis for mining operations, and illnesses that Station. they believe are attributable to air We also do not agree that we are considering the costs of compliance in pollution from the power plants and required to consider the cumulative a BART determination. Projections of electricity rate impacts are inherently mines in the area (e.g., asthma and 284 See document titled: ‘‘Timeline of all tribal fraught with uncertainty due to the bronchitis). A number of commenters consultations on BART.docx’’ in the docket for this numerous variables involved and the pointed out that there are numerous old final rulemaking. complexity of the regulatory regime power plants in and around the Navajo
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Nation, which they believe are causing we do not require the BART analysis to device that has not already been air pollution that contributes to haze consider building a natural gas-fired demonstrated in practice.287 and an increase in the incidence of lung electric turbine although the turbine The Guidelines further provide that: and heart disease and cancer in humans, may be inherently less polluting on a In order to provide certainty in the process, 285 as well as harming native plants and per unit basis.’’ Therefore, we did all technologies should be considered if animals. Some of these commenters not consider such alternatives as part of available before the close of the State’s public advocated for a conversion to renewable our BART analyses. Nonetheless, we comment period. You need not consider energy sources, which they believe will acknowledge that many kinds of technologies that become available after this provide jobs, improve health, and renewable energy do not produce haze- date. reduce emissions that contribute to causing pollutants, and transitioning to The commenter has not provided climate change. One commenter those sources of energy could lead to evidence that this technology has been specifically suggested that EPA promote visibility improvements. demonstrated in practice or that it was alternatives like natural gas and algae The CAA applies equally to all parts available before the close of the State’s ponds as a source of energy. of the United States. In making a public comment period. Therefore, we One commenter indicated that determination in this case, we have have not considered it as a potential reduced haze would improve tourism, applied the applicable provisions of the control option. An additional resulting in increased jobs and tax CAA and the RHR. We have also consideration is that typically 90 receipts. Another tribal commenter considered other applicable percent of the NOX from combustion is stated that before acting, EPA should requirements, including Executive emitted in the form of NO, rather than evaluate the impact on employment and Order 12898,286 which establishes NO2. Since the boiling point of NO is on the Hopi’s revenue from coal if the federal executive policy on 121 K or ¥242 degrees F, much lower FIP causes power plants to close. environmental justice. This Executive than for NO2, and the stack exit One tribal commenter alleged that the Order directs federal agencies, to the temperature is the range of 300–400 K National Academy of Sciences did a greatest extent practicable and or 120–280 degrees F, a large degree of study a number of years ago that permitted by law, to make cooling would be necessary to condense concluded that some areas of the environmental justice part of their the NO, and so the energy costs could country could be designated as mission by identifying and addressing, be substantial. ‘‘national sacrifice areas’’ that would be as appropriate, disproportionately high used for national priorities, irrespective 4. Requests for Extension of Comment of resulting permanent environmental and adverse human health or Period and Additional Hearings damages. According to the commenter, environmental effects of their programs, policies, and activities on minority Comment: A number of commenters many Indian reservations are located in remarked on EPA’s timeline for such areas, such as all of the Navajo and populations and low-income populations in the United States. soliciting public comments, and stated Hopi reservations. The commenter that they believe that the time allowed EPA has determined that our final asserted that the study concluded that was insufficient. One commenter rule will not have disproportionately the well-being of the people in such requested more public hearings, and high and adverse human health or areas can be forfeited so that the rest of another commenter requested a 90-day environmental effects on minority or the country can enjoy cheap energy. extension of the deadline for comments low-income populations because it Response: EPA acknowledges the (starting from July 18, 2012), so that the increases the level of environmental comments. Neither Section 169A of the public has ample time to review, protection for all affected populations CAA nor the BART Guidelines requires analyze, comment, and react to the rule without having any disproportionately that BART analyses include or quantify and in particular EPA’s Technical high and adverse human health or benefits to health or tourism or impact Support Document. The commenter environmental effects on any on employment. EPA does not intend added that an extension would allow population, including any minority or for this action to cause any power plants the ADEQ the opportunity to further low-income population. This rule to close. Although a quantitative collaborate with EPA in revising the requires emissions reductions of NOx analysis of the health and tourism state’s SIP submittal (for the purpose of from three facilities in Arizona. The benefits is beyond the scope of what is nullifying the proposed FIP), and partial approval of the SIP approves required under BART EPA agrees with thereby adhering to the intent of the state law as meeting Federal commenters that emission reductions CAA. achieved to improve visibility will also requirements. Response: As explained above, our improve air quality. Improved air Comment: One commenter suggested proposed rule, which was signed on quality, in turn, affects public health that EPA investigate the technology of July 2, 2012 and published in the and may enhance tourism in the area. cooling steam exhaust through a Federal Register on July 20, 2012,288 EPA notes that even if we had magnetic refrigerator to remove NO2 as provided for a public hearing in quantified the benefits to health and a liquid, since it would condense at the Phoenix, Arizona, on July 31, 2012, and tourism, such an analysis would not relatively high temperature of 294 K or a public comment deadline of August likely have altered the outcome of our 70 degrees F (boiling point). 31, 2012. In response to requests from BART determination. Response: The BART Guidelines various parties for a longer comment Renewable energy technology is not a provide that: period and additional hearings, we retrofit option for the sources subject to extended the public comment period to BART and is therefore outside the scope Technologies which have not yet been applied to (or permitted for) full scale a total of sixty days from publication in of our BART determination. As noted in operations need not be considered as the Federal Register.289 We also the BART Guidelines, ‘‘[w]e do not available; we do not expect the source owner scheduled two more public hearings in consider BART as a requirement to to purchase or construct a process or control redesign the source when considering 287 BART Guidelines, 40 CFR Part 51, Appendix available control alternatives. For 285 BART Guidelines, 40 CFR Part 51, Appendix Y, section IV.D.1. example, where the source subject to Y, section IV.D.1. 288 77 FR 42834. BART is a coal-fired electric generator, 286 59 FR 7629, February 16, 1994. 289 See 77 FR 45326 (July 31, 2012).
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Southern Arizona (Benson) and in V. Summary of Final Action compliance deadlines and requirements Northern Arizona (Holbrook) on August for equipment maintenance and 14 and 15, 2012, respectively. EPA is taking final action to approve operation, including monitoring, in part and disapprove in part a portion recordkeeping and reporting Comment: One comment letter signed of Arizona’s SIP for Regional Haze and by 728 residents, business owners, requirements for all pollutants at all of to promulgate a FIP for the disapproved the BART units. As a result, we find that citizens and other interested parties elements of the SIP. This final action this final disapproval is the only path urged EPA to extend the comment addresses only the State’s BART that is consistent with the Act at this period on our proposal and provide determinations for the specified units at time. additional hearings near the Cholla the three power plants. We will propose EPA estimates this action will Power Plant. action on the remainder of Arizona’s improve visibility at 18 Class I areas by Response: As noted the preceding Regional Haze SIP in a separate notice. reducing NOX emissions from three response, we extended the comment EPA takes very seriously a decision to power plants by about 22,700 tons per period on our propose rule and we held disapprove portions of a state plan. In year. The total costs associated with additional public hearings, including this instance, we find that the State’s these reductions, according to the one in Holbrook, Arizona, near the NOX BART determinations for the coal- supplemental cost analysis we Cholla Power Plant. fired units are not consistent with the performed based on cost estimates requirements of the Act and the RHR. In provided by the facility owners, are addition, the SIP lacks the necessary summarized in Table 18.
TABLE 18—SUMMARY OF SUPPLEMENTAL COST ANALYSIS
Annualized cap- Total Capital cost ital cost Annual O&M annualized cost Cost- ($) ($/yr) ($/yr) ($/yr) effectiveness
Apache Unit 2 ...... $82,481,439 $7,785,664 $1,760,600 $9,546,264 $3,450 Apache Unit 3 ...... 82,481,439 7,785,664 1,760,600 9,546,264 2,973 Cholla Unit 2 ...... 87,713,386 8,279,523 1,626,683 9,906,206 2,979 Cholla Unit 3 ...... 83,461,195 7,878,146 1,570,766 9,448,912 2,838 Cholla Unit 4 ...... 119,083,832 11,240,671 2,350,182 13,590,853 3,083 Coronado Unit 1 ...... 80,633,219 7,611,205 4,492,736 12,103,941 2,135 Coronado Unit 2 ...... 2,500,000 235,982 ...... 235,982 1,900
VI. Statutory and Executive Order displays a currently valid Office of portion of the Arizona SIP and a Reviews Management and Budget (OMB) control Regional Haze FIP for units at three number. The OMB control numbers for electric generating facilities in Arizona. A. Executive Order 12866: Regulatory Planning and Review our regulations in 40 CFR are listed in Firms primarily engaged in the 40 CFR part 9. generation, transmission, and/or This action finalizes approval of a distribution of electric energy for sale source-specific portion of the Arizona C. Regulatory Flexibility Act are small if, including affiliates, the total SIP and a Regional Haze FIP for units The Regulatory Flexibility Act (RFA) electric output for the preceding fiscal at three facilities in Arizona. This action year did not exceed 4 million megawatt is not a rule of general applicability, and generally requires an agency to prepare a regulatory flexibility analysis of any hours. Only one of the three facilities not a ‘‘significant regulatory action’’ affected by this action is a small entity: under the terms of Executive Order rule subject to notice and comment rulemaking requirements under the AEPCO sold under 3 million megawatt 12866 (58 FR 51735, October 4, 1993). hours in 2011. This type of action is exempt from Administrative Procedure Act or any review under Executive Order (EO) other statute unless the agency certifies Although a regulatory flexibility 12866 (58 FR 51735, October 4, 1993) that the rule will not have a significant analysis as specified by the RFA is not and is therefore not subject to review economic impact on a substantial required when a rule has impact on only under Executive Order 13563 (76 FR number of small entities. Small entities one small entity, EPA estimated the 3821, January 21, 2011). include small businesses, small potential impact to AEPCO of our organizations, and small governmental proposal to require SCR in AEPCO’s B. Paperwork Reduction Act jurisdictions. For purposes of assessing Units 1 and 2. EPA also requested This action does not impose an the impacts of today’s rule on small information from AEPCO on the information collection burden under the entities, small entity is defined as: (1) A economics of operating Apache provisions of the Paperwork Reduction small business as defined by the Small Generating Station and what impact the Act, 44 U.S.C. 3501 et seq. Burden is Business Administration’s (SBA) installation of SCR may have on the defined at 5 CFR 1320.3(b). Because this regulations at 13 CFR 121.201; (2) a economics of operating Apache action will finalize approval of a source- small governmental jurisdiction that is a Generating Station. A summary of the specific portion of the Arizona SIP and government of a city, county, town, comments regarding the impact of this a Regional Haze FIP for units at only school district or special district with a action on AEPCO, and EPA’s response three facilities in Arizona, the population of less than 50,000; and (3) to those concerns, is provided in section Paperwork Reduction Act does not a small organization that is any not-for- I.V. of this preamble. After considering apply. See 5 CFR 1320.3(c). An agency profit enterprise which is independently the economic impacts of this action on may not conduct or sponsor, and a owned and operated and is not small entities, I certify that this action person is not required to respond to a dominant in its field. This action will not have a significant economic collection of information unless it finalizes approval of a source-specific impact on a substantial number of small
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entities. The FIP for the three Arizona contain a Federal mandate that may response to Navajo Nation is provided facilities being issued today does not result in expenditures that exceed the in section I.V. of this preamble. impose new requirements on a inflation-adjusted UMRA threshold of G. Executive Order 13045: Protection of substantial number of small entities $100 million (in 1996 dollars) by State, Children From Environmental Health because one significantly impacted local, or Tribal governments or the Risks and Safety Risks small entity is not a ‘‘substantial’’ private sector in any 1 year. In addition, number. Finalizing approval of a source- this rule does not contain a significant Executive Order 13045: Protection of specific portion of the Arizona Regional Federal intergovernmental mandate as Children from Environmental Health Haze SIP merely approves state law as described by section 203 of UMRA nor Risks and Safety Risks (62 FR 19885, meeting Federal requirements and does it contain any regulatory April 23, 1997), applies to any rule that: imposes no additional requirements requirements that might significantly or (1) Is determined to be economically beyond those imposed by state law. See uniquely affect small governments. significant as defined under Executive Mid-Tex Electric Cooperative, Inc. v. Order 12866; and (2) concerns an FERC, 773 F.2d 327 (D.C. Cir. 1985). E. Executive Order 13132: Federalism environmental health or safety risk that This action does not have federalism we have reason to believe may have a D. Unfunded Mandates Reform Act disproportionate effect on children. EPA (UMRA) implications. It will not have substantial direct effects on the States, on the interprets EO 13045 as applying only to Unfunded Mandates Reform Act of relationship between the national those regulatory actions that concern health or safety risks, such that the 1995 (UMRA), Public Law 104–4, government and the States, or on the establishes requirements for Federal analysis required under section 5–501 of distribution of power and agencies to assess the effects of their the EO has the potential to influence the responsibilities among the various regulatory actions on State, local, and regulation. This action is not subject to levels of government, as specified in Tribal governments and the private EO 13045 because it implements Executive Order 13132, because it sector. Under section 202 of UMRA, specific standards established by addresses the State not fully meeting its EPA generally must prepare a written Congress in statutes. Also, because this obligation to protect visibility statement, including a cost-benefit action only applies to three sources and established in the CAA and this final analysis, for proposed and final rules is not a rule of general applicability, it action will reduce the emissions of NO with ‘‘Federal mandates’’ that may X is not economically significant as from three facilities in Arizona. Thus, result in expenditures to State, local, defined under Executive Order 12866, Executive Order 13132 does not apply and Tribal governments, in the and the rule also does not have a to this action. Although section 6 of aggregate, or to the private sector, of disproportionate effect on children. Executive Order 13132 does not apply $100 million or more (adjusted for However, to the extent this action will to this action, a summary of the inflation) in any one year. Before limit emissions of NO , SO , and PM , concerns raised by State and local X 2 10 promulgating an EPA rule for which a the rule will have a beneficial effect on officials, and EPA’s response to those written statement is needed, section 205 children’s health by reducing air concerns is provided in section I.V. of of UMRA generally requires EPA to pollution that causes or exacerbates this preamble. identify and consider a reasonable childhood asthma and other respiratory number of regulatory alternatives and to F. Executive Order 13175: Consultation issues. adopt the least costly, most cost- and Coordination With Indian Tribal H. Executive Order 13211: Actions effective, or least burdensome Governments alternative that achieves the objectives Concerning Regulations That of the rule. The provisions of section Subject to the Executive Order 13175 Significantly Affect Energy Supply, 205 of UMRA do not apply when they (65 FR 67249, November 9, 2000) EPA Distribution, or Use are inconsistent with applicable law. may not issue a regulation that has tribal This action is not subject to Executive Moreover, section 205 of UMRA allows implications, that imposes substantial Order 13211 (66 FR 28355 (May 22, EPA to adopt an alternative other than direct compliance costs, and that is not 2001)), because it is not a significant the least costly, most cost-effective, or required by statute, unless the Federal regulatory action under Executive Order least burdensome alternative if the government provides the funds 12866. Administrator publishes with the final necessary to pay the direct compliance I. National Technology Transfer and rule an explanation why that alternative costs incurred by tribal governments, or Advancement Act was not adopted. Before EPA establishes EPA consults with tribal officials early any regulatory requirements that may in the process of developing the Section 12(d) of the National significantly or uniquely affect small proposed regulation and develops a Technology Transfer and Advancement governments, including Tribal tribal summary impact statement. We Act of 1995 (NTTAA), Public Law 104– governments, it must have developed believe this rule does not have tribal 113, 12 (10) (15 U.S.C. 272 note) directs under section 203 of UMRA a small implications, as specified in Executive EPA to use voluntary consensus government agency plan. The plan must Order 13175, and will not have standards (VCS) in its regulatory provide for notifying potentially substantial direct effects on tribal activities unless to do so would be affected small governments, enabling governments. Thus, Executive Order inconsistent with applicable law or officials of affected small governments 13175 does not apply to this rule. otherwise impractical. VCS are to have meaningful and timely input in However, in our proposal we requested technical standards (e.g., materials the development of EPA regulatory comment on our proposed rule from specifications, test methods, sampling proposals with significant Federal tribal officials. The Navajo Nation procedures and business practices) that intergovernmental mandates, and Environmental Protection Agency are developed or adopted by the VCS informing, educating, and advising provided comments on our proposed bodies. The NTTAA directs EPA to small governments on compliance with rule, both orally at a public hearing and provide Congress, through annual the regulatory requirements. by letter, which EPA considered in reports to OMB, with explanations Under Title II of UMRA, EPA has developing this final rule. EPA’s when the Agency decides not to use determined that this rule does not summary of these comments and our available and applicable VCS. The
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rulemaking involves technical parties. 5 U.S.C. 804(3). EPA is not (i) Table 1.1—NOX BART, entry for standards. Therefore, the Agency required to submit a rule report AEPCO [Apache], ST1 [Unit 1] only. conducted a search to identify regarding today’s action under section (ii) Table 1.2—PM10 BART, entries for potentially applicable voluntary 801 because this is a rule of particular AEPCO [Apache], APS Cholla Power consensus standards. However, we applicability and only applies to three Plant and SRP Coronado Generating identified no such standards, and none facilities. Station. were brought to our attention in L. Petitions for Judicial Review (iii) Table 1.3—SO2 BART, entries for comments. Therefore, EPA has decided AEPCO, APS Cholla Power Plant and to use 40 CFR Part 60 Appendix A Under section 307(b)(1) of the Clean SRP Coronado Generating Station. Method 5, 40 CFR Part 51 Appendix M Air Act, petitions for judicial review of ■ 3. Section 52.145 is amended by Methods 201A/202, 40 CFR Part 60 this action must be filed in the United adding paragraphs (e) and (f) to read as Appendix A Method 19, and 40 CFR States Court of Appeals for the follows: Part 75. appropriate circuit by February 4, 2013. Filing a petition for reconsideration by § 52.145 Visibility protection. J. Executive Order 12898: Federal the Administrator of this final rule does Actions To Address Environmental * * * * * not affect the finality of this rule for the Justice in Minority Populations and (e) Approval. On February 28, 2011, purposes of judicial review nor does it Low-Income Populations the Arizona Department of extend the time within which a petition Environmental Quality submitted the Executive Order 12898 (59 FR 7629, for judicial review may be filed, and ‘‘Arizona State Implementation Plan, February 16, 1994), establishes federal shall not postpone the effectiveness of Regional Haze Under Section 308 of the executive policy on environmental such rule or action. This action may not Federal Regional Haze Rule’’ (‘‘Arizona justice. Its main provision directs be challenged later in proceedings to Regional Haze SIP’’). federal agencies, to the greatest extent enforce its requirements. (See CAA (1) With the exception of the NOX practicable and permitted by law, to section 307(b)(2).) make environmental justice part of their BART determinations for Units ST2 and mission by identifying and addressing, List of Subjects in 40 CFR Part 52 ST3 at AEPCO Apache Generating Station; Units 2, 3, and 4 at APS Cholla as appropriate, disproportionately high Environmental protection, Air Power Plant; and Units 1 and 2 at SRP and adverse human health or pollution control, Incorporation by Coronado Generating Station, and the environmental effects of their programs, reference, Intergovernmental relations, BART compliance provisions for all policies, and activities on minority Nitrogen oxides, Sulfur dioxide, BART emissions limits at the eight units populations and low-income Particulate matter, Reporting and at the three power plants, the BART populations in the United States. EPA recordkeeping requirements, Visibility, determinations for AEPCO Apache has determined that this final rule will Volatile organic compounds. not have disproportionately high and Generating Station, APS Cholla Power Dated: November 15, 2012. adverse human health or environmental Plant, and SRP Coronado Generating effects on minority or low-income Lisa P. Jackson, Station in the Arizona Regional Haze populations because it increases the Administrator. SIP meet the applicable requirements of level of environmental protection for all Part 52, chapter I, title 40 of the Code Clean Air Act sections 169A and 169B affected populations without having any of Federal Regulations is amended as and the Regional Haze Rule in 40 CFR disproportionately high and adverse follows: 51.301 through 51.308. human health or environmental effects (f) Source-specific federal on any population, including any PART 52—APPROVAL AND implementation plan for regional haze minority or low-income population. PROMULGATION OF at Apache Generating Station, Cholla This rule requires emissions reductions IMPLEMENTATION PLANS Power Plant, and Coronado Generating Station — (1) Applicability. This of NOX from three facilities in Arizona. ■ 1. The authority citation for Part 52 paragraph (f) applies to each owner/ The partial approval of the SIP merely continues to read as follows: approves state law as meeting Federal operator of the following coal-fired requirements and imposes no additional Authority: 42 U.S.C. 7401 et seq. electricity generating units (EGUs) in requirements beyond those imposed by the state of Arizona: Apache Generating Subpart D—Arizona state law. Station, Units 2 and 3; Cholla Power Plant, Units 2, 3, and 4; and Coronado ■ 2. Section 52.120 is amended by K. Congressional Review Act Generating Station, Units 1 and 2. This adding paragraph (c)(154) to read as The Congressional Review Act, 5 paragraph (f) also applies to each follows: U.S.C. 801 et seq., as added by the Small owner/operator of the following natural Business Regulatory Enforcement § 52.120 Identification of plan. gas-fired EGUs in the state of Arizona: Fairness Act of 1996, generally provides * * * * * Apache Generating Station Unit 1. The that before a rule may take effect, the (c) * * * provisions of this paragraph (f) are agency promulgating the rule must (154) The following plan was severable, and if any provision of this submit a rule report, which includes a submitted February 28, 2011, by the paragraph (f), or the application of any copy of the rule, to each House of the Governor’s designee. provision of this paragraph (f) to any Congress and to the Comptroller General (i) [Reserved] owner/operator or circumstance, is held of the United States. Section 804 (ii) Additional materials. invalid, the application of such exempts from section 801 the following (A) Arizona Department of provision to other owner/operators and types of rules (1) rules of particular Environmental Quality. other circumstances, and the remainder applicability; (2) rules relating to agency (1) Arizona State Implementation of this paragraph (f), shall not be management or personnel; and (3) rules Plan, Regional Haze Under Section 308 affected thereby. of agency organization, procedure, or of the Federal Regional Haze Rule: (2) Definitions. Terms not defined practice that do not substantially affect Appendix D, Arizona BART— below shall have the meaning given to the rights or obligations of non-agency Supplemental Information: them in the Clean Air Act or EPA’s
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regulations implementing the Clean Air Generating Station; and Units 2, 3, and units. Each emission limit shall be Act. For purposes of this paragraph (f): 4 for Cholla Power Plant. based on a rolling 30-boiler-operating- ADEQ means the Arizona Department lb means pound(s). day average, unless otherwise indicated of Environmental Quality. NOX means nitrogen oxides expressed in specific paragraphs. Boiler-operating day means a 24-hour as nitrogen dioxide (NO2). period between 12 midnight and the Owner(s)/operator(s) means any Federal following midnight during which any person(s) who own(s) or who operate(s), Group of coal-fired units emission limitation fuel is combusted at any time in the control(s), or supervise(s) one or more of unit. the units identified in paragraph (f)(1) of Apache Generating Station Coal-fired unit means any of the EGUs this section. Units 2 and 3 ...... 0.070 identified in paragraph (f)(1) of this MMBtu means million British thermal Cholla Power Plant Units 2, section, except for Apache Generating unit(s). 3, and 4 ...... 0.055 Station, Unit 1. Operating hour means any hour that Coronado Generating Station Continuous emission monitoring fossil fuel is fired in the unit. Units 1and 2 ...... 0.065 system or CEMS means the equipment PM10 means filterable total particulate required by 40 CFR Part 75 and this matter less than 10 microns and the (ii) SO2 removal efficiency paragraph (f). condensable material in the impingers requirement. The owners/operators of Emissions limitation or emissions as measured by Methods 201A and 202. Cholla Power Plant Units 2, 3, and 4 limit means any of the Federal Emission Regional Administrator means the shall achieve and maintain a 30-day Limitations required by this paragraph Regional Administrator of EPA Region rolling average SO2 removal efficiency (f) or any of the applicable PM10 and IX or his/her authorized representative. of 95 percent at each unit. SO2 emissions limits for Apache SO2 means sulfur dioxide. (4) Compliance dates. (i) The owners/ Generating Station, Cholla Power Plant, SO4 removal efficiency means the operators of each unit subject to this and Coronado Generating Station quantity of SO2 removed as calculated paragraph (f) shall comply with the NOX submitted to EPA as part of the Arizona by the procedure in paragraph emissions limitations and other NOX- Regional Haze SIP in a letter dated (f)(5)(iii)(B) of this section. related requirements of this paragraph February 28, 2011, and approved into Unit means any of the EGUs identified (f) no later than December 5, 2017. the Arizona State Implementation Plan in paragraph (f)(1) of this section. (ii) The owners/operators of each unit on December 5, 2012. Valid data means data recorded when subject to this paragraph (f) shall Flue Gas Desulfurization System or the CEMS is not out-of-control as comply with the applicable PM10 and FGD means a pollution control device defined by Part 75. SO2 emissions limits submitted to EPA that employs flue gas desulfurization (3) Federal emission limitations.—(i) as part of the Arizona Regional Haze SIP technology, including an absorber NOX emission limitations. The owner/ in a letter dated February 28, 2011, and utilizing lime, fly ash, or limestone operator of each coal-fired unit subject approved into the Arizona State slurry, for the reduction of sulfur to this paragraph (f) shall not emit or Implementation Plan on December 5, dioxide emissions. cause to be emitted NOX in excess of the 2012, as well as the related compliance, Group of coal-fired units mean Units following limitations, in pounds per recordkeeping and reporting of this 1 and 2 for Coronado Generating million British thermal units (lb/ paragraph (f) no later than the following Station; Units 2 and 3 for Apache MMBtu) from any group of coal-fired dates:
Compliance date Unit PM10 SO2
Apache Generating Station, Unit 1 ...... June 3, 2013 ...... June 3, 2013. Apache Generating Station, Unit 2 ...... December 5, 2016 ...... December 5, 2016. Apache Generating Station, Unit 3 ...... December 5, 2016 ...... December 5, 2016. Cholla Power Plant, Unit 2 ...... April 1, 2016 ...... April 1, 2016. Cholla Power Plant, Unit 3 ...... June 3, 2013 ...... June 3, 2013. Cholla Power Plant, Unit 4 ...... June 3, 2013 ...... June 3, 2013. Coronado Generating Station, Unit 1 ...... June 3, 2013 ...... June 3, 2013. Coronado Generating Station, Unit 2 ...... June 3, 2013 ...... June 3, 2013.
(iii) The owners/operators of Cholla (5) Compliance determinations for the requirements found at 40 CFR Part Power Plant Units 2, 3 and 4 shall NOX and SO4—(i) Continuous emission 75, to accurately measure SO2 emissions comply with the SO2 removal efficiency monitoring system. and diluent at the inlet of the sulfur requirement in paragraph (f)(5)(iii)(B) of (A) At all times after the compliance dioxide control device. Apache Unit 1 this section all related compliance, date specified in paragraph (f)(4) of this NOX and diluent CEMs shall be recordkeeping and reporting section, the owner/operator of each operated to meet the requirements of requirements no later than the following coal-fired unit shall maintain, calibrate, Part 75. All valid CEMS hourly data dates: and operate a CEMS, in full compliance shall be used to determine compliance with the requirements found at 40 CFR with the emission limitations for NOX Cholla Power Plant, April 1, 2016. Part 75, to accurately measure SO2, and SO2 in paragraph (f)(3) of this Unit 2. NOX, diluent, and stack gas volumetric section for each unit. When the CEMS Cholla Power Plant, December 5, 2013. flow rate from each unit. In addition, is out-of-control as defined by Part 75, Unit 3. the owner/operator of Cholla Units 2, 3, that CEMs data shall be treated as Cholla Power Plant, December 5, 2013. missing data and not used to calculate Unit 4. and 4 shall calibrate, maintain, and operate a CEMS, in full compliance with the emission average. Each required
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CEMS must obtain valid data for at least four for each group of coal-fired units, (B) The 30-day rolling average SO2 90 percent of the unit operating hours, to calculate the 30-day rolling average removal efficiency for Cholla Units 2, 3, on an annual basis. NOX emission rate for each group of and 4 shall be calculated as follows: (B) The owner/operator of each unit coal-fired units, in pounds of NOX per Step one, sum the total pounds of SO2 shall comply with the quality assurance MMBtu, for each calendar day. Each 30- emitted as measured at the outlet of the procedures for CEMS found in 40 CFR day rolling average NOX emission rate FGD system for the unit during the Part 75. In addition to these Part 75 shall include all emissions and all heat current boiler-operating day and the requirements, relative accuracy test input that occur during all periods previous twenty-nine (29) boiler- audits shall be calculated for both the within any boiler-operating day, operating days as measured at the outlet NOX and SO2 pounds per hour including emissions from startup, of the FGD system for that unit; step measurement and the heat input shutdown, and malfunction. two, sum the total pounds of SO2 measurement. The CEMs monitoring (B) The 30-day rolling average NOX delivered to the inlet of the FGD system data shall not be bias adjusted. The inlet emission rate for Apache Unit 1 shall be for the unit during the current boiler- SO2 and diluent monitors required by calculated in accordance with the operating day and the previous twenty- this rule shall also meet the Quality following procedure: step one, sum the nine (29) boiler-operating days as Assurance/Quality Control (QA/QC) total pounds of NOX emitted from the measured at the inlet to the FGD system requirements of Part 75. The testing and unit during the current boiler-operating for that unit (for each hour, the total evaluation of the inlet monitors and the day and the previous twenty-nine (29) pounds of SO2 delivered to the inlet of calculations of relative accuracy for lb/ boiler-operating days; step two, sum the the FGD system for a unit shall be hr of NOX, SO2 and heat input shall be total heat input to the unit in MMBtu calculated by measuring the ratio of the performed each time the Part 75 CEMS during the current boiler-operating day lb/MMBtu SO2 inlet to the lb/MMBtu undergo relative accuracy testing. In and the previous twenty-nine (29) SO2 outlet and multiplying the outlet addition, relative accuracy test audits boiler-operating days; and step three, pounds of SO2 by that ratio); step three, shall be performed in the units of lb/ divide the total number of pounds of subtract the outlet SO2 emissions MMBtu for the inlet and outlet SO2 calculated in step one from the inlet SO2 NOX emitted during the thirty (30) monitors at Cholla Units 2, 3, and 4. boiler-operating days by the total heat emissions calculated in step two; step Heat input for Apache Unit 1 shall be input during the thirty (30) boiler- four, divide the remainder calculated in measured in accordance with Part 75 operating days. A new 30-day rolling step three by the inlet SO2 emissions fuel gas measurement procedures found calculated in step two; and step five, average NOX emission rate shall be in 40 CFR Part 75, Appendix D. calculated for each new boiler-operating multiply the quotient calculated in step (ii) Compliance determinations for four by 100 to express as a percentage day. Each 30-day rolling average NOX NOX. (A) The 30-day rolling average emission rate shall include all emissions removal efficiency. A new 30-day NO emission rate for each group of X and all heat input that occur during all rolling average SO2 removal efficiency coal-fired units shall be calculated for periods within any boiler-operating day, shall be calculated for each new boiler- each calendar day, even if a unit is not operating day, and shall include all in operation on that calendar day, in including emissions from startup, shutdown, and malfunction. emissions that occur during all periods accordance with the following within each boiler-operating day, (C) If a valid NO pounds per hour or procedure: step one, for each unit, sum X including emissions from startup, heat input is not available for any hour the hourly pounds of NOX emitted shutdown, and malfunction. for a unit, that heat input and NOX during the current boiler-operating day (C) If a valid SO2 pounds per hour at (or most recent boiler-operating day if pounds per hour shall not be used in the the outlet of the FGD system or heat the unit is not in operation), and the calculation of the 30-day rolling input is not available for any hour for average. preceding twenty-nine (29) boiler- a unit, that heat input and SO2 pounds operating days, to calculate the total (iii) Compliance determinations for per hour shall not be used in the pounds of NOX emitted over the most SO2. (A) The 30-day rolling average SO2 calculation of the 30-day rolling recent thirty (30) boiler-operating day emission rate for each coal-fired unit average. period for each coal-fired unit; step two, shall be calculated in accordance with (D) If both a valid inlet and outlet SO2 for each unit, sum the hourly heat input, the following procedure: Step one, sum lb/MMBtu and an outlet value of lb/hr in MMBtu, during the current boiler- the total pounds of SO2 emitted from the of SO2 are not available for any hour, operating day (or most recent boiler- unit during the current boiler-operating that hour shall not be included in the operating day if the unit is not in day and the previous twenty-nine (29) efficiency calculation. operation), and the preceding twenty- boiler-operating days; step two, sum the (6) Compliance determinations for nine (29) boiler-operating days, to total heat input to the unit in MMBtu particulate matter. Compliance with the calculate the total heat input, in during the current boiler-operating day particulate matter emission limitation MMBtu, over the most recent thirty (30) and the previous twenty-nine (29) for each coal-fired unit shall be boiler-operating day period for each boiler-operating day; and step three, determined from annual performance coal-fired unit; step 3, sum together the divide the total number of pounds of stack tests. Within sixty (60) days of the total pounds of NOX emitted from the SO2 emitted during the thirty (30) compliance deadline specified in group of coal-fired units over each unit’s boiler-operating days by the total heat paragraph (f)(4) of this section, and on most recent thirty (30) boiler-operating input during the thirty (30) boiler- at least an annual basis thereafter, the day period (the most recent 30 boiler- operating days. A new 30-day rolling owner/operator of each unit shall operating day periods for different units average SO2 emission rate shall be conduct a stack test on each unit to may be different); step four, sum calculated for each new boiler-operating measure PM10 using EPA Method 5, in together the total heat input from the day. Each 30-day rolling average SO2 40 CFR part 60, Appendix A, or Method group of coal-fired units over each unit’s emission rate shall include all emissions 201A/202 in 40 CFR Part 51, Appendix most recent thirty (30) boiler-operating and all heat input that occur during all M. A test protocol shall be submitted to day period; and step five, divide the periods within any boiler-operating day, EPA and ADEQ a minimum of 30 days total pounds of NOX emitted from step including emissions from startup, prior to the scheduled testing. The three by the total heat input from step shutdown, and malfunction. protocol shall identify which method(s)
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will be used to demonstrate compliance. measurement and hourly heat input appropriate performance or compliance Each test shall consist of three runs, measurement. test had been performed, can be used to with each run at least 120 minutes in (v) Records of all major maintenance establish whether or not the owner or duration and each run collecting a activities conducted on emission units, operator has violated or is in violation minimum sample of 60 dry standard air pollution control equipment, and of any standard or applicable emission cubic feet. Results shall be reported in CEMS. limit in the plan. lb/MMBtu using the calculation in 40 (vi) Any other records required by 40 (10) Equipment operations. At all CFR Part 60 Appendix A Method 19. In CFR Part 75. times, including periods of startup, addition to annual stack tests, the (8) Reporting. All reports and shutdown, and malfunction, the owner owner/operator shall monitor notifications under this paragraph (f) particulate emissions for compliance shall be submitted to the Director of or operator shall, to the extent with the emission limitations in Enforcement Division, U.S. EPA Region practicable, maintain and operate the accordance with the applicable IX, at 75 Hawthorne Street, San unit including associated air pollution Compliance Assurance Monitoring Francisco, CA 94105. control equipment in a manner (CAM) plan developed and approved in (i) The owner/operator shall notify consistent with good air pollution accordance with 40 CFR Part 64. The EPA within two weeks after completion control practices for minimizing averaging time for any other of installation of combustion controls or emissions. Pollution control equipment shall be designed and capable of demonstration of the PM10 compliance Selective Catalytic Reactors on any of or exceedance shall be based on a 6- the units subject to this section. operating properly to minimize hour average. (ii) Within 30 days after the emissions during all expected operating (7) Recordkeeping. The owner or applicable compliance date(s) in conditions. Determination of whether operator of each unit shall maintain the paragraph (f)(4) of this section and acceptable operating and maintenance following records for at least five (5) within 30 days of every second calendar procedures are being used will be based years: quarter thereafter (i.e., semi-annually), on information available to the Regional (i) All CEMS data, including the date, the owner/operator of each unit shall Administrator which may include, but place, and time of sampling or submit a report that lists the daily 30- is not limited to, monitoring results, measurement; parameters sampled or day rolling emission rates for NOX and review of operating and maintenance measured; and results. SO2 for each unit and, for Cholla Units procedures, and inspection of the unit. 2, 3, and 4, the SO removal efficiency, (ii) Daily 30-day rolling emission rates 2 (11) Affirmative defense for for NO and SO and SO removal calculated in accordance with paragraph X 2 2 malfunctions. The following regulations efficiency, when applicable, for each (f)(5) of this section. Included in this are incorporated by reference and made unit, calculated in accordance with report shall be the results of any relative part of this federal implementation plan: paragraph (f)(5) of this section. accuracy test audit performed during (iii) Records of quality assurance and the two preceding calendar quarters. (i) R–18–2–101, paragraph 65; quality control activities for emissions (9) Enforcement. Notwithstanding any (ii) R18–2–310, sections (A), (B), (D) measuring systems including, but not other provision in this implementation and (E) only; and limited to, any records required by 40 plan, any credible evidence or (iii) R18–2–310.01. CFR Part 75. information relevant as to whether the (iv) Records of the relative accuracy unit would have been in compliance [FR Doc. 2012–28565 Filed 12–4–12; 8:45 am] test for hourly NOX and SO2 lb/hr with applicable requirements if the BILLING CODE 6560–50–P
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Part IV
Office of Personnel Management
45 CFR Part 800 Patient Protection and Affordable Care Act; Establishment of the Multi- State Plan Program for the Affordable Insurance Exchanges; Proposed Rule
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OFFICE OF PERSONNEL Abbreviations A. Affordable Insurance Exchanges MANAGEMENT FEHBA Federal Employees Health Benefits The Affordable Care Act authorizes Act (5 U.S.C. 8901 et seq.) the establishment of Exchanges where 45 CFR Part 800 FEHBP Federal Employees Health Benefits Program individuals and small businesses with RIN 3206–AM47 HHS U.S. Department of Health and Human up to 100 employees can purchase Services qualified coverage. States have the Patient Protection and Affordable Care HMO Health Maintenance Organization option of defining a small group as one Act; Establishment of the Multi-State MSP Multi-State Plan with up to 50 employees through 2016.1 Plan Program for the Affordable MSPP Multi-State Plan Program Beginning January 1, 2014, the Insurance Exchanges NAIC National Association of Insurance Exchanges will provide competitive Commissioners marketplaces for individuals and small OPM U.S. Office of Personnel Management AGENCY: U.S. Office of Personnel employers to directly compare available Management. PHS Act Public Health Service Act QHP Qualified Health Plan private health insurance options on the ACTION: Proposed rule. SHOP Small Business Health Options basis of price, quality, and other factors. Program The Exchanges will enhance SUMMARY: The U.S. Office of Personnel Table of Contents competition in the health insurance Management (OPM) is issuing a market, improve choice of affordable proposed rule to implement the Multi- I. Background health insurance, and give individuals State Plan Program (MSPP). OPM is A. Affordable Insurance Exchanges and small businesses purchasing power establishing the MSPP pursuant to the B. Objectives of the Multi-State Plan comparable to that of large businesses. Patient Protection and Affordable Care Program (MSPP) Act, as amended by the Health Care and C. Review of OPM’s Role in Contracting The U.S. Department of Health and Education Reconciliation Act of 2010, Under the Federal Employees Health Human Services (HHS) has issued a Benefits Program (FEHBP) referred to collectively as the Affordable final regulation outlining standards to D. Overview of the MSPP’s Statutory certify Exchanges and qualified health Care Act. Through contracts with OPM, Requirements health insurance issuers will offer at plans (QHPs) that will be offered on E. Stakeholder Interaction 2 least two multi-State plans (MSPs) on II. Proposed Regulatory Approach Exchanges. If a State does not elect to each of the Affordable Insurance A. Overview of Regulatory Approach operate an Exchange or is not certified Exchanges (Exchanges). Under the law, B. Governing Law (or conditionally approved) to operate an MSPP issuer may phase in the States III. Provisions of the Proposed Regulation one by January 1, 2013, HHS will in which it offers coverage over four A. General Provisions and Definitions operate the Exchange in that State. B. Multi-State Plan Issuer Requirements years, but it must offer MSPs on The purpose of this proposed C. Premiums, Rating Factors, Medical Loss regulation is to outline the process by Exchanges in all States and the District Ratios, and Risk Adjustment of Columbia by the fourth year in which D. Application and Contracting Procedures which OPM will establish the MSPP, the MSPP issuer participates in the E. Compliance pursuant to section 1334 of the MSPP. OPM aims to administer the F. Appeals by Enrollees for Denials of Affordable Care Act, to offer high- MSPP in a manner that is consistent Claims for Payment or Service quality, private health insurance with State insurance laws and that is G. Miscellaneous products on the Exchanges, as well as to informed by input from a broad array of IV. Regulatory Impact Analysis establish standards and requirements for V. Paperwork Reduction Act stakeholders. MSPs and MSPP issuers. This proposed VI. Regulatory Flexibility Act regulation recognizes that the MSPP is DATES: Comments are due on or before VII. Unfunded Mandates January 4, 2013. VIII. Federalism an important tool for implementing the Affordable Care Act by fostering ADDRESSES: You may submit comments, I. Background competition in Exchanges on the basis identified by Regulation Identifier of price, quality, and benefit delivery, Number (RIN) 3206–AM47 using any of Section 1334 of the Affordable Care while ensuring that MSPs operate on a the following methods: Act creates the Multi-State Plan Program level playing field with other issuers Federal eRulemaking Portal: http:// (MSPP) to foster competition among operating in the Exchanges. www.regulations.gov. Follow the plans competing in the individual and instructions for submitting comments. small group health insurance markets B. Objectives of the Multi-State Plan Mail, Hand Delivery or Courier: on the Affordable Insurance Exchanges Program (MSPP) National Healthcare Operations, (Exchanges) on the basis of price, Healthcare and Insurance, U.S. Office of quality, and benefit delivery. The The MSP is a new product and will Personnel Management, 1900 E Street Affordable Care Act directs the U.S. be one of several private health NW., Room 2347, Washington, DC Office of Personnel Management (OPM) insurance options offered on the 20415. to contract with private health Exchanges beginning in 2014. In insurance issuers to offer at least two administering the MSPP, OPM is FOR FURTHER INFORMATION CONTACT: Julia multi-State plans (MSPs) on each of the advancing several important objectives: Elam by telephone at (202) 606–2128, by Exchanges in the 50 States and the • To ensure a choice of at least two FAX at (202) 606–4430, or by email at District of Columbia. The law allows high-quality products to consumers [email protected]. MSPP issuers to phase in coverage, but participating on each Exchange; SUPPLEMENTARY INFORMATION: The U.S. coverage must be offered on Exchanges • To promote competition in the Office of Personnel Management (OPM) in all States and the District of Columbia health insurance marketplace to the is proposing this regulation to outline by the fourth year in which the MSPP benefit of all consumers; the Multi-State Plan Program (MSPP), a issuer participates in the MSPP. The new program created pursuant to first open enrollment period for plans 1 For purposes of this regulation, OPM refers to section 1334 of the Affordable Care Act offered through Exchanges will begin on Affordable Insurance Exchanges and SHOPs as to offer high-quality health insurance October 1, 2013, for coverage starting in ‘‘Exchanges’’ collectively. products on the Exchanges. January 2014. 2 45 CFR Parts 155 and 156.
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• To offer plans from the same issuer MSPP issuers differ from those compliance, reviews plan brochures, to families or small businesses that may governing QHPs, they will be designed handles enrollees’ complaints, contracts reside or operate in more than one State; to afford the MSPs and MSPP issuers with an external entity for • To provide strong, effective neither a competitive advantage nor a recommendations during OPM’s review contractual oversight of the issuers that disadvantage with respect to other plans of disputed claims, and monitors the choose to offer MSPs; and offered on the Exchange. OPM will financial stability of all participating • To work cooperatively with States administer the MSPP in a manner that carriers, including the maintenance of and HHS to ensure a level playing field is sensitive to the significant State and adequate reserves in a dedicated fund. between QHPs and MSPs. Federal interests affected by the MSPP Through this process, OPM has Across the country, consumers and that is informed by input from a developed relationships with health shopping for insurance in the individual broad array of stakeholders. insurance issuers and plans around the and small group market often have Accordingly, OPM appreciates the country, including local, community- limited options. In some States, the coordination and cooperation with the based plans. In the FEHBP, OPM acts on market is extremely concentrated. The States and HHS in administration of the behalf of employees and annuitants of MSPP will provide consumers in every MSPP. the Federal government. OPM has Exchange with the additional choice of significant responsibility to ensure that two high-quality health insurance plans C. Review of OPM’s Role in Contracting Under the Federal Employees Health FEHBP health plans provide the best thereby further promoting competition 4 Benefits Program (FEHBP) possible coverage at the lowest cost. on the Exchanges. Moreover, like the OPM currently only negotiates health plans offered in the Federal Section 1334(a)(4) directs OPM to contracts with carriers in the large group Employees Health Benefits Program implement the MSPP ‘‘in a manner market. While OPM intends to create a (FEHBP), consumers will benefit from similar to the manner in which the process for negotiating with issuers OPM oversight and contract negotiation Director implements the contracting participating in the MSPP that is guided experience to ensure consumers get the provisions with respect to carriers’’ by its experience in the FEHBP, this greatest value for their premium dollars. under the FEHBP. OPM therefore process will necessarily differ in certain Section 1334 of the Affordable Care Act intends to draw on its significant respects from the FEHBP process to directs OPM to enter into contracts with experience in contracting with and account for the differences between the participating issuers, including overseeing private issuers in large group market, where OPM negotiating premiums and benefits, as is administering FEHBP to develop and currently operates, and the individual done in the FEHBP. In addition, OPM manage the MSPP. and small group markets, which will be will monitor MSP performance in the The Federal Employees Health served by the Exchanges. market, and oversee plan compliance Benefits Act (FEHBA) was enacted in with legal requirements and contractual 1959 to provide health benefits to D. Overview of the MSPP’s Statutory terms. Federal employees, annuitants, and Requirements Issuers participating in the MSPP will their dependents. OPM has more than Section 1334 of the Affordable Care benefit from market efficiencies because 50 years of experience working with Act directs OPM to administer the they will contract with a single private issuers in the large group MSPP. Specifically, section 1334(a)(1) of agency—OPM—which will enable them market. Approximately eight million the Affordable Care Act requires OPM to to participate in all Exchanges. employees, annuitants, and their family ‘‘enter into contracts with health Specifically, section 1334(d) of the members are currently covered under insurance issuers, (which may include a Affordable Care Act provides that health the FEHBP. Enrollees can choose from plans that meet OPM’s requirements for among fee-for-service plans with group of health insurance issuers MSPs are deemed certified to be offered preferred providers, local HMOs, affiliated either by common ownership on all Exchanges. In return for these consumer-driven health plans, or high- and control or by the common use of a administrative efficiencies, MSPP deductible health plan options. Among nationally licensed service mark) * * * issuers will offer at least two plans (one these options are six nationwide plans, to offer at least 2 multi-State qualified at the silver level of coverage and one health plans through each Exchange in each of which offers coverage in all 50 5 at the gold level of coverage) in each States and the District of Columbia. In each State.’’ OPM interprets section Exchange. The statute allows MSPP 2011, 78.9 percent of Federal employees 1334(a)(1) as requiring OPM to contract issuers to phase in their coverage in all and annuitants chose to participate in with at least two issuers, which may be States and the District of Columbia over the FEHBP nationwide plans, which ‘‘groups of health insurance issuers four years, though MSPP issuers must offer portable coverage that continues affiliated either by common ownership offer coverage in at least 31 States in the when the enrollee or a covered family and control or by the common use of a 6 first year of their participation. member moves to another State.3 OPM nationally licensed service mark.’’ Pursuant to section 1334 of the has been able to administer this robust The Director is authorized to Affordable Care Act, the Director of health insurance program efficiently, implement and administer the MSPP OPM will set the standards for the keeping administrative costs low. ‘‘in a manner similar to the manner in MSPP. OPM expects that these In managing contracts with carriers in which the Director implements the standards will be consistent with the FEHBP, OPM negotiates rates and contracting provisions with respect to standards set for QHPs and QHP issuers benefits annually, oversees contract carriers under the Federal Employees 7 by HHS and the Exchanges, although in Health Benefit Program.’’ Further, some unique and specific 3 U.S. Office of Personnel Management, OPM may enter into these contracts circumstances, as addressed in this Healthcare and Insurance, Federal Employee without regard to competitive bidding Insurance Operations (March 2011). This proposed rule, the MSP standards may percentage includes participation in the following 4 differ from QHP requirements. In nationwide plans: Blue Cross Blue Shield (BCBS), It should be noted that § 1334(g)(2) directs OPM to treat MSPs as a separate risk pool from the implementing the MSPP, OPM will Government Employees Health Association, Inc. (GEHA), Mail Handlers, American Postal Workers FEHBP, and the MSPP will not affect FEHBP costs. promote a level playing field on each Union (APWU), National Association of Letter 5 Affordable Care Act § 1334(a)(1). Exchange, meaning that, to the extent Carriers (NALC), and Special Agents Mutual Benefit 6 Affordable Care Act § 1334(a)(1). any of the rules governing MSPs and Association (SAMBA). 7 Affordable Care Act § 1334(a)(4).
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laws.8 Each MSPP contract must be for year, it must be offered in at least 85 Operated and Oriented Plan (CO–OP) 33 a term of at least one year, but can be percent of the States (44 States).21 In all is not subject to any Federal or State law automatically renewable in the absence subsequent years, the MSPP issuer must related to one of the 13 categories listed of a notice of termination from either offer the MSP in all States and District in section 1324(b), then neither shall the MSPP issuer or OPM.9 of Columbia.22 any health insurance coverage offered The statute grants to OPM the The statute gave the Director the by a private health insurance issuer be authority to certify MSPs.10 Any MSPs authority to determine if the plan meets subject to such law.34 The categories offered under a contract negotiated with essential health benefits package listed in section 1324(b) are: guaranteed OPM are then ‘‘deemed to be certified requirements, meets qualified health renewal, rating, preexisting conditions, by an Exchange for purposes of section plan requirements of title I of the non-discrimination, quality 1311(d)(4)(A)’’ of the Affordable Care Affordable Care Act, meets premiums improvement and reporting, fraud and Act and would not need to apply rating requirements under part A of title abuse, solvency and financial separately for certification on each XXVII of the PHS Act, and offers the requirements, market conduct, prompt individual Exchange,11 as recognized in plan in all geographic locations payment, appeals and grievances, current regulations at 45 CFR prescribed by the statute.23 The statute privacy and confidentiality, licensure, 155.1010(b)(1). The Director is specifies that an MSP must offer a and benefit plan material or authorized to withdraw approval of an uniform benefits package in each State information. Beginning in 2014, the MSPP contract after notice and that includes essential health benefits Affordable Care Act sets Federal opportunity for a hearing.12 The pursuant to section 1302 of the standards for categories such as Director is also given the explicit Affordable Care Act.24 Under the guaranteed renewal, preexisting statutory authority to negotiate with statute, this does not prevent a State conditions, and non-discrimination that each MSP ‘‘(A) a medical loss ratio; (B) from requiring additional benefits 25 so will apply in all States. a profit margin; (C) the premiums to be long as it defrays the costs.26 The MSPP charged; and (D) such other terms and issuer must offer the plan in all States E. Stakeholder Interaction conditions of coverage as are in the after a phase-in, including those with In order to assess the level of interest interests of enrollees in such plans.’’ 13 adjusted community rating at the time in participating in the MSPP, and to The Affordable Care Act directs that of enactment of the Affordable Care obtain feedback from stakeholders about an MSPP issuer be licensed in each Act.27 At least one MSP must not the program, OPM issued a Request for State where it offers an MSP 14 and be provide coverage of services described Information (RFI) on June 16, 2011.35 ‘‘subject to all requirements of State law in section 1303(b)(1)(B)(i) of the OPM received 19 responses representing not inconsistent with this section Affordable Care Act as applicable.28 the views of 39 groups and [1334], including the standards and Finally, to the extent that they do not organizations. Responses came from requirements that a State imposes that conflict with provisions in title I of the health insurance issuers (including do not prevent the application of a Affordable Care Act, requirements dental and vision insurance vendors), requirement of part A of title XXVII of under chapter 89 of title 5 of the United employer organizations, labor the Public Health Service Act (PHS Act) States Code (the FEHBA) will apply to organizations, consumer groups, patient or a requirement of this title [I of the MSPs. organizations, and provider Affordable Care Act].’’ 15 The Affordable Though our experience with the associations. This proposed rule does Care Act directs that issuers must FEHBP guides us in crafting the MSPP, not directly respond to each of the comply with the minimum standards for the statute distinguishes the MSPP from responses from the RFI. However, these carriers under section 8902(e) of title 5 FEHBP in important respects. Thus, the responses informed the drafting of this of the United States Code to the extent Affordable Care Act prohibits the proposed rule. that the standards do not conflict with Director from allocating fewer resources In addition to the RFI, OPM has held provisions of title I of the Affordable to administering the FEHBP in order to meetings and phone calls with Care Act.16 Congress also authorized administer the MSPP and requires the numerous stakeholders to seek input OPM to establish additional standards Director to ensure that the two programs and guidance before engaging in for MSPs that OPM, in consultation are kept separate.29 Any premiums paid proposed rulemaking, including from with HHS, deems ‘‘appropriate.’’ 17 for coverage under the MSPP are not to the National Association of Insurance The Affordable Care Act authorizes an be considered Federal funds.30 Commissioners (NAIC), States, tribal MSPP issuer to phase-in the States in Enrollees of each program must be representatives through the tribal which the MSP is offered.18 In the first treated as separate risk pools 31 and consultation process, consumer year the MSP is offered, it must be FEHBP carriers are not required to advocates, health insurance issuers, offered in at least 60 percent of the participate in the MSPP.32 labor organizations, provider States (31 States).19 In the second year, We are also guided by the level associations, and trade groups. OPM it must be offered in at least 70 percent playing field provision of the Affordable values the participation of a broad array of the States (36 States).20 In the third Care Act. Section 1324 of the Act of diverse stakeholders, and OPM specifies that if an MSP or Consumer encourages them to submit comments 8 Affordable Care Act § 1334(a)(1). on this proposed rule. 9 Affordable Care Act § 1334(a)(2). 21 Affordable Care Act § 1334(e)(3). 10 Affordable Care Act § 1334(d). 22 Affordable Care Act § 1334(e)(4). II. Proposed Regulatory Approach 11 23 Affordable Care Act § 1334(d). Affordable Care Act § 1334(c)(1). A. Overview of Regulatory Approach 12 Affordable Care Act § 1334(a)(7). 24 Affordable Care Act § 1334(c)(1)(A). 13 Affordable Care Act § 1334(a)(4). 25 Affordable Care Act § 1334(c)(2). OPM’s approach to the development 14 Affordable Care Act § 1334(b)(2). 26 Affordable Care Act § 1334(c)(4). of this proposed regulation seeks to: 15 Affordable Care Act § 1334(b)(2). 27 Affordable Care Act § 1334(c)(1)(D). 16 Affordable Care Act § 1334(b)(3). 28 See also Affordable Care Act § 1334(a)(6). 33 Affordable Care Act § 1322. 17 Affordable Care Act § 1334(b)(4). 29 Affordable Care Act § 1334(g)(5). 34 Affordable Care Act § 1324. 18 Affordable Care Act § 1334(e). 30 Affordable Care Act § 1334(g)(5). 35 The RFI is available at https://www.fbo.gov/ 19 Affordable Care Act § 1334(e)(1). 31 Affordable Care Act § 1334(g)(2). index?s=opportunity&mode=form&id=677e422dd3 20 Affordable Care Act § 1334(e)(2). 32 Affordable Care Act § 1334(g)(6). f2bc983cb985eb73995b63&tab=core&_cview=1.
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• Create a program that will attract respect to the 13 categories of laws set redress for all denied claims. This issuers to apply to offer a new product forth in section 1324(b) of the proposed approach would not trigger in each Exchange in 50 States and the Affordable Care Act, the level playing the level playing field provisions of District of Columbia. field provision. Third, OPM has set section 1324 because MSPP issuers will • Balance State and Federal forth the standards and requirements still be subject to the same law as other regulatory interests in a manner that that will govern the MSPP, which it has issuers. The law governing external will enable MSPP issuers to offer viable established based on its research into appeals for all issuers is found in plans on Exchanges while maintaining a currently existing State and Federal section 2719 of the PHS Act and its level playing field between issuers. requirements. OPM believes that these implementing regulations at 45 CFR Ensure a level playing field such that standards and requirements are 147.136. The Departments of Health and neither MSPs nor plans offered by non- consistent with State legal requirements. Human Services, Labor, and the MSPP issuers are advantaged or Fourth, OPM has proposed establishing Treasury intend to propose amendments disadvantaged on Exchange a dispute resolution process to be used to those regulations to apply to the marketplaces. after these regulations are published in MSPP process the same standards that OPM seeks comment on whether final form to resolve future disputes apply to State external review processes. these proposed regulations satisfy these about the applicability of State law goals. requirements to the MSPP. OPM Rating B. Governing Law believes this approach affords it sufficient flexibility to administer the For purposes of compliance with The Affordable Care Act generally MSPP in 50 States and the District of section 1324(b)(2) of the Affordable Care requires that the MSPP be governed by Columbia without disrupting State Act, OPM has defined ‘‘rating’’ to all State and Federal laws that apply to markets. OPM requests public comment require compliance with the rating QHPs. The Act, however, grants on whether these proposed standards factors permitted by section 2701 of the discretion to the Director to administer and requirements will ensure a level PHS Act. Thus, the proposed rule would the MSPP in a manner that fulfills playing field between MSPP issuers and require MSPP issuers, in proposing OPM’s statutory responsibility to ensure QHP issuers, whether the standards and premiums for OPM approval, to use that there are at least two issuers requirements OPM is proposing for the only the rating factors permitted by offering MSPs on each Exchange in MSPP are consistent with applicable section 2701 of the PHS Act. It would every State and the District of Columbia. State and Federal requirements for also require MSPP issuers to comply OPM recognizes that potential MSPP QHPs, and whether the MSPs or MSPP with State laws relating to rating factors. issuers seek administrative simplicity issuers will be at a competitive With regard to the MSPP, OPM does and some uniformity of standards in the advantage or disadvantage under this not consider ‘‘rating’’ to be the same as MSPP. Accordingly, in unusual approach with respect to the QHPs ‘‘rate review.’’ As directed by section circumstances, it may be necessary for offered on the Exchanges. 1334(a)(4) of the Affordable Care Act, the Director to adopt standards or the Director negotiates premiums, a requirements for the MSPP that differ Level Playing Field medical loss ratio, a profit margin, and from standards and requirements As discussed above, OPM is such other terms and conditions as are applicable to QHPs under either State or proposing to require compliance with in the best interest of enrollees. With Federal law. This proposed regulation, State and Federal laws related to the 13 respect to rate review, OPM intends to however, reflects the Director’s categories listed in section 1324(b) of conduct its own rate review process, intention for the MSPs and MSPP the Affordable Care Act. There are, and provide its rate review analysis to issuers to adhere to all State and Federal however, three categories of law among laws applicable to QHPs and QHP the 13 listed in section 1324(b) of the each State in which the MSP is issuers, except to the extent any such Affordable Care Act for which OPM operating. Each State also would have laws are inconsistent with these would like specifically to solicit public the opportunity to review the MSP rates regulations, OPM guidance, or OPM’s comment: appeals, rating, and benefit under its own procedures. If a State contracts with MSPP issuers. plan material or information. disagrees with OPM’s determination to It is not possible at this time, approve the MSP rates, OPM would however, to identify with specificity the Appeals work with the State to attempt to resolve laws that OPM deems to be inconsistent OPM proposes to resolve external the differences. We expect that few such with these regulations, OPM guidance, appeals pursuant to its own process, disagreements will arise and, if they do, or OPM’s contracts with MSPP issuers. which will be similar to the disputed that we will be successful in resolving OPM will monitor future developments claims process used in the FEHBP. OPM them in a manner that is acceptable both around the State specific requirements interprets section 1334(a)(4) of the to OPM and the State. In the event that that will be in place in 2014 and beyond Affordable Care Act to require OPM to a State withholds approval of an MSP and identify inconsistencies as they maintain authority over external review rate for reasons that OPM determines, in arise. because Congress directed that OPM its discretion, to be arbitrary, capricious, OPM has addressed the evolving implement the MSPP in a manner or an abuse of discretion, the Act nature of the law and OPM’s interest in similar to the manner in which it authorizes the Director to make the final providing meaningful guidance to the implements the contracting provisions decision to approve rates for public regarding the standards and of the FEHBP. In the FEHBP, OPM participation in the MSPP requirements that apply to the MSPP in resolves all external appeals as a part of notwithstanding the absence of State four primary ways. First, OPM has its contract administration approval. We expect that the Director identified the currently existing responsibilities. OPM similarly believes will rarely, if ever, have to exercise this provisions of Federal law that govern that it is necessary to decide these authority to approve MSP rates over the QHPs and, thus, the MSPP. Second, appeals in the MSPP in order to ensure objection of a State. . OPM welcomes OPM has asserted its intention to that the MSPP contract is administered comments on whether this is an require MSPs and MSPP issuers to equitably throughout all 51 jurisdictions appropriate approach and on the impact follow all State law requirements with and to provide enrollees an avenue of of this approach.
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Benefit Plan Material or Information into compliance with applicable State Section 800.10 proposes the scope of MSPs will be subject to Federal and law. this proposed regulation, which is to State laws with respect to benefit plan The proposed process is intended to establish standards for the following: material or information, including allow for a targeted analysis of (1) Health insurance issuers wishing requirements proposed in § 800.113. particular State law provisions and its to contract with OPM to participate in OPM has defined the term ‘‘benefit plan impact on OPM’s ability to administer the MSPP; (2) Health insurance issuers to appeal material or information’’ to include the MSPP. This process is particularly a decision by OPM either to non-renew explanations or descriptions, whether important given that many States are or terminate a health insurance issuer’s printed or electronic, that describe a still developing their Exchange contract to participate in the MSPP; and health insurance issuer’s products. The standards. OPM invites comments on (3) Enrollees in an MSP to appeal term does not include a policy or this process, including its scope, the denials of payment or services by an contract for health insurance coverage. factors OPM should consider when MSPP issuer. While OPM intends to review and determining whether State law is approve policy forms for health applicable or whether the relevant 2. Definitions (§ 800.20) insurance coverage, OPM expects MSPP market has been or will be disrupted by Section 800.20 proposes definitions issuers to comply with related state law the inapplicability of State law and for terms that are used throughout part requirements for policy form review. whether the process will be an effective 800. In general, the definitions OPM expects that that few way to resolve any such disputes. contained in § 800.20 come from three disagreements will arise between OPM OPM also invites comments on sources: title I of the Affordable Care and a state regarding policy form review whether it should include in this Act and the final Exchange regulation at and, if they do, that we will be process States’ having concerns about 45 CFR parts 155, 156, and 157; title successful in resolving them in a MSPP issuer compliance with State law XXVII of the PHS Act and the manner that is acceptable both to OPM requirements related to the 13 categories regulations at 45 CFR part 144; and the and the State at issue. As it does in the listed in section 1324(b) of the FEHBA at chapter 89 of title 5, United FEHBP, OPM will review and approve Affordable Care Act. As discussed States Code and the regulations the policy or contract for health above, OPM’s intention is to ensure that governing the FEHBP at 5 CFR part 890 insurance coverage. In § 800.113, OPM MSPP issuers comply with all State law and 48 CFR 1609.70. Some new has proposed reserving its authority to requirements concerning the 13 definitions were created for the purpose request benefit plan material or categories, and OPM appreciates of implementing the MSPP. The information (other than the policy comments on whether this proposed application of the terms defined in this document or information) for review by section is limited to this proposed rule. OPM in addition to any State review. In rule has met this intent. However, OPM recognizes that future issues could arise Several defined terms in this section § 800.113, OPM also has proposed to are in common use and are defined as allow an MSPP issuer to state that OPM regarding whether MSPs and MSPP issuers are properly made subject to such. These include: has certified a plan and will oversee its • State and Federal laws related to the FEHBP administration. OPM solicits comments • HHS on whether it is appropriate to exclude section 1324(b) categories. OPM is • asking for comment on whether the HHS Secretary (‘‘Secretary’’) policies and contracts from the • OPM dispute resolution process should also definition of ‘‘benefit plan material or • OPM Director (‘‘Director’’) be available as another avenue for information.’’ Several terms are based on definitions addressing any such concerns. Process for Disputes Regarding State in the Affordable Care Act or regulations Law III. Provisions of the Proposed issued to implement 45 CFR Parts 155, Regulation 156, and 157. These include: OPM is sensitive to the impact that its • Cost sharing (defined in 45 CFR decisions with respect to the standards A. General Provisions and Definitions 155.20). and requirements applicable to the (Subpart A, 800.10 and 800.20) • Exchange (defined in 45 CFR MSPP could potentially have on State 155.20). The purpose of this subpart is to insurance markets. For this reason, with • Level of coverage (defined as one of define the basis and scope of part 800. respect to the 13 categories listed in four standardized actuarial values, or In addition, this subpart sets forth section 1324(b) of the Affordable Care AV, of plan coverage specified in definitions for terms that are used Act, as stated above, OPM’s proposal is section 1302(d)(1) of the Affordable Care throughout this part. to require MSPP issuers to comply with Act). all State laws in those categories, as 1. Basis and Scope (§ 800.10) • Plan year (defined in 45 CFR defined in these regulations. There may 155.20). be other State laws, however, that are The primary authority for the • QHP (defined in 45 CFR 155.20). not related to the 13 categories listed in establishment of the MSPP is section • SHOP (defined in 45 CFR 155.20). section 1324(b) for which compliance 1334 of the Affordable Care Act. In • Small employer (defined in 45 CFR would prevent OPM from administering addition, section 1324 of the Affordable 155.20). the MSPP. In those circumstances, the Care Act is the level playing field • State (defined in 45 CFR 155.20). State law requirements may be provision. It addresses MSP compliance OPM proposes definitions for several inconsistent with these regulations, with applicable Federal or State law in terms based on three HHS proposed OPM guidance, or OPM’s contracts with 13 categories. Other relevant statutory rules. First, HHS published a proposed MSPP issuers. With respect to those provisions of title I of the Affordable essential health benefits (EHB) rule in non-1324(b) provisions, OPM is Care Act are enumerated in § 800.102. In the Federal Register on November 26, proposing a process for States to seek addition, MSPP issuers and MSPs must 2012 to provide standards related to changes to the regulations, OPM comply with all provisions of part A of EHB, actuarial value (AV), and guidance, or OPM’s contracts with title XXVII of the PHS Act enumerated accreditation. Second, HHS published a MSPP issuers in order to bring them in § 800.102. proposed rule in the Federal Register on
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November 26, 2012 to provide standards • Group of issuers means (1) a group assumptions, used to set premiums for related to fair health insurance of health insurance issuers who are a health plan. premiums, guaranteed availability, either affiliated by common ownership • State insurance commissioner guaranteed renewability, risk pools, and and control or by common use of a means the commissioner or other chief rate review (the proposed health nationally licensed service mark, or (2) insurance regulatory official of a State.36 insurance market rules). Third, HHS an affiliation of health insurance issuers B. Multi-State Plan Issuer Requirements will soon publish a proposed rule in the and an entity who is not an issuer but (Subpart B, 800.101 Through 800.116) Federal Register to provide notice of who owns a nationally licensed service standards relating to benefit and mark. The purpose of this subpart is to set payment parameters for 2014, including • Licensure means the authorization forth standards for MSPP issuers in standards related to advance payments obtained from the appropriate State order to participate in the MSPP of the premium tax credit and cost- official or regulatory authority to offer pursuant to section 1334(b) of the sharing reductions (the proposed health insurance coverage in the State. Affordable Care Act. The following • payment rule). OPM expects to follow MSP means a private health plan proposed provisions of the regulation the definitions promulgated by HHS. that is offered under a contract with implement this statutory provision. The proposed definitions include: OPM pursuant to section 1334 of the 1. General Requirements (§ 800.101) • Actuarial value (AV) (defined in Affordable Care Act and meets the This section proposes standards to proposed 45 CFR 156.20). requirements of this part. • implement section 1334(b) of the • EHB-benchmark plan (defined in MSPP means the program Affordable Care Act. It also proposes proposed 45 CFR 156.20). administered by OPM pursuant to • Indian (defined in proposed 45 CFR section 1334 of the Affordable Care Act. that an MSPP issuer must offer a choice • 155.300(a)). MSPP issuer means a health of plans (i.e., at least one of each at the • Zero cost sharing plan variation insurance issuer or group of issuers, as silver level of coverage and gold level of (defined in proposed 45 CFR 156.400). defined in this proposed rule, that has coverage) on the individual Exchange • Percentage of total allowed cost of a contract with OPM to offer health and in the SHOP, if the MSPP issuer benefits (defined in proposed 45 CFR plans pursuant to section 1334 of the chooses to participate in the SHOP. In 156.20). Affordable Care Act and meets the addition, OPM proposes that the MSPP • Plan variation (defined in proposed requirements of this part. issuer will, pursuant to its contract with 45 CFR 156.400). • Nationally licensed service mark OPM, offer child-only coverage for each • Silver plan variation (defined in means a word, name, symbol, or device, level of coverage that it makes available proposed 45 CFR 156.400). or any combination thereof, that an in each Exchange. An MSPP issuer must • Standard plan (defined in proposed issuer or group of issuers uses ensure that all MSPs it offers meet the 45 CFR 156.400). consistently nationwide to identify requirements of this proposed rule. Several terms are given the same itself. Section 1334(a)(1) states that Regarding eligibility and enrollment, definition as previously released issuers applying for an MSPP contract OPM proposes that MSPP issuers meet regulations pertaining to the PHS Act, may include a group of issuers affiliated the same requirements as those that the Affordable Care Act, and the either by common ownership and apply to QHP issuers under the FEHBA. These include: control or by the common use of a Exchange rules in 45 CFR parts 155 and • Health insurance coverage (defined nationally licensed service mark. 156. OPM seeks comment on any in 45 CFR 144.103). Licensing of service marks can take unique enrollment and eligibility issues • Health insurance issuer, or issuer, place by private agreement between two that might affect MSPs. means an insurance company, insurance or more issuers. 2. Compliance With Federal Law • service, or insurance organization Non-profit entity means: (1) An (§ 800.102) (including an HMO) that is required to organization that is incorporated under be licensed to engage in the business of State law as a non-profit entity and The purpose of this section is to insurance in a State and that is subject licensed under State law as a health specify the laws with which MSPP issuers must comply as a condition of to State law that regulates insurance insurance issuer, or (2) a group of health participation in the MSPP. Section (within the meaning of section 514(b)(2) insurance issuers licensed under State 1334(b)(2) of the Affordable Care Act of the Employee Retirement Income law a substantial portion of which are directs an MSPP issuer to be licensed in Security Act (ERISA)). This term does incorporated under State law as non- every State and be ‘‘subject to all not include a group health plan as profit entities. Pursuant to section requirements of State law not defined in 45 CFR 146.145(a). 1334(a)(3), at least one MSPP contract is inconsistent with this section [1334], Several terms below are given specific to be with a non-profit entity. OPM has including the standards and definitions for use in this regulation and interpreted this requirement with the requirements that a State imposes that should only be read to apply to this goal of attracting a broad pool of do not prevent the application of a proposed rule. OPM proposes the potential issuers that will provide high- requirement of part A of title XXVII of following definitions to implement this quality private health insurance the PHS Act or a requirement of this regulation. coverage to consumers. • Applicant means an issuer or group • Prompt payment means a title [I of the Affordable Care Act].’’ of issuers that submitted an application requirement imposed on a health Section 1334(b)(3) further directs an to OPM to be considered for insurance issuer to pay a provider or MSPP issuer to comply ‘‘with the participation in the MSPP. enrollee for a claimed benefit or service minimum standards prescribed for • Benefit plan material or within a defined time period, including carriers offering health benefits plans information means explanations or the penalty or consequence imposed on under section 8902(e) of title 5, United descriptions, whether printed or the issuer for failure to meet the States Code, to the extent that such electronic, that describes a health requirement. 36 • Rating means the process, including This definition is used in many of the models insurance issuer’s products. The term issued by the NAIC. See, for example, NAIC Unfair does not include a policy or contract for rating factors, numbers, formulas, Trade Practices Model Act § 2.B. and accompanying health insurance coverage. methodologies, and actuarial Drafting Note (July 2008).
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standards do not conflict with a available in all States and the District of coverage have been established without provision of this title [I of the Affordable Columbia by the fourth year, OPM is regard to racial, ethnic, language, health Care Act].’’ In addition, section proposing to allow MSPP issuers status-related factors listed in section 1334(c)(1)(B) requires an MSP to meet flexibility to phase in coverage to the 2705(a) of the PHS Act, or other factors all the requirements of title I of the SHOPs. Accordingly, MSPP issuers may that exclude specific high utilizing, high Affordable Care Act with respect to a offer coverage in the individual cost, or medically-underserved QHP, and section 1334(f) states that ‘‘the Exchange, and not the SHOP, populations. OPM also proposes to requirements under chapter 89 of title 5, throughout the duration of the phase-in clarify that, during each year of the United States Code, applicable to health period. MSPP issuers that initially phase-in period, an issuer need only be benefits plans under such chapter shall choose to offer coverage only in the licensed in the States where it is apply to multi-State qualified health individual Exchange and not the SHOP offering coverage during that year, and plans provided for under this section must provide to OPM their plan to not in all States. [1334] to the extent that such expand coverage to the SHOP in all 5. Benefits (§ 800.105) requirements do not conflict with a States. In any event, OPM proposes that provision of this title.’’ OPM has by the end of the phase-in period, MSPP The RFI did not ask specific questions performed a detailed analysis of title I issuers are required to offer coverage on about the health benefit packages that of the Affordable Care Act and part A the SHOP in addition to the individual would be offered by MSPs.38 However, of title XXVII of the PHS Act. The list Exchange. We solicit comments on this some respondents mentioned benefits contained in the appendices of the approach to SHOP participation, package design in addressing questions proposed rule is intended to clarify for including on whether participation in about the level of interest in the MSPP, applicants and MSPP issuers the exact SHOP should be required from the enrollment and marketing, and provisions of these laws that they must outset or, whether we should allow operations. Some respondents preferred comply with in order to enter into an MSPP issuers to provide a plan that a uniform benefits package for MSPs. MSPP contract with OPM and maintain requires a period longer than the phase- For instance, one respondent stated that that contract. in period to fully participate in the consumers would benefit from having This list is focused exclusively on SHOP. an MSP structured as a national plan title I of the Affordable Care Act and offering uniform benefits across all part A of title XXVII of the PHS Act. It 3. Authority To Contract With Issuers States. Other respondents raised the is not intended to specify every legal (§ 800.103) concern that a uniform package would requirement that applies to MSPP In this section, OPM specifies that it be inconsistent with or inadequate in issuers and MSPs. In addition to the may enter into an MSPP contract with comparison to State benefit mandates. statutory provisions that are listed, a group of issuers affiliated either by Another respondent stated that if OPM MSPP issuers must comply with any common ownership and control or by requires MSPP issuers to provide applicable regulations implementing the use of a nationally licensed service benefits that are not required for QHP those provisions. For example, MSPP mark, or an affiliation of health issuers, MSPs may attract higher risk issuers must ensure guaranteed insurance issuers and an entity that is individuals, making the MSP less availability of coverage, and MSPP not an issuer but that owns a nationally competitive on an Exchange. issuers offering MSPs in a State must licensed service mark, as set forth in Section 1334(c)(1)(A) of the accept every individual and employer in section 1334(a)(1) of the Affordable Care Affordable Care Act directs that an MSP the State that applies for coverage, Act. offer a benefits package that is uniform in each State and consists of the subject to certain exceptions, as 4. Phased Expansion (§ 800.104) outlined in § 147.104 of the HHS essential health benefits described in proposed health insurance market rules This section implements provisions of section 1302 of the Affordable Care Act. (including any modifications adopted in section 1334(e) of the Affordable Care OPM proposes to implement this the final HHS rules). Additionally, Act. OPM proposes to allow for provision through proposed § 800.105. MSPP issuers must ensure guaranteed contracting with an issuer that offers OPM has developed its proposed renewability of coverage, and MSPP coverage in part of a State, but not benefits policy in coordination with issuers offering MSPs in a State must necessarily the entire State. OPM HHS, which has already promulgated renew coverage at the option of the plan proposes that, for each State in which the EHB proposed rule. HHS proposes sponsor or individual, with certain the MSPP issuer offers partial coverage, that EHB would be defined by a exceptions, as outlined in § 147.106 of the issuer’s application for participation benchmark plan selected by each State, the HHS proposed health insurance in the MSPP under § 800.301 and the or in the absence of a State benchmark market rules (including any MSPP issuer’s information submitted to designation, a default benchmark. These modifications adopted in the final HHS support renewal of the contract under proposed base-benchmark plans would rules). OPM will coordinate its § 800.305 must include a plan for be supplemented, if necessary, to ensure approach with the final HHS health offering coverage throughout the State. they meet EHB standards including insurance market rules. OPM will monitor the MSPP issuer’s coverage in each of the 10 coverage OPM notes that the preamble to the progress in implementing the plan as categories set forth in the statute.39 HHS regulations implementing 45 CFR parts part of its contract compliance activities 155, 156, and 157 leaves to the under subpart E. OPM requests 38 Responses to the RFI were due on September discretion of each Exchange whether to comment on whether an MSPP issuer 9, 2011 to OPM, which was before HHS published require a QHP issuer to participate in should be required to offer coverage its proposed rule on essential health benefits. 39 The four benchmark plan types for EHB both the SHOP and the individual statewide by the fourth year of proposed by HHS for 2014 and 2015 are: (1) The market Exchanges.37 Given that MSPP participation in the MSPP, when largest plan by enrollment in any of the three largest issuers are required to make MSPs coverage must be offered in each small group insurance products in the State’s small available in 31 States in the first year Exchange in 50 States and the District group market; (2) any of the largest three State employee health benefit plans by enrollment; (3) and must build the capacity to be of Columbia. OPM will evaluate MSP any of the largest three national FEHBP plan issuers to ensure that the locations in options by enrollment; or (4) the largest insured 37 77 FR at 18401 (March 27, 2012). which they propose to offer MSP commercial non-Medicaid Health Maintenance
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also proposed at 45 CFR 156.105 that largest three FEHBP plan options, as of determine what habilitative services and MSPs must meet benchmark standards March 31, 2012, to be the following: devices are to be included in that EHB- set by OPM. Blue Cross Blue Shield (BCBS) Standard benchmark plan. In § 800.105(a)(1), OPM proposes that Option, BCBS Basic Option, and In § 800.105(c)(5), OPM proposes that, an MSPP issuer must offer a uniform Government Employees Health for at least years 2014 and 2015, OPM’s benefits package for each MSP. OPM Association (GEHA) Standard Option.40 EHB-benchmark plans would also proposes that the benefits for each MSP An MSPP issuer that selects one of these include, for each State, any State- must be uniform within a State, but not benchmarks must have a uniform required benefits enacted by December necessarily uniform among States. In benefits package in all States in which 31, 2011 that are included in a State’s § 800.105(a)(2), OPM proposes that the it operates an MSP. EHB-benchmark plan or specific to the benefits package noted in § 800.105(a)(1) Upon initial comparative research, it market in which the MSP offers must comply with section 1302 of the appears that the proposed OPM-selected coverage. Accordingly, these State- Affordable Care Act as well as any EHB-benchmark plans are largely required benefits would be treated as applicable standards set by OPM or similar in scope of benefits covered as part of the EHB. However, consistent HHS in regulations. Together, these two those benchmark-eligible plans in the with proposed 45 CFR 155.170, OPM is provisions clarify that MSPP issuers small group markets.41 This research proposing that State-required benefits must comply with applicable HHS also indicates that the proposed OPM- enacted after December 31, 2011 would requirements and that OPM may issue selected EHB-benchmark plans, like be in addition to the EHB. Under section additional guidance regarding any other benchmark-eligible plans, may 1334(c)(4) of the Affordable Care Act, a issues unique to MSPs. lack coverage for pediatric oral services, State must assume the cost of such In § 800.105(b)(1), OPM proposes pediatric vision services, and additional benefits over the EHB by allowing potential MSPP issuers to offer habilitative services and devices. making payments either to the enrollee a benefits package, in all States, that is Moreover, the EHB-benchmark may also or on behalf of the enrollee to the MSPP substantially equal to either (1) each lack State-required benefits. issuer, if applicable. An MSPP issuer State’s EHB-benchmark plan in each Accordingly, OPM is proposing must calculate and report the costs of State in which it operates; or (2) any standards for supplementing the additional State-required benefits EHB-benchmark plan selected by OPM. proposed OPM-selected EHB- pursuant to 45 CFR 155.170. The second option offers administrative benchmark plans in proposed OPM is proposing that if an MSPP efficiencies for MSPP issuers, who face §§ 800.105(c)(2)–(4). issuer chooses to use an EHB- a number of challenges in being able to In § 800.105(c)(2), OPM proposes that benchmark plan selected by OPM in all offer MSPs in all 50 States and the any OPM-selected EHB-benchmark plan States, the MSPP issuer would need to District of Columbia. We note, however, lacking coverage of pediatric oral use a State-selected benchmark only in that issuers could potentially services or pediatric vision services States that do not allow substitution for accomplish a similar consistency in must be supplemented by the addition services at all within the benchmark their benefits offerings by adhering to of the entire category of benefits from benefits. MSPs using an OPM State EHB benchmark plans and the largest Federal Employee Dental and benchmark in States that require all applying the EHB substitution rules Vision Insurance Program (FEDVIP) plans to offer the same set of benefits proposed at 45 CFR 156.115. We request dental or vision plan option, would be different from all of the other comment on these options, including on respectively, pursuant to 45 CFR plans offered on the market, potentially whether either option would discourage 156.110(b) and section 1302(b) of the causing adverse selection. OPM seeks or encourage an issuer’s participation in Affordable Care Act. On July 3, 2012, comment on this proposal. the MSPP and whether or not, given the HHS identified the largest FEDVIP proposed substitution rules, the dental and vision plan options, as of In § 800.105(d), OPM proposes that an allowance of the OPM benchmark March 31, 2012, to be, respectively, the MSPP issuer’s benefits package, option disrupts State level playing following: MetLife Federal Dental Plan including its prescription drug list, must fields. High Option and FEP BlueVision High be submitted to and approved by OPM, No matter which option an MSPP Option. which would determine whether a issuer chooses, it would need to apply In § 800.105(c)(4), an MSPP issuer benefits package proposed by a MSPP that benefits package option uniformly must follow State definitions where the issuer is substantially equal to an EHB- to each of the States in which the MSPP State chooses to specifically define the benchmark plan, in accordance with the issuer proposes to offer MSPs. That is, habilitative services category pursuant guidelines set forth by HHS in the except as discussed below with respect to proposed 45 CFR 156.110(f). In the proposed EHB rule. In determining to § 800.105(c)(5), our proposed case in which a State chooses not to whether an MSPP issuer’s benefits approach does not permit an issuer to define this category, OPM proposes that package should be approved, OPM use a State benchmark plan in some of if any OPM-selected EHB-benchmark proposes to follow the HHS approach the States in which it is operating and plan lacks coverage of habilitative set forth at proposed 45 CFR 156.115, an OPM-chosen benchmark plan in services and devices, then OPM may 156.120, and 156.125 (subject to any others. changes adopted in the final HHS rule). In § 800.105(c)(1), OPM proposes 40 Centers for Medicare and Medicaid Services, Proposed 45 CFR 156.115(b) allows selecting, as EHB-benchmark plans, the Essential Health Benefits: List of the Largest Three issuers to make benefit substitutions three largest FEHBP plan options by Small Group Products by State, available at within each EHB category, and directs http://cciio.cms.gov/resources/files/largest- issuers to submit evidence of actuarial enrollment that are open to Federal smgroup-products-7-2-2012.pdf.PDF (July 3, 2012). employees, and annuitants, which have 41 U.S. Department of Health and Human equivalence of substituted benefits to a been identified by HHS pursuant to Services, Office of the Assistant Secretary for State. OPM requests comments on section 1302(b) of the Affordable Care Planning and Evaluation, ASPE Research Brief, whether MSPP issuers should submit Essential Health Benefits: Comparing Benefits in evidence of actuarial equivalence of Act. On July 3, 2012, HHS identified the Small Group Products and State and Federal Employee Plans, available at http://aspe.hhs.gov/ substituted benefits to the OPM in Organization (HMO) operating in the State. See health/reports/2011/MarketComparison/rb.pdf addition to, or in lieu of, their proposed 45 CFR 156.100. (December 2011). submission to a State.
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In reviewing an MSPP issuer’s In § 800.106(b), OPM proposes that for enrollees in a QHP pursuant to section proposed benefit design, OPM plans to each MSP it offers, an MSPP issuer must 1402 of the Affordable Care Act, see review an MSPP issuer’s benefits make available to an eligible individual proposed 45 CFR part 156. OPM package for discriminatory benefit the premium tax credits under section proposes in § 800.107(d) that MSPP design pursuant to section 1302(b)(4) of 36B of the Internal Revenue Code of issuers shall comply with applicable the Affordable Care Act and proposed 1986 and the cost-sharing reductions HHS requirements to offer such plan 45 CFR 156.110(d), 156.110(e), and under section 1402 of the Affordable variations. In addition, OPM proposes 156.125. OPM will work closely with Care Act. An MSPP issuer must also in § 800.107(e) that MSP plan variations States and HHS to identify and comply with any standards set by OPM will be submitted to OPM for review investigate any potentially or HHS in regulations concerning the and approval. OPM will coordinate its discriminatory benefit design in MSPs. administration of these subsidies. This approach on this issue with the final OPM solicits comments on the provision would implement section HHS notice of benefit and payment provision of pediatric dental services by 1334(c)(3)(B) of the Affordable Care Act, parameters for 2014. OPM will exercise MSPs in order to meet the requirements which specifies that individuals this discretion to promote the best of section 1302(b)(1)(J) of the Affordable enrolled in an MSP are eligible for the interests of enrollees and potential Care Act. Under one possible approach, premium tax credits and cost-sharing enrollees in the MSPP and to assure an MSP would have to cover pediatric reductions just as they would be if adequate administrative oversight of dental services in conjunction with purchasing any other insurance product each MSP and MSPP issuer. on the Exchange. This provision also other benefits in its benefits package. 8. Assessments and User Fees clarifies that MSPP issuers must comply OPM solicits comments on how stand- (§ 800.108) alone dental plans offered on the with applicable statutory and HHS Exchanges should affect this requirements, and that OPM may issue In this section, OPM proposes to requirement, if at all. OPM solicits additional guidance regarding any reserve its authority to assess a user fee comments on this approach, including unique issues faced by MSPs. See HHS on MSPP issuers to cover the agency’s their advantages, disadvantages, and proposed standards at 45 CFR part 156, costs of performing its functions under whether there is legal justification for subpart E. OPM solicits comments on the Affordable Care Act for a plan year. each approach, and invites comment on what additional guidance, if any, it The purpose of assessments and user other possible approaches. should adopt to address unique issues fees would be to cover the administrative costs of performing the OPM anticipates that its policy on faced by MSPs. contracting and certification of MSPs EHB benchmark standards for the MSPP 7. Levels of Coverage (§ 800.107) and of operating the program, functions will evolve as HHS develops the final In § 800.107(a), OPM proposes that an typically conducted through an EHB rule. OPM solicits comments on MSPP issuer, like QHPs participating in Exchange for QHPs. OPM seeks the provisions of proposed § 800.105, Exchanges, must offer at least one plan comments on the use of assessments including provisions relating to the two at the silver level of coverage and one and user fees to fund the MSPP. EHB benchmark options and limited plan at the gold level of coverage in scope dental plans.42 9. Network Adequacy (§ 800.109) each Exchange in which the issuer is 6. Cost-Sharing Limits, Premium Tax certified to offer an MSP pursuant to a Consistent with the Affordable Care Credits, and Cost-Sharing Reductions contract with OPM. OPM also clarifies Act’s goal of providing more (§ 800.106) that it will use its discretion about competition in the health insurance whether an MSPP issuer may offer markets and expanding coverage of the In § 800.106(a), OPM proposes that for products in addition to the required uninsured, OPM asked RFI respondents each MSP it offers, an MSPP issuer must gold and silver products. to indicate which areas of the country ensure that the cost-sharing provisions In § 800.107(c), OPM proposes that for are difficult to serve and how the of the MSP comply with section 1302(c) each level of coverage, an MSPP issuer respondent would handle hard-to-serve of the Affordable Care Act as well as any must offer a child-only plan at the same areas. OPM also asked for applicable standards set by OPM or level of coverage, as any health recommendations with respect to HHS in regulations. This provision insurance coverage offered to standards for network access. clarifies that MSPP issuers must comply individuals who, as of the beginning of Respondents identified rural areas as with any applicable HHS requirements the plan year, have not attained the age difficult to serve, and one respondent and that OPM may issue additional of 21. An MSPP issuer could satisfy this noted that every State has areas that are guidance regarding issues unique to standard by offering the same product to difficult to serve. Some respondents MSPs. See HHS proposed standards at consumers seeking child-only coverage were able to identify a means of 45 CFR 156.170. OPM solicits comments that it offers to consumers seeking reaching hard-to-serve areas, and some on additional standards, if any, that it coverage solely for adults or for families stated that they had been able to should adopt to address unique issues including both adults and children, as overcome these difficulties. In addition, faced by MSPs. long as the child-only coverage is priced some respondents indicated a in accordance with the applicable rating willingness to collaborate with other 42 In a pending advanced notice of proposed rulemaking regarding Certain Preventive Services rules. organizations to increase capacity to under the Affordable Care Act (77 FR 16,501 (Mar, OPM recognizes that HHS has provide coverage. Some respondents 21, 2012), one of several proposals for comments requested comments in its proposed suggested having a uniform network was that one or more issuers offering an MSP could EHB rule and draft notice of benefit and adequacy standard across all States for be incentivized or required to provide contraceptive coverage to participants and beneficiaries covered payment parameters for 2014 on the MSPs, some wanted to preserve State under certain religious organizations’ self-insured definition of levels of coverage and plan network adequacy laws, and others plans as part of an accommodation of those variations. The proposed HHS suggested using the rule applicable to organizations’ religious objections to providing regulations direct QHP issuers to offer QHPs on a specific Exchange. such coverage. Should the proposed and final rule regarding Certain Preventive Services affect the silver plan variations for the purpose of With respect to network adequacy, MSPP, this final rule may include that policy as implementing the reduction or OPM’s proposed standard mirrors the well. elimination of cost sharing for eligible HHS standard set forth in 45 CFR
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156.230 and is intended to ensure that issuer can only offer an MSP in a information is intended to strengthen an MSP’s services are available to all portion of a service area during the OPM’s oversight of MSPs and MSPP enrollees.43 Consistent with the phase-in as long as the selection of the issuers and is the same as standards for Exchange final rule’s alignment with the service areas is not discriminatory. In QHP issuers set forth in 45 CFR 156.275. NAIC Model Act, OPM proposes to States where the Exchange permits OPM requests comments on its require an MSPP issuer to: (1) Maintain issuers to define their service areas, proposed accreditation requirements. a sufficient provider network in the OPM proposes to require that it approve 12. Reporting Requirements (§ 800.112) number and types of providers to assure an MSPP issuer’s service areas and will that all services will be accessible ensure MSPs meet QHP requirement in OPM also proposes to use the FEHBP without reasonable delay for enrollees; 45 CFR 155.1055(b).44 OPM also plans approach as a model for reporting (2) offer a provider network that is to review any requests for coverage of requirements, and OPM requests consistent with network adequacy partial county service areas and comment on this approach. Examples of provisions set out in section 2702(c) of coordinate with HHS in order to align reporting that is currently required for the PHS Act; and (3) offer a provider service areas with those of QHPs to the FEHBP and that may be required for network that includes essential prevent gaming of service areas. OPM the MSPP include financial reports, community providers in compliance believes that allowing MSPP issuers premium payment information, with 45 CFR 156.235. OPM intends for time to develop the capacity to offer enrollment reporting, and quality an MSPP issuer to make its provider coverage throughout a service area will assurance information.45 OPM will directory available to the Exchange for enhance competition in the MSPP. OPM determine the data and information that online publication and to potential invites comments on this approach. MSPP issuers report and the frequency and process for submitting such reports. enrollees in hard copy, upon request. 11. Accreditation Requirement Reporting of certain types of OPM is aware that certain States have (§ 800.111) more specific rules on network information is critical for OPM to adequacy and will consult with States to With respect to accreditation, OPM implement and administer the MSPP. set more specific criteria with respect to proposes that MSPP issuers be or To oversee MSPP contracts, OPM will network adequacy for the MSPP in become accredited consistent with the need to collect certain information to future guidance. OPM requests requirements for QHP issuers specified ensure the integrity of the MSPP, to comments on its approach to network in section 1311 of the Affordable Care protect enrollees, to prevent fraud and adequacy, including issues concerning Act, in 45 CFR 156.275(a), and in abuse, to monitor quality and quality applicable State law. OPM proposes that network adequacy as a condition of improvement, and for other purposes. MSPP issuers be or become accredited State licensure and any issues for MSPs The agency will develop and issue by an accrediting entity recognized by with respect to State-specific network guidance on this subject for MSPP HHS pursuant to 45 CFR 156.275(c). adequacy requirements. issuers and potential issuers. Consistent with 45 CFR 155.1045, The proposed regulation specifies that 10. Service Area (§ 800.110) which gives OPM discretion to establish OPM may collect such data and a timeline for accreditation for MSPP With respect to service areas, OPM information as are permitted or required issuers not already accredited, OPM proposes that MSPP issuers adhere to by the Affordable Care Act to be proposes to require that an MSPP issuer the service areas defined by Exchanges, collected from an MSPP issuer. that is not accredited as of the date that but does not necessarily require that an Additionally, the Affordable Care Act at it enters into a contract with OPM MSP be offered in all defined service section 3101(a)(2)(E), requires that ‘‘any become accredited within the timeframe areas. OPM proposes that, for each State reporting requirement imposed for established by OPM. A potential MSPP purposes of measuring quality under in which the MSPP issuer does not offer issuer may need additional time to coverage in all service areas, the MSPP any ongoing or federally conducted or obtain accreditation on the basis of the supported health care or public health issuer’s application for participation in local performance of its MSPs in the MSPP under § 800.301 and the program, activity, or survey includes multiple States. requirements for the collection of data MSPP issuer’s information submitted to OPM also proposes that the MSPP on individuals receiving health care support renewal of the contract under issuer authorize the accrediting entity to items or services under such programs § 800.305 must include a plan for release to OPM and to Exchanges a copy activities by race, ethnicity, sex, primary offering coverage throughout the State. of the MSPP issuer’s most recent language, and disability status.’’ OPM will monitor the MSPP issuer’s accreditation survey, along with any Therefore, OPM intends to collect this progress in implementing the plan as survey-related information that OPM or data by these categories. OPM will also part of its contract compliance activities an Exchange may require, such as collect such other data and information under subpart E. OPM seeks comment corrective action plans and summaries as it determines necessary for the on whether MSPP issuers should be of findings. The release of survey required to offer MSPs in all service oversight and administration of the MSPP. OPM requests comments on the areas by the fourth year of participation 44 45 CFR 155.1055(b) establishes that QHP in the MSPP, when coverage must be service areas be established in a non-discriminatory types of information it proposes to offered in each Exchange in all the manner and states that: ‘‘such service areas meet the collect and mechanisms that can reduce States and the District of Columbia. following minimum criteria: (a) The service area of unnecessary duplication of data a QHP covers a minimum geographical area that is disclosure to OPM, HHS, States, and the OPM has also heard concerns about at least the entire geographic area of a county, or MSPP issuers’ ability to cover an entire a group of counties defined by the Exchange, unless Exchanges. Exchange service area during the four the Exchange determines that serving a smaller With respect to quality reporting, year phase-in period and is considering geographic area is necessary, nondiscriminatory, under FEHBP, OPM requires all health and in the best interest of the qualified individuals plans to report their performance permitting an exception if an MSPP and employers. (b) The service area of a QHP has been established without regard to racial, ethnic, through Healthcare Effectiveness Data 43 This HHS standard is based on the NAIC language, health status-related factors specified Managed Care Plan Network Adequacy Model Act under section 2705(a) of the PHS Act, or other 45 OPM’s Routine Reports and Submissions (74–1) and establishes a baseline for measuring factors that exclude specific high utilizing, high required for FEHB carriers is available at http:// network adequacy. cost or medically-underserved populations.’’ www.opm.gov/carrier/reports/index.asp.
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and Information Set (HEDIS) metrics benefit information to be displayed on effectuated through an MSPP contract, and Consumer Assessment of HHS or Exchange web portals. these regulations, or OPM guidance, Healthcare Providers and Systems Unlike the policy or contract for whether particular State laws fall into (CAHPS) surveys, independent of the health insurance coverage, which OPM these categories. source of plan accreditation. This allows will review and approve, OPM proposes 15. Level Playing Field (§ 800.115) for comparison between plans in a to review and approve only certain consistent manner. OPM expects to take benefit plan material or information as In § 800.115, OPM proposes to a similar approach to performance defined in § 800.20 of the proposed maintain a level playing field by measurement in MSPs to facilitate regulation. OPM may not necessarily requiring MSPs and MSPP issuers to oversight. OPM requests comments on review all benefit plan material or comply with the State and Federal laws the unique aspects of accreditation and information. It may request from MSPP relating to the 13 categories listed in reporting for MSPs as compared with issuers those materials that it wishes to section 1324(b) of the Affordable Care accreditation of QHPs. review and approve. OPM’s review will Act. focus on the MSPP issuer’s compliance 16. Process for Dispute Resolution 13. Benefit Plan Material or Information with the standards promulgated by OPM (§ 800.116) (§ 800.113) with respect to benefit plan material or OPM has defined the term ‘‘benefit information. OPM will work with States In § 800.116, OPM proposes a process plan material or information’’ narrowly concerning this review of benefit plan for resolving disputes about the to include explanations or descriptions, material or information and may work applicability to the MSPs and MSPP whether printed or electronic, that with States to define the respective roles issuers of State laws not related to the describe a health insurance issuer’s through Memoranda of Understanding categories set forth in section 1324(b) of products. The term does not include a (MOU). the Affordable Care Act. Under this policy or contract for health insurance In paragraph (g) of § 800.113, OPM process, a State may request that OPM coverage. proposes to allow an MSPP issuer to reconsider a standard applicable to MSPs or MSPP issuers that is consistent OPM proposes that MSPP issuers state that OPM has certified a plan as an MSP and will oversee its with that State’s laws for QHPs or QHP comply with Federal and State laws administration. OPM is aware that many issuers. As discussed above (see related to benefit plan material or States have adopted laws or regulations discussion on proposed § 800.114), the information. OPM also proposes that an prohibiting issuers from using State must demonstrate that the law is MSPP issuer must comply with OPM advertisements that ‘‘may lead the not inconsistent with section 1334 or guidance specifying OPM standards, public to believe that the advertised regulations issued to implement that process, and timeline for approval of coverages are somehow provided by or section; does not prevent the benefit plan material or information. endorsed by [a] governmental application of part A of title XXVII of Similar to QHPs, OPM proposes that agenc[y].’’ 46 However, because OPM the PHS Act; and does not prevent the all MSP enrollee notices must meet will have certified an MSPP issuer and application of a requirement of the minimum access standards for an MSP as meeting certain standards, sections of title I of the Affordable Care individuals with limited English potential issuers may wish to include Act specified in § 800.101 of this proficiency and for individuals with this fact in materials they distribute to proposed regulation. In making these disabilities as described in 45 CFR the public subject to review by OPM. determinations, OPM proposes to 155.205(c). As stated in the final OPM does not view this as a violation examine several factors, including Exchange rule, HHS intends to issue of State law anti-endorsement whether the law at issue: further guidance on minimum standards provisions, because it is a recitation of (1) Imposes on MSPP issuers or MSPs to address language access and the fact that the issuer is providing any requirement that differs from those coordinate HHS accessibility standards coverage pursuant to a contract with applicable to QHP issuers or QHPs with insurance affordability programs, OPM. offered in one or more Exchanges in that and across HHS programs, as 14. Compliance With State Law State; appropriate. OPM expects MSPP issuers (2) Creates responsibilities, (§ 800.114) to adhere to these minimum access administrative burdens, or costs for an standards once HHS publishes this In § 800.114, OPM proposes that MSPP issuer that significantly deter or guidance. OPM may also establish MSPP issuers generally must comply impede the MSPP issuer from offering a additional standards for MSPP with State law in accordance with viable product in one or more applications and notices. section 1334(b)(2) of the Affordable Care Exchanges; OPM proposes that an MSPP issuer is Act. However, the Affordable Care Act (3) Creates responsibilities, responsible for the accuracy of its provides that MSPs and MSPP issuers administrative burdens, or costs for benefit plan material or information. need not comply with State laws that: OPM that significantly deter or impede Benefit plan material or information (1) Are inconsistent with section 1334 OPM’s effective implementation of the must also be in plain language, be of the Affordable Care Act or regulations MSPP; or truthful, not be misleading, and contain issued to implement that section; (4) Prevents an MSPP issuer from no material omissions. QHPs must (2) Prevent the application of a offering an MSP in one or more comply with the provisions of section requirement of part A of title XXVII of Exchanges in a State. 2715 of the PHS Act and its the PHS Act; or OPM solicits comments on whether to implementing regulations at 45 CFR (3) Prevent the application of a have such a process, its scope, the 147.200 on uniform explanation of requirement of title I of the Affordable factors OPM should consider when coverage documents and standardized Care Act. determining whether State law is definitions, and OPM also will require Accordingly, OPM reserves the right applicable or whether the relevant MSPs to comply with the statute and to determine in its judgment, as market has been or will be disrupted by regulations. Additionally, OPM expects the inapplicability of State law, and 46 These State law prohibitions derive from the that MSPP issuers will meet any NAIC’s Advertisements of Accident and Sickness whether the process will be an effective requirements that allow standardized Insurance Model Regulation § 13.C. (Apr. 1999). way to resolve any such disputes. OPM
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further invites comments on whether C. Premiums, Rating Factors, Medical the temporary reinsurance program the process should also be available for Loss Ratios, and Risk Adjustment established pursuant to section 1341 of States to raise disputes concerning laws (Subpart C, 800.201 Through 800.204) the Affordable Care Act and 45 CFR part related to the 13 categories listed in Section 1334(a)(4) on 153, the risk corridor program section 1324(b) of the Affordable Care ‘‘Administration’’ directs that OPM established pursuant to section 1342 of Act. implement the MSPP ‘‘in a manner the Affordable Care Act and 45 CFR part 153, and the risk adjustment program 17. Other Issues similar to the manner’’ in which OPM implements the contracting provisions established pursuant to section 1343 of Adjusted community rating: with respect to carriers under the the Affordable Care Act and 45 CFR part FEHBP, including negotiating with each 153. Section 1334(c)(1)(D) of the OPM recognizes that HHS has Affordable Care Act requires that MSPP MSPP issuer: (1) A medical loss ratio (MLR); (2) a profit margin; (3) the requested comments on calculation of issuers offer the MSP in all geographic AV in its proposed EHB rule; see regions and in all States that have premiums to be charged; and (4) such other terms and conditions of coverage proposed 45 CFR 156.135. The proposed adopted adjusted community rating HHS regulation states an issuer would before March 23, 2010, the enactment as are in the interests of enrollees in such plans. The following proposed use the AV calculator developed by date of the Affordable Care Act. The HHS to determine the plan’s level of statute does not require that these provisions of the regulation implement this section. coverage as proposed, subject to adjusted community rating States be exceptions in section 156.135(b) OPM included in the first year of the phase- 1. General Requirements (§ 800.201) proposes in section 800.201(d) that in process described in section 1334(e) As it does with FEHBP carriers, OPM MSPP issuers shall calculate AV in the of the Affordable Care Act and in same manner as QHP issuers. OPM § 800.104 of this proposed regulation for proposes in § 800.201(a) and (b) to negotiate annually with an MSPP issuer intends to review MSPP issuer several reasons. First, in 2014 all health compliance with these AV provisions. insurance issuers in the individual and the premiums for each MSP offered by that issuer, and these premiums will OPM will coordinate its approach with small group market, both inside and the final HHS EHB rule on this issue. outside the Exchange, must comply remain in effect for the 12-month plan year. OPM has authority to negotiate In approving rates for MSPs, OPM with section 2701 of the PHS Act and intends to follow State rating standards will therefore use adjusted community ‘‘premiums to be charged,’’ including the authority to review an MSPP issuer’s with respect to rating factors generally rating based only on age, tobacco use, applicable in a State. OPM will comply geographic area, and family rating practices. ‘‘Rating’’ means the process, including rating factors, with section 2701 of the PHS Act and composition. The States described in any applicable regulations under that section 1334(c)(1)(D) will therefore not numbers, formulas, methodologies, and actuarial assumptions, used to set section that sets forth basic be unique. Second, OPM interprets the requirements in terms of rating factors phase-in provision of subsection (e) of premiums for a health plan. In addition to rating factors, HHS or the States may and their application. Under section section 1334 to permit a phase-in of 2701, States have flexibility in applying compliance with (c)(1)(D) of section set other requirements for premium increases in the individual and small narrower ratios for age and tobacco use 1334. OPM’s rationale is that an MSPP and may require issuers to use pure issuer has four years to offer MSPs in group markets. In reviewing an MSPP issuer’s proposed rate information, OPM community rating. Section 1334(a)(4) each Exchange in all States and the gives OPM the explicit authority to District of Columbia, and section plans to review an MSPP issuer’s rate proposal and cost-sharing arrangements negotiate premiums, profit margins, and 1334(e) contains no requirements about an MLR. Recognizing that some States the particular States an MSPP issuer for discriminatory benefit design, and will work closely with States to identify have a prior approval process for rates must cover in any of the phase-in years. and the authority to reject rates, OPM Potential issuers will need flexibility to and investigate any potentially discriminatory benefit design in MSPs. intends to work closely with each State choose their initial States and the order in approving a rate for the MSPs in that in which they phase in other States. For In FEHBP, OPM issues rating guidance to FEHBP carriers via a carrier State and will consult with that State this reason, OPM proposes not to about patterns in its markets and about identify any specific States that an letter. This guidance provides carriers information needed to construct their other rates that an MSPP issuer might be MSPP issuer must cover in the initial proposing in that State for non-MSPs. years of the MSPP. rating structures for FEHBP and instructions for submitting rates for However, the final decision regarding Financial requirements: negotiation with OPM. Similarly, OPM rates for MSPs rests with OPM, as OPM anticipates MSPP issuers will proposes to issue guidance addressing required by the statute. OPM proposes meet State financial requirements methods for the development of rates for that MSPP issuers follow State rating including participation in State the MSPP. In addition, this guidance standards, and OPM’s process will meet guaranty funds and meeting State will provide instructions for submitting the standards with respect to review and reserving requirements. OPM may seek rating structures as part of OPM’s disclosure requirements for an to execute an MOU between a State and process for negotiating premiums with ‘‘effective rate review program’’ as set 47 OPM specifying how OPM will be each MSPP issuer. out in 45 CFR 154. notified and the circumstances that OPM intends that each MSP set its As described above, and set out in the would trigger a payment from such fund premiums on a State-by-State basis. proposed § 800.201(e) and (f), with with respect to an MSPP issuer or MSP. Unlike the FEHBP, there will not be any respect to rate review, OPM intends to OPM invites comments on the MSPs that are offered at one premium conduct its own rate review process, but participation of MSPP issuers in State nationwide. Therefore, OPM intends to intends to share its rate review analysis guaranty funds. OPM also seeks follow State rating laws as much as 47 practicable so as not to distort local Rate Increase Disclosure and Review, 45 CFR comment on how it may further ensure 154 (May 23, 2012), available at http:// the financial stability of MSPs across markets. This will also be necessary in cciio.cms.gov/resources/files/ State lines. order for MSPP issuers to participate in rate_increase_final_rule.pdf.
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with each State in which an MSP is grandfathered health plans in the such as suspension of marketing. In the operating. MSPP issuers are subject to a individual and small group markets, case of widespread, repeated failures, State’s rate review process including a respectively. OPM intends for the MSPP more severe sanctions may include State’s Effective Rate Review Program issuer to be subject to any Federal or decertifying an MSP in one or more established by HHS pursuant to section State regulations that implement or States or terminating an MSPP issuer’s 2794 of the PHS Act and 45 CFR 154. enforce section 1312(c), such as contract pursuant to § 800.404. OPM OPM proposes that for States with proposed 45 CFR 156.80. In addition, will coordinate all actions concerning Effective Rate Review Programs under section 1312(c)(3) permits a State to MLR with HHS to ensure that there is section 2794, the MSPP issuer would merge the individual and small group not duplicative reporting by issuers or comply with the State standards. In markets within the State. Under duplicative compliance activity. addition, OPM proposes that in States § 800.201(g), a State election to merge its In addition to the explicit authority where HHS is reviewing rates, HHS individual and small group markets, as for OPM to set an MLR, section would take the judgment of OPM for well as any Federal or State regulations 1334(a)(4) also provides OPM with the MSP rates. Furthermore, MSPP issuers promulgated to implement section 1312, authority to set a profit margin. OPM must comply with the reporting and would apply to an MSPP issuer. has not proposed a standard for profit disclosure requirements for all rate margin. OPM seeks comment on 2. Rating Factors (§ 800.202) justifications to HHS, States, and whether OPM should set such a Exchanges, such as the requirements set Section 2701 of the PHS Act, as standard, and the impact that such a forth in 42 CFR 156.210(c). amended by the Affordable Care Act, standard would have on the Exchanges Each State would have the requires issuers in the individual and and any existing state requirements opportunity to review the MSP rates small group market to rate based only concerning profit margin. under its own procedures and on permitted rating factors: Family processes. If a State disagrees with composition, geographic area, age, and 4. Reinsurance, Risk Corridors, and Risk OPM’s determination to approve the tobacco use within limits. Section Adjustment (§ 800.204) MSP rates, OPM would work with the 1334(c)(1)(C) of the Affordable Care Act OPM proposes that an MSPP issuer State to attempt to resolve the explicitly limits MSPP issuers to only participates in the transitional differences. OPM expects that few such these factors as well. OPM proposes in reinsurance program for the individual disagreements will arise and, if they do, § 800.202(a) that MSPP issuers shall market established pursuant to section that we will be successful in resolving comply with requirements setting 1341 of the Affordable Care Act and 45 them in a manner that is acceptable both standards for fair health insurance CFR part 153 and comply with to OPM and the State at issue. In the premiums appearing in HHS requirements issued by HHS or the event that a State withholds approval of regulations. MSPP issuers must follow State, if the State is operating an an MSP rate for reasons that OPM standards set for rating areas in a State Exchange, to implement the program. determines, in its discretion, to be established under any HHS or State For example, if a State were to impose arbitrary, capricious, or an abuse of regulations implementing section 2701 additional reinsurance assessments on discretion, the Act authorizes the of the PHS Act. issuers, MSPs would be subject to such Director to make the final decision to In approving rates for MSPs, OPM assessments in order to maintain a level approve rates for participation in the intends to follow State rating standards playing field. OPM also proposes that an MSPP notwithstanding the absence of with respect to rating factors, including MSPP issuer participates in the State approval. We expect that the the application of tobacco use. OPM temporary risk corridors program Director will rarely, if ever, have to will also coordinate its approach with established pursuant to section 1342 of exercise this authority to approve MSP the final HHS health insurance market the Affordable Care Act and 45 CFR part rates over the objection of a State. OPM rules. 153 and comply with requirements welcomes comments on whether this is 3. Medical Loss Ratio (§ 800.203) issued by HHS to implement the an appropriate approach and on the program. Additionally, OPM proposes impact of this approach. OPM expects MSPP issuers to attain that an MSPP issuer participates in the After OPM and the MSPP issuer the MLR required under section 2718 of risk adjustment program established complete the rate negotiation process, the PHS Act and regulations pursuant to section 1343 of the and OPM approves the rates, an MSPP promulgated by HHS. Section 1334(a)(4) Affordable Care Act and 45 CFR part issuer would file rates with the of the Affordable Care Act authorizes 153 and comply with requirements on Exchange, when necessary to post MSP OPM to set an MLR for each MSP, issued by HHS or the State, if the State premium and rate information to the similar to FEHBP. OPM reserves the is operating an Exchange, to implement Exchange portal, and with the State, authority to impose a different, MSP- the program. Participation by MSPP when necessary to meet licensure specific MLR threshold (i.e., an MLR issuers in these programs will ensure requirements. threshold based only on an MSPP that all issuers have the same fiscal Section 1312(c)(1) and (2) of the issuer’s MSP population in each State) responsibilities and protections. Affordable Care Act provide that a if that would be in the best interests of health insurance issuer consider all enrollees. Proposed § 800.203 articulates D. Application and Contracting enrollees in all non-grandfathered this discretion. It is not OPM’s intention Procedures (Subpart D, 800.301 health plans in the individual market to to apply a national aggregate MLR. OPM Through 800.306) be members of a single risk pool and all requests comments on its proposal to set This subpart describes the process by enrollees in non-grandfathered health an MSP-specific MLR and the which issuers can apply to participate plans in the small group market to be methodology that MSPP issuers should in the MSPP. members of a single risk pool within a use to calculate an MSP-specific MLR. State. With proposed § 800.201(g), OPM The proposed rule gives OPM the 1. Application Process (§ 800.301) clarifies that an MSPP issuer must discretion to take appropriate action if Section 1334(a) authorizes OPM to consider MSP enrollees to be members an MSPP issuer fails to attain any implement the MSPP without regard to of the same risk pool as all other required MLR. Such appropriate actions section 5 of title 41, United States Code, enrollees of the issuer in non- may include intermediate sanctions, or other statutes requiring competitive
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bidding. Therefore, OPM has structured 5. Contract Renewal Process (§ 800.305) renew an MSPP contract. Either OPM or the process as an application process If an MSPP issuer is in compliance an MSPP issuer may decline to renew a rather than a request for proposals, with the requirements of this rule and contract by giving a written notice of which affords the agency discretion to wishes to continue participating in the nonrenewal. The issuer’s notice must be contract with as many issuers as meet MSPP, OPM will conduct negotiations given in accordance with its MSPP the requirements of section 1334. The with such an issuer to renew its MSPP contract, and an issuer must comply MSPP contract application must be in contract. The agency recognizes that with the rules of an Exchange with such form, contain such information, section 1334(a)(2) creates an expectation respect to termination of a QHP, and be submitted in such manner as of automatic renewal. However, OPM including the requirement to provide OPM may prescribe. This process is intends to fulfill its statutory advance notice in writing to enrollees. modeled on the approach OPM uses responsibility to ensure that all MSPP If an Exchange does not specify the under the FEHBP. issuers and MSPs remain in compliance timeframe for notifying enrollees, OPM will require notice no later than 90 days 2. Review of Applications (§ 800.302) with all legal requirements. Therefore, an MSPP issuer wishing to continue in prior to termination, unless OPM OPM will review applications to the MSPP for a subsequent year must determines that there is good cause for determine whether the applicant meets provide to OPM, in the form, manner, less than 90 days’ notice. the requirements of this part. OPM may and timeline prescribed by OPM, the E. Compliance (Subpart E, 800.401 request additional information from the information requested by OPM for Through 800.405) applicant to make the determination. determining whether the MSPP issuer This subpart describes how OPM will OPM may either accept an applicant to continues to meet the requirements of enforce compliance in the MSPP. enter into MSPP contract negotiations or the MSPP. OPM retains discretion to decline to enter negotiations with the renew the MSPP contract for a 1. Contract Performance (§ 800.401) applicant. In the latter case, OPM will subsequent plan year with an MSPP Pursuant to an MSPP contract with inform the applicant in writing of the issuer who submits the information OPM, an MSPP issuer must meet the reason(s) for declining the application. described above and continues to meet requirements of section 1334 and the OPM reserves discretion about the requirements of applicable law and requirements of this part. Each MSPP whether to enter into contract this rule. OPM may decline to renew the issuer will be required to: negotiations with an applicant. MSPP contract of an MSPP issuer if: (1) • Have the financial resources, in the However, a decision by OPM to decline OPM and the MSPP issuer fail to agree judgment of OPM, to carry out its an application to participate in the on benefits and premiums for an MSP obligations under the MSPP. MSPP does not preclude the applicant on one or more Exchanges for the • Keep reasonable financial and from submitting an application to subsequent plan year; (2) the MSPP statistical records, and furnish reports participate in the MSPP for a issuer has engaged in conduct described related to these records with respect to subsequent year. in § 800.404(a); or (3) OPM determines the MSP or the MSPP, as may be that the MSPP issuer will be unable to requested by OPM. 3. MSPP Contracting (§ 800.303) comply with a material provision of • Permit representatives of OPM An applicant does not become an section 1334 of the Affordable Care Act. (including the OPM Office of Inspector MSPP issuer until it signs a contract If OPM and the MSPP issuer fail to General), the U.S. Government with OPM to participate in the MSPP. agree on benefits and premiums for an Accountability Office, and any other OPM will establish a standard contract MSP on one or more Exchanges by the applicable Federal government auditing for the MSPP. OPM will approve benefit date set by OPM, that MSP would be entities to audit and examine its records packages and negotiate premiums for an offered on that Exchange or Exchanges and accounts which pertain, directly or MSP for each plan year. OPM may also in the subsequent plan year with the indirectly, to the MSP at such negotiate additional terms, conditions, same premiums and benefits as in the reasonable times and places as may be and requirements that are in the current plan year, unless OPM or the designated by OPM or the U.S. interests of MSP enrollees or that OPM, MSPP issuer provides written notice of Government Accountability Office. in consultation with HHS, determines to non-renewal, or OPM exercises its Also, note that nothing in this proposed be appropriate. discretion to withdraw the certification regulation changes or diminishes the of that MSP on one or more Exchanges. authorities of HHS, including the Each MSPP contract will specify the Based on its experience with the authorities of the HHS Office of Exchanges in which the MSPP issuer is FEHBP, OPM anticipates that situations Inspector General. authorized to offer the MSP for a plan in which OPM and the MSPP issuer fail • Submit to OPM a properly year, as well as the benefit packages and to agree on premiums and benefits will completed and signed novation or premiums to be charged. An MSPP occur infrequently. If OPM chooses not change-of-name agreement in a timely issuer cannot offer an MSP on an to renew an MSPP issuer’s MSPP manner and in accordance with 48 CFR Exchange unless its MSPP contract contract, OPM must provide the MSPP 42.12. includes a certification authorizing the issuer with notice and the opportunity • Perform the MSPP contract in MSPP issuer to offer the MSP on that for a hearing pursuant to § 800.405. It is accordance with prudent business Exchange. OPM’s intention to ensure that premium practices as described below. • 4. Term of the Contract (§ 800.304) and benefit information for all MSPs are Not engage in poor business submitted to each Exchange in practices as described below. The term of the contract will be for a compliance with the timeline Under the MSPP, OPM proposes period of at least 12 consecutive months established by that Exchange. prudent businesses practices to include, defined as the plan year. ‘‘Plan year’’ is but not be limited to: (1) Timely defined as a consecutive 12-month 6. Nonrenewal (§ 800.306) compliance with OPM instructions and period during which the MSP provides For this subpart, OPM is defining directives; (2) legal and ethical business coverage for health benefits and may be ‘‘nonrenewal’’ to mean the decision by and health care practices; (3) a calendar year or otherwise. either OPM or an MSPP issuer to not compliance with the terms of the MSPP
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contract, regulations, statutes, and solicits comments on how best to against an MSPP issuer if it determines additional agency guidance; (4) timely collect, hold, and release these funds. that the MSPP issuer is not in and accurate adjudication of claims or OPM also requests comments on compliance with applicable law, this rendering of medical services; (5) a alternative methods of fulfilling OPM’s part, or the terms of the MSPP contract. system of accounting for costs incurred goals of ensuring contract compliance In this situation, OPM may take under the MSPP contract; (6) accurate and ensuring performance standards are compliance actions against the MSPP accounting reports of administration met. issuer, including, but not limited to: (1) costs relevant to the MSPP contract; (7) Establishing and implementing a applying performance standards for 2. Contract Quality Assurance corrective action plan; (2) imposing assuring contract quality outlined in (§ 800.402) intermediate sanctions; (3) imposing § 800.402; and (8) a system of internal This section describes general policies monetary penalties; (4) reducing the controls related to the MSP and MSPP and procedures to ensure that services MSPP issuer’s service area; (5) issuer. acquired under the MSPP contract withdrawing certification for the MSPP Under the MSPP, OPM will consider conform to the contract’s quality issuer to offer an MSP on one or more the following types of activities, among assurance requirements. Periodically, Exchanges; (6) not renewing the MSPP others, as poor business practices: (1) OPM will evaluate an MSPP issuer’s contract; or (7) terminating the MSPP Using fraudulent or unethical business system of internal controls as discussed contract. If OPM initiates a compliance or health care practices or otherwise in § 800.401. Upon the initial review, action, it will notify the MSPP issuer in displaying a lack of business integrity or OPM will acknowledge in writing writing of the compliance action. The honesty; (2) repeatedly or knowingly whether or not the system established notice will indicate the specific reason providing false or misleading and maintained by the MSPP issuer is for the compliance action. If the information in the rate setting process consistent with the requirements set compliance action is the withdrawal of for an MSP; (3) failing to comply with forth in the MSPP contract. In addition the certification of the MSPP issuer to OPM instructions or directives; (4) to reviewing an MSPP issuer’s system of offer the MSP on one or more having an accounting system that is internal controls, OPM will issue Exchanges, the nonrenewal of the MSPP incapable of separate accounting for specific performance standards for contract, or the termination of the MSPP costs incurred under the MSPP contract MSPP contracts. The OPM Office of the contract, the notice must also include a and/or lacks internal controls necessary Inspector General will conduct periodic statement that the MSPP issuer is to fulfill the terms of the MSPP contract; evaluations of the contractor’s system of entitled to request a reconsideration of (5) failing to assure that the MSPP issuer internal controls. OPM’s determination to impose the properly pays or denies claims, or compliance action in accordance with provides medical services which are 3. Fraud and Abuse (§ 800.403) § 800.405, including a hearing on the inconsistent with standards of good Pursuant to the MSPP contract, an issuer’s request. medical practice; and (6) entering into MSPP issuer is required to have a If OPM does not renew or terminates contracts or employment agreements program to assess its vulnerability to an MSPP contract or withdraws with providers, provider groups, or fraud and abuse as well as to address certification of the MSPP issuer to offer health care workers that include such vulnerabilities. The fraud detection an MSP on one or more Exchanges, the provisions or financial incentives that system of the MSPP issuer must be MSPP issuer must adhere to any directly or indirectly create an designed to detect and eliminate fraud requirements related to notification of inducement to limit or restrict and abuse by employees of the MSPP termination of a QHP imposed by an communication about medically issuer and its subcontractors, by Exchange. If an Exchange does not have necessary services to any individual providers furnishing goods and services requirements to notify enrollees of the covered under the MSPP. Financial to MSP enrollees, and by MSP enrollees. termination of a QHP, then the MSPP incentives are defined as bonuses, An MSPP issuer must provide to OPM, issuer must provide current enrollees withholds, commissions, profit sharing upon request, such information or with a notice of the MSP’s termination or other similar adjustments to basic assistance as may be necessary for OPM no later than 90 calendar days prior to compensation (e.g., service fee, to carry out any audit activities. OPM termination. capitation, salary) which have the effect will determine the timeline, form, and For purposes of subpart E of 45 CFR of limiting or reducing communication manner in which the MSPP issuer must part 800, termination of a contract about appropriate medically necessary submit this information to OPM. means OPM’s withdrawal of approval of services. the contract. OPM seeks to encourage MSPP issuers 4. Compliance Actions (§ 800.404) 5. Reconsideration of Compliance to meet or exceed performance OPM may impose compliance actions Actions (§ 800.405) standards. OPM proposes to establish against an MSPP issuer for the following performance escrow accounts for each causes, as OPM may determine: In the case of withdrawal of the MSPP issuer through a modest • Failure of the MSPP issuer to meet certification of the MSPP issuer to offer assessment on issuers. The funds from the requirements of the MSPP contract the MSP on one or more Exchanges, such accounts could be used to provide and § 800.401(a) and (b). nonrenewal of the MSPP contract, or a rebate to enrollees in cases of • Sustained failure of the MSPP termination of the MSPP contract, the inadequate performance or could be issuer to perform the MSPP contract in MSPP issuer has the right to request a returned to plan as a reward for meeting accordance with prudent business reconsideration of OPM’s action in performance standards. These accounts practices. accordance with the process proposed could also be used to hold funds paid • Evidence of poor business practices in this regulation. OPM’s in response to audit findings, not or demonstration of a pattern of poor reconsideration may be conducted by meeting performance standards under business practices by the MSPP issuer. the Director or a representative the contract, or other issues of • Violation of law or regulation by the designated by the Director who did not noncompliance. OPM requests comment MSPP issuer. participate in the initial decision that is on the establishment of a performance At any time during the contract term, the subject of the request for review. escrow account. Specifically, OPM OPM may impose a compliance action OPM will notify the MSPP issuer in
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writing of the final decision and the By reviewing these adverse benefit final agency action that is subject to specific reasons for that final decision. determinations, OPM would be able to review under the Administrative OPM’s written decision will constitute ensure the uniform and equitable Procedure Act in the appropriate U.S. final agency action that is subject to administration of the MSPP. OPM will district court. review under the Administrative issue further guidance explaining the OPM requests comments on this Procedure Act in the appropriate U.S. details of its process for external review approach for MSPP appeals as well as district court. Such review is limited to of adverse benefit determinations. the alternative approaches mentioned the record that was before OPM when it OPM considered an approach for and feasible combinations of the made its decision. external review that would expand the different approaches. OPM also invites use of the Federal external review comments on the impact of the F. Appeals by Enrollees for Denial of process that OPM administers in approaches in providing for a level Claims for Payment or Service (Subpart conjunction with HHS, which is playing field for all plans on the F, 800.501 Through 800.505) currently used for external review of Exchanges, consumer choice and The Affordable Care Act added a new cases arising in States without effective consistency of processes across different section 2719 to the PHS Act. This processes, to be the exclusive method of Exchanges. section requires that all non- external review for the MSPP. OPM also grandfathered group health plans and considered a hybrid approach to G. Miscellaneous (Subpart G, 800.601 health insurance issuers provide for external review under which OPM and 800.602) internal appeals and external review would render a final decision in all processes that meet specific consumer cases, using the standards and Section 800.601 reserves to OPM the protection standards. Under regulations timeframes of 45 CFR 147.136(d) for right to implement and supplement this and guidance issued by HHS, along with adverse benefit determinations based on regulation with operational guidelines. the Departments of Labor and Treasury, medical judgment, and using a process Section 800.602(a) implements the health insurance issuers must meet similar to the FEHBP disputed claims requirement of section 1334(a)(6) of the specific standards with respect to process for adverse benefit Affordable Care Act that at least one internal appeals and external review determinations not based on medical MSP on each Exchange not provide processes. With respect to external judgment. coverage of services described in section review, States must have external OPM proposes instead to build on its 1303(b)(1)(B) of the Affordable Care Act. review processes that meet specific expertise concerning external review OPM proposes to implement this minimum criteria. If a State external while adhering to external standards requirement across all Exchanges review process meets these criteria, an under section 2719 and its subject to the phase-in provision of issuer in that State must comply with implementing regulations. MSP § 800.104. In § 800.602(b), OPM that external review process. In States enrollees would benefit from access to proposes to apply the State opt out with no external review process, or with an external review process that is provisions in section 1303(a) of the a process that has not been determined consistent with the process that is Affordable Care Act to MSPs. to meet specific criteria, health available to enrollees in QHPs for insurance issuers must implement a adverse benefit determinations. OPM IV. Regulatory Impact Analysis separate ‘‘federal external review considers it necessary for the OPM has examined the impact of this process.’’ In this subpart, OPM proposes appropriate administration of MSPP rule as required by Executive Order that MSPP issuers have an internal contracts to perform external review of 12866 on Regulatory Planning and appeals process consistent with the adverse benefit determinations. Review (September 30, 1993) and requirements of section 2719 of the PHS For all notices involving internal Executive Order 13563 on Improving Act and its implementing regulations at appeals and external review, cultural Regulation and Regulatory Review 45 CFR 147.136(b). With respect to its and linguistic appropriateness (January 18, 2011). Executive Orders internal appeals process, therefore, an standards, as articulated in 45 CFR 12866 and 13563 direct agencies to MSP must meet the same standards as 147.136(e), would apply. Notices to assess all costs and benefits of available QHPs. MSP enrollees must adequately describe regulatory alternatives and, if regulation With respect to external review, OPM the enrollee’s rights and obligations proposes that MSPP issuers would is necessary, to select regulatory with respect to external review of approaches that maximize net benefits comply with OPM’s external review adverse benefit determinations. OPM process, which will meet the standards (including potential economic, will review such notices to ensure environmental, public health and safety for State external review processes 48 appropriateness and accessibility. effects, distributive impacts, and established under section 2719 of the OPM’s decision about an adverse equity). A regulatory impact analysis PHS Act and 45 CFR 147.136(c). OPM’s benefit determination will constitute external review process for the MSPP must be prepared for major rules with economically significant effects ($100 will be similar to the disputed claims 48 Note, nothing in this regulation should be process administered under the FEHBP. construed as limiting an individual’s rights under million or more in any 1 year adjusted The disputed claims process serves federal civil rights statutes, such as Section 1557 of for inflation). Section 3(f) of Executive two purposes: First, it provides an the Affordable Care Act and Title VI of the Civil Order 12866 defines a ‘‘significant Rights Act of 1964 (Title VI). For example, to ensure regulatory action’’ as an action that is avenue of redress for enrollees whose non-discrimination on the basis of national origin, claims have been denied, and second, it entities covered by Title VI must take reasonable likely to result in a rule that may: permits OPM to ensure the uniform and steps to ensure meaningful access by persons with (1) Have an annual effect on the limited English proficiency to their programs and correct administration of FEHBP activities. For more information, see ‘‘Guidance to economy of $100 million or more in any contracts. Similarly, proposed federal Financial Assistance recipients regarding one year or adversely affect in a material § 800.504(b) would protect enrollees by Title VI Prohibition Against National Origin way a sector of the economy, creating a process for review of adverse Discrimination Affecting Limited English Proficient productivity, competition, jobs, the Persons to better understand the obligations under benefit determinations while Title VI,’’ at http://www.hhs.gov/ocr/civilrights/ environment, public health or safety, or simultaneously providing OPM with a resources/specialtopics/lep/ State, local, or tribal government or necessary tool for contractual oversight. policyguidancedocument.html. communities;
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(2) Create a serious inconsistency or Additional benefits would be are the same as those of QHPs and, as otherwise interfere with an action taken generated for newly enrolled stated in 45 CFR part 157, will include: or planned by another agency; individuals in the form of improved accreditation, network adequacy (3) Materially alter the budgetary financial security. There is evidence standards, and quality improvement impacts of entitlement grants, user fees, that bankruptcy filings, for instance, strategy reporting. The costs associated or loan programs, or the rights and decrease in response to increases in with MSP certification offset the costs obligations of recipients thereof; or Medicaid eligibility.53 Furthermore, a that issuers would face were they to be (4) Raise novel legal or policy issues 2011 analysis by the Office of the certified by the State, or HHS on behalf arising out of legal mandates, the Assistant Secretary for Planning and of the State, to offer QHPs through the President’s priorities, or the principles Evaluation (ASPE) found that most of Exchange. set forth in Executive Order 12866. the uninsured were unable to afford a Finally, some of the most notable The economic impact of this rule may single hospitalization, because 90 effects of Exchanges in general, and exceed the $100 million threshold for at percent of the uninsured reported MSPs in particular, may not be net least one year; we therefore assess costs having total financial assets below social costs or benefits, but would and benefits as required by the $13,000.54 A related benefit would be instead be transfers between members of Executive Order. generated by increased access to non- society. Potential examples include This rule gives health insurance employment-based health insurance, decreases in uncompensated care and issuers the opportunity to contract with which can give individuals greater changes in premiums that do not reflect OPM to offer a product on the flexibility to separate from current shifts in society’s resource use to or Affordable Insurance Exchanges, but employment in order to search for away from provision of medical services does not require those issuers to outlay positions that better match their skills or and insurance policies. funds. In a 2009 analysis of legislation interests. OPM lacks data to quantify most of that ultimately became the Affordable Expansion of health insurance these benefits, costs and transfers. Care Act, the Congressional Budget coverage leads to many benefits such as Perhaps most notably, OPM cannot Office (CBO) and the Joint Committee improved access to health care, and isolate the effects of MSPs from on Taxation (JCT) estimated the effects improved financial security for the forecasts of the overall effects of the of the Affordable Care Act on newly insured. However, insurance Affordable Care Act coverage nationwide insurance enrollment and coverage, which generally makes provisions, and, therefore, requests on the federal budget.49 CBO and JCT medical care more affordable, can lead comments on any aspects of this estimated that ‘‘from 2016 on, between to an inefficiency commonly called proposed rule’s cost-benefit analysis. 23 million and 25 million people will moral hazard. When people make V. Paperwork Reduction Act receive coverage through the economic decisions to purchase goods The Paperwork Reduction Act of 1995 [E]xchanges.’’ 50 We lack the and services, but do not bear the full information necessary to make (44 U.S.C. chapter 35; see 5 CFR part cost of these goods and services, there 1320) requires that OMB approve all assumptions about the potential can be a tendency to purchase more enrollment penetration for MSPs on the collections of information by a Federal than the efficient amount of that service. agency from the public before they can Exchange but seek comment on the Studies that estimated the effects of number of states where MSPs will be implemented. Respondents are not Medicare, however, found that the cost required to respond to any collection of participate and the influence of current of this inefficiency is likely more than information unless it displays a current market dynamics on enrollment in offset by the benefit of risk valid OMB control number. OPM is MSPs. 55 56 reduction. proposing several collections from One primary benefit of health Administrative costs of the rule insurance coverage would be an MSPP issuers or applicants seeking to would be generated both within OPM become MSPP issuers, but we have increase in longevity or health for newly and by issuers deciding to offer MSPs. enrolled individuals. Improved access determined that they are exempt from The costs that MSPP issuers may incur the requirements of the Paperwork to health care services has been shown Reduction Act. For example, we seek to to lead to higher use of preventive Outcomes: Using Auto Accidents and Health collect information in connection with services and health improvements, such Shocks.’’ National Bureau of Economic Research. the MSPP application process and as reduced hypertension, improved NBER Working Paper No. 11099, February 2005. 52 reporting requirements under § 800.112. vision and better self-reported health See the regulatory impact analysis developed by HHS for the Exchange Establishment final rule, We are also proposing requirements for status, as well as better clinical available at http://cciio.cms.gov under ‘‘Regulations issuers to authorize accrediting entities outcomes and lower mortality.51 52 and Guidance’’, for a comprehensive overview of the empirical evidence on the benefits of enhanced to send documentation to OPM under 49 Letter to Senator Harry Reid, Majority Leader, availability of quality, affordable health insurance, § 800.111. The proposal would also set from Douglas W. Elmendorf, Director of the which to great extent applies to the MSPP program up a process under § 800.116 for states Congressional Budget Office, December 19, 2009, p. and this proposed rule as well. to request that OPM reconsider a 9. 53 Gross, T., Notowidigdo, M. ‘‘Health Insurance standard applicable to MSPs or MSPP 50 and the Consumer Bankruptcy Decision: Evidence Congressional Budget Office, Estimates for the issuers that does not comply with that Insurance Coverage Provisions of the Affordable from Medicaid Expansions.’’ Journal of Public Care Act Updated for the Recent Supreme Court Economics 95(7–8): 2011. State’s laws for QHPs. Under § 800.503, Decision (July 2012), p.13. 54 Assistant Secretary for Planning and Evaluation MSPP issuers are directed to provide 51 Brook, Robert H., John E. Ware, William H. The Value of Health Insurance: Few of the certain written notices, which are third- Rogers, Emmett B. Keeler, Allyson Ross Davies, Uninsured Have Adequate Resources to Pay party disclosures under the Paperwork Cathy D. Sherbourne, George A. Goldberg, Kathleen Potential Hospital Bills: 2011. Washington DC: US N. Lohr, Patricia Camp and Joseph P. Newhouse. Department of Health and Human Services. Reduction Act. These collections would The Effect of Coinsurance on the Health of Adults: 55 Finkelstein A, McKnight R: ‘‘What Did generally be considered reporting Results from the RAND Health Insurance Medicare Do (And Was It Worth It)?’’ Journal of requirements under the Paperwork Experiment. Santa Monica, CA: RAND Corporation, Public Economics 2008, 92:1644–1669. Reduction Act. Moreover, based on 1984. Finkelstein, A. et al. ‘‘The Oregon Health 56 Finkelstein, Amy, ‘‘The Aggregate Effects of Insurance Experiment: Evidence from the First Health Insurance: Evidence from the Introduction of responses to the RFI, subsequent Year.’’ NBER Working Paper No. 17190, July 2011. Medicare,’’ National Bureau of Economic Research. conversations with both responding Doyle, J.J. ‘‘Health Insurance, Treatment and Working Paper No. 11619, Sept, 2005. health insurance issuers and other
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health insurance issuers subsequent to OPM does not think that this dollars, updated annually for inflation. the RFI, and other practical proposed rule would have a significant In 2012, that threshold is approximately considerations, OPM expects fewer than economic impact on a substantial $139 million. UMRA does not address ten responsible entities to respond to all number of small businesses with annual the total cost of a rule. Rather, it focuses of the collections noted above. For that receipts less than $7.0 million, because on certain categories of costs, mainly reason alone, the collections are exempt there are only a few health insurance those ‘‘Federal mandate’’ costs resulting from the Paperwork Reduction Act issuers that could be considered small from: (1) Imposing enforceable duties on under 44 U.S.C. 3502(3)(A)(i). There businesses. Moreover, while the State, local, or Tribal governments, or may also be other reasons why these Director must enter into an MSPP on the private sector; or (2) increasing collections are exempt from these contract with at least one non-profit the stringency of conditions in, or requirements. We seek comments on entity, OPM does not think that this decreasing the funding of, State, local, these assumptions. proposed rule would have a significant or tribal governments under entitlement economic impact on a substantial programs. VI. Regulatory Flexibility Act number of small non-profit This proposed rule does not place any The Regulatory Flexibility Act organizations, because few health Federal mandates on State, local, or (RFA) 57 requires agencies to prepare an insurance issuers are small non-profit Tribal governments, or on the private initial regulatory flexibility analysis to organizations. sector. This proposed rule would describe the impact of the proposed rule OPM incorporates by reference establish the MSPP, a voluntary federal on small entities, unless the head of the previous analysis by HHS, which program that provides health insurance agency can certify that the rule would provides some insight into the number issuers the opportunity to contact with not have a significant economic impact of health insurance issuers that could be OPM to offer MSPs on the Exchanges. on a substantial number of small small entities. Particularly, as discussed Section 3 of UMRA excludes from the entities. The RFA generally defines a by HHS in the Medical Loss Ratio definition of ‘‘Federal mandate’’ duties ‘‘small entity’’ as—(1) a proprietary firm interim final rule (75 FR 74918), few, if that arise from participation in a meeting the size standards of the Small any, issuers are small enough to fall voluntary Federal program. Business Administration (SBA); (2) a below the size thresholds for small Accordingly, no analysis under UMRA not-for-profit organization that is not business established by the SBA. In that is required. rule, HHS used a data set created from dominant in its field; or (3) a small VIII. Federalism government jurisdiction with a 2009 NAIC Health and Life Blank Executive Order 13132 outlines population of less than 50,000. States annual financial statement data to fundamental principles of federalism, and individuals are not included in the develop an updated estimate of the and requires the adherence to specific definition of ‘‘small entity.’’ number of small entities that offer criteria by Federal agencies in the The RFA requires agencies to analyze comprehensive major medical coverage process of their formulation and options for regulatory relief of small in the individual and group markets. implementation of policies that have businesses, if a proposed rule has a For purposes of that analysis, HHS used total Accident and Health earned ‘‘substantial direct effects’’ on the significant impact on a substantial States, the relationship between the number of small entities. For purposes premiums as a proxy for annual receipts. HHS estimated that there are national government and States, or on of the RFA, small entities include small the distribution of power and businesses, small non-profit 28 small entities with less than $7 million in accident and health earned responsibilities among the various organizations, and small government levels of government. Federal agencies jurisdictions. Small businesses are those premiums offering individual or group comprehensive major medical coverage. promulgating regulations that have with sizes below thresholds established these federalism implications must by the SBA. With respect to health OPM concurs with this HHS analysis, and, thus, does not think that this consult with State and local officials, insurers, the SBA size standard is $7.0 and describe the extent of their million in annual receipts.58 proposed rule would have a significant economic impact on a substantial consultation and the nature of the OPM does not think that small number of small entities. concerns of State and local officials in businesses with annual receipts less Based on the foregoing, OPM is not the preamble to the regulation. than $7.0 million would likely have preparing an analysis for the RFA These proposed regulations have sufficient economies of scale to become because OPM has determined, and the federalism implications, because they MSPP issuers or be part of a group of Director certifies, that this proposed rule have direct effects on the States, the MSPP issuers. Similarly, while the would not have a significant economic relationship between the national Director must enter into an MSPP impact on a substantial number of small government and States, or on the contract with at least one non-profit entities. distribution of power and entity, OPM does not think that small responsibilities among various levels of non-profit organizations would likely VII. Unfunded Mandates government. In particular, under have sufficient economies of scale to Section 202 of the Unfunded proposed § 800.114, OPM may deem a become MSPP issuers or be part of a Mandates Reform Act of 1995 State law to be inconsistent with section group of MSPP issuers. (UMRA) 59 requires that agencies assess 1334 of the Affordable Care Act, and, anticipated costs and benefits and take thus, inapplicable to an MSP or MSPP 57 5 U.S.C. 601 et seq. certain other actions before issuing a issuer. However, in OPM’s view, the 58 According to the SBA size standards, entities proposed rule (and subsequent final federalism implications of these with average annual receipts of $7 million or less would be considered small entities for North rule) that includes any Federal mandate proposed regulations are substantially American Industry Classification System (NAICS) that may result in expenditures in any mitigated because, OPM expects that the Code 524114 (Direct Health and Medical Insurance one year by a State, local, or tribal vast majority of States have laws that are Carriers) (for more information, see ‘‘Table of Size governments, in the aggregate, or by the consistent with section 1334 of the Standards Matched To North American Industry Classification System Codes,’’ effective March 26, private sector, of $100 million in 1995 Affordable Care Act. Furthermore, 2012, U.S. Small Business Administration, available proposed § 800.116 sets forth a process at http://www.sba.gov). 59 Public Law 104–4. for dispute resolution if a State seeks to
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challenge OPM’s determination that a 800.106 Cost-sharing limits, premium tax (1) 1001. Amendments to the Public State law is inapplicable to an MSP or credits, and cost-sharing reductions. Health Service Act. MSPP issuer. 800.107 Levels of coverage. (2) 1302. Essential Health Benefit In compliance with the requirement 800.108 Assessments and user fees. Requirements. of Executive Order 13132 that agencies 800.109 Network adequacy. (3) 1311. Affordable Choices of Health examine closely any policies that may 800.110 Service area. Benefit Plans. 800.111 Accreditation requirement. have federalism implications or limit 800.112 Reporting requirements. (4) 1324. Level Playing Field. the policy making discretion of the 800.113 Benefit plan material or (5) 1334. Multi-State Plans. States, OPM has engaged in efforts to information. (6) 1341. Transitional Reinsurance consult with and work cooperatively 800.114 Compliance with applicable State Program for Individual Market in Each with affected State and local officials, law. State. including attending meetings of the 800.115 Level playing field. (7) 1342. Establishment of Risk NAIC and consulting with State 800.116 Process for dispute resolution. Corridors for Plans in Individual and insurance officials on an individual Subpart C—Premiums, Rating Factors, Small Group Markets. basis. It is expected OPM will act in a Medical Loss Ratios, and Risk Adjustment (8) 1343. Risk Adjustment. (b) Scope. This part establishes similar fashion in enforcing the 800.201 General requirements. Affordable Care Act requirements. 800.202 Rating factors. standards for health insurance issuers to Throughout the process of developing 800.203 Medical loss ratio. contract with the United States Office of these proposed regulations, OPM has 800.204 Reinsurance, risk corridors, and Personnel Management (OPM) to offer attempted to balance the States’ risk adjustment. multi-State plans to provide health insurance coverage on Exchanges for interests in regulating health insurance Subpart D—Application and Contracting issuers, and the statutory requirement to Procedures each State. It also establishes standards provide two MSPs in all Exchanges in for appeal of a decision by OPM 800.301 Application process. affecting the issuer’s participation in the the 50 States and the District of 800.302 Review of applications. Columbia. By doing so, it is OPM’s view 800.303 MSPP contracting. Multi-State Plan Program (MSPP) and that it has complied with the 800.304 Term of the contract. standards for an enrollee in a multi- requirements of Executive Order 13132. 800.305 Contract renewal process. State plan (MSP) to appeal denials of Pursuant to the requirements set forth 800.306 Nonrenewal. payment or services by an MSPP issuer. in section 8(a) of Executive Order Subpart E—Compliance § 800.20 Definitions. 13132, and by the signature affixed to this proposed regulation, OPM certifies 800.401 Contract performance. The following definitions apply to 800.402 Contract quality assurance. that it has complied with the this part: 800.403 Fraud and abuse. Actuarial value (AV) has the meaning requirements of Executive Order 13132 800.404 Compliance actions. for the attached regulations in a given such term in proposed 45 CFR 800.405 Reconsideration of compliance 156.20. meaningful and timely manner. actions. Affordable Care Act means the Patient List of Subjects in 45 CFR Part 800 Subpart F—Appeals by Enrollees for Protection and Affordable Care Act Administrative practice and Denials of Claims for Payment or Service (Pub. L. 111–148) as amended by the procedure, Health facilities, Health 800.501 General requirements. Health Care and Education insurance, Health professions, reporting 800.502 MSPP issuer internal claims and Reconciliation Act of 2010 (Pub. L. 111– and recordkeeping requirements. appeals processes. 152). 800.503 MSPP issuer internal claims and Applicant means an issuer or group of U.S. Office of Personnel Management. appeals timeframes and notice of issuers that has submitted an John Berry, determination. application to OPM to be considered for Director. 800.504 External review. 800.505 Judicial review. participation in the Multi-State Plan For the reasons stated in the Program. preamble, the U.S. Office of Personnel Subpart G—Miscellaneous Benefit plan material or information Management proposes to add 45 CFR 800.601 Reservation of authority. means explanations or descriptions, chapter VIII, consisting of part 800, to 800.602 Consumer choice with respect to whether printed or electronic, that read as follows: certain services. describe a health insurance issuer’s Appendix A to Part 800—Applicable Title 45 products. The term does not include a Provisions of Part A of title XXVII of the policy or contract for health insurance PHS Act CHAPTER VIII—OFFICE OF PERSONNEL coverage. MANAGEMENT Appendix B to Part 800—Applicable Provisions of the Affordable Care Act Cost sharing has the meaning given such term in 45 CFR 155.20. PART 800—MULTI–STATE PLAN Appendix C to Part 800—Applicable Director means the Director of the PROGRAM Provisions of the Internal Revenue Code Authority: Section 1334 of the Patient United States Office of Personnel Subpart A—General Provisions and Protection and Affordable Care Act, (Pub. L. Management. Definitions 111–148), as amended by the Health Care and EHB-benchmark plan has the meaning Sec. Education Reconciliation Act of 2010 (Pub. L. given such term in proposed 45 CFR 800.10 Basis and scope. 111–152). 156.20. 800.20 Definitions. Exchange means a governmental Subpart A—General Provisions and Subpart B—Multi-State Plan Issuer agency or non-profit entity that meets Requirements Definitions the applicable requirements of 45 CFR part 155 and makes qualified health 800.101 General requirements. § 800.10 Basis and scope. 800.102 Compliance with Federal law. plans (QHPs) and MSPs available to 800.103 Authority to contract with issuers. (a) Basis. This part is based on the qualified individuals and qualified 800.104 Phased expansion. following sections of title I of the employers. Unless otherwise identified, 800.105 Benefits. Affordable Care Act: this term refers to State Exchanges,
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regional Exchanges, subsidiary this section) that has a contract with a calendar year and a plan year, an Exchanges, and a Federally-facilitated OPM to offer health plans pursuant to employer who employed an average of Exchange. section 1334 of the Affordable Care Act at least 1 but not more than 100 Federal Employees Health Benefits and meets the requirements of this part. employees on business days during the Program or FEHBP means the health Multi-State Plan Program or MSPP preceding calendar year and who benefits program administered by the means the program administered by employs at least 1 employee on the first United States Office of Personnel OPM pursuant to section 1334 of the day of the plan year. In the case of plan Management pursuant to chapter 89 of Affordable Care Act. years beginning before January 1, 2016, title 5, United States Code. Nationally licensed service mark a State may elect to define small Group of issuers means: means a word, name, symbol, or device, employer by substituting ‘‘50 (1) A group of health insurance or any combination thereof, that an employees’’ for ‘‘100 employees.’’ issuers who are affiliated either by issuer or group of issuers uses Standard plan has the meaning given common ownership and control or by consistently nationwide to identify such term in proposed 45 CFR 156.400. common use of a nationally licensed itself. State means each of the 50 States or service mark (as defined in this section); Non-profit entity means: the District of Columbia. or (1) An organization that is State Insurance Commissioner means (2) An affiliation of health insurance incorporated under State law as a non- the commissioner or other chief issuers and an entity that is not an profit entity and licensed under State insurance regulatory official of a State. issuer but that owns a nationally law as a health insurance issuer; or licensed service mark (as defined in this (2) A group of health insurance Subpart B—Multi-State Plan Issuer section). issuers licensed under State law, a Requirements Health insurance coverage means substantial portion of which are benefits consisting of medical care incorporated under State law as non- § 800.101 General requirements. (provided directly, through insurance or profit entities. An MSPP issuer must: reimbursement, or otherwise) under any OPM means the United States Office (a) Licensed. Be licensed as a health hospital or medical service policy or of Personnel Management. insurance issuer in each State where it certificate, hospital or medical service Percentage of total allowed cost of offers health insurance coverage; plan contract, or HMO contract offered benefits has the meaning given such (b) Contract with OPM. Have a by a health insurance issuer. Health term in 45 CFR 156.20. contract with OPM pursuant to this part; insurance coverage includes group Plan year means a consecutive 12 (c) Required levels of coverage. Offer health insurance coverage, individual month period during which a health levels of coverage as required by health insurance coverage, and short- plan provides coverage for health § 800.107; term, limited duration insurance. benefits. A plan year may be a calendar (d) Eligibility and enrollment. MSPs Health insurance issuer or Issuer year or otherwise. and MSPP issuers must meet the same means an insurance company, insurance Prompt payment means a requirements for eligibility, enrollment, service, or insurance organization requirement imposed on a health and termination of coverage as those (including an HMO) that is required to insurance issuer to pay a provider or that apply to QHPs and QHP issuers be licensed to engage in the business of enrollee for a claimed benefit or service pursuant to 45 CFR parts 155 subparts insurance in a State and that is subject within a defined time period, including D, E, and H and 45 CFR 156.250, to State law that regulates insurance the penalty or consequence imposed on 156.260, 156.265, 156.270, 156.285. (within the meaning of section 514(b)(2) the issuer for failure to meet the (e) Applicable to each MSP. Ensure of the Employee Retirement Income requirement. that each of its MSPs meets the Security Act (ERISA)). This term does Qualified Health Plan or QHP means requirements of this part; not include a group health plan as a health plan that has in effect a (f) Compliance. Comply with all defined in 45 CFR 146.145(a). certification that it meets the standards standards set forth in this part; HHS means the United States described in subpart C of 45 CFR part (g) OPM direction and other legal Department of Health and Human 156 issued or recognized by each requirements. Timely comply with OPM Services. Exchange through which such plan is instructions and directions and with Indian has the meaning given to the offered pursuant to the process other applicable law; and term in proposed 45 CFR 155.300(a). described in subpart K of 45 CFR part (h) Other requirements. Meet such Indian plan variation has the meaning 155. other requirements as determined given such term in proposed 45 CFR Rating means the process, including appropriate by OPM, in consultation 156.400. rating factors, numbers, formulas, with HHS, pursuant to § 1334(b)(4) of Level of Coverage means one of four methodologies, and actuarial the Affordable Care Act. standardized actuarial values of plan assumptions, used to set premiums for (i) Non-discrimination. In carrying out coverage as defined by section a health plan. the requirements of this part, the MSPP 1302(d)(1) of the Affordable Care Act. Secretary means the Secretary of the issuer must: Licensure means the authorization Department of Health and Human (1) Comply with applicable non- obtained from the appropriate State Services. discrimination statutes; and official or regulatory authority to offer SHOP means a Small Business Health (2) With respect to its MSP, not health insurance coverage in the State. Options Program operated by an discriminate based on race, color, Multi-State Plan or MSP means a Exchange through which a qualified national origin, disability, age, sex health plan that is offered under a employer can provide its employees and (including pregnancy and gender contract with OPM pursuant to section their dependents with access to one or identity), or sexual orientation. 1334 of the Affordable Care Act and more qualified health plans (QHPs). meets the requirements of this part. Silver plan variation has the meaning § 800.102 Compliance with Federal law. Multi-State Plan Program Issuer or given such term in 45 CFR 156.400. (a) Public Health Service Act. As a MSPP issuer means a health insurance Small employer means, in connection condition of participation in the MSPP, issuer or group of issuers (as defined in with a group health plan with respect to an MSPP issuer must comply with the
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provisions of part A of title XXVII of the contract compliance activities under section must include, for each State, any PHS Act, as determined by the Director, subpart E of this part. State-required benefits enacted before as listed in appendix A to this part. (c) Licensed where offered. OPM may December 31, 2011 that are included in (b) Affordable Care Act. As a enter into a contract with an MSPP the State’s EHB-benchmark plan as condition of participation in the MSPP, issuer who is not licensed in every described in paragraph (b)(1)(i) of this an MSPP issuer must comply with the State, provided that the issuer is section, or specific to the market in provisions of title I of the Affordable licensed in every State where it offers which the plan is offered. In the case in Care Act, as determined by the Director, MSP coverage through any Exchanges in which a State chooses not to define this as listed in appendix B to this part. that State and demonstrates to OPM that category, OPM proposes that if any it is making a good faith effort to OPM-selected EHB-benchmark plan § 800.103 Authority to contract with become licensed in every State lacks coverage of habilitative services issuers. consistent with the timeframe in and devices, then OPM may determine (a) General. OPM may enter into paragraph (a) of this section. what habilitative services and devices contracts with health insurance issuers are to be included in that EHB- § 800.105 Benefits. to offer at least two MSPs on Exchanges benchmark plan. and SHOPs in each State, without (a) Benefits package. (1) An MSPP (d) OPM approval. An MSPP issuer’s regard to any statutes that would issuer must offer a uniform benefits benefits package, including its otherwise require competitive bidding. package, including the essential health prescription drug list, must be (b) Non-profit entity. In entering into benefits (EHB) described in section 1302 submitted to approved by OPM, which contracts with health insurance issuers of the Affordable Care Act, for each MSP will review a benefits package proposed to offer MSPs, OPM will enter into a within a State. by an MSPP issuer and determine if it contract with at least one non-profit (2) The benefits package noted in is substantially equal to an EHB- entity as defined in § 800.20. paragraph (a)(1) of this section must benchmark plan described in paragraph (c) Group of issuers. Any contract to comply with section 1302 of the (b)(1) of this section pursuant to offer an MSP may be with a group of Affordable Care Act as well as any standards set forth by OPM or HHS issuers as defined in § 800.20. applicable standards set by OPM or including proposed 45 CFR 156.115, (d) Individual and group coverage. HHS. 156.120, and 156.125. The contracts will provide for (b) Benefits package options. (1) An (e) State payments for additional individual health insurance coverage MSPP issuer must offer a benefits State-required benefits. If a State and for group health insurance coverage package, in all States, that is requires that benefits in addition to the for small employers. substantially equal to: benchmark package be offered to MSP (i) The EHB-benchmark plan in each enrollees in that State, then pursuant to § 800.104 Phased expansion. State in which it operates; or (a) Phase-in. OPM may enter into a section 1334(c)(2) of the Affordable Care (ii) Any EHB-benchmark plan selected Act, the State must assume the cost of contract with a health insurance issuer by OPM under paragraph (c) of this to offer an MSP if the health insurance such additional benefits by making section. payments either to the enrollee or on issuer agrees that: (2) An issuer applying to participate behalf of the enrollee to the MSPP (1) With respect to the first year for in the MSPP must select one of the two issuer. which the health insurance issuer offers benefits package options described in an MSP, the health insurance issuer will paragraph (b)(1) of this section in its § 800.106 Cost-sharing limits, premium tax offer the MSP in at least 60 percent of application. credits, and cost-sharing reductions. the States (31 States); (c) OPM selection of benchmark (a) Cost-sharing limits. For each MSP (2) With respect to the second such plans. (1) The OPM-selected EHB- it offers, an MSPP issuer must ensure year, the health insurance issuer will benchmark plans are the three largest that the cost-sharing provisions of the offer the MSP in at least 70 percent of Federal Employees Health Benefits MSP comply with section 1302(c) of the the States (36 States); Program (FEHBP) plan options, as Affordable Care Act as well as any (3) With respect to the third such identified by HHS pursuant to section applicable standards set by OPM or year, the health insurance issuer will 1302(b) of the Affordable Care Act, and HHS. offer the MSP in at least 85 percent of as supplemented pursuant to paragraphs (b) Premium tax credits and cost- the States (44 States); and (c)(2) through (4) of this section. sharing reductions. For each MSP it (4) With respect to each subsequent (2) Any EHB-benchmark plan selected offers, an MSPP issuer must make year, the health insurance issuer will by OPM under paragraph (c)(1) of this available to an eligible individual the offer the MSP in all States. section lacking the coverage of pediatric premium tax credits under section 36B (b) Partial coverage within a State. oral services or pediatric vision services of the Internal Revenue Code of 1986 OPM may enter into a contract with an must be supplemented by the addition and the cost-sharing reductions under MSPP issuer even if the MSPP issuer’s of the entire category of benefits from section 1402 of the Affordable Care Act. MSPs for a State cover fewer than all the the largest Federal Employee Dental and An MSPP issuer must also comply with service areas specified for that State Vision Insurance Program (FEDVIP) any applicable standards set by OPM or pursuant to § 800.110. For each State in dental or vision plan options, HHS. which the MSPP issuer offers partial respectively, pursuant to 45 CFR coverage, the MSPP issuer’s application 156.110(b) and section 1302(b) of the § 800.107 Levels of coverage. for participation in the MSPP under Affordable Care Act. (a) Silver and gold levels of coverage section 800.301 and the MSPP issuer’s (3) An MSPP issuer must follow State required. An MSPP issuer must offer at information submitted to support definitions where the State chooses to least one MSP at the silver level of renewal of the contract under section specifically define the habilitative coverage and at least one MSP at the 800.305 must include a plan for offering services category pursuant to 45 CFR gold level of coverage on each Exchange coverage throughout the State. OPM will 156.110(f). in which the issuer is certified to offer monitor the MSPP issuer’s progress in (4) Any EHB-benchmark plan selected an MSP pursuant to a contract with implementing the plan as part of its by OPM under paragraph (c)(1) of this OPM.
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(b) Bronze or platinum metal levels of (c) OPM guidance. OPM will issue The Director of OPM may require that coverage permitted. Pursuant to a guidance containing the criteria and MSPP issuers submit claims payment contract with OPM, an MSPP issuer may standards that it will use to determine and enrollment data to facilitate OPM’s offer one or more MSPs at the bronze the adequacy of a provider network. oversight and administration of the level of coverage or the platinum level MSPP in a manner similar to the of coverage, or both, on any Exchange or § 800.110 Service area. FEHBP. SHOP in any State. An MSPP issuer must offer an MSP (b) Quality and quality improvement (c) Child-only plans. For each level of within one or more service areas in a standards. An MSPP issuer must coverage, the MSPP issuer must offer a State defined by each Exchange comply with any standards required by child-only plan at the same level of pursuant to 45 CFR 155.1055. If an OPM for reporting quality and quality coverage, as any health insurance Exchange permits issuers to define their improvement activities including, but coverage offered to individuals who, as service areas, an MSPP issuer must not limited to, implementation of a of the beginning of the plan year, have obtain OPM’s approval for its proposed quality improvement strategy, not attained the age of 21. service areas. Pursuant to § 800.104, disclosure of quality measures to (d) Plan variations for the reduction OPM may enter into a contract with an enrollees and prospective enrollees, or elimination of cost sharing. An MSPP MSPP issuer even if the MSPP issuer’s reporting of pediatric quality measures, issuer must comply with section 1402 of MSPs for a State cover fewer than all the and implementation of rating and the Affordable Care Act as well as any service areas specified for that State. For enrollee satisfaction surveys, which will applicable standards set by OPM or each State in which the MSPP issuer be similar to standards under section HHS. does not offer coverage in all service 1311(c)(1)(E), (H), and (I), (c)(3), and (e) OPM approval. An MSPP issuer areas, the MSPP issuer’s application for (c)(4) of the Affordable Care Act. must submit the levels of coverage plans participation in the MSPP under section and plan variations to OPM for review 800.301 and the MSPP issuer’s § 800.113 Benefit plan material or information. and approval by OPM. information submitted to support renewal of the contract under section (a) Compliance with Federal and State § 800.108 Assessments and user fees. 800.305 must include a plan for offering law. An MSPP issuer must comply with (a) Discretion to charge assessment coverage throughout the State. OPM will Federal and State laws relating to and user fees. OPM may require an monitor the MSPP issuer’s progress in benefit plan material or information, MSPP issuer to pay an assessment or implementing the plan as part of its including the provisions of this section user fee as a condition of participating contract compliance activities under and guidance issued by OPM specifying in the MSPP. Subpart E and will ensure MSPs meet its standards, process, and timeline for (b) Determination of amount. The QHP requirement in 45 CFR approval of benefit plan material or amount of the assessment or user fee 155.1055(b). information. charged by OPM for a plan year is the (b) General standards for MSP amount determined necessary by OPM § 800.111 Accreditation requirement. applications and notices. An MSPP to meet the costs of OPM’s functions (a) General requirement. An MSPP issuer must provide all applications and under the Affordable Care Act for a plan issuer must be or become accredited notices to enrollees in accordance with year, including but not limited to such consistent with the requirements for the standards described in at 45 CFR functions as entering into contracts QHP issuers specified in section 1311 of 155.205(c). OPM may establish with, certifying, recertifying, the Affordable Care Act and in 45 CFR additional standards to meet the needs decertifying, and overseeing MSPs and 156.275(a). of MSP enrollees. MSPP issuers for that plan year. (b) Release of survey. An MSPP issuer (c) Accuracy. An MSPP issuer is must authorize the accrediting entity responsible for the accuracy of its § 800.109 Network adequacy. that accredits the MSPP issuer to release benefit plan material or information. (a) General requirement. An MSPP to OPM and to the Exchange a copy of (d) Truthful, not misleading, no issuer must ensure that the provider its most recent accreditation survey, material omissions, and plain language. network of each of its MSPs, as available together with any survey-related All benefit plan material or information to all enrollees, meets the following information that OPM or an Exchange must be: standards: may require, such as corrective action (1) Truthful, not misleading, and not (1) Maintains a network that is plans and summaries of findings. contain material omissions; and sufficient in number and types of (c) Timeframe for accreditation. An (2) Written in plain language, as providers to assure that all services will MSPP issuer that is not accredited as of defined in section 1311(e)(3)(B) of the be accessible without unreasonable the date that it enters into a contract Affordable Care Act. delay; with OPM must become accredited (e) Uniform Explanation of Coverage (2) Is consistent with the network within the timeframe established by Documents and Standardized adequacy provisions of section 2702(c) OPM as authorized by 45 CFR 155.1045. Definitions. An MSPP issuer must of the Public Health Service Act; and comply with the provisions of section (3) Includes essential community § 800.112 Reporting requirements. 2715 of the PHS Act and regulations providers in compliance with 45 CFR (a) OPM specification of reporting issued to implement that section. 156.235. requirements. OPM will specify the data (f) OPM review and approval of (b) Provider directory. An MSPP and information that must be reported benefit plan material or information. issuer must make its provider directory by an MSPP issuer, including data OPM may request an MSPP issuer for an MSP available to the Exchange for permitted or required by the Affordable submit to OPM benefit plan material or publication online pursuant to guidance Care Act and such other data as OPM information, as defined in § 800.20. from the Exchange and to potential may determine necessary for the OPM reserves the right to review and enrollees in hard copy upon request. In oversight and administration of the approve benefit plan material or the provider directory, an MSPP issuer MSPP. OPM will also specify the form, information to ensure that an MSPP must identify providers that are not manner, processes, and frequency for issuer complies with Federal and State accepting new patients. the reporting of data and information. laws, and the standards prescribed by
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OPM with respect to benefit plan factors permitted under section 2701 of a dispute about the applicability to an material or information. the PHS Act and State law. MSP or MSPP issuer of a State law not (g) Statement on certification by OPM. (c) Preexisting conditions. Not impose related to the 13 categories in section An MSPP issuer may include a any preexisting condition exclusion and 1324(b) of the Affordable Care Act, the statement in its benefit plan material or comply with section 2704 of the PHS State may request that OPM reconsider information that: Act. a determination, made under section (1) OPM has certified the MSP as (d) Non-discrimination. Comply with 800.114 that an MSP or MSPP issuer is eligible to be offered on the Exchange; section 2705 of the PHS Act. not subject to such State law. and (e) Quality improvement and (b) Required demonstration. A State (2) OPM monitors the MSP for reporting. Comply with all Federal and making a request under subparagraph compliance with all applicable law. State quality improvement and (1) must demonstrate that the State law § 800.114 Compliance with applicable reporting requirements. ‘‘Quality at issue: State law. improvement and reporting’’ means (1) Is not inconsistent with section quality improvement as defined in (a) Compliance with State law. An 1334 of the Affordable Care Act or this section 1311(h) of the Affordable Care MSPP issuer must, with respect to each part; Act and quality improvement plans or of its MSPs, generally comply with State (2) Does not prevent the application of strategies required under State law, and law pursuant to section 1334(b)(2) of the a requirement of part A of title XXVII of quality reporting as defined in section Affordable Care Act. However, the MSPs the PHS Act; and 2717 of the PHS Act and section 1311(g) (3) Does not prevent the application of and MSPP issuers need not comply with of the Affordable Care Act. Quality a requirement of title I of the Affordable State laws that: (1) Are inconsistent with section 1334 improvement also includes activities Care Act. of the Affordable Care Act or this part; such as, but not limited to, (c) Request for review. The request (2) Prevent the application of a implementation of a quality must be in writing and include contact requirement of part A of title XXVII of improvement strategy, disclosure of information, including the name, the PHS Act; and quality measures to enrollees and telephone number, email address, and (3) Prevent the application of a prospective enrollees, and reporting of mailing address of the person or persons requirement of title I of the Affordable pediatric quality measures, which will whom OPM may contact regarding the Care Act. be similar to standards under section request for review. The request must be (b) Determination of inconsistency. 1311(c)(1)(E), (H), and (I) of the in such form, contain such information, OPM reserves the right to determine, in Affordable Care Act. and be submitted in such manner and its judgment, as effectuated through an (f) Fraud and abuse. Comply with all within such timeframe as OPM may MSPP contract, these regulations, or Federal and State fraud and abuse laws. prescribe. OPM guidance whether the standards (g) Licensure. Be licensed in every (1) The requester may submit to OPM set forth in paragraph (a) of this section State in which it offers an MSP. any relevant information to support its are satisfied with respect to particular (h) Solvency and financial request. State laws. In making any such requirements. Comply with the solvency (2) OPM may obtain additional determinations, OPM will consider standards set by each State in which it information relevant to the request from whether the State law at issue: offers an MSP. any source as it may, in its judgment, (1) Imposes on MSPP issuers or MSPs (i) Market conduct. Comply with the deem necessary. OPM will provide the a requirement or requirements that market conduct standards of each State requester with a copy of any additional differ from those applicable to QHP in which it offers an MSP. information it obtains and provide an issuers and QHPs offered on one or (j) Prompt payment. Adhere to opportunity for the requester to respond more Exchanges in that State; applicable State law in negotiating the (including by submission of additional (2) Creates responsibilities, terms of payment in contracts with its information or explanation). administrative burdens, or costs for an providers and in making payments to (3) OPM will issue a written decision MSPP issuer that significantly deter or claimants and providers. within 60 calendar days after receiving impede the MSPP issuer from offering a (k) Appeals and grievances. Comply the written request, or after the due date viable product on one or more with Federal standards under section for the response, whichever is later, Exchanges; 2719 of the PHS Act for appeals and unless a different timeframe is agreed (3) Creates responsibilities, grievances relating to adverse benefit upon. administrative burdens, or costs for determinations, as described in subpart (4) OPM’s written decision will OPM that significantly deter or impede F. constitute final agency action that is OPM’s effective implementation of the (l) Privacy and confidentiality. subject to review under the MSPP; or Comply with all Federal and State Administrative Procedure Act in the (4) Prevents an MSPP issuer from privacy and security requirements and appropriate U.S. district court. Such offering an MSP on one or more laws. Comply with any standards review is limited to the record that was Exchanges in that State. required by OPM in guidance or before OPM when OPM made its contract, which will be similar to the decision. § 800.115 Level playing field. standards contained in 45 CFR part 162 An MSPP issuer must, with respect to and applicable State law. Subpart C—Premiums, Rating Factors, each of its MSPs, meet the following (m) Benefit plan material or Medical Loss Ratios, and Risk requirements in order to ensure a level information. Comply with Federal and Adjustment playing field: State law, including § 800.113 of this (a) Guaranteed renewal. Guarantee part. § 800.201 General requirements. that an enrollee can renew enrollment (a) Premium negotiation. OPM will in an MSP in compliance with sections § 800.116 Process for dispute resolution. negotiate annually with an MSPP issuer, 2703 and 2742 of the PHS Act. (a) Determinations about applicability on a State by State basis, the premiums (b) Rating. In proposing premiums for of State law under section 1334(b)(2) of for each MSP offered by that issuer in OPM approval, use only the rating the Affordable Care Act. In the event of that State. Such negotiations may
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include negotiations about the cost- PHS Act must be applied by an MSPP 45 CFR part 153, and any applicable sharing provisions of an MSP. issuer based on the portion of the Federal or State regulations under (b) Duration. Premiums will remain in premium attributable to each family section 1342 that sets forth requirements effect for the plan year. member covered under the coverage in to implement the risk corridor program. (c) Guidance on rate development. accordance with any applicable Federal (c) Risk adjustment program. An OPM will issue guidance addressing or State laws and regulations MSPP issuer must comply with methods for the development of implementing section 2701(a) of the participate in the risk adjustment premiums for the MSPP. Such guidance PHS Act. program established pursuant to section will follow State rating standards (c) Age rating. For age rating, an 1343 of the Affordable Care Act, 45 CFR generally applicable in a State to the MSPP issuer must use the ratio part 153, and any applicable Federal or greatest extent practicable. established by the State in which the State regulations under section 1343 (d) Calculation of actuarial value. An MSP is offered if it is less than 3:1. that sets forth requirements to MSPP issuer must calculate actuarial (1) Age bands. An MSPP issuer must implement the risk adjustment program. value in the same manner as QHP use the uniform age bands established issuers under section 1302(d) of the under HHS regulations implementing Subpart D—Application and Affordable Care Act as well as any section 2701(a) of the PHS Act. Contracting Procedures applicable standards set by OPM or (2) Age curves. An MSPP issuer must § 800.301 Application process. HHS. use the age curves established under (e) OPM rate review process. An HHS regulations implementing section (a) Acceptance of applications. MSPP issuer must participate in the rate 2701(a) of the PHS Act. Without regard to section 6101(b) review process established by OPM to (d) Rating areas. An MSP must use through (d) of title 41, United States negotiate rates for MSPs. The rate the rating areas appropriate to the State Code, or any other statute requiring review process established by OPM will in which the MSP is offered and competitive bidding, OPM may consider be similar to the process established by established under HHS regulations annually applications from health HHS pursuant to section 2794 of the implementing section 2701(a) of the insurance issuers, including groups of PHS Act and disclosure and review PHS Act. health insurance issuers as defined in standards established under 45 CFR part (e) Tobacco rating. An MSPP issuer § 800.20, to participate in the MSPP. If 154. must apply tobacco use as a rating factor OPM determines that it is not beneficial (f) State Effective Rate Review. With in accordance with any applicable for the MSPP to consider new respect to its MSPs, an MSPP issuer is Federal or State laws and regulations applications for an upcoming year, OPM subject to a State’s rate review process implementing section 2701(a) of the will issue a notice to that effect. including a State’s Effective Rate PHS Act. (b) Form and manner of applications. Review program established by HHS An applicant must submit to OPM, in pursuant to section 2794 of the PHS Act § 800.203 Medical loss ratio. the form and manner, and in accordance and 45 CFR part 154. In the event HHS (a) Required medical loss ratio. An with the timeline specified by OPM, the is reviewing rates for a State pursuant to MSPP issuer must attain: information requested by OPM for section 2794 of the PHS Act, then HHS (1) The medical loss ratio (MLR) determining whether an applicant meets will defer to OPM’s judgment of the required under section 2718 of the PHS the requirements of this part. MSPs proposed rate increase. In the Act and regulations promulgated by § 800.302 Review of applications. event that a State withholds approval of HHS; and an MSP rate for reasons that OPM (2) Any MSP-specific MLR that OPM (a) Determinations. OPM will determines, in its discretion, to be may set in the best interests of MSP determine if an applicant meets the arbitrary, capricious, or an abuse of enrollees or that is necessary to be requirements of this part. If OPM discretion, OPM retains authority to consistent with a State’s requirements determines that an applicant meets the make the final decision to approve rates with respect to MLR. requirements of this part, OPM may for participation in the MSPP (b) Consequences of not attaining accept the applicant to enter into notwithstanding the absence of State required medical loss ratio. If an MSPP contract negotiations with OPM to approval. issuer fails to attain an MLR set forth in participate in the MSPP. (g) Single risk pool. An MSPP issuer paragraph (a), then OPM may take any (b) Requests for additional must consider all enrollees in an MSP appropriate action including, information. OPM may request to be in the same risk pool as all intermediate sanctions, such as additional information from an enrollees in all other health plans in the suspension of marketing, but not limited applicant before making a decision individual market or small group to, decertifying a MSP in one or more about whether to enter into contract market, respectively, in compliance States or terminating an MSPP issuer’s negotiations with that applicant to with section 1312(c) of the Affordable contract pursuant to § 800.404. participate in the MSPP. Care Act, 45 CFR 156.80, and any (c) Declination of application. If, after applicable Federal or State laws and § 800.204 Reinsurance, risk corridors, and reviewing an application to participate risk adjustment. regulations implementing section in the MSPP, OPM declines to enter into 1312(c). (a) Transitional reinsurance program. contract negotiations with the applicant, An MSPP issuer must comply with OPM will inform the applicant in § 800.202 Rating factors. section 1341 of the Affordable Care Act, writing of the reasons for that decision. (a) Permissible rating factors. In 45 CFR part 153, and any applicable (d) Discretion. The decision whether proposing premiums for each MSP, an Federal or State regulations under that to enter into contract negotiations with MSPP issuer must use only the rating section that sets forth requirements to a health insurance issuer who has factors permitted under section 2701 of implement the transitional reinsurance applied to participate in the MSPP is the PHS Act. program for the individual market. committed to OPM’s discretion. (b) Application of variations based on (b) Temporary risk corridors program. (e) Impact on future applications. age or tobacco use. Rating variations An MSPP issuer must comply with OPM’s declination of an application to permitted under section 2701(a) of the section 1342 of the Affordable Care Act, participate in the MSPP will not
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preclude the applicant from submitting renew the MSPP contract of an MSPP that there is good cause for less than 90 an application for a subsequent year to issuer who timely submits the days’ notice. participate in the MSPP. information described in paragraph (a) of this section. Subpart E—Compliance § 800.303 MSPP contracting. (c) OPM discretion not to renew. OPM § 800.401 Contract performance. (a) Participation in MSPP. To become may decline to renew the contract of an (a) General. An MSPP issuer must an MSPP issuer, the applicant and the MSPP issuer if: perform an MSPP contract with OPM in Director or his designee must sign a (1) OPM and the MSPP issuer fail to accordance with the requirements of contract that meets the requirements of agree on premiums and benefits for an section 1334 of the Affordable Care Act this part. MSP for the subsequent plan year; and the requirements of this part. The (b) Standard contract. OPM will (2) The MSPP issuer has engaged in establish a standard contract for the MSPP issuer must continue to meet conduct described in § 800.404(a); or such requirements while under an MSPP. (3) OPM determines that the MSPP (c) Premiums. OPM and the applicant MSPP contract with OPM. issuer will be unable to comply with a will negotiate the premiums for an MSP (b) Specific requirements for issuers. material provision of section 1334 of the for each plan year in accordance with In addition to the requirements Affordable Care Act or this part. the provisions of subpart C. described in paragraph (a) of this (d) Failure to agree on premiums and (d) Benefit packages. OPM must section, the following requirements benefits. Except as otherwise provided approve the applicant’s benefit packages apply to each MSPP issuer: in this part, if an MSPP issuer has for an MSP. (1) It must have, in the judgment of complied with paragraph (a) of this (e) Additional terms and conditions. OPM, the financial resources to carry section and OPM and the MSPP issuer OPM may elect to negotiate with an out its obligations under the MSPP; fail to agree on premiums and benefits applicant such additional terms, (2) It must keep such reasonable for an MSP on one or more Exchanges conditions, and requirements that: financial and statistical records, and (1) Are in the interests of MSP for the subsequent plan year by the date furnish to OPM such reasonable enrollees; or required by OPM, either party may financial and statistical reports with (2) OPM determines to be appropriate. provide notice of nonrenewal pursuant respect to the MSP or the MSPP, as may (f) Certification to offer health to § 800.306 or OPM may in its be requested by OPM; insurance coverage. (1) For each plan discretion withdraw the certification of (3) It must permit representatives of year, an MSPP contract will contain a that MSP on the Exchange or Exchanges OPM (including the OPM Office of certification that specifies the for that plan year. In addition, if OPM Inspector General), the U.S. Government Exchanges in which the MSPP issuer is and the MSPP issuer fail to agree on Accountability Office, and any other authorized to offer an MSP, as well as benefits and premiums for an MSP on applicable Federal government auditing the specific benefit packages authorized one or more Exchanges by the date set entities to audit and examine its records to be offered on each Exchange and the by OPM and in the event of no action and accounts which pertain, directly or premiums to be charged for each benefit (no notice of nonrenewal or renewal) by indirectly, to the MSP at such package on each Exchange. either party, the MSPP contract will be reasonable times and places as may be (2) An MSPP issuer cannot offer an renewed and the existing premiums and designated by OPM or the U.S. MSP on an Exchange unless its MSPP benefits for that MSP on that Exchange Government Accountability Office; contract with OPM includes a or Exchanges will remain in effect for (4) It must timely submit to OPM a certification authorizing the MSPP the subsequent plan year. properly completed and signed novation issuer to offer the MSP on that Exchange § 800.306 Nonrenewal. or change-of-name agreement in in accordance with paragraph (f)(1) of accordance with 48 CFR part 42 subpart (a) Definition of nonrenewal. As used this section. 42.12; in this subpart and subpart E of this (5) It must perform the MSPP contract § 800.304 Term of the contract. part, ‘‘nonrenewal’’ means a decision by in accordance with prudent business (a) Term of a contract. The term of the either OPM or an MSPP issuer not to practices, as described in paragraph (c) contract will be specified in the MSPP renew an MSPP contract. of this section; and contract and must be for a period of at (b) Notice required. Either OPM or an (6) It must not perform the MSPP least the 12 consecutive months defined MSPP issuer may decline to renew an contract in accordance with poor as the plan year. MSPP contract by providing a written business practices, as described in (b) Plan year. The plan year is a notice of nonrenewal to the other party. paragraph (d) of this section. consecutive 12 month period during (c) MSPP issuer responsibilities. The (c) Prudent business practices. For which an MSP provides coverage for MSPP issuer’s written notice of purposes of paragraph (b)(5) of this health benefits. A plan year may be a nonrenewal must be made in section, prudent business practices calendar year or otherwise. accordance with its MSPP contract with include, but are not limited to, the OPM. The MSPP issuer must also following: § 800.305 Contract renewal process. adhere to any requirements imposed by (1) Timely compliance with OPM (a) Renewal. To continue participating an Exchange with respect to the instructions and directives; in the MSPP, an MSPP issuer must termination of a QHP, including the (2) Legal and ethical business and provide to OPM, in the form and requirement to provide advance written health care practices; manner, and in accordance with the notice of termination to enrollees. If an (3) Compliance with the terms of the timeline prescribed by OPM, the Exchange does not have requirements MSPP contract, regulations, and information requested by OPM for about advance written notice of statutes; determining whether the MSPP issuer termination to enrollees, the MSPP (4) Timely and accurate adjudication continues to meet the requirements of issuer must inform current MSP of claims or rendering of medical this part. enrollees in writing of the MSP’s services; (b) OPM decision. Subject to termination no later than 90 days prior (5) Operating a system for accounting paragraph (c) of this section, OPM will to termination, unless OPM determines for costs incurred under the MSPP
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contract, which includes segregating ensure contract compliance and benefit (2) An MSPP issuer’s sustained failure and pricing MSP medical utilization MSP enrollees. to perform the MSPP contract in and allocating indirect and accordance with prudent business administrative costs in a reasonable and § 800.402 Contract quality assurance. practices, as described in § 800.401(c); equitable manner; (a) General. This section prescribes (3) A pattern of poor conduct or (6) Maintaining accurate accounting general policies and procedures to evidence of poor business practices reports of costs incurred in the ensure that services acquired under such as those described in § 800.401(d); administration of the MSPP contract; MSPP contracts conform to the or (7) Applying performance standards contract’s quality requirements. (4) Such other violations of law or (b) Internal controls. OPM will for assuring contract quality as outlined regulation as OPM may determine. periodically evaluate the contractor’s at § 800.402; and (b) Compliance actions. (1) OPM may system of internal controls under the (8) Establishing and maintaining a impose a compliance action against an quality assurance program required by system of internal controls that provides MSPP issuer at any time during the the contract and will acknowledge in reasonable assurance that: contract term if it determines that the writing whether or not the system is (i) The provision and payments of MSPP issuer is not in compliance with consistent with the requirements set benefits and other expenses comply applicable law, this part, or the terms of with legal, regulatory, and contractual forth in the contract. OPM’s reviews do not diminish the contractor’s obligation its contract with OPM. guidelines; (2) Compliance actions may include, (ii) MSP funds, property, and other to implement and maintain an effective and efficient system to apply the but are not limited to: assets are safeguarded against waste, (i) Establishment and implementation loss, unauthorized use, or internal controls. (c) Performance standards. (1) OPM of a corrective action plan; misappropriation; and (ii) Imposition of intermediate (iii) Data are accurately and fairly will issue specific performance sanctions such as suspension of disclosed in all reports required by standards for MSPP contracts and will marketing; OPM. inform MSPP issuers of the applicable (iii) Performance incentives; (d) Poor business practices. For performance standards prior to purposes of paragraph (b)(6) of this negotiations for the contract year. OPM (iv) Reduction of service area or section, poor business practices include, may benchmark its standards against area(s); but are not limited to, the following: standards generally accepted in the (v) Withdrawal of the certification of (1) Using fraudulent or unethical insurance industry. OPM may authorize the MSPP issuer to offer the MSP on one business or health care practices or nationally recognized standards to be or more Exchanges; otherwise displaying a lack of business used to fulfill this requirement. (vi) Nonrenewal of the MSPP contract; integrity or honesty; (2) MSPP issuers must comply with and (2) Repeatedly or knowingly the performance standards issued under (vii) Withdrawal of approval or providing false or misleading this section. termination of the MSPP contract. (c) Notice of compliance action. (1) information in the rate setting process; § 800.403 Fraud and abuse. (3) Failing to comply with OPM OPM must notify an MSPP issuer in (a) Program required. An MSPP issuer instructions and directives; writing of a compliance action under must conduct a program to assess its (4) Having an accounting system that this section. Such notice must indicate vulnerability to fraud and abuse as well is incapable of separately accounting for the specific compliance action as to address such vulnerabilities. undertaken and the reason for the costs incurred under the contract and/ (b) Fraud detection system. An MSPP or that lacks the internal controls compliance action. issuer must operate a system designed (2) For compliance actions listed in necessary to fulfill the terms of the to detect and eliminate fraud and abuse contract; § 800.404(b)(2)(v) through (vii), such by employees and subcontractors of the notice must include a statement that the (5) Failing to assure that the MSP MSPP issuer, by providers furnishing MSPP issuer is entitled to request a properly pays or denies claims, or if goods or services to MSP enrollees, and reconsideration of OPM’s determination applicable, provides medical services by MSP enrollees. that are inconsistent with standards of (c) Submission of information. An to impose a compliance action pursuant good medical practice; and MSPP issuer must provide to OPM to § 800.405. (6) Entering into contracts or (including its Office of Inspector (d) Notice to enrollees. If OPM employment agreements with providers, General) such information or assistance terminates an MSPP issuer’s MSPP provider groups, or health care workers as may be necessary for the agency to contract with OPM, or OPM withdraws that include provisions or financial carry out the duties and responsibilities the MSPP issuer’s certification to offer incentives that directly or indirectly specified in sections 4 and 6 of the the MSP on an Exchange, the MSPP create an inducement to limit or restrict Inspector General Act of 1978 (5 U.S.C. issuer must adhere to any requirements communication about medically App.). An MSPP issuer must provide imposed by an Exchange in which the necessary services to any individual any requested information in the form, MSP was offered with respect to the covered under the MSPP. Financial manner, and timeline prescribed by termination of a QHP, including the incentives are defined as bonuses, OPM. requirement to provide advance written withholds, commissions, profit sharing notice of termination to enrollees. If an or other similar adjustments to basic § 800.404 Compliance actions. Exchange does not have requirements compensation (e.g., service fee, (a) Causes for OPM compliance about advance written notice of capitation, salary) which have the effect actions. The following constitute cause termination to enrollees, the MSPP of limiting or reducing communication for OPM to impose a compliance action issuer must inform current MSP about appropriate medically necessary described in paragraph (b) of this enrollees in writing of the MSP’s services. section against an MSPP issuer: termination no later than 90 days prior (e) Performance escrow account. OPM (1) Failure by the MSPP issuer to meet to termination, unless OPM determines may require MSPP issuers to pay an the requirements described in that there is good cause for less than 90 assessment into an escrow account to § 800.401(a) and (b); days’ notice.
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(e) Definition. As used in this subpart, (c) Notice of final decision. OPM will comply with 45 CFR 147.136(e), and are ‘‘termination’’ means a decision by OPM notify the MSPP issuer, in writing, of subject to review and approval by OPM. to cancel an MSPP contract prior to the OPM’s final decision on the MSPP (c) Issuer obligation. An MSPP issuer end of its contract term. The term issuer’s request for reconsideration and must pay a claim or provide a health- includes OPM’s withdrawal of approval the specific reasons for that final related service or supply pursuant to of an MSPP contract. decision. OPM’s written decision will OPM’s final decision or the final constitute final agency action that is decision of an independent review § 800.405 Reconsideration of compliance subject to review under the organization without delay, regardless actions. Administrative Procedure Act in the of whether the plan or issuer intends to (a) Right to request reconsideration. appropriate U.S. district court. Such seek judicial review of the external An MSPP issuer may request that OPM review is limited to the record that was review decision and unless or until reconsider a determination to impose before OPM when it made its decision. there is a judicial decision otherwise. one of the following compliance actions: (1) Withdrawal of the certification of Subpart F—Appeals by Enrollees for § 800.505 Judicial review. the MSPP issuer to offer the MSP on one Denials of Claims for Payment or OPM’s written decision under or more Exchanges. Service § 800.504(a) will constitute final agency (2) Nonrenewal of the MSPP contract; action that is subject to review under or § 800.501 General requirements. the Administrative Procedure Act in the (3) Termination of the MSPP contract; (a) Definitions. For purposes of this appropriate U.S. district court. Such (b) Request for reconsideration and/or subpart: review is limited to the record that was hearing. (1) An MSPP issuer with a right (1) Claim means a request for: before OPM when it made its decision. to request reconsideration specified in (i) Payment of a health-related bill; or paragraph (a) of this section may request (ii) Provision of a health-related Subpart G—Miscellaneous a hearing in which OPM will reconsider service or supply. its determination to impose a (2) Adverse benefit determination § 800.601 Reservation of authority. compliance action. means an adverse benefit determination OPM reserves the right to implement (2) A request under this section must as defined in 45 CFR 147.136(a)(2)(i). and supplement these regulations with be in writing and contain contact (b) Applicability. This subpart applies written operational guidelines. information, including the name, to enrollees and to other individuals or § 800.602 Consumer choice with respect telephone number, email address, and entities who are acting on behalf of an to certain services. enrollee and who have the enrollee’s mailing address of the person or persons (a) Assured availability of varied specific written consent to pursue a whom OPM may contact regarding a coverage. Consistent with § 800.104, remedy of an adverse benefit request for a hearing with respect to the OPM will ensure that at least one of the determination. reconsideration. The request must be in MSPP issuers on each Exchange in each such form, contain such information, § 800.502 MSPP issuer internal claims and State offers at least one MSP that does and be submitted in such manner as appeals processes. not provide coverage of services OPM may prescribe. MSPP issuers are required to comply described in section 1303(b)(1)(B) of the (3) The request must be received by Affordable Care Act. OPM within 15 calendar days after the with the internal claims and appeals processes applicable to group health (b) State opt-out. An MSP may not date of the MSPP issuer’s receipt of the offer abortion coverage in any State notice of compliance action. The MSPP plans and health insurance issuers under 45 CFR 147.136(b). where such coverage of abortion issuer may request that OPM’s services is prohibited by State law. reconsideration allow a representative § 800.503 MSPP issuer internal claims and of the MSPP issuer to appear personally appeals timeframes and notice of Appendix A to Part 800—Applicable before OPM. determination. Provisions of Part A of Title XXVII of (4) A request under this section must An MSPP issuer must provide written the PHS Act include a detailed statement of the notice to an enrollee of its Section 2701: Fair Health Insurance reasons that the MSPP issuer disagrees determination on a claim brought under Premiums with OPM’s imposition of the § 800.502 according to the timeframes Section 2702: Guaranteed Availability of compliance action, and may include any and notification rules under 45 CFR Coverage additional information that will assist 147.136(b) and (e), including the Section 2703: Guaranteed Renewability of OPM in rendering a final decision under timeframes for urgent claims. If the Coverage this section. Section 2704: Prohibition of Preexisting MSPP issuer denies a claim (or a portion Condition Exclusions or Other (5) OPM may obtain additional of the claim), the enrollee may appeal information relevant to the request from Discrimination Based on Health Status the adverse benefit determination to the Section 2705: Prohibiting Discrimination any source as it may, in its judgment, MSPP issuer in accordance with 45 CFR Against Individual Participants and deem necessary. OPM will provide the 147.136(b). Beneficiaries Based on Health Status MSPP issuer with a copy of any Section 2706: Non-Discrimination in Health additional information it obtains and § 800.504 External review. Care provide an opportunity for the MSPP (a) External review by OPM. OPM will Section 2707: Comprehensive Health issuer to respond (including by conduct external review of adverse Insurance Coverage submission of additional information or benefit determinations using a process Section 2708: Prohibition on Excessive explanation). similar to OPM review of disputed Waiting Periods (6) OPM’s reconsideration and claims under 5 CFR 890.105(e), subject Section 2709: Coverage for Individuals Participating in Approved Clinical Trials hearing if requested may be conducted to the standards and timeframes set Section 2709 [sic]: Disclosure of Information by the Director or a representative forth at 45 CFR 147.136(c)(2). Section 2711: No Lifetime or Annual Limits designated by the Director who did not (b) Notice. Notices to MSP enrollees Section 2712: Prohibition on Rescissions participate in the initial decision that is regarding external review under Section 2713: Coverage of Preventive Health the subject of the request for review. paragraph (a) of this section must Services
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Section 2714: Extension of Dependent Section 2742: Guaranteed Renewability of Section 1341: Transitional Reinsurance Coverage Individual Health Insurance Coverage Program for Individual Market in Each Section 2715: Development and Utilization of Section 2743: Certification of Coverage State Uniform Explanation of Coverage Section 2751: Standards Relating to Benefits Section 1342: Establishment of Risk Documents and Standardized Definitions for Mothers and Newborns [in the Corridors for Plans in Individual and Section 2715A: Provision of Additional Individual Market] Small Group Markets Information Section 2752: Required Coverage for Section 1343: Risk Adjustment Section 2717: Ensuring the Quality of Care Section 1401: Refundable Premium Tax Section 2718: Bringing Down the Cost of Reconstructive Surgery Following Mastectomies Credit Providing Premium Assistance for Health Care Coverage Coverage under a Qualified Health Plan Section 2719: Appeals Process Section 2753: Prohibition of Health Section 1402: Reduced Cost-Sharing for Section 2719A: Patient Protections Discrimination on the Basis of Genetic Individuals Enrolling in Qualified Health Section 2725: Standards Relating to Benefits Information for Mothers and Newborns [in the Group Section 2753 [sic]: Coverage of Dependent Plans Market] Students on Medically Necessary Leave Section 1412(c): Payment of Premium Tax Section 2726: Parity in Mental Health and of Absence Credits and Cost-Sharing Reductions Substance Use Disorder Benefits Section 1557: Nondiscrimination Section 2727: Required Coverage for Appendix B to Part 800—Applicable Section 6005: Pharmacy Benefit Managers Reconstructive Surgery Following Provisions of the Affordable Care Act Transparency Requirements Mastectomies Appendix C to Part 800—Applicable Section 2728: Coverage of Dependent Section 1302: Essential Health Benefits Students on Medically Necessary Leave Requirements Provisions of the Internal Revenue of Absence Section 1303: Special Rules Code Section 1304: Related Definitions Section 2741: Guaranteed Availability of Section 36B: Internal Revenue Code of 1986 Individual Health Insurance Coverage to Section 1311: Affordable Choices of Health Certain Individuals With Prior Group Benefit Plans [FR Doc. 2012–29118 Filed 11–30–12; 11:15 am] Coverage Section 1334: Multi-State Plans BILLING CODE 6325–64–P
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Part V
Department of the Treasury
Internal Revenue Service 26 CFR Part 1 Net Investment Income Tax; Proposed Rule
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DEPARTMENT OF THE TREASURY Washington, DC 20503, with copies to become material in the administration the Internal Revenue Service, Attn: IRS of any internal revenue law. Generally, Internal Revenue Service Reports Clearance Officer, tax returns and tax return information SE:W:CAR:MP:T:T:SP, Washington, DC are confidential, as required by section 26 CFR Part 1 20224. Comments on the collection of 6103. [REG–130507–11] information should be received by Background February 4, 2013. Comments are RIN 1545–BK44 specifically requested concerning: Section 1402(a)(1) of the Health Care Whether the proposed collection of and Education Reconciliation Act of Net Investment Income Tax information is necessary for the proper 2010 (Pub. L. 111–152, 124 Stat. 1029) AGENCY: Internal Revenue Service (IRS), performance of the functions of the IRS, added section 1411 to a new chapter 2A Treasury. including whether the information will of subtitle A (Income Taxes) of the Code effective for taxable years beginning ACTION: Notice of proposed rulemaking have practical utility; after December 31, 2012. Section 1411 and notice of public hearing. The accuracy of the estimated burden associated with the proposed collection imposes a 3.8 percent tax on certain SUMMARY: This document contains of information; and individuals, estates, and trusts. See proposed regulations that provide Estimates of capital or start-up costs section 1411(a)(1) and (a)(2). The tax guidance under section 1411 of the and costs of operation, maintenance, does not apply to a nonresident alien or Internal Revenue Code (Code). Section and purchase of services to provide to a trust all of the unexpired interests 1402(a)(1) of the Health Care and information. in which are devoted to one or more of Education Reconciliation Act of 2010 There are two collections of the purposes described in section added new section 1411 to the Code information in the proposed regulations. 170(c)(2)(B). See section 1411(e). effective for taxable years beginning The first collection is in proposed In the case of an individual, section after December 31, 2012. The proposed § 1.1411–7(d) and the second collection 1411(a)(1) imposes a tax (in addition to regulations affect individuals, estates, is in proposed § 1.1411–10(g). any other tax imposed by subtitle A) for and trusts. This document also contains The information collected in each taxable year equal to 3.8 percent of a notice of a public hearing on these proposed § 1.1411–7(d) is required by the lesser of (A) the individual’s net proposed regulations. the IRS to verify the taxpayer’s reported investment income for such taxable year, or (B) the excess (if any) of (i) the DATES: Written or electronic comments adjustment under section 1411(c)(4). individual’s modified adjusted gross must be received by March 5, 2013. This information will be used to income for such taxable year, over (ii) ADDRESSES: Send submissions to: determine whether the amount of tax has been reported and calculated the threshold amount. Section 1411(b) CC:PA:LPD:PR (REG–130507–11), Room provides that the threshold amount is: 5203, Internal Revenue Service, P.O. correctly. The likely respondents are owners of interests in partnerships and (1) In the case of a taxpayer making a Box 7604, Ben Franklin Station, joint return under section 6013 or a Washington, DC 20044. Submissions S corporations. Estimated total annual reporting and/ surviving spouse (as defined in section may be hand-delivered Monday through 2(a)), $250,000; (2) in the case of a Friday between the hours of 8 a.m. and or recordkeeping burden: 315,000 hours. Estimated average annual burden per married taxpayer (as defined in section 4 p.m. to CC:PA:LPD:PR (REG–130507– respondent: 5 hours. 7703) filing a separate return, $125,000; 11), Courier’s Desk, Internal Revenue Estimated number of respondents: and (3) in any other case, $200,000. Service, 1111 Constitution Avenue NW., 63,000. Section 1411(d) defines modified Washington, DC, or sent electronically, Estimated annual frequency of adjusted gross income as adjusted gross via the Federal eRulemaking portal at responses: On occasion. income increased by the excess of (1) www.regulations.gov (IRS REG–130507– The collection of information in the amount excluded from gross income 11). proposed § 1.1411–10(g) is necessary for under section 911(a)(1), over (2) the FOR FURTHER INFORMATION CONTACT: the IRS to determine whether a taxpayer amount of any deductions (taken into Concerning the proposed regulations, has made an election pursuant to account in computing adjusted gross Michala Irons, (202) 622–3050, or David proposed § 1.1411–10(g) and to income) or exclusions disallowed under H. Kirk, (202) 622–3060; concerning determine whether the amount of tax section 911(d)(6) with respect to the submissions of comments, the hearing, has been reported and calculated amount excluded from gross income and/or to be placed on the building correctly. The likely respondents are under section 911(a)(1). access list to attend the hearing, individuals, estates, and trusts. In the case of an estate or trust, Oluwafunmilayo (Funmi) Taylor, (202) Estimated total annual reporting and/ section 1411(a)(2) imposes a tax (in 622–7180 (not toll-free numbers). or recordkeeping burden: 62,000 hours. addition to any other tax imposed by SUPPLEMENTARY INFORMATION: Estimated average annual burden per subtitle A) for each taxable year equal to respondent: 4 hours. 3.8 percent of the lesser of (A) the Paperwork Reduction Act Estimated number of respondents: estate’s or trust’s undistributed net The collection of information 15,500. investment income, or (B) the excess (if contained in this notice of proposed Estimated annual frequency of any) of (i) the estate’s or trust’s adjusted rulemaking has been submitted to the responses: Other (one time). gross income (as defined in section Office of Management and Budget for An agency may not conduct or 67(e)) for such taxable year, over (ii) the review in accordance with the sponsor, and a person is not required to dollar amount at which the highest tax Paperwork Reduction Act of 1995 (44 respond to, a collection of information bracket in section 1(e) begins for such U.S.C. 3507(d)). Comments on the unless it displays a valid control taxable year. collection of information should be sent number assigned by the Office of Section 1402(a)(2) of the Health Care to the Office of Management and Management and Budget. and Education Reconciliation Act of Budget, Attn: Desk Officer for the Books or records relating to a 2010 also amended section 6654 of the Department of the Treasury, Office of collection of information must be Code to provide that the tax imposed Information and Regulatory Affairs, retained as long as their contents may under chapter 2A (which includes
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section 1411) is subject to the estimated at fair market value immediately before designed to promote the fair tax provisions. the disposition of such interest. administration of section 1411 while The tax imposed by section 1411 is Net investment income does not preventing circumvention of the not deductible in computing any tax include distributions from a plan or purposes of the statute. One of the imposed by subtitle A of the Code. See arrangement described in section 401(a), general purposes of section 1411 is to Joint Committee on Taxation, General 403(a), 403(b), 408, 408A, or 457(b). impose a tax on unearned income or Explanation of Tax Legislation Enacted Section 1411(c)(5). investments of certain individuals, in the 111th Congress (JCS–2–11) Net investment income also does not estates, and trusts. (March 24, 2011), at 364 (JCT 2011 include any item taken into account in Under these proposed regulations, Explanation). determining self-employment income except as otherwise provided, chapter 1 Amounts collected under section for a taxable year on which a tax is principles and rules apply in 1411 are not designated for the imposed by section 1401(b). Section determining the tax under section 1411. Medicare Trust Fund. The Joint 1411(c)(6). Consistent with this general approach, Committee on Taxation in 2011 stated except as otherwise provided in the that ‘‘[i]n the case of an individual, Explanation of Provisions proposed regulations, gain that is not estate, or trust an unearned income 1. Overview of Proposed Regulations recognized under chapter 1 for a taxable Medicare contribution tax is imposed. year is not recognized for that year for No provision is made for the transfer of Proposed § 1.1411–1 provides general purposes of section 1411 (for example, the tax imposed by this provision from operating rules applicable to section gain deferred or excluded under section the General Fund of the United States 1411. Proposed § 1.1411–2 provides 453 (installment method), section 1031 Treasury to any Trust Fund.’’ See JCT specific rules applicable to individuals. (like-kind exchanges), section 1033 2011 Explanation, at 363; see also Joint Proposed § 1.1411–3 provides specific (involuntary conversions), or section Committee on Taxation, Description of rules applicable to estates and trusts. 121 (sale of principal residence)). the Social Security Tax Base (JCX–36– Proposed § 1.1411–4 provides rules for Deferral or disallowance provisions of 11) (June 21, 2011), at 24. defining net investment income. chapter 1 used in determining adjusted Section 1411(c)(1) provides that net Proposed § 1.1411–5 provides rules for gross income apply to the determination investment income means the excess (if net investment income derived from of net investment income (for example, any) of (A) the sum of (i) gross income trades or businesses that are passive section 163(d) (limitation on investment from interest, dividends, annuities, activities or trading in financial interest), section 265 (expenses and royalties, and rents, other than such instruments or commodities. Proposed interest relating to tax-exempt income), income derived in the ordinary course § 1.1411–6 provides rules for gross section 465(a)(2) (at risk limitations), of a trade or business to which the tax income and net gain on the investment section 469(b) (passive activity loss does not apply, (ii) other gross income of working capital. Proposed § 1.1411–7 limitations), section 704(d) (partner loss derived from a trade or business to provides rules for dispositions of limitations), section 1212(b) (capital loss which the tax applies, and (iii) net gain interests in partnerships and S carryover limitations), or section (to the extent taken into account in corporations. Proposed § 1.1411–8 1366(d)(2) (S corporation shareholder computing taxable income) attributable provides rules for distributions from loss limitations)). A deduction carried to the disposition of property other than certain qualified plans. Proposed over to a taxable year by reason of property held in a trade or business to § 1.1411–9 provides rules for items section 163(d), section 465(a)(2), section which the tax does not apply; over (B) taken into account in determining self- 469(b), section 704(d), section 1212(b), the deductions allowed by subtitle A employment income. Proposed or section 1366(d)(2) and allowed for which are properly allocable to such § 1.1411–10 provides rules with respect that taxable year in determining gross income or net gain. to controlled foreign corporations and adjusted gross income is also allowed Section 1411(c)(1)(A) defines net passive foreign investment companies. for the determination of net investment investment income, in part, by reference Finally, proposed § 1.469–11(b)(3)(iv) income, whether or not the taxable year to trades or businesses described in provides a regrouping ‘‘fresh start’’ from which the deduction is carried section 1411(c)(2). A trade or business is under section 469 for certain taxpayers. precedes the effective date of section described in section 1411(c)(2) if such 2. In General 1411. trade or business is (A) a passive However, the proposed regulations activity (within the meaning of section Section 1411 (which constitutes modify the chapter 1 rules in certain 469) with respect to the taxpayer, or (B) chapter 2A of the Code) contains terms respects in order to prevent a trade or business of trading in commonly used in Federal income circumvention of the purposes of the financial instruments or commodities taxation and cross-references certain statute. For example, substitute interest (as defined in section 475(e)(2)). provisions of chapter 1 such as sections and dividends, which are included in Income on the investment of working 67(e), 469, 401(a), and 475(e)(2). gross income under chapter 1, are net capital is not treated as derived from a However, other than these specific investment income even though these trade or business for purposes of section cross-references to provisions of chapter amounts are not categorically ‘‘interest’’ 1411(c)(1) and is subject to tax under 1, and certain specific definitions set and ‘‘dividends’’ under chapter 1. In section 1411. See section 1411(c)(3). forth in section 1411, section 1411 does addition, while an item of income that In the case of the disposition of an not provide definitions of its operative is specifically excluded from gross interest in a partnership or an S phrases or terminology. Moreover, there income under chapter 1 generally also is corporation, section 1411(c)(4) provides is no indication in the legislative history excluded from net investment income that gain or loss from such disposition of section 1411 that Congress intended, under section 1411 (for example, tax- is taken into account for purposes of in every event, that a term used in exempt interest), distributions described section 1411(c)(1)(A)(iii) only to the section 1411 would have the same in section 959(d) or section 1293(c), extent of the net gain or net loss which meaning ascribed to it for other Federal excess distributions under section 1291 would be so taken into account by the income tax purposes (such as chapter 1). that are dividends, and gains that are transferor if all property of the Accordingly, the definitional rules set treated as excess distributions under partnership or S corporation were sold forth in the proposed regulations are section 1291 (which are discussed in
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part 11.B of this preamble) are net $220,000, which includes net taxpayer filing a joint return. Proposed investment income under chapter 2A. investment income of $50,000, the § 1.1411–2(a)(2)(i)(B)(2) provides Proposed § 1.1411–1(b) provides individual has a section 1411 tax of procedural requirements for making this generally that all references to an $760 (3.8 percent times $20,000). election. individual’s adjusted gross income shall The proposed regulations also clarify C. Bona Fide Residents of U.S. be treated as references to adjusted gross the treatment of (1) grantor trusts (see Territories income (as defined in section 62) and proposed §§ 1.1411–2(a)(2)(ii), 1.1411– that all references to an estate’s or trust’s 3(b)(5), and part 4.B.ii of this preamble), Proposed § 1.1411–2(a)(2)(iv) provides adjusted gross income shall be treated as (2) certain bankruptcy estates (see guidance on the application of section references to adjusted gross income (as proposed §§ 1.1411–2(a)(2)(iii), 1.1411– 1411 to individuals who are bona fide defined in section 67(e)). As provided in 3(d)(1), and part 4.D of this preamble), residents (within the meaning of section part 11 of this preamble, there may be and (3) bona fide residents of the U.S. 937(a)) of possessions of the United adjustments to adjusted gross income as territories (see proposed § 1.1411– States (U.S. territories) (namely, a result of investments in controlled 2(a)(2)(iv) and part 3.C of this American Samoa, Guam, the Northern foreign corporations and passive foreign preamble). Mariana Islands, Puerto Rico, and the United States Virgin Islands). An investment companies. B. Joint Returns in the Case of a The IRS will closely review individual who is a citizen, resident, or Nonresident Alien Individual Married nonresident alien with respect to the transactions that manipulate a to a U.S. Citizen or Resident taxpayer’s net investment income to United States may qualify as a bona fide reduce or eliminate the amount of tax Proposed § 1.1411–2(a)(2)(i) addresses resident of a U.S. territory. imposed by section 1411. In appropriate certain joint returns filed by married The application of the tax under circumstances, the IRS will challenge individuals. Proposed § 1.1411– section 1411 to a bona fide resident of such transactions based on applicable 2(a)(2)(i)(A) provides that in the case of a U.S. territory depends on whether the statutes and judicial doctrines. Thus, for a U.S. citizen or resident who is married U.S. territory has a mirror code system example, if an investment arrangement (as defined in section 7703) to a of taxation, meaning the income tax that in form gives rise to income that nonresident alien individual, the laws are generally identical to the Code does not constitute net investment spouses will be treated as married filing (except for the substitution of the name income is in substance properly treated separately for purposes of section 1411. of the relevant territory for the term for Federal tax purposes as the holding For purposes of calculating the tax ‘‘United States’’ where appropriate). of securities by one party as agent for imposed under section 1411(a)(1), the Three of the five U.S. territories (Guam, another, the arrangement will be taxed U.S. citizen or resident spouse will be the Northern Mariana Islands, and the subject to the threshold amount in United States Virgin Islands) have a in accordance with its substance. section 1411(b)(2) ($125,000) for a mirror code. 3. Application to Individuals married taxpayer filing a separate Bona fide residents of U.S. territories return, and the nonresident alien spouse that are mirror code jurisdictions have A. In General will be exempt from section 1411 no income tax obligation (or related Section 1411(a)(1) imposes a tax on taxation under section 1411(e)(1). In return filing requirement) with the individuals, but section 1411(e)(1) accordance with the rules for married United States provided, generally, that provides that section 1411 does not taxpayers filing separate returns, the they properly report income and pay apply to a nonresident alien. The U.S. citizen or resident spouse must income tax to the tax administration of proposed regulations provide that the determine his or her own net their respective U.S. territory. See term individual for purposes of section investment income and modified generally sections 932, 934, and 935. 1411 is any natural person, except for adjusted gross income. Therefore, the tax imposed by section natural persons who are nonresident In general, section 6013(a) provides 1411(a) generally does not apply to bona aliens. Therefore, section 1411 applies that no joint return may be made by fide residents of mirror code to any citizen or resident of the United married taxpayers if either spouse is a jurisdictions because they will not have States (within the meaning of section nonresident alien at any time during a an income tax liability to the United 7701(a)(30)(A)). taxable year. Section 6013(g), however, States if they fully comply with the tax The amount of the tax on individuals generally permits a nonresident alien laws of the relevant territory. is equal to 3.8 percent of the lesser of individual married to a citizen or Bona fide residents of non-mirror two amounts: (A) An individual’s net resident of the United States to elect for code jurisdictions (American Samoa and investment income for such taxable purposes of chapter 1 and chapter 24 of Puerto Rico) generally exclude territory- year, or (B) the excess (if any) of (i) the the Code to be treated as a resident of source income from U.S. Federal gross individual’s modified adjusted gross the United States. Proposed § 1.1411– income under sections 931 and 933, income for such taxable year, over (ii) 2(a)(2)(i)(B) provides that married respectively. (American Samoa the threshold amount. For example, if taxpayers who file a joint Federal currently is the only territory to which an unmarried U.S. citizen has modified income tax return pursuant to a section section 931 applies because it is the adjusted gross income (as defined in 6013(g) election can also elect to be only territory that has entered into an section 1411(d) and proposed § 1.1411– treated as making a section 6013(g) implementing agreement under sections 2(c)) of $190,000, which includes election for purposes of chapter 2A of 1271(b) and 1277(b) of the Tax Reform $50,000 of net investment income (as the Code. For purposes of calculating Act of 1986.) Although territory-source defined in section 1411(c)(1) and the tax imposed under section income is excluded, these bona fide proposed § 1.1411–4), there is no tax 1411(a)(1), the effect of such an election residents are subject to U.S. Federal imposed under section 1411 because the is to include the combined income of income taxation, and have a related threshold amount for a single individual the U.S. citizen or resident spouse and income tax return filing requirement is $200,000 (see section 1411(b)(3) and the nonresident spouse in the section with the United States to the extent they proposed § 1.1411–2(d)(1)(iii)). On the 1411(a)(1) calculation and subject that have U.S.-source or other non-territory other hand, if that individual has income to the threshold amount in source income or income from amounts modified adjusted gross income of section 1411(b)(1) ($250,000) for a paid for services performed as an
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employee of the United States or any of a married taxpayer (as defined in trusts that are subject to the provisions agency thereof (collectively, U.S. section 7703) filing a separate return, of part I of subchapter J of chapter 1 of reportable income). See section 931(a) $125,000, and (3) in any other case, subtitle A of the Code) implements this and (d) and section 933. Furthermore, $200,000. For special rules regarding a approach. This rule excludes from the under section 876 and § 1.876–1, bona nonresident alien individual married to application of section 1411 business fide residents of non-mirror code U.S. citizen or resident, see proposed trusts described in § 301.7701–4(b), jurisdictions who are nonresident aliens § 1.1411–2(a)(2)(i) and part 3.B of this which are treated as business entities with respect to the United States are preamble. For rules regarding certain under § 301.7701–2 and as eligible subject to net-basis U.S. taxation on U.S. bankruptcy estates, see proposed entities for purposes of entity reportable income under sections 1 and §§ 1.1411–2(a)(2)(iii), 1.1411–3(d)(1), classification in § 301.7701–3. 55, rather than to gross-basis U.S. and part 4.D of this preamble. The Accordingly, such trusts are not subject taxation with respect to U.S.-source threshold amount is not indexed for to section 1411 at the entity level. income under sections 871 through 879 inflation. In addition, the general rule excludes (provisions that otherwise generally Under the proposed regulations, the certain state law trusts that are subject apply to nonresident aliens with respect threshold amount is generally not to specific taxation regimes in chapter 1 to U.S.-source income). prorated in the case of a short taxable other than part I of subchapter J. This Therefore, the tax imposed under year of an individual. However, the exclusion is consistent with the section 1411(a) is applicable to bona proposed regulations provide a special exception in the entity classification fide residents of non-mirror code rule in the case of an individual who regulations for entities where a specific jurisdictions if they have U.S. reportable has a short taxable year resulting from provision of the Code provides for income that gives rise to both net a change of annual accounting period. special treatment of that organization. investment income and modified Under section 443(b)(1), a taxpayer that See § 301.7701–1(b). Examples of these adjusted gross income exceeding the undergoes a change in annual trusts include common trust funds taxed threshold amount in section 1411. accounting period under section 442 under section 584 and expressly not However, section 1411(a) does not apply and has a short period must annualize subject to taxation under chapter 1 (per if such bona fide residents are its taxable income. The taxpayer’s section 584(b)) and designated nonresident alien individuals with Federal income tax is the tax computed settlement funds taxed under section respect to the United States because on the annualized taxable income by 468B in lieu of any other taxation under section 1411(e)(1) and proposed multiplying the taxable income for the subtitle A (per section 468B(b)(4)). § 1.1411–2(a)(1) exclude from section short period by twelve and dividing the However, section 1411 does apply to 1411(a) all nonresident alien result by the number of months in the trusts subject to the provisions of part I individuals, which would include bona short period. Proposed § 1.1411– of subchapter J, even though such trusts fide residents of any U.S. territory. 2(d)(2)(ii) provides that an individual may have special computational rules However, nonresident alien individuals taxpayer that has a short period within those provisions. These trusts who are bona fide residents of non- resulting from a change of annual include pooled income funds described mirror code jurisdictions remain subject accounting period shall reduce the in section 642(c)(5), cemetery perpetual to taxation under chapter 1 of subtitle A applicable threshold amount to an care funds described in section 642(i), pursuant to section 876. amount that bears the same ratio to the and qualified funeral trusts described in full threshold amount provided under D. Modified Adjusted Gross Income section 685. Similarly, section 1411 section 1411(b) as the number of months applies to certain Alaska Native For purposes of section 1411 and the in the short period bears to twelve. settlement trusts described in section regulations thereunder, the term 646 (if that provision is in effect after modified adjusted gross income is 4. Application to Estates and Trusts the effective date of section 1411). The defined in section 1411(d) and proposed In general, section 1411(a)(2) imposes Treasury Department and the IRS § 1.1411–2(c)(1) as adjusted gross a tax of 3.8 percent on estates and trusts request comments as to whether there income increased by the excess of (1) on the lesser of their undistributed net may be administrative reasons to the amount excluded from gross income investment income or the excess of their exclude one or more of these types of under section 911(a)(1), over (2) the adjusted gross income (as defined in trusts from section 1411. amount of any deductions (taken into section 67(e)) over the dollar amount at account in computing adjusted gross which the highest tax bracket in section B. Application to Specific Trusts income) or exclusions disallowed under 1(e) begins for such taxable year. i. Tax-Exempt Trusts section 911(d)(6) with respect to the Proposed § 1.1411–3 provides special amounts excluded from gross income rules for applying section 1411 to Section 1411 is in subtitle A. As a under section 911(a)(1). See part 11 of estates and trusts, including an estate or result, section 1411 does not apply to this preamble for additional discussion trust with a short taxable year resulting any trust, fund, or other special account on adjustments to modified adjusted from the formation or termination of the that is exempt from tax imposed under gross income with respect to the estate or trust or a change in accounting subtitle A. This exclusion applies even ownership of interests in controlled period. if such trust may be subject to tax under foreign corporations and passive foreign section 511 on its unrelated business A. Trusts Subject to Section 1411 investment companies. taxable income (and even if the trust’s Because Congress did not provide a unrelated business taxable income is E. Threshold Amount rule specifying the particular trusts comprised of net investment income). For purposes of section 1411(a)(1) and subject to section 1411, the Treasury Accordingly, the proposed regulations (b) and the regulations thereunder, the Department and the IRS have provide that any account, fund, or trust term threshold amount for an individual determined that section 1411 applies to that is exempt from taxation under means (1) in the case of a taxpayer ordinary trusts described in § 301.7701– subtitle A (for example, sections 501(a), making a joint return under section 4(a). The general rule set forth in 664(c)(1), 220(e)(1), 223(e)(1), 529(a), 6013 or a surviving spouse (as defined proposed § 1.1411–3(a)(1)(i) (that and 530(a)) is also exempt from section in section 2(a)), $250,000, (2) in the case section 1411 applies to all estates and 1411.
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Section 1411(e)(2) specifically excepts section 1411(a)(2)(B)(ii). This rule years beginning after December 31, from the application of section 1411 a applies a single section 1(e) threshold so 2012, less the total amount of net trust all of the unexpired interests in as to not inequitably benefit ESBTs over investment income distributed for all which are devoted to one or more of the other taxable trusts. prior taxable years beginning after purposes described in section Proposed § 1.1411–3(c)(1)(ii) provides December 31, 2012. 170(c)(2)(B). See proposed § 1.1411– the method to determine the ESBT’s Thus, under proposed § 1.1411– 3(b)(1). section 1411 tax base. First, the ESBT 3(c)(2), current and accumulated net will separately calculate the investment income of the trust is ii. Grantor Trusts undistributed net investment income of deemed to be distributed before A grantor trust is a trust or any the S portion and non-S portion in amounts that are not items of net portion thereof that is treated as being accordance with the general rules for investment income for purposes of owned by the grantor or another person trusts under chapter 1, and combine the section 1411. This classification of under subpart E of subchapter J (see undistributed net investment income of income as net investment income or sections 671 through 679). The owner the S portion and the non-S portion. non-net investment income is separate must compute the owner’s taxable Second, the ESBT will determine its from, and in addition to, the four tiers income and credits by including the adjusted gross income, solely for under section 664(b), which continue to items of income, deduction, and credit purposes of section 1411, by adding the apply. against the tax attributable to the trust net income or net loss from the S The Treasury Department and the IRS or the portion thereof treated as being portion to that of the non-S portion as considered an alternative method for owned by the owner. Thus, a grantor a single item of income or loss. Finally, determining the distributed amount of trust’s income is not taxed as trust to determine whether the ESBT is net investment income in which net income but instead is treated as being subject to section 1411, and if so, the investment income would be the income of (and taxable to) the section 1411 tax base, the ESBT will determined on a class-by-class basis owner. The same rule applies for compare the combined undistributed within each of the § 1.664–1(d)(1) purposes of section 1411, thereby net investment income with the excess enumerated categories. Under this providing a consistent application of the of its adjusted gross income over the alternative method, trustees would need grantor trust rules. This approach is also section 1(e) threshold. to account for additional classes of consistent with the IRS’s position that income within each category, consistent the application of section 671 is not iv. Charitable Remainder Trusts with § 1.664–1(d)(1)(i), for taxable years limited to chapter 1 of subtitle A. See Proposed § 1.1411–3(c)(2) provides beginning after December 31, 2012. The Notice 97–24 (1997–1 CB 409); see special computational rules for alternative method would create a sub- § 601.601(d)(2). charitable remainder trusts. Although class system of net investment income Proposed § 1.1411–3(b)(5) provides the trust itself is not subject to section and non-net investment income within that the tax under section 1411 is not 1411 as provided in proposed § 1.1411– each class and category of the section imposed on a grantor trust, but if a 3(b)(3), annuity and unitrust 664 framework. Although differentiating grantor or another person is treated as distributions may be net investment between net investment income and the owner of all or a portion of a trust income to the non-charitable recipient non-net investment income within each under subpart E of part I of subchapter beneficiary. Proposed § 1.1411–3(c)(2) class and category might be considered J of chapter 1 any items of income, provides special rules to maintain the more consistent with the structure deduction, or credit that are included in character and distribution ordering rules created for charitable remainder trusts computing taxable income of such of § 1.664–1(d) for purposes of section by section 664 and the corresponding grantor or other person under section 1411. The Treasury Department and the regulations, the Treasury Department 671 shall be treated as if such items had IRS are proposing these rules to and the IRS believe that the been received or paid directly by the determine whether items of income recordkeeping and compliance burden grantor or other person for purposes of allocated to annuity or unitrust that would be imposed on trustees by calculating such person’s net payments constitute net investment this alternative would outweigh the investment income. income to the recipient beneficiary. benefits. Proposed § 1.1411–3(c)(2)(i) provides iii. Electing Small Business Trusts that distributions from a charitable C. Foreign Estates and Foreign Trusts (ESBTs) remainder trust to a beneficiary for a Section 1411 does not specifically Proposed § 1.1411–3(c)(1) provides taxable year consist of net investment address the treatment of foreign estates special computational rules for ESBTs. income in an amount equal to the lesser and foreign nongrantor trusts. See part For purposes of chapter 1, section of the total amount of the distributions 4.B.ii of this preamble for the rules that 641(c)(1) provides that (A) the portion of for that year, or the current and apply if the foreign trust is treated as any ESBT which consists of stock in one accumulated net investment income of owned by a grantor or another person or more S corporations shall be treated the charitable remainder trust. For under sections 671 through 679. The as a separate trust, and (B) the amount charitable remainder trusts with Treasury Department and the IRS of the tax imposed by chapter 1 on such multiple annuity or unitrust believe that section 1411 should not separate trust shall be determined with beneficiaries, the trust shall apportion apply to foreign estates and foreign certain modifications detailed in section the net investment income among the trusts that have little or no connection 641(c)(2). Section 1.641(c)–1(a) provides beneficiaries based on their respective to the United States (for example, if that an ESBT is treated as two separate shares of the total annuity or unitrust none of the beneficiaries is a United trusts for purposes of chapter 1. amount paid by the trust for that taxable States person). Accordingly, proposed The proposed regulations preserve the year. §§ 1.1411–3(d)(2)(i) and 1.1411–3(b)(6) chapter 1 treatment of the ESBT as two Proposed § 1.1411–3(c)(2)(ii) defines provide, as a general rule, that foreign separate trusts for computational the term accumulated net investment estates and foreign trusts are not subject purposes but consolidates the ESBT into income as the total amount of net to section 1411. The Treasury a single trust for determining the investment income received by a Department and the IRS believe, adjusted gross income threshold in charitable remainder trust for all taxable however, that net investment income of
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a foreign estate or foreign trust should taxpayer filing separately. Therefore, includes items that are not includible in be subject to section 1411 to the extent consistent with section 1398, regardless net investment income by either specific such income is earned or accumulated of the actual marital status of the debtor, exclusion under chapter 1 (for example, for the benefit of, or distributed to, a bankruptcy estate of a debtor who is interest on state and local bonds under United States persons. The taxation of an individual is treated as a married section 103(a)); specific exclusion United States beneficiaries receiving taxpayer filing separately for purposes contained in section 1411 (for example, current distributions of net investment of the thresholds in section 1411(b), and section 1411(c)(5) or (6)) or the income from a foreign estate or foreign therefore the threshold amount proposed regulations; or are not nongrantor trust will be consistent with applicable to such a bankruptcy estate is specifically included in section the general operation of subparts A $125,000. 1411(c)(1)(A) or elsewhere in the through D of part I of subchapter J and E. Calculation of Undistributed Net proposed regulations. will be subject to section 1411. See Investment Income proposed §§ 1.1411–4(e) and 1.1411– 5. Definition of Net Investment Income 3(e)(3). Under section 1411(a)(2), the tax Section 1411(c)(1) defines net Proposed §§ 1.1411–3(d)(2)(ii) and under section 1411 is imposed on the investment income as the excess (if any) 1.1411–3(c)(3) reserve on the lesser of (A) the undistributed net of (A) the sum of (i) gross income from application of section 1411 to foreign investment income of the estate or trust interest, dividends, annuities, royalties, estates and foreign trusts with United for such year, or (B) the excess (if any) and rents, other than such income States beneficiaries. The Treasury of the adjusted gross income (as defined derived in the ordinary course of a trade Department and the IRS request in section 67(e)) for the taxable year, or business to which the tax does not comments on the application of section over the dollar amount at which the apply, (ii) other gross income from 1411 to net investment income of highest tax bracket in section 1(e) begins trades or businesses to which the tax foreign estates and foreign trusts that is for such taxable year. Thus, similar to applies, and (iii) net gain (to the extent earned or accumulated for the benefit of the computation for individuals, it is the taken into account in computing taxable United States beneficiaries, including lesser of two amounts. Net investment income) attributable to the disposition whether section 1411 should be applied income is defined in section 1411(c)(1) of property other than property held in to the foreign estate or foreign trust, or and proposed § 1.1411–4, and this same a trade or business to which the tax does to the United States beneficiaries upon definition applies to individuals, not apply, over (B) deductions allowed an accumulation distribution. Regarding estates, and trusts. Undistributed net by subtitle A which are properly the application of section 1411 to the investment income is a section 1411 allocable to such gross income or net foreign estate or foreign trust, term used solely for estates and trusts gain. consideration is being given to whether (and not individuals), and is not defined If items of net investment income the definition of a United States in section 1411. The proposed (including the properly allocable beneficiary should exclude contingent regulations conform the taxation of deductions) pass through to an or future beneficiaries and to adoption estates and trusts under section 1411 to individual, estate, or trust from a of an exclusion from section 1411 for the rules of part I of subchapter J to partnership or S corporation, the foreign pension funds that are treated as avoid double taxation of net investment allocation of such items must be trusts for United States tax purposes. To income and the taxation of amounts separately stated under section 702 or the extent that the final regulations do distributed to charities. section 1366 and the regulations not subject foreign estates or foreign The proposed regulations give effect thereunder. trusts to tax under section 1411, the to the provisions of subchapter J that Treasury Department and IRS request treat an estate or trust as a conduit by A. Gross Income Items Described in comments on how section 1411 should reducing the estate’s or trust’s taxable Section 1411(c)(1)(A)(i) apply to United States persons that income to take into account i. In General receive accumulation distributions from distributions to beneficiaries and the The proposed regulations provide that foreign estates and foreign trusts, charitable deduction. The proposed net investment income includes, in part, including the means by which to regulations, accordingly, provide that identify such distributions as net undistributed net investment income of gross income from interest, dividends, investment income. an estate or trust is its net investment annuities, royalties, and rents. However, income (as determined under proposed such income is excluded from net D. Bankruptcy Estates § 1.1411–4) reduced by the share of net investment income if it is derived in the A bankruptcy estate of a debtor who investment income included in the ordinary course of a trade or business is an individual is treated as an deductions of the estate or trust under not described in section 1411(c)(2). This individual for purposes of computing section 651 or section 661, and the share exclusion is described in part 5.A.vi of the tax under section 1411. Section 1398 of net investment income allocated to this preamble. provides rules for the taxation of the section 642(c) deduction of the ii. Interest and Dividends bankruptcy estates in chapter 7 and estate or trust in accordance with chapter 11 cases under the Bankruptcy § 1.642(c)–2(b) and the allocation and (a) In General Code in which the debtor is an ordering rules under § 1.662(b)–2. The Gross income from interest includes individual. In these cases, the proposed regulations adopt the class any item treated as interest for purposes bankruptcy estate computes its tax in system of income categorization, of chapter 1, and includes substitute the same manner as an individual. generally embodied in sections 651 interest (as discussed in part 5.A.ii.(b) of Section 1398(c)(2) provides that the tax through 663 and the regulations this preamble). rate under section 1 for the bankruptcy thereunder, to arrive at the trust’s net Gross income from dividends estate is the same as that imposed on a investment income reduction in the case includes any item treated as a dividend married taxpayer filing separately, and of distributions that are comprised of for purposes of chapter 1. This includes, section 1398(c)(3) provides that the both net investment income and net but is not limited to, amounts treated as bankruptcy estate is entitled to a excluded income items. For this dividends pursuant to subchapter C that standard deduction of a married purpose, the term excluded income are included in gross income (including
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constructive dividends); amounts substitute in order to preclude starting date are included in gross treated as dividends under section avoidance of nonresident withholding income to the extent allocable to income 1248(a); amounts treated as dividends tax. See §§ 1.861–2(a)(7); 1.861–3(a)(6); on the contract on an income-first basis. under § 1.367(b)–2(e)(2); and amounts 1.871–7(b)(2); and 1.881–2(b)(2). Gain or loss from the sale of an treated as dividends under section In certain other contexts, substitute annuity would be treated as net 1368(c)(2). In addition, as discussed in payments are not treated in the same investment income for purposes of part 5.A.ii.(b) and part 11 of this manner as actual interest or dividend section 1411. To the extent the sales preamble, substitute dividends, payments (for example, a substitute price of the annuity does not exceed its distributions from previously taxed dividend payment is not eligible for the surrender value, the gain recognized earnings and profits (within the dividends received deduction or for the would be treated as gross income meaning of section 959(d) or section lower rate of tax applicable to qualified described in section 1411(c)(1)(A)(i) and 1293(c)), and certain excess dividends under section 1(h)(11)). In proposed § 1.1411–4(a)(1)(i). If the sales distributions (within the meaning of those contexts, however, disparate price of the annuity exceeds its section 1291(b)) are included in net treatment serves essentially the same surrender value, the seller would treat investment income. purpose, that is, to preclude the the gain equal to the difference between Gross income from notional principal avoidance of tax through the the basis in the annuity and the contracts (within the meaning of multiplication of tax benefits or tax surrender value as gross income § 1.446–3(c)) is not included in net exclusions. The Treasury Department described in section 1411(c)(1)(A)(i) and investment income under section and the IRS believe that it is appropriate proposed § 1.1411–4(a)(1)(i), and would 1411(c)(1)(A)(i). However, if gross to treat substitute payments in a manner treat the excess of the sales price over income from notional principal that precludes their use to facilitate tax the surrender value as gain from the contracts is derived in a trade or avoidance. Accordingly, these proposed disposition of property under section business described in proposed regulations treat substitute interest and 1411(c)(1)(A)(iii) and proposed § 1.1411–5, all of such gross income is substitute dividends as interest and § 1.1411–4(a)(1)(iii). included in net investment income dividends for purposes of determining under section 1411(c)(1)(A)(ii). In net investment income. iv. Royalties addition, gain on a disposition of a Gross income from royalties includes notional principal contract is included (c) Controlled Foreign Corporations and amounts received from mineral, oil, and in net investment income under either Passive Foreign Investment Companies gas royalties, and amounts received for section 1411(c)(1)(A)(ii) or section Special rules apply to a United States the privilege of using patents, 1411(c)(1)(A)(iii) (see parts 5.B and 5.C shareholder of a controlled foreign copyrights, secret processes and of this preamble). corporation or a United States person who owns stock in a passive foreign formulas, goodwill, trademarks, (b) Substitute Interest and Substitute investment company. See part 11 of this tradebrands, franchises, and other like Dividends preamble. property. A substitute interest payment or a v. Rents substitute dividend payment made to iii. Annuities the transferor of a security in a Gross income from annuities includes Gross income from rents includes securities lending transaction or a sale- the amount received as an annuity amounts paid or to be paid principally repurchase transaction is treated as an under an annuity, endowment, or life for the use of (or the right to use) interest payment or dividend payment, insurance contract that is includible in tangible property. as applicable, for purposes of section gross income as a result of the vi. Ordinary Course of a Trade or 1411, and thus as net investment application of section 72(a) and section Business Exception income for purposes of proposed 72(b), and an amount not received as an § 1.1411–4(a)(1)(i). If substitute interest annuity under an annuity contract that The items described in parts 5.A.ii and substitute dividend payments were is includible in gross income under through 5.A.v of this preamble are not not treated in this manner, the Treasury section 72(e). included in net investment income by Department and the IRS believe that The Code does not define the term reason of section 1411(c)(1)(A)(i) if the taxpayers could easily avoid the section annuity. Section 72(a) provides that item meets the ordinary course of a 1411 tax with respect to interest or gross income includes any amount trade or business exception. See dividend income by lending their received as an annuity under an proposed § 1.1411–4(b). The ordinary securities over a payment date. The annuity, endowment, or life insurance course of a trade or business exception Treasury Department and the IRS do not contract. Section 72(b), however, is a two-part test. First, the item must be believe that Congress intended the excludes from gross income that part of ‘‘derived in’’ a trade or business not imposition of the section 1411 tax to an amount received as an annuity that described in section 1411(c)(2). Second, turn on transactional formalities that are bears the same ratio to that amount as if the item is derived in a trade or so readily manipulated by well-advised the investment in the contract bears to business not described in section taxpayers. This approach is consistent the expected return under the contract 1411(c)(2), then such item must also be with other contexts in which substitute (determined as of the annuity starting derived in the ‘‘ordinary course’’ of such interest and dividend payments have date). trade or business. As explained in part been treated in the same manner as Section 72(e) governs the treatment of 6 of this preamble, a trade or business actual interest or dividend payments in amounts received under an annuity described in section 1411(c)(2) is either order to preclude avoidance of tax. For contract that are not received as an a trade or business that is (A) a passive example, regulations under sections annuity (such as lump sum distributions activity (within the meaning of section 861, 871, and 881 treat substitute or surrenders). Section 72(e)(2) provides 469) with respect to the taxpayer, or (B) interest and dividend payments as in general that such amounts received trading in financial instruments (as having the same source and the same on or after the annuity starting date are defined in proposed § 1.1411–5(c)(1)) or character as the actual interest or included in gross income, and that commodities (as defined in section dividend payments for which they amounts received before the annuity 475(e)(2)).
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(a) Derived In whether PRS’s trade or business is a share of dividends and interest from In order for an item of gross income passive activity with respect to A is PRS will be subject to section described in section 1411(c)(1)(A)(i) to made in accordance with section 469 1411(c)(1)(A)(i) because they are not be excluded from section 1411 under and the regulations under that section. derived in a trade or business and the ordinary course of a trade or See part 6.B of this preamble for rules therefore cannot be excluded under the business exception, the income must be to determine whether a trade or ordinary course of a trade or business derived in a trade or business that is business is a passive activity with exception. Similar rules regarding whether the neither a passive activity with respect to respect to a taxpayer. On the other hand, the determination trade or business is determined at the the taxpayer (as described in section of whether the trade or business from taxpayer level or the entity level apply 1411(c)(2)(A) and the regulations which the income is derived is a trade in determining whether net gain is thereunder) nor a trade or business of or business of trading in financial attributable to the disposition of trading in financial instruments or instruments or commodities is made at property ‘‘held’’ in a trade or business commodities (as described in section the passthrough entity level (the subject to section 1411. See part 5.C of 1411(c)(2)(B) and the regulations partnership or S corporation level). If this preamble. thereunder). the passthrough entity is engaged in a The interaction of the ordinary course In the case of an individual who is trade or business of trading in financial of a trade or business exception and the engaged in the conduct of a trade or instruments or commodities, income trade or business rules under sections business directly (for example, a sole from such trade or business retains its 1411(c)(2)(A) and 1411(c)(2)(B) can be proprietor) or through ownership of an character as it passes from the entity to illustrated in the following example. B, interest in an entity that is disregarded the taxpayer. Therefore, regardless of an individual, owns an interest in S, an as an entity separate from the individual whether the individual is directly S corporation, which is a bank. S earns owner under § 301.7701–3, the engaged in a trade or business or interest in the ordinary course of its determination of whether an item of whether an intervening passthrough trade or business (which is not trading gross income is derived in a trade or entity is engaged in a trade or business, in financial instruments or business described in section such income will not qualify for the commodities). Accordingly, the interest 1411(c)(2)(A) or (B) is made at the ordinary course of a trade or business B earns through S is not derived in a individual level. For example, if A, an exception in section 1411(c)(1)(A)(i) trade or business described in section individual, is engaged in a trade or because such income is derived in a 1411(c)(2)(B). B will then have to business that is not described in section trade or business of trading in financial determine if S’s trade or business is a 1411(c)(2) and the trade or business has instruments or commodities (as passive activity with respect to B. If B gross income (for example, royalties), described in section 1411(c)(2)(B)). See is passive with respect to S’s banking such gross income is derived in A’s Example 2 of proposed § 1.1411–4(b)(3). business, then even though the interest trade or business, and therefore A meets Conversely, if the passthrough entity was not subject to section the first part of the ordinary course of is not engaged in a trade or business, 1411(c)(1)(A)(i) because of section a trade or business exception. However, income allocated to an individual from 1411(c)(2)(B), B’s pro rata share of S’s if A’s trade or business is a passive such entity will not qualify for the interest is net investment income under activity with respect to A or if A’s trade ordinary course of a trade or business section 1411(c)(1)(A)(ii) because of or business is trading in financial exception even if the individual or an section 1411(c)(2)(A). See Example 3 of instruments or commodities, the intervening entity is engaged in a trade proposed § 1.1411–4(b)(3). ordinary course of a trade or business or business. For example, B, an exception will be inapplicable because individual, owns an interest in UTP, a (b) Ordinary Course the income is derived in a trade or partnership, which is engaged in a trade Section 1411 does not define ordinary business described in section 1411(c)(2). or business. UTP owns an interest in course of a trade or business, and the In the case of an individual, estate, or LTP, also a partnership, which is not proposed regulations do not provide trust that owns an interest in a trade or engaged in a trade or business. Any guidance on the meaning of ordinary business through one or more income described in section course. However, other regulation passthrough entities (a partnership or an 1411(c)(1)(A)(i) passed through from sections and case law provide guidance S corporation), the determination of LTP (through UTP) to B will not be on whether an item of gross income is whether an item of gross income derived in a trade or business because derived in the ordinary course of a trade described in section 1411(c)(1)(A)(i) LTP is not engaged in a trade or or business. See, for example, Lilly v. allocated to the individual, estate, or business. This characterization applies Comm’r, 343 U.S. 90, 93 (1953), rev’g trust from the passthrough entity is even though UTP is engaged in a trade 188 F.2d 269 (4th Cir. 1951), aff’g 14 derived in a trade or business described or business and even if (1) B is engaged T.C. 1066 (1950) (holding that expenses in section 1411(c)(2)(A) (a passive in a trade or business, (2) B provides incurred regularly and arising from activity with respect to the taxpayer) or services with respect to UTP’s trade or transactions that commonly or section 1411(c)(2)(B) (trading in business, and/or (3) B provides services frequently occur in the type of business financial instruments or commodities) is to LTP. See Example 1 of proposed involved are ‘‘ordinary’’); § 1.469– made in the following manner. The § 1.1411–4(b)(3). 2T(c)(3)(ii) (providing rules for determination of whether the trade or In addition, if the passthrough entity determining whether certain portfolio business from which the income is is not engaged in a trade or business and income is excluded from the definition derived is a passive activity with respect the passthrough entity has items of of passive activity gross income). to the taxpayer is determined at the income described in section taxpayer (individual, estate, or trust) 1411(c)(1)(A)(i), the individual’s status vii. Income From Employment level in accordance with the general under section 469 is irrelevant. For For purposes of section 1411, an principles of section 469. For example, example, C, an individual, owns an employee is treated as engaged in the if A, an individual, owns an interest in interest in PRS, a partnership that is not trade or business of being an employee. PRS, a partnership, which is engaged in engaged in a trade or business and earns Therefore, regardless of whether such a trade or business, the determination of dividends and interest. C’s distributive amounts are calculated by reference to
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the items described in proposed 1411(c)(1)(A)(i). For example, any gain deemed liquidation of the S corporation § 1.1411–4(a), amounts paid by an from marking to market under section resulting from the section 338(h)(10) employer to an employee that are 475(f) or section 1256 and any realized election, which gain or loss will also treated as wages for purposes of section gain from the disposition of property generally be taken into account under 3401 are not net investment income held in the trade or business of trading section 1411(c)(1)(A)(iii) in determining because such amounts are derived in the in financial instruments or commodities net investment income. In addition, ordinary course of a trade or business to is classified as other gross income capital gain dividends from regulated which section 1411 does not apply. For subject to section 1411(c)(1)(A)(ii) (and investment companies and real estate example, amounts paid to an employee not classified as net gain under section investment trusts described in sections under a nonqualified deferred 1411(c)(1)(A)(iii)). 852(b)(3)(C) and 857(b)(3)(C), compensation plan for such employee respectively, and undistributed capital (or that otherwise become includible in C. Net Gain Described in Section gains described in sections 852(b)(3)(D) income under section 409A, 457(f), 1411(c)(1)(A)(iii) and 857(b)(3)(D), are included in net 457A, or other Code section or tax Section 1411(c)(1)(A)(iii) states that investment income as net gain under doctrine) that include gross income net investment income includes net gain section 1411(c)(1)(A)(iii), and not as from interest or other earnings are not (to the extent taken into account in dividend income under section treated as net investment income, computing taxable income) attributable 1411(c)(1)(A)(i). regardless of whether such amounts are to the disposition of property other than 2. Mark-to-Market Rules for Non- not subject to Federal Insurance property held in a trade or business not Traders Contributions Act tax due to the earlier described in section 1411(c)(2). See part application of section 3121(v)(2). 11 of this preamble for additional Under certain statutory or regulatory discussion on net investment income provisions, a non-trader may (or may be viii. Coordination With Portfolio Income required to) mark assets to market. For Rules in Section 469 with respect to controlled foreign corporations and passive foreign example, under section 1256, a taxpayer Because section 469 treats portfolio investment companies. is treated as selling a section 1256 income (which includes, for example, contract for fair market value at the end gross income from interest and i. Disposition of the taxable year, and the taxpayer dividends) as not derived in the 1. In General includes in gross income any gain and, ordinary course of a trade or business, in certain cases, loss recognized as a the ordinary course of a trade or The proposed regulations provide that result of the deemed sale. Similarly, as business exception in section net investment income includes net gain further discussed in part 11 of this 1411(c)(1)(A)(i) does not apply to such (to the extent taken into account in preamble, under section 1296, a United income, and such income will be net computing taxable income) attributable States person that has made a mark-to- investment income under proposed to the sale, exchange, transfer, market election with respect to stock in § 1.1411–4(a)(1)(i). The section 469 conversion, cash settlement, a passive foreign investment company portfolio income rules are discussed in cancellation, termination, lapse, recognizes income at the close of each detail in part 6.B.i.(c).(1).(I) of this expiration, or other disposition taxable year based on the difference preamble. (collectively, referred to as the between the fair market value of the disposition) of property other than passive foreign investment company B. Other Trade or Business Gross property held in a trade or business not stock and the person’s adjusted basis in Income Described in Section described in proposed § 1.1411–5. such stock (or is allowed a deduction 1411(c)(1)(A)(ii) Except as otherwise provided, the equal to the lesser of the excess of the Net investment income also includes income tax rules in chapter 1 generally adjusted basis of such stock over its fair other gross income derived from a trade will determine whether there has been market value or the unreversed mark-to- or business described in section a disposition of property under section market inclusions with respect to the 1411(c)(2). See section 1411(c)(1)(A)(ii). 1411. For example, if a partner receives passive foreign investment company The trades or businesses described in a distribution of money from a stock). These proposed regulations treat section 1411(c)(2) are discussed in part partnership in excess of the adjusted amounts of gain or loss recognized as a 6 of this preamble. basis of the partner’s interest in the result of marking to market as net For a trade or business described in partnership and recognizes gain under investment income. For rules regarding section 1411(c)(2)(A), which is a trade section 731(a), or if an S corporation section 1296, see part 11 of this or business that is a passive activity shareholder receives a distribution of preamble. For rules regarding traders with respect to the taxpayer, section money from the S corporation in excess who mark assets to market under 1411(c)(1)(A)(ii) includes other gross of the adjusted basis of the shareholder’s sections 475 and 1256, see part 5.B of income that is not gross income stock in the corporation and recognizes this preamble. described in section 1411(c)(1)(A)(i) or gain under section 1368(b)(2), the gain net gain described in section is treated as gain from the sale or ii. Determination of Net Gain From 1411(c)(1)(A)(iii). Thus, if an item of exchange of such partnership interest or Disposition gross income or net gain is subject to S corporation stock for purposes of Except as otherwise expressly section 1411(c)(1)(A)(i) or (iii), it is section 1411(c)(1)(A)(iii). As another provided in the regulations, the income generally not other gross income example, if stock of an S corporation is tax gain and loss recognition rules in described in section 1411(c)(1)(A)(ii). sold and a section 338(h)(10) election is chapter 1 apply for purposes of For a trade or business described in made, each shareholder’s pro rata share determining net gain under section section 1411(c)(2)(B), which is a trade or of the deemed asset sale gain or loss 1411. Thus, for example, to the extent business of trading in financial may be taken into account in gain from a like-kind exchange is not instruments or commodities, section determining net investment income recognized for income tax purposes 1411(c)(1)(A)(ii) includes all other gross under section 1411(c)(1)(A)(iii). under section 1031, it is not recognized income from such trade or business that Furthermore, each shareholder may for purposes of determining net is not gross income described in section have additional gain or loss upon the investment income under section 1411.
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Losses properly taken into account in instruments or commodities is made at an unrelated party during the taxable determining net gain include all losses the entity level. For example, S, an S year. The Treasury Department and the deductible under section 165, to the corporation, is engaged in trade or IRS request comments on whether the extent they are attributable to property business, and A, an individual, owns losses triggered under section 469(g)(1) that is either (1) not held in a trade or stock in S. If S sells its Property 1 for upon the disposition should be business, or (2) held in a trade or a gain, the determination of whether A’s considered taken into account in business described in proposed gain from the disposition of S’s Property determining the taxpayer’s net gain on § 1.1411–5. 1 is subject to section 1411(c)(1)(A)(iii) the disposition of the activity under The amount of net gain on the depends on (1) whether S held Property section 1411(c)(1)(A)(iii) or whether the disposition of an interest in a 1 in its trade or business, and (2) if S losses should be considered properly partnership or an S corporation taken held Property 1 in its trade or business, allocable deductions to gross income into account for purposes of section whether S’s trade or business is and net gain described in section 1411(c)(1)(A)(iii) may be adjusted in described in proposed § 1.1411–5. If S 1411(c)(1)(A)(i) through (iii). accordance with proposed § 1.1411–7 held Property 1 in its trade or business The proposed regulations provide that (relating to the special rule in section and S’s trade or business is neither a net investment income does not take 1411(c)(4) for the dispositions of certain passive activity with respect to A nor into account a net operating loss interests in partnerships or S trading in financial instruments or deduction. While some of the corporations). commodities with respect to S, net gain deductions included in the computation Because section 1411(c)(1)(A)(iii) uses from the disposition of Property 1 will of a net operating loss may be the term net gain (which contemplates not be subject to section deductions described in proposed a positive number), the proposed 1411(c)(1)(A)(iii). § 1.1411–4(f), the character of each of regulations provide that the amount of the various deduction items that net gain included in net investment D. Distributions From Trusts comprise a net operating loss is income may not be less than zero. The proposed regulations provide that generally not tracked for purposes of Although capital losses in excess of net investment income includes a chapter 1 once the item becomes part of capital gains are not recognized for beneficiary’s share of distributable net a net operating loss. Thus, when an item purposes of section 1411, losses income, as described in sections 652(a) becomes part of a net operating loss that allowable under section 1211(b)(1) and and 662(a), to the extent that, under is carried to another year, it generally is (2) are permitted to offset gain from the sections 652(b) and 662(b), the character no longer properly allocable to a disposition of assets other than capital of such income constitutes net specific type of income, such as gross assets that are subject to section 1411. investment income, with further income from interest. In addition, rules computations provided in proposed iii. Exception for Property Held in a to determine the portion of a net § 1.1411–3(e). Trade or Business Not Described in operating loss deduction properly Section 1411(c)(2) E. Properly Allocable Deductions allocable to items of gross income or net gain subject to section 1411 would be Section 1411(c)(1)(A)(iii) generally The proposed regulations provide that unduly complex and not administrable. applies if the property disposed of is in determining net investment income, This result is similar to the result for either not held in a trade or business, or items of gross income and net gain are self-employment income, where section is held in a trade or business described reduced by properly allocable 1402(a)(4) specifically provides that the in section 1411(c)(2) and proposed deductions. Principles applied in deduction for net operating losses § 1.1411–5. See part 6 of this preamble determining the amount and timing of a provided in section 172 shall not be for rules relating to trades or business deduction for purposes of Federal allowed in determining net earnings subject to section 1411. However, if the income taxation generally apply for from self-employment. In determining a property disposed of is ‘‘held’’ in a trade purposes of determining a deduction taxpayer’s modified adjusted gross or business and such trade or business under section 1411. However, only income (in the case of an individual) or is not described in proposed § 1.1411– amounts paid or incurred by a taxpayer adjusted gross income (in the case of an 5, net investment income would not to produce gross income or net gain estate or trust), however, net operating include gain attributable to such described in proposed § 1.1411–4 may losses continue to be taken into account. property. be deducted in determining net The Treasury Department and the IRS The determination of whether investment income. invite comments on this issue. property is ‘‘held’’ in a trade or business Net investment income for any Gross income from rents or royalties is determined in the same manner as taxable year may not be less than zero. may be reduced by deductions whether gross income is ‘‘derived in’’ a In addition, any otherwise allowable described in section 62(a)(4) that are trade or business for purposes of section deductions not taken into account for allocable to such income. Net 1411(c)(1)(A)(i). These rules are section 1411 purposes may only be investment income also takes into described in detail in part 5.A.vi of this taken into account in another taxable account the deduction for penalties preamble. Thus, for individuals directly year to the extent allowed for chapter 1 associated with the early withdrawal of engaged in a trade or business, the purposes (such as a carryforward of savings described in section 62(a)(9). determination is made at the individual investment interest under section In addition, the proposed regulations level. If an individual, estate, or trust 163(d), a suspended passive activity loss permit gross income from a trade or holds an interest in a passthrough entity that is allowed in a later year under business described in proposed and such entity disposes of its property, section 469(b), or a capital loss § 1.1411–5 that constitutes net the determination of whether property carryforward under section 1212). investment income to be reduced by is held in a trade or business that is a Section 469(g)(1) provides special deductions described in section 62(a)(1) passive activity is made at the taxpayer rules for the treatment of suspended that are allocable to such income. level (that is, the individual, estate, or passive losses when the taxpayer However, the amount of deductions trust level), and the determination of disposes of its entire interest in any allowed under section 1411(c)(1)(B) may whether property is held in a trade or passive activity (or former passive be reduced or eliminated by the business of trading in financial activity) in a fully taxable transaction to application of the self-employment
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income exception in section 1411(c)(6) 1411 because the expenses were taken both sections 67 and 68, while other and proposed § 1.1411–9. into account under section 1402 in deductions, such as state taxes, are As discussed in part 10 of this determining the taxpayer’s self- subject only to the limitation under preamble, under section 1411(c)(6) and employment income and would section 68. It is necessary to apportion proposed § 1.1411–9(a), amounts taken therefore be excluded under section these deduction limitations between into account in determining self- 1411(c)(6) and the general rule in deductions properly allocable to net employment income are excluded from proposed § 1.1411–9(a). investment income and deductions that net investment income. Amounts not The Treasury Department and the IRS are not properly allocable to net taken into account in determining self- believe that a trader should be able to investment income. The proposed employment income because they are reduce gross income described in regulations provide a method for excluded from net earnings from self- proposed § 1.1411–4(a)(1)(ii) by apportioning these limitations to employment are not covered by the self- properly allocable deductions if the determine the amount of deductions employment income exception in deductions did not actually reduce net allowed in computing net investment section 1411(c)(6), and thus may be net earnings from self-employment, even income after applying sections 67 and investment income. The application of after aggregating net earnings from self- 68. This method first applies section 67 section 1411(c)(6) and the general rule employment from other trades or to all deductions subject to that in proposed § 1.1411–9(a) to properly businesses. Therefore, proposed limitation. The disallowance is applied allocable deductions under section § 1.1411–9(b) provides a special rule for proportionately to each deduction 1411(c)(1)(B) might produce an traders of financial instruments or subject to section 67. The proposed unintended result in the context of commodities. If the trader has regulations then apply a similar process traders in financial instruments or deductions that did not reduce the to deductions subject to section 68. commodities. In many cases, the gross taxpayer’s net earnings from self- Deductions for losses under section income earned by a taxpayer engaged in employment (that is, excess 165 are taken into account only in the trade or business of trading financial deductions), even after aggregating net computing net gain. Therefore, because instruments or commodities will be earnings from self-employment from net gain in section 1411(c)(1)(A)(iii) subject to section 1411 because the other trades or businesses, such excess cannot be less than zero, any excess of trading income is not taken into account deductions are properly allocable losses over gains are not allowable in in determining the taxpayer’s self- deductions under section 1411(c)(1)(B), the computation of net investment employment income due to section notwithstanding the exclusion in income. Accordingly, properly allocable 1402(a)(3)(A) (and in cases where the section 1411(c)(6). This trader exception deductions do not include deductions trader has made a section 475 election, and section 1411(c)(6) are also under section 165. due to the interaction of sections discussed in part 10 of this preamble. F. Income Inclusion From Tax-Exempt 475(f)(1)(D) and 1402(a)(3)(A)), and thus The proposed regulations also provide Trusts the self-employment income exception that several itemized deductions are in section 1411(c)(6) does not apply to properly allocable deductions under Generally, a recipient of a distribution the income. However, the properly section 1411. The proposed regulations from a tax-exempt trust (other than non- allocable deductions attributable to a provide that investment interest allowed charitable beneficiary of a charitable trade or business of trading in financial as a deduction by reason of section remainder trust as described in part instruments or commodities would be 163(d)(1), investment expenses 4.B.iv of this preamble) will not be taken into account in determining the described in section 163(d)(4)(C), and liable for Federal income tax on the taxpayer’s self-employment income taxes imposed on investment income distribution because the distribution is (even though the gross income was not) that are described in section 164(a)(3) tax-exempt income. Accordingly, the and, absent an exception, would are deductible in determining net recipient (whether an individual, estate, therefore not reduce the taxpayer’s gross investment income. In the case of taxes or trust) will not be liable for tax under income under section 1411. imposed on both investment income section 1411 regardless of whether the For example, assume A, an and non-investment income, the distributed amount is comprised of individual, is engaged in the trade or proposed regulations provide that the items of net investment income. business of trading in commodities, and portion of taxes properly allocable to However, there may be certain made an election under section investment income may be determined situations in which the recipient of a 475(f)(2). A earns $500,000 of gross by taxpayers using any reasonable distribution from a tax-exempt trust is income (which is subject to proposed method. The proposed regulations liable for Federal income tax on all or § 1.1411–4(a)(1)(ii)), and A also incurs further provide that allocating the a part of the distributed amount. For $100,000 of expenses relating to the deduction based on the ratio of example, a distribution from a qualified trading business. Under section 1402, investment income to total gross income tuition program under section 529, a none of the $500,000 of gross income is an example of a reasonable method. Coverdell education savings account, an would be taken into account in Under the proposed regulations, Archer medical savings account (Archer determining A’s self-employment properly allocable deductions that are MSA), or a health savings account income (as provided in sections itemized deductions subject to the 2- (HSA) may be subject to Federal income 475(f)(1)(D) and 1402(a)(3)(A)), but all of percent floor on miscellaneous itemized tax if the distributed amounts are not the $100,000 of expenses would be deductions under section 67 or subject used by the recipient for qualified taken into account within the meaning to the overall limitation on itemized expenses. In these situations, it is of the general rule in proposed deductions under section 68 may be possible that a portion of the § 1.1411–9(a), even though there are no deducted in determining net investment distribution may be comprised of items net earnings from self-employment and income only to the extent that they are of net investment income generated by thus no self-employment income to deductible for income tax purposes after the trust corpus. However, in these reduce. Absent the exception described the application of the 2-percent floor cases, a recipient of a distribution from in proposed § 1.1411–9(b), the expenses and the overall deduction limitation. a tax-exempt trust will not be subject to also would not reduce the taxpayer’s Some deductions, such as investment tax under section 1411 on the $500,000 of gross income under section expenses, are subject to limitation under distribution (even if the recipient
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otherwise may be liable for Federal attributable to a passive activity (within of whether the taxpayer materially income tax on the distribution) because the meaning of section 469) that participates in the rental activity). See of the difficulty in determining whether involves the conduct of a trade or also § 1.469–1T(e)(3)(ii). For rules the distributions from the corpus of the business (within the meaning of section regarding the treatment of working trust are gross income from items that 162). The definitions of trade or interests in oil or gas property, see may constitute net investment income business and passive activity for section section 469(c)(3). (such as interest). Distributions from 1411 purposes are more restrictive than (b) Application of Existing Section 469 certain tax-exempt settlement funds for section 469 purposes in two Rules covering Indian tribal governments also respects. First, section 469 and the will not be subject to tax under section regulations thereunder provide that a Section 469 and the regulations 1411, although income subsequently trade or business includes not only a thereunder provide rules for generated from distributed funds (for trade or business (within the meaning of determining whether trade or business example, after deposit in an interest- section 162), but also any activity activities and certain rental activities are bearing account) may be subject to conducted in anticipation of the passive activities with respect to a section 1411. commencement of a trade or business taxpayer. Generally, these rules will also apply in determining whether a section 6. Section 1411 Trades or Businesses and any activity involving research or experimentation (within the meaning of 162 trade or business is a passive Section 1411(c)(1)(A) defines net section 174). See section 469(c)(5), activity for purposes of section investment income, in part, by reference §§ 1.469–1(e)(2), and 1.469–4(b)(1). 1411(c)(2)(A). Examples of this to trades or businesses described in Second, while section 469 defines principle are discussed in this section 1411(c)(2). The trades or passive activity as any trade or business preamble, but these examples are not businesses described in section in which the taxpayer does not meant to be an exhaustive list of the 1411(c)(2) are (A) a passive activity materially participate, it also includes rules that apply. (within the meaning of section 469) any rental activity in the definition of (1) Material Participation with respect to the taxpayer, and (B) passive activity. See section 469(c)(1) trading in financial instruments or Section 469(h)(1) provides that a and (2). The proposed regulations taxpayer shall be treated as materially commodities (as defined in section provide that the definition of trade or 475(e)(2)). participating in an activity only if the business for section 1411 purposes is taxpayer is involved in the operations of A. In General limited to a trade or business within the the activity on a basis which is regular, Section 1411’s statutory language and meaning of section 162. continuous, and substantial. Section Due to the differences in the legislative history do not provide a 1.469–5T provides additional guidance definitions for purposes of section 1411 definition of trade or business. The most for individuals on the meaning of and section 469, under the proposed established definition of trade or ‘‘material participation.’’ The material regulations, in some cases gross income business is found under section 162(a), participation rules of section 469 will from activities that are passive activities which permits a deduction for all the apply for purposes of determining under section 469 will not be taken into ordinary and necessary expenses paid or whether a taxpayer materially account for purposes of section incurred in carrying on a trade or participates in a section 162 trade or 1411(c)(1)(A)(ii) because the gross business. The rules under section 162 business for purposes of determining income is derived from an activity that for determining the existence of a trade whether such trade or business is does not rise to the level of a trade or or business are well-established, and described in section 1411(c)(2)(A). business (within the meaning of section there is a large body of case law and 162). In such cases, the gross income (2) Real Estate Professionals administrative guidance interpreting will not be taken into account under section 162’s meaning of trade or Section 469(c)(7) and § 1.469–9 section 1411 unless it is taken into business. The proposed regulations provide special rules for certain account under section 1411(c)(1)(A)(i) incorporate the rules under section 162 individual taxpayers involved in the or section 1411(c)(1)(A)(iii) and the for determining whether an activity is a conduct of real property trades or proposed regulations. See Example 1 of trade or business for purposes of section businesses (real estate professionals). If proposed § 1.1411–5(b)(2). 1411 and the proposed regulations. The a taxpayer meets the requirements to be use of the section 162 definition of trade i. Passive Activities That Are Section a real estate professional in section or business facilitates administration of 1411 Trades or Businesses 469(c)(7)(B), the taxpayer’s interests in rental real estate are no longer subject to section 1411 and should simplify (a) In General taxpayer compliance. See parts 5.A.vi section 469(c)(2), and the rental real and 5.C of this preamble for rules For purposes of section 1411(c)(2)(A) estate activities of the taxpayer will not relating to the determination of whether and the proposed regulations, the be passive activities if the taxpayer certain items of income are derived in taxpayer must determine whether a materially participates in each of those the ordinary course of a trade or section 162 trade or business in which activities. However, a taxpayer who business and whether net gain is the taxpayer owns an interest is a qualifies as a real estate professional is attributable to the disposition of passive activity. Section 1411(c)(2)(A) not necessarily engaged in a trade or property held in a trade or business, provides that the term passive activity business (within the meaning of section respectively. has the same meaning as section 469. 162) with respect to the rental real estate Section 469(c)(1) provides that a passive activities. If the rental real estate B. Trade or Business That Is a Passive activity is any activity that involves the activities are section 162 trades or Activity With Respect to the Taxpayer conduct of any trade or business and in businesses, the rules in section 469(c)(7) As described in part 6.A of this which the taxpayer does not materially and § 1.469–9 will apply in determining preamble, the statutory language in participate. Section 469(c)(2) provides whether a rental real estate activity of a sections 1411(c)(1)(A) and 1411(c)(2)(A) that, except as provided in section real estate professional is a passive is intended to take into account only 469(c)(7), a passive activity also activity for purposes of section gross income from and net gain includes any rental activity (regardless 1411(c)(2)(A). However, if the rental real
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estate activities of the real estate other gross income derived from a trade (c) Special Rules for Certain Income professional are not section 162 trades or business described in proposed From Passive Activities or businesses, the gross income from § 1.1411–5(a)(1). Section 469 and the regulations rents derived from such activity will not Section 1.469–4(e)(1) provides that, be excluded under section thereunder provide several rules that except as provided in §§ 1.469–4(e)(2) 1411(c)(1)(A)(i) by the ordinary course restrict the ability of taxpayers to and 1.469–11, once a taxpayer has of a trade or business exception. The artificially generate passive income from ordinary course of a trade or business grouped activities, the taxpayer may not certain types of passive activities. Some exception is inapplicable because the regroup those activities in subsequent rules specifically recharacterize income rents are not derived from a trade or taxable years. The Treasury Department from a passive activity as income not business and will therefore be subject to and the IRS have determined on prior from a passive activity (income section 1411. The ordinary course of a occasions that taxpayers should be recharacterization rules). Other rules trade or business exception is described given a ‘‘fresh start’’ to redetermine their recharacterize the activity itself as being in part 5.A.vi of this preamble. groupings. The enactment of section a non-passive activity (activity 1411 may cause taxpayers to reconsider (3) Rental Activity Exceptions recharacterization rules). their previous grouping determinations, Section 469(j)(8) and the regulations and therefore the Treasury Department (1) Income Recharacterization Rules thereunder provide that a rental activity and the IRS have determined that (I) Portfolio Income is any activity where payments are taxpayers should be given the principally for the use of tangible opportunity to regroup. Thus, the Section 469(e)(1)(A)(i)(I) provides that property that is used or held for use by proposed regulations provide that in determining the income or loss from customers. Section 1.469–1T(e)(3)(ii) taxpayers may regroup their activities in any activity there shall not be taken into provides several exceptions to the the first taxable year beginning after account any gross income from interest, definition of a rental activity. If a taxpayer’s activity meets one of these December 31, 2013, in which the dividends, annuities, or royalties not exceptions, the activity is not a rental taxpayer meets the applicable income derived in the ordinary course of a trade activity for purposes of section 469 (that threshold in proposed § 1.1411–2(d) and or business (portfolio income). Thus, is, it is no longer per se passive), and the has net investment income (as defined items of net investment income in activity will not be a passive activity if in proposed § 1.1411–4). The section 1411(c)(1)(A)(i) and proposed the taxpayer materially participates in determination in the preceding sentence § 1.1411–4(a)(1)(i) that are portfolio that activity. These rental activity is made without regard to the effect of income will, by definition, be included exceptions will also apply for the regrouping. Taxpayers may regroup in section 1411 because these portfolio determining whether the activity is a their activities in reliance on this items are not derived in the ordinary passive activity of a taxpayer for proposed regulation for any taxable year course of a trade or business. In purposes of section 1411(c)(2)(A). that begins during 2013 if section 1411 addition, § 1.469–7 provides an However, a taxpayer who meets one of would apply to such taxpayer in such exception to the portfolio income rules these exceptions is not necessarily taxable year. A taxpayer may only for self-charged interest, which is engaged in a trade or business (within regroup activities once pursuant to treated as passive income, and therefore, the meaning of section 162) with respect § 1.469–11(b)(3)(iv)(A), and any such the gross income from such interest to the activity. In other words, even if regrouping will apply to the taxable year would be gross income from interest the taxpayer meets one of the exceptions for which the regrouping is done and all subject to proposed § 1.1411–4(a)(1)(i). in § 1.469–1T(e)(3)(ii), if the taxpayer’s subsequent years. activity is not a section 162 trade or Similarly, section 469(e)(1)(A)(ii) business, gross income from rents from The regrouping must comply with the provides that gain or loss not derived in the activity will be subject to section existing requirements under § 1.469–4. the ordinary course of a trade or 1411(c)(1)(A)(i) because the activity For example, § 1.469–4(e) provides that business which is attributable to the does not meet the ordinary course of a taxpayers must comply with disclosure disposition of property (I) producing trade or business exception. The requirements that the Commissioner portfolio income, or (II) held for proposed regulations provide examples may prescribe with respect to both their investment, should not be taken into that illustrate the interaction of section original groupings and the addition and account in determining income from a 1411 and the section 469 rental activity disposition of specific activities within passive activity. Thus, gain described in exceptions. See Examples 3 and 4 of those chosen groupings in subsequent section 469(e)(1)(A)(ii) will be net proposed § 1.1411–5(b)(2). taxable years. On January 25, 2010, the investment income if (1) the gain is (4) Grouping Rules Treasury Department and the IRS attributable to property held in a section published Revenue Procedure 2010–13 162 trade or business of trading in Section 1.469–4 provides rules for (2010–4 IRB 329), which requires financial instruments or commodities, defining an activity for purposes of taxpayers to report to the IRS their or (2) the gain is attributable to property applying the passive activity loss rules groupings and regroupings of activities not held in a section 162 trade or of section 469 (grouping rules). The grouping rules will apply in and the addition of specific activities business. See part 5.C of this preamble. within their existing groupings of determining the scope of a taxpayer’s (II) Working Capital trade or business in order to determine activities for purposes of section 469 whether such trade or business is a and § 1.469–4. Thus, the disclosure Section 469(e)(1)(B) provides special passive activity for purposes of section requirements of § 1.469–4(e) and rules for return on working capital. 1411(c)(2)(A). However, a proper Revenue Procedure 2010–13 require Section 1411(c)(3) provides that rules grouping under § 1.469–4(d)(1) taxpayers who regroup their activities similar to section 469(e)(1)(B) also apply (grouping rental activities with other pursuant to proposed § 1.469– for purposes of section 1411. Working trade or business activities) will not 11(b)(3)(iv) to report their regroupings to capital is discussed in part 7 of this convert gross income from rents into the IRS. See § 601.601(d)(2). preamble.
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(III) Net Income Recharacterization by virtue of § 1.469–2T(c)(3)(ii)(D), such trade or business of trading in financial Rules gross income or net gain nevertheless instruments or commodities, the gross The regulations under section 469 will be taken into account under section income must be derived from an activity provide special rules that treat income 1411(c)(2)(B) if the activity constitutes a that would constitute trading for purposes of chapter 1. Therefore, a from certain activities as not from a section 162 trade or business of trading person that is a trader in commodities passive activity. See § 1.469–2T(f)(2) in financial instruments or or a trader in financial instruments is (special rule for significant commodities. Trading in financial engaged in a trade or business for participation); § 1.469–2T(f)(3) (rental of instruments or commodities is purposes of section 1411(c)(2)(B). The nondepreciable property); § 1.469– discussed in part 6.C of this preamble. Treasury Department and the IRS 2T(f)(4) (net interest income from C. Trading in Financial Instruments or emphasize that the proposed regulations passive equity-financed lending Commodities do not change the state of the law with activity); § 1.469–2(f)(5) (net income i. Distinguishing Between Dealers, respect to classification of traders, from certain property rented incidental Traders, and Investors dealers, or investors for purposes of to development activity); § 1.469–2(f)(6) chapter 1. (property rented to a nonpassive Determining whether trading in activity); § 1.469–2T(f)(7) (special rules financial instruments or commodities ii. Definition of Financial Instruments applicable to the acquisition of an rises to the level of a section 162 trade Section 1411 does not define the term interest in a passthrough entity engaged or business is a question of fact. Higgins ‘‘financial instrument.’’ Section in the trade or business of licensing v. Comm’r, 312 U.S. 212, 217 (1941); 731(c)(2)(C) provides a definition of intangible property). In most cases, Estate of Yaeger v. Comm’r, 889 F.2d 29, financial instrument for purposes of these items will be subject to section 33 (2d Cir. 1989). In general, section section 731, and this existing statutory 1411 if the item of income constitutes 475(c)(1) provides that the term dealer definition is used as a guideline for the gross income from one of the items in securities means a taxpayer who (A) section 1411 definition. The proposed described in proposed § 1.1411– regularly purchases securities from or regulations define the term financial 4(a)(1)(i) and the item of income is not sells securities to customers in the instrument to include stocks and other derived in the ordinary course of a trade ordinary course of a trade or business, equity interests, evidences of or business. For example, if a taxpayer or (B) regularly offers to enter into, indebtedness, options, forward or has gross income from rents from an assume, offset, assign, or otherwise futures contracts, notional principal activity described in § 1.469–2(f)(6) that terminate positions in securities with contracts, any other derivatives, or any is not derived in the ordinary course of customers in the ordinary course of a evidence of an interest in any of the a trade or business, the gross income trade or business. In contrast, a trader listed items. An evidence of an interest from rents will be subject to section seeks profit from short-term market in any of these listed items includes, but 1411. The ordinary course of a trade or swings and receives income principally is not limited to, short positions or business exception is described in part from selling on an exchange rather than partial units in any of these listed items. 5.A.vi of this preamble. from dividends, interest, or long-term appreciation. Groetzinger v. Comm’r, iii. Definition of Commodities (IV) Substantially Appreciated Property 771 F.2d 269, 274–275 (7th Cir. 1985), In accordance with the statutory Section 1.469–2(c)(2)(iii)(A) generally aff’d 480 U.S. 23 (1987); Moller v. language in section 1411(c)(2)(B), the provides that if an interest in property United States, 721 F.2d 810, 813 (Fed. proposed regulations provide that the used in an activity is substantially Cir. 1983). A person will be a trader, term commodities has the same meaning appreciated at the time of its and therefore engaged in a section 162 as that provided in section 475(e)(2). disposition, any gain from the trade or business, if his or her trading disposition shall be treated as not from is frequent and substantial, which has 7. Working Capital Exception a passive activity. The recharacterized been rephrased as ‘‘frequent, regular, Section 1411(c)(3) provides that a rule gain may be taken into account under and continuous.’’ Boatner v. Comm’r, similar to the rule of section 469(e)(1)(B) section 1411(c)(1)(A)(iii) if the gain is T.C. Memo. 1997–379, aff’d in applies for purposes of section 1411 (the attributable to the disposition of unpublished opinion 164 F.3d 629 (9th working capital rule). Section property. Cir. 1998). 469(e)(1)(B) provides that, for purposes An investor is a person who of determining whether income is (2) Activity Recharacterization Rules purchases and sells securities with the treated as from a passive activity, any Section 1.469–1T(e)(6) provides that principal purpose of realizing income or gain attributable to an an activity of trading personal property investment income in the form of investment of working capital shall be for the account of owners of interests in interest, dividends, and gains from treated as not derived in the ordinary the activity is not a passive activity appreciation in value over a relatively course of a trade or business. (without regard to whether such activity long period of time (that is, long-term The term working capital is not is a trade or business activity). For this appreciation). The management of one’s defined in either section 469 or section purpose, § 1.469–1T(e)(6)(ii) provides own investments is not considered a 1411, but it generally refers to capital set that the term personal property means section 162 trade or business no matter aside for use in and the future needs of personal property (within the meaning how extensive or substantial the a trade or business. Because the capital of section 1092(d), without regard to investments might be. See Higgins v. may not be necessary for the immediate paragraph (3) thereof). Section Comm’r, 312 U.S. 212, 217 (1941); King conduct of the trade or business, the 1092(d)(1) provides that personal v. Comm’r, 89 T.C. 445 (1987). amounts are often invested by property means any personal property Therefore, an investor is not considered businesses in income-producing liquid of a type which is actively traded. While to be engaged in a section 162 trade or assets such as savings accounts, the gross income from or net gain business of investing. certificates of deposit, money market attributable to an activity of trading or For purposes of section 1411(c)(2)(B), accounts, short-term government and dealing in property will not be taken in order to determine whether gross commercial bonds, and other similar into account under section 1411(c)(2)(A) income is derived from a section 162 investments. These investment assets
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will usually produce portfolio-type in the partnership interest or S A. Mechanics of Section 1411(c)(4) income, such as interest. Under section corporation stock and the transferor’s i. In General 469(e)(1)(B), portfolio-type income share of the entity’s adjusted basis in the generated by working capital is not underlying properties. See Example 2 of The proposed regulations provide derived in the ordinary course of a trade proposed § 1.1411–7(e). Second, the that, for purposes of section 1411(c)(4), or business, and therefore, it is not sales price of the interest may not reflect a transferor computes the gain or loss treated as passive income. Under the proportionate share of the from the sale of the underlying section 1411(c)(3), gross income from underlying properties’ fair market value properties of the partnership or S and net gain attributable to the with respect to the interest sold. corporation using a deemed asset sale investment of working capital is not method (Deemed Sale), and then In order to achieve parity between an determines if, based on the Deemed derived in the ordinary course of a trade interest sale and an asset sale, section or business, and therefore such gross Sale, there is an adjustment (either 1411(c)(4) must be applied on a positive or negative) to the transferor’s income and net gain is subject to section property-by-property basis, which 1411. gain or loss on the disposition of the requires a determination of how the partnership or S corporation interest for A taxpayer may take into account the property was held in order to determine properly allocable deductions (related to purposes of section 1411(c)(1)(A)(iii). whether the gain or loss to the transferor An adjustment only occurs if the losses or deductions properly allocable from the hypothetical disposition of to the investment of such working underlying property is used in a trade such property would have been gain or or business not described in proposed capital) in determining net investment loss subject to section 1411(c)(1)(A)(iii). income. See part 5.E of this preamble § 1.1411–5 (a positive adjustment As described in proposed § 1.1411– regarding properly allocable deductions. reduces a loss on the disposition of the 4(a)(1)(iii) and proposed § 1.1411–4(d), interest, and a negative adjustment 8. Dispositions of Interests in section 1411(c)(1)(A)(iii) applies if the reduces the gain on the disposition of Partnerships and S Corporations property disposed of is either not held the interest). Because the proposed In most cases, an interest in a in a trade or business, or held in a trade regulations apply a Deemed Sale by the partnership or S corporation is not or business described in proposed passthrough entity of all its assets for property held in a trade or business. § 1.1411–5. In other words, under the cash equal to the fair market value of the Therefore, gain or loss from the sale of proposed regulations, the exception in entity’s properties, any gain or loss on a partnership interest or S corporation section 1411(c)(4) is only applicable the interest sale that is not reflected in stock will be subject to section where the property is held in a trade or the underlying properties of the 1411(c)(1)(A)(iii). See also section 731(a) business not described in section passthrough entity (as the result of an and section 1368(b)(2) (providing that 1411(c)(2). See JCT 2011 Explanation, at inside-outside basis disparity) would the gain recognized when cash is 364, fn. 976 (and accompanying text); not create an adjustment. This is distributed in excess of the adjusted Joint Committee on Taxation, Technical illustrated in Example 2 of proposed basis of, as applicable, a partner’s Explanation of the Revenue Provisions § 1.1411–7(e). interest in a partnership or a of the ‘‘Reconciliation Act of 2010,’’ as In developing the Deemed Sale, the shareholder’s stock in an S corporation amended, in combination with the Treasury Department and the IRS is treated as gain from the sale or ‘‘Patient Protection and Affordable Care considered existing hypothetical exchange of such partnership interest or Act’’ (JCX–18–10) (Mar. 21, 2010), at transactions, such as the hypothetical S corporation stock). 135 fn. 286 (and accompanying text) transaction to determine a transferee’s Section 1411(c)(4)(A) provides that, in (JCT 2010 Explanation). This means that basis adjustment under section 743(b). the case of a disposition of an interest the exception in section 1411(c)(4) does See § 1.743–1. The proposed regulations in a partnership or S corporation, gain not apply where (1) there is no trade or provide that the Deemed Sale under from such disposition shall be taken business, (2) the trade or business is a section 1411(c)(4) applies, in part, rules into account under section passive activity (within the meaning of similar to § 1.743–1(d)(2). However, the 1411(c)(1)(A)(iii) only to the extent of proposed § 1.1411–5(a)(1)) with respect Treasury Department and the IRS the net gain which would be so taken to the transferor, or (3) where the recognize that the Deemed Sale may into account by the transferor under partnership or the S corporation is in impose an administrative burden on section 1411(c)(1)(A)(iii) if all property the trade or business of trading in owners of partnerships and S of the partnership or S corporation were financial instruments or commodities corporations in certain circumstances. sold for fair market value immediately (within the meaning of proposed The Treasury Department and the IRS before the disposition of such interest. § 1.1411–5(a)(2)), because in these cases request comments on other methods Section 1411(c)(4)(B) applies a similar there would be no change in the amount that would implement the provisions of rule to a loss from a disposition. of net gain determined under proposed section 1411(c)(4) without imposing an For purposes of section 1411, § 1.1411–4(a)(1)(iii) upon an asset sale undue burden on taxpayers. In addition, Congress intended section 1411(c)(4) to under section 1411(c)(4). For example, if the IRS and the Treasury Department put a transferor of an interest in a the transferor is passive with respect to request comments on how to determine partnership or S corporation in a similar the entity’s trade or business, the a partner’s interest in section 1411 position as if the partnership or S application of the deemed asset sale rule assets upon a distribution in which gain corporation had disposed of all of its under section 1411(c)(4), as described in is recognized pursuant to section 731. properties and the accompanying gain part 8.A of this preamble, would not or loss from the disposition of such adjust the transferor’s section ii. Deemed Sale properties passed through to its owners 1411(c)(1)(A)(iii) gain on the disposition The first step of the Deemed Sale is (including the transferor). However, the of the interest. See Example 7 of a hypothetical disposition of all the gain or loss upon the sale of an interest proposed § 1.1411–7(e) for a situation entity’s properties (including goodwill) in the entity and a sale of the entity’s involving the transferor of an interest in in a fully taxable transaction for cash underlying properties will not always an S corporation with two trades or equal to the fair market value of the match. First, there may be disparities businesses, only one of which is entity’s properties immediately before between the transferor’s adjusted basis described in proposed § 1.1411–5. the disposition of the interest.
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The second step of the Deemed Sale in a trade or business not described in goodwill is allocated between the trades is to compute the gain or loss on each section 1411(c)(2) (thus, a negative or businesses based on the relative fair of the entity’s properties (including adjustment) and the transferor had a market value of the property (excluding goodwill). The calculation of gain or gain on the disposition of the interest, cash) held for use in each trade or loss is determined by comparing the fair then the gain on the disposition of the business. For example, if the entity has market value of each property with such interest will be reduced for purposes of total assets with a fair market value of property’s adjusted basis. The gain or determining net investment income. $110,000 (consisting of assets of $10,000 loss from each property must be However, in a situation in which a not held in any trade or business, computed separately. transferor has a gain (determined $15,000 of assets held for use in The third step of the Deemed Sale is without regard to section 1411(c)(4)) Business 1, $45,000 of assets held for to allocate the gain or loss from each from the disposition of the partnership use in Business 2, $10,000 of cash, and property determined in the second step or S corporation interest, a negative goodwill of $30,000), and if the gain on to the transferor. In the case of a adjustment cannot result in the the goodwill is $20,000, $5,000 of such partnership, the amount of gain or loss transferor having a loss on the gain is allocated to Business 1 and the allocated to the transferor must take into disposition of the partnership or S remaining $15,000 gain is allocated to account the allocations provided in the corporation interest for purposes of Business 2. See Example 8 of proposed partnership agreement and any section 1411(c)(1)(A)(iii), and a positive § 1.1411–7(e). allocations required by sections 704(b) adjustment is not taken into account. and 704(c) (and the regulations For example, if a transferor has a B. Special Situations thereunder), as well as basis $100,000 gain on the disposition of S i. Interaction of Section 1411(c)(4) and adjustments under section 743 with corporation stock, the section 1411(c)(4) Section 338(h)(10) Election respect to the transferor. In the case of adjustment cannot result in a gain for In the case of a disposition of stock in an S corporation, the amount of gain or section 1411 purposes greater than an S corporation with respect to which loss allocated to the transferor is $100,000, and cannot result in a loss for a section 338(h)(10) election is made, determined under section 1366(a), and section 1411 purposes. See Example 3 section 1411(c)(4) is inapplicable to the the allocation should not take into of proposed § 1.1411–7(e). Similarly, in account any reduction in the transferor’s a situation where a transferor has a loss deemed asset sale and liquidation distributive share in section 1366(f)(2) (determined without regard to section transactions that result from the section resulting from the hypothetical 1411(c)(4)) from the disposition of the 338(h)(10) election. Under section imposition of tax under section 1374 as partnership or S corporation interest, a 338(h)(10), the sale of the S corporation a result of the Deemed Sale. positive adjustment cannot result in the stock is treated as an actual asset sale by The fourth step of the Deemed Sale is transferor having a gain on the the S corporation. Section 1411(c)(4) is to determine whether the amount of disposition of the partnership or S inapplicable to such an asset sale. In the gain or loss allocated to the transferor corporation interest for purposes of deemed liquidation of the former S with respect to each property under the section 1411(c)(1)(A)(iii), and a negative corporation, section 1411(c)(4) is also Deemed Sale would have been taken adjustment is not taken into account. inapplicable to the shareholders because into account in determining the For example, if a transferor has a the underlying character of the gain or transferor’s net gain under section $50,000 loss on the disposition of S loss in the assets at the former S 1411(c)(1)(A)(iii) if it were an actual corporation stock, the section 1411(c)(4) corporation level is already fully taken disposition. If the entity’s property is adjustment cannot result in a loss for into account in the deemed asset sale. either held in a trade or business section 1411 purposes greater than ii. Installment Sales described in section 1411(c)(2) with $50,000, and cannot result in a gain for respect to the partnership, the S section 1411 purposes. In the case of a disposition of a corporation, or the transferor, or is not The proposed regulations provide a partnership or S corporation interest in held in a trade or business, there will be special rule for property held in more an installment sale transaction to which no adjustment under section 1411(c)(4) than one trade or business during the section 453 applies, proposed § 1.1411– with respect to that property. However, twelve-month period ending on the date 7(b)(1)(i) provides that the adjustment to if the property is held in a trade or of the disposition. In such case, the fair net gain will be calculated in the year business not described in section market value and the adjusted basis of of the disposition. However, under 1411(c)(2), there is an adjustment under such property must be allocated among proposed § 1.1411–4(a)(1)(iii), the gain section 1411(c)(4) calculated in the the trades or businesses on a basis that and any applicable adjustment are following manner. First, the transferor’s reasonably reflects the use of the deferred and recognized proportionally gains or losses from such property (or property. This allocation rule is pursuant to section 453. properties) are aggregated to create a net illustrated in Example 7 of proposed In the event that the year of the gain (which will be treated as a negative § 1.1411–7(e). disposition of the interest occurs before adjustment) or a net loss (which will be The proposed regulations provide the effective date of section 1411, the treated as a positive adjustment). rules to determine the treatment of gain adjustment under section 1411(c)(4) and Second, based on the adjustment or loss from goodwill for purposes of proposed § 1.1411–7(c) will not be calculated and subject to certain section 1411(c)(4). If the entity is applicable. However, the proposed limitations, the transferor then must engaged in one trade or business, the regulations allow taxpayers to elect into adjust the gain or loss from the entire gain or loss on the goodwill will the rules of proposed § 1.1411–7 if they disposition of the partnership or S be treated as gain or loss from the receive installment sale payments corporation interest determined in disposition of property held for use in attributable to a disposition of an section 1411(c)(1)(A)(iii) (without regard that trade or business, and no portion of interest in a partnership or S to section 1411(c)(4)) by the positive or such gain or loss will be treated as corporation that occurred before the negative adjustment. attributable property not held for use in effective date of section 1411. This For example, if in the Deemed Sale the trade or business. If the entity is election allows taxpayers that sell their the transferor would have been engaged in more than one trade or interests in installment sales before the allocated a net gain from property held business, the gain or loss on the effective date of section 1411 to be
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treated similarly with taxpayers that sell of the interest; and (8) the computation deferrals as described in § 1.457–4(e)(2) their interests after the effective date. In of the adjustment under proposed through (4). submitting the required statement of § 1.1411–7(c)(5). Second, the proposed regulations adjustment (described in proposed In cases involving partnerships provide that, for purposes of section § 1.1411–7(d)), this election will require without a section 754 election in effect 1411, amounts that are deemed the taxpayer to have the information (or where there is no mandatory section distributions under the Code for (such as basis and fair market value of 743 adjustment) and S corporations, the purposes of income tax are distributions each property) as of the date of transferor may not have access to the for purposes of section 1411(c)(5), even disposition. information that is necessary to make if these distributions are not treated as the adjustment and to file the required actual distributions for purposes of the iii. Sale by a Qualified Subchapter S statements. The Treasury Department qualification requirements under Trust (QSST) and the IRS request comments on how section 401(a). Examples of deemed If an election is made pursuant to a transferor may acquire the required distributions include conversions to a section 1361(d)(2), a QSST can be an information in these cases. Roth IRA described in section 408A and eligible shareholder of an S corporation. deemed distributions under section Section 1.1361–1(j)(8) provides rules for 9. Exception for Distributions From 72(p). coordinating the QSST rules and the Qualified Plans Third, any amount that is not treated grantor trust rules, and provides that the Section 1411(c)(5) provides that net as a distribution, but is otherwise income beneficiary of the QSST is investment income does not include any includible in gross income pursuant to treated as the owner, for purposes of distribution from the following plans or a rule relating to amounts held in a section 678(a), of that portion of the arrangements: qualified plan or arrangement, is a trust that consists of the stock of the S (1) A qualified pension, stock bonus, distribution within the meaning of corporation for which the QSST election or profit-sharing plan under section section 1411(c)(5), and thus is not was made. However, solely for purposes 401(a); included in net investment income. For of this rule, an income beneficiary who (2) A qualified annuity plan under example, any income of the trust of a is a deemed section 678 owner only by section 403(a); qualified plan or arrangement that is reason of section 1361(d)(1) will not be (3) A tax-sheltered annuity under applied to purchase a participant’s life treated as the owner of the S corporation section 403(b); insurance coverage (the P.S. 58 costs) is stock in determining and attributing the (4) An individual retirement account a distribution within the meaning of Federal income tax consequences of a (IRA) under section 408; section 1411(c)(5), and thus is not disposition of the stock by the QSST. (5) A Roth IRA under section 408A; or included in net investment income. Therefore, if the QSST sells some (or all) (6) A deferred compensation plan of While distributions from qualified of its S corporation stock, any gain or a State and local government or a tax- plans or arrangements are not includible loss recognized on the sale will be that exempt organization under section in net investment income, as defined in of the trust, not the income beneficiary. 457(b). section 1411(c)(1), distributions from a (On the other hand, the disposition is These proposed regulations provide qualified plan or arrangement that are treated as a disposition by the income rules relating to whether an amount is includible in gross income under beneficiary for purposes of applying a distribution from a plan within the chapter 1 are taken into account in sections 465 and 469 to the income meaning of section 1411(c)(5) and, thus, determining the taxpayer’s modified beneficiary of a QSST.) exempt from net investment income. adjusted gross income or adjusted gross The proposed regulations do not First, the proposed regulations provide income for purposes of calculating the address whether special rules are that, for purposes of section 1411, any amount subject to tax under section needed to coordinate the QSST rules amount actually distributed from a 1411(a)(1)(B) or (a)(2)(B). regarding dispositions of stock in an S qualified plan or arrangement is a 10. Exception for Items Subject to Self- corporation in § 1.1361–1(j)(8) and distribution within the meaning of Employment Tax section 1411(c)(4). The Treasury section 1411(c)(5), and thus is not Department and the IRS request included in net investment income. The Section 1411(c)(6) provides that net comments on whether special proposed regulations provide examples investment income shall not include coordination rules are necessary. of actual distributions, including a any item taken into account in rollover to an eligible retirement plan determining self-employment income C. Required Statements within the meaning of section for such taxable year on which a tax is Any transferor making an adjustment 402(c)(8)(B), a distribution of a plan imposed by section 1401(b). Section under proposed § 1.1411–7(c)(5) must offset amount within the meaning of 1401(b) imposes a Medicare tax on the attach a statement to the transferor’s Q&A–13(b) of § 1.72(p)–1, and self-employment income of individuals return for the year of disposition. The corrective distributions from a qualified equal to a specified percentage (2.9 statement must include: (1) A plan or arrangement to maintain its tax- percent) of the amount of the self- description of the disposed-of interest; favored status. The term ‘‘corrective employment income for such taxable (2) the name and taxpayer identification distribution’’ includes any of the year and an Additional Medicare Tax number of the entity disposed of; (3) the following distributions: (1) A for taxable years beginning after fair market value of each property of the distribution of excess deferrals as December 31, 2012, equal to 0.9 percent entity; (4) the entity’s adjusted basis in described in § 1.402(g)–1(e)(3); (2) for of self-employment income in excess of each property; (5) the transferor’s purposes of section 408 IRAs, a certain threshold amounts. Section allocable share of gain or loss with distribution of excess contributions as 1402(b) provides that the term self- respect to each property of the entity; (6) described in § 1.408–4(c); (3) for employment income generally means information regarding whether the purposes of section 408A Roth IRAs, a the net earnings from self-employment property was held in a trade or business distribution of excess contributions as (defined under section 1402(a)) derived not described in section 1411(c)(2); (7) described in Q&A–1(d) of § 1.408A–6; by an individual except that such term the amount of the section and (4) for purposes of eligible section shall not include the net earnings from 1411(c)(1)(A)(iii) gain on the disposition 457(b) plans, a distribution of excess self-employment if such net earnings for
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the taxable year are less than $400. account in computing taxable income) to include amounts in income currently Section 1402(a) generally defines the attributable to the disposition of under section 1293(a) (section 1293 term net earnings from self-employment property other than property held in a inclusions) if the person makes a as the gross income derived by an trade or business to which the tax does qualified electing fund (QEF) election individual from any trade or business not apply. Accordingly, income with under section 1295 with respect to the carried on by such individual, less the respect to investments in foreign PFIC. Section 1293 inclusions also are deductions allowed which are corporations generally is included in the not treated as dividends unless attributable to such trade or business, calculation of net investment income for expressly provided for in the Code, and, plus his distributive share (whether or section 1411 purposes. Specifically, therefore, also are not taken into not distributed) of income or loss dividends and gains derived with account for purposes of calculating net described in section 702(a)(8) from any respect to the stock of a controlled investment income (unless the amount trade or business carried on by a foreign corporation (within the meaning is derived from a trade or business to partnership of which he is a member. of section 957(a)) (CFC) or a passive which the tax applies as provided in Section 1402(a)(1) through (17) includes foreign investment company (within the section 1411(c)(1)(A)(ii) and proposed exceptions from the definition of net meaning of section 1297(a)) (PFIC) are § 1.1411–4(a)(1)(ii)). earnings from self-employment as well taken into account in computing net The subpart F and PFIC regimes as other special rules. investment income. provide rules that prevent amounts that The JCT 2011 and 2010 Explanations have been included in income under state that net investment income does A. CFC or PFIC Amounts Derived From sections 951 and 1293 by a United not include ‘‘amounts subject to SECA a Trade or Business Described in States person from being subject to tax [Self-Employment Contribution Act] Proposed § 1.1411–5 again when there is an actual tax.’’ JCT 2011 Explanation, at 365; JCT The special rules described in distribution from the foreign 2010 Explanation, at 135. Therefore, the proposed § 1.1411–10 do not apply to corporation. Specifically, section 959(d) proposed regulations provide that for income derived from a trade or business provides that distributions from a CFC purposes of section 1411(c)(6), ‘‘items described in section 1411(c)(2) and that are excluded from gross income for taken into account’’ in determining self- proposed § 1.1411–5 because such purposes of chapter 1 under section employment income means income income is included in net investment 959(a) (earnings and profits attributable included and deductions allowed in income under section 1411(c)(1)(A)(ii) to section 951 inclusions) are treated for determining net earnings from self- and proposed § 1.1411–4(a)(1)(ii). Thus, chapter 1 purposes as distributions that employment under section 1402(a) for an amount included in gross income are not dividends. Similarly, section purposes of determining self- under section 1296(a) that is also 1293(c) provides that distributions paid employment income under section income derived from a trade or business out of earnings and profits of a PFIC that 1402(b), but does not include amounts described in section 1411(c)(2) and are attributable to section 1293 excepted from net earnings from self- proposed § 1.1411–5 is net investment inclusions are treated for chapter 1 employment under section 1402(a)(1) income within the meaning of section purposes as distributions that are not through (17). In addition, proposed 1411(c)(1)(A)(ii) and proposed § 1.1411– dividends. However, in the absence of § 1.1411–9(b) provides a special rule for 4(a)(1)(ii). Similarly, amounts included these special rules, which expressly properly allocable deductions (as in income under sections 951(a) and apply for chapter 1 purposes and are defined in proposed § 1.1411–4(f)(2)(ii)) 1293(a) that are derived from a trade or intended to reflect that the relevant CFC in the case of a taxpayer engaged in the business described in section 1411(c)(2) or PFIC earnings have already been trade or business of trading in financial and proposed § 1.1411–5, and therefore taxed for chapter 1 purposes, the actual instruments or commodities (as defined fall within section 1411(c)(1)(A)(ii) and distributions would be taxable as in proposed § 1.1411–5(a)(2)). This proposed § 1.1411–4(a)(1)(ii), are taken dividends under general Code rules exception provides that deductions into account for purposes of section applicable to corporations and their described in proposed § 1.1411– 1411 when they are taken into account shareholders. Moreover, as is the case 4(f)(2)(ii) that do not reduce a taxpayer’s for purposes of chapter 1, and with dividends, such actual net earnings from self-employment accordingly, the modifications distributions reduce the earnings and (after aggregating the net earnings from described in this part of the preamble profits of the relevant CFC or PFIC. self-employment from all of the are not necessary. Accordingly, the proposed regulations taxpayer’s trades or business) are not B. Net Investment Income reflect the premise that a distribution of considered taken into account for earnings and profits that previously purposes of section 1411(c)(6) and may Under subpart F of the Code, a United were taxed pursuant to section 951(a) or be considered in determining the States shareholder (as defined in section section 1293(a), and which is not a taxpayer’s net investment income under 951(b)) of a CFC is required to include dividend for chapter 1 purposes under section 1411. Generally, this exception certain amounts in income currently section 959(d) or section 1293(c), will apply if the taxpayer is engaged in under section 951(a) (section 951 remains a dividend for chapter 2A a trade or business of trading in inclusions). Section 951 inclusions are purposes, and therefore constitutes financial instruments or commodities not treated as dividends unless gross income from dividends for and does not have any net earnings from expressly provided for in the Code, and purposes of section 1411(c)(1)(A)(i) and self-employment or the deductions from therefore are not within any of the proposed § 1.1411–4(a)(1)(i). trading exceed the taxpayer’s net categories of income items that Nevertheless, in light of the effective earnings from self-employment. comprise net investment income (unless date of section 1411 and the the amount is derived from a trade or administrative burdens that would be 11. Controlled Foreign Corporations and business to which the tax applies as imposed if taxpayers were required to Passive Foreign Investment Companies provided in section 1411(c)(1)(A)(ii) and reconstruct the tax basis of their CFC or As noted in part 5 of this preamble, proposed § 1.1411–4(a)(1)(ii)). See QEF stock (and any intermediate section 1411(c)(1) provides that net Rodriguez v. Comm’r, 137 T.C. 174 entities) to eliminate the basis investment income includes dividends (2011). Similarly, a United States person adjustments (described in this part 11) and net gain (to the extent taken into owning shares in a PFIC also is required associated with pre-effective date
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income inclusions under sections 951(a) for chapter 1 and chapter 2A purposes. applicable to excess distributions under and 1293(a), the proposed regulations As described in detail in part 11.F of section 1291. The proposed regulations provide a limit on the treatment of this preamble, however, the proposed provide that the calculation of net distributions of previously taxed regulations seek to minimize complexity investment income includes any earnings and profits of a CFC or QEF as arising from the different treatment distribution of earnings and profits by a dividends for section 1411 purposes. under chapter 1 and chapter 2A by PFIC that constitutes a dividend within Specifically, under the proposed providing an election that, if made, the meaning section 316(a), or any gain regulations, such treatment would apply results in consistent treatment for from a disposition of PFIC stock, even only with respect to distributions of chapter 1 and chapter 2A purposes with though all or a portion of the dividend earnings and profits that previously respect to stock of CFCs and QEFs. See or gain may be treated as an excess were taxed pursuant to section 951(a) or proposed § 1.1411–10(g). distribution and allocated to prior section 1293(a) in a taxable year To the extent that a disposition of taxable years for purposes of computing beginning after December 31, 2012. For stock of a CFC or QEF gives rise to net the additional amount of tax imposed purposes of determining whether a gain under section 1411(c)(1)(A)(iii), under section 1291(a)(1)(C) (and hence distribution is attributable to earnings such amount is included in net may not be taxed as a dividend or gain and profits that previously were taxed investment income. In the absence of an for chapter 1 purposes). pursuant to section 951(a) or section election under proposed § 1.1411–10(g), In addition, the proposed regulations 1293(a) in a taxable year beginning after the basis increases provided in sections provide rules applicable to a United December 31, 2012 (and thus is treated 961(a) and 1293(d) that apply for States person that has elected to mark to as a dividend for section 1411 chapter 1 purposes for amounts market its PFIC stock under section purposes), a distribution of earnings and included in gross income for chapter 1 1296. In such case, amounts that are profits that previously were taxed purposes under sections 951(a) and included in gross income under section pursuant to section 951(a) or section 1293(a) in taxable years beginning after 1296(a)(1) and, correspondingly, 1293(a) will be considered attributable December 31, 2012, do not apply to the amounts allowable as a deduction under first to such earnings and profits, if any, calculation of gain or loss for purposes section 1296(a)(2) are taken into account derived from the current taxable year, of section 1411. Similarly, in the under section 1411(c)(1)(A)(iii) and and then from taxable years beginning absence of an election, the basis proposed § 1.1411–4(a)(1)(iii) in with the most recent prior taxable year. decreases provided in sections 961(b) computing net gain for purposes of In the case of a distribution from a CFC, and 1293(d) that apply for chapter 1 section 1411. such determination shall be made purposes do not apply to the extent that Section 1411(c)(1)(B) provides that, in without regard to whether the earnings such decreases are attributable to a determining net investment income, and profits are described in section distribution of post-effective date items of gross income and net gain are 959(c)(1) or section 959(c)(2). Thus, this earnings and profits that is treated as a reduced by properly allocable classification of distributions as net dividend for chapter 2A purposes. deductions. In the absence of an investment income or non-net In certain circumstances, section 1248 election under proposed § 1.1411–10(g), investment income is separate from, and may apply for chapter 1 purposes to differences may occur in the timing of in addition to, the allocation of recharacterize all or a portion of gain income derived with respect to CFCs distributions to previously taxed recognized on the disposition of stock of and QEFs for chapter 1 and chapter 2A earnings and profits that are described a foreign corporation as dividend purposes. Consequently, the in sections 959(c)(1) and 959(c)(2). income. Section 1248 also may apply to determination of properly allocable Accordingly, absent an election under determine whether any portion of the deductions with respect to sections proposed § 1.1411–10(g) (described in gain calculated for section 1411 959(d) and 1293(c) dividend part 11.F of this preamble), the timing purposes should be recharacterized as a distributions may require special rules. of income derived from an investment dividend. If no election is made For example, certain itemized in a CFC or a QEF may be different for pursuant to proposed § 1.1411–10(g), deductions related to items of net chapter 1 and chapter 2A purposes. the proposed regulations provide that investment income described in Taxpayers will not include section 951 sections 1248(d)(1) and 1248(d)(6) proposed § 1.1411–10(c) (such as the inclusions or section 1293 inclusions in (relating to amounts excluded from investment interest deduction) may net investment income, but generally earnings and profits for purposes of require special rules to determine when will take distributions that are not determining the amount of gain these deductions are properly allocable treated as dividends for chapter 1 recharacterized as a dividend under deductions for purposes of section 1411. purposes under section 959(d) or section 1248) generally do not apply The Treasury Department and the IRS section 1293(c) into account for because the earnings and profits of the request comments on whether guidance purposes of determining net investment foreign corporation are not attributable is necessary to determine the income under section 1411(c)(1)(A)(i) to any amount previously taxed for deductions that are properly allocable to and proposed § 1.1411–4(a)(1)(i). purposes of section 1411. However, the items of net investment income Including an amount in income only proposed regulations provide that described in proposed § 1.1411–10(c) if for purposes of chapter 1 or chapter 2A sections 1248(d)(1) and 1248(d)(6) do the election under proposed § 1.1411– however, requires special rules to apply for purposes of section 1411 to 10(g) is not made. calculate and administer the tax the extent the earnings and profits of the imposed by section 1411. For example, foreign corporation are attributable to an C. Modified Adjusted Gross Income because the rules governing previously amount that was included in chapter 1 Because of the different timing under taxed income under chapter 1 require income in a taxable year that began chapter 1 and chapter 2A for including basis adjustments to the stock of the prior to December 31, 2012 (the effective certain income from investments in CFC or QEF, a United States person will date of section 1411). CFCs and PFICs, the proposed be required to compute its tax basis in Proposed § 1.1411–10 also provides regulations contain rules coordinating the stock (as well as its basis in special rules that apply to a United these provisions with the determination intermediate entities through which it States shareholder of a PFIC who is of the calculation of the section 1411 holds the CFC or QEF stock) differently subject to the tax and interest charge tax, which is based, in part, in section
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1411(a)(1)(B) on an individual’s D. Special Rules Where Stock Is Held by F. Election modified adjusted gross income. Absent Partnerships or S Corporations As described in parts 11.B through an election under proposed § 1.1411– The proposed regulations provide 11.E of this preamble, certain 10(g), the proposed regulations provide rules that apply to an individual, estate, adjustments, including adjustments to that an individual who owns stock in a or trust that owns stock of a CFC or QEF modified adjusted gross income for CFC or a QEF must increase or decrease through a domestic partnership or S purposes of section 1411, are necessary modified adjusted gross income (as corporation. Because of the different with respect to inclusions under defined in proposed § 1.1411–2(c)) in timing rules under chapter 1 and sections 951 and 1293. The Treasury certain circumstances. For example, chapter 2A and the fact that Department and the IRS recognize that proposed § 1.1411–10(e) provides that partnerships and S corporations are these rules may create an additional modified adjusted gross income is passthrough entities, the proposed administrative burden for certain increased by any section 959(d) or regulations provide rules on the taxpayers. Thus, proposed § 1.1411– section 1293(c) distributions that are determination for section 1411 purposes 10(g) allows individuals, estates, and dividends for chapter 2A purposes. In of (1) the partner’s or shareholder’s trusts to make an election to include order to avoid subjecting the same outside basis in his interest, and (2) the inclusions under sections 951 and 1293 amount of income to tax twice under partnership’s or S corporation’s adjusted in net investment income in the same section 1411, section 951 inclusions and basis in its CFC or QEF stock. The manner and in the same taxable year as section 1293 inclusions are excluded Treasury Department and the IRS such amounts are included in income from modified adjusted gross income believe that the partnership or S for chapter 1 purposes. If an individual, under proposed § 1.1411–10(e)(1)(iii) for corporation will need to separately estate, or trust makes the election, any purposes of section 1411. In addition, state, in addition to a partner’s section 959(d) or section 1293(c) modified adjusted gross income is distributive share of the amounts distributions that are not treated as adjusted to take into account the included in the partnership’s income dividends for chapter 1 purposes are not amount of gain or loss attributable to a under section 951(a) or section 1293(a), treated as dividends for section 1411 purposes, and thus would not be disposition of stock of a CFC or QEF for a partner’s distributive share of any included in net investment income for section 1411 purposes, which may differ distributions of previously taxed section 1411 purposes. Moreover, the from the amount of gain or loss earnings and profits of a CFC or QEF received by the partnership or S separate computation of basis for calculated for chapter 1 purposes. For corporation that are dividends for section 1411 purposes would not be purposes of section 1411, in the absence purposes of chapter 2A. The Treasury required, and thus distributions under of an election under proposed § 1.1411– Department and the IRS request sections 959(d) and 1293(c) would 10(g), gain or loss is determined without comments on appropriate ways to decrease the taxpayer’s basis in its CFC taking into account basis increases determine a partner’s distributive share or PFIC stock, and inclusions under under sections 961(a) and 1293(d) that of a distribution of previously taxed sections 951 and 1293 would increase are included in the calculation of basis earnings and profits given the purpose the taxpayer’s basis in its CFC or PFIC for purposes of chapter 1 with respect of section 1411. stock, in the same manner as the to amounts included in gross income for The Treasury Department and the IRS taxpayer’s basis is adjusted for chapter chapter 1 purposes under sections request comments on improving the 1 purposes. 951(a) and 1293(a) in taxable years administrability of these provisions, An individual, estate, or trust that beginning after December 31, 2012. In including the reporting of CFC or QEF wants to make the election generally addition, gain or loss is determined amounts through domestic partnerships must do so for the first taxable year without taking into account basis or S corporations. In addition, the beginning after December 31, 2013, decreases under sections 961(a) and Treasury Department and the IRS during which (1) the individual, estate, 1293(d) that are included in the request comments on the determination or trust owns an interest in a CFC or calculation of basis for purposes of of a partner’s basis adjustment under PFIC, and (2) the individual, estate, or chapter 1 to the extent the decreases are section 743 for purposes of section 1411 trust is subject to tax under section 1411 attributable to a distribution of earnings when the partnership holds stock in a or would be subject to tax under section and profits that is treated as a dividend CFC or QEF. 1411 if the election under proposed for chapter 2A purposes. § 1.1411–10(g) is made. In addition, the E. Conforming Rules for Estates and election may be made for a taxable year Modified adjusted gross income is Trusts that begins before January 1, 2014. The also adjusted with respect to interests in The proposed regulations also provide determination of whether an individual, PFICs that are subject to tax under conforming rules for estates, trusts, and estate, or trust is subject to tax under section 1291. Specifically, the proposed their beneficiaries. Proposed § 1.1411– section 1411 for a taxable year is based regulations provide that modified 10(c)(5), (e)(2), and (f) coordinate the on whether the individual’s modified adjusted gross income for section 1411 rules relating to the computation of net adjusted gross, or the estate’s or trust’s purposes is increased by the amount of investment income and any associated adjusted gross income, exceeds the any excess distribution (within the increase or decrease to adjusted gross applicable threshold set forth in meaning of section 1291(b)) to the income with the distributable net § 1.1411–2(d) or § 1.1411– extent the distribution constitutes a income regime and other general 3(a)(1)(ii)(B)(2), regardless of whether dividend under section 316(a) and is not operating rules governing the income the individual, estate, or trust has an otherwise included in income for taxation of estates and trusts contained income inclusion under section 951(a) chapter 1 purposes under section in Subchapter J and proposed § 1.1411– or section 1293(a), or receives a 1291(a)(1)(B), and by any gain treated as 3. The Treasury Department and the IRS distribution of previously taxed income an excess distribution under section request comments on the interaction of with respect to any CFC or QEF in that 1291(a)(2) to the extent not otherwise subchapter J and the PFIC rules in order taxable year. For example, if in 2014, a included in income for chapter 1 to address consistency issues between single individual acquires an interest in purposes under section 1291(a)(1)(B). chapter 1 and chapter 2A. a QEF, has a QEF inclusion of $5,000,
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and has modified adjusted gross income taxable years beginning after December outline of the topics to be discussed and of $150,000, the individual would not 31, 2012. the time to be devoted to each topic have to make an election for 2014 (signed original and eight (8) copies) by Special Analyses because section 1411 is not applicable. March 5, 2013. A period of 10 minutes If, in 2015, the individual has modified It has been determined that this notice will be allotted to each person for adjusted gross income in excess of of proposed rulemaking is not a making comments. An agenda showing $200,000, and the individual would like significant regulatory action as defined the scheduling of the speakers will be to take QEF inclusions into account for in Executive Order 12866, as prepared after the deadline for receiving purposes of section 1411 in the same supplemented by Executive Order outlines has passed. Copies of the manner and in the same taxable year as 13563. Therefore, a regulatory agenda will be available free of charge such amounts are taken into account for assessment is not required. It also has at the hearing. chapter 1 purposes, the individual must been determined that section 553(b) of make the election for 2015 in the time the Administrative Procedure Act (5 Drafting Information and manner described in proposed U.S.C. chapter 5) does not apply to the The principal authors of the proposed § 1.1411–10(g). proposed regulations. Pursuant to the regulations are Michala Irons and David Once an election is made, it applies Regulatory Flexibility Act (RFA) (5 H. Kirk, IRS Office of the Associate to all interests in CFCs and PFICs, U.S.C. chapter 6), it is hereby certified Chief Counsel (Passthroughs and including CFCs and PFICs that that the proposed regulations will not Special Industries). However, other subsequently are acquired by the have a significant economic impact on personnel from the Treasury electing taxpayer. The election cannot a substantial number of small entities. Department and the IRS participated in be revoked, except with the The applicability of the proposed their development. Commissioner’s consent. regulations are limited to individuals, The Treasury Department and the IRS estates, and trusts, which are not small List of Subjects in 26 CFR Part 1 request comments on this election, entities as defined by the RFA (5 U.S.C. Income taxes, Reporting and including the conditions under which 601). Accordingly, the RFA does not recordkeeping requirements. an automatic extension of time to make apply. Therefore, a regulatory flexibility Proposed Amendments to the the election should be permitted. analysis is not required. Pursuant to section 7805(f) of the Code, the Regulations 12. Taxpayer Reliance on Proposed proposed regulations have been Accordingly, 26 CFR part 1 is Regulations submitted to the Chief Counsel for proposed to be amended as follows: These regulations are proposed to be Advocacy of the Small Business effective for taxable years beginning Administration for comment on its PART 1—INCOME TAXES after December 31, 2013, except that impact on small business. Paragraph 1. The authority citation § 1.1411–3(c)(2) is proposed to apply to Comments and Public Hearing for part 1 continues to read in part as taxable years beginning after December follows: 31, 2012. The Treasury Department and Before the proposed regulations are IRS intend to finalize regulations under adopted as final regulations, Authority: 26 U.S.C. 7805 * * * section 1411 in 2013. Taxpayers are consideration will be given to any Par 2. Section 1.469–0 is amended by reminded that section 1411 is effective written comments (a signed original and adding the following entries to the table for taxable years beginning after eight (8) copies) or electronic comments of contents: December 31, 2012. Taxpayers may rely that are submitted timely to the IRS. The on these proposed regulations for Treasury Department and the IRS § 1.469–0 Table of contents. purposes of compliance with section request comments on all aspects of the * * * * * 1411 until the effective date of the final proposed rules. All comments will be § 1.469–11 Effective date and transition regulations. To the extent these available for public inspection and rules. proposed regulations provide taxpayers copying. * * * * * with the ability to make an election, A public hearing has been scheduled (b) * * * taxpayers may make the election, for Tuesday, April 2, 2013, beginning at (3) * * * (iv) Regrouping for taxpayers subject to including regroupings described in 10:00 a.m. in the Auditorium, Internal Revenue Building, 1111 Constitution section 1411. § 1.469–11(b)(3)(iv), provided that the (A) In general. election is made in the manner Avenue NW., Washington, DC. Due to (B) Effective/applicability date. building security procedures, visitors described in the applicable provision. * * * * * Any election made in reliance on these must enter at the Constitution Avenue Par 3. Section 1.469–11 is amended proposed regulations will be in effect for entrance. In addition, all visitors must by adding paragraph (b)(3)(iv) to read as the year of the election, and will remain present photo identification to enter the follows: in effect for subsequent taxable years. building. Because of access restrictions, However, if final regulations provide for visitors will not be admitted beyond the § 1.469–11 Effective date and transition the same or a similar election, taxpayers immediate entrance area more than 30 rules. who opt not to make an election in minutes before the hearing starts. For * * * * * reliance on these proposed regulations information about having your name (b) * * * will not be precluded from making that placed on the building access list to (3) * * * election pursuant to the final attend the hearing, see the FOR FURTHER (iv) Regrouping for taxpayers subject regulations. INFORMATION CONTACT section of this to section 1411—(A) In general. If an preamble. individual, estate, or trust has net Proposed Effective Date The rules of 26 CFR 601.601(a)(3) investment income (as defined in These regulations are proposed to be apply to the hearing. Persons who wish § 1.1411–4) and such individual’s (as effective for taxable years beginning to present oral comments at the hearing defined in § 1.1411–2(a)) modified after December 31, 2013, except that must submit electronic or written adjusted gross income (as defined in § 1.1411–3(c)(2) is proposed to apply to comments by March 5, 2013, and an § 1.1411–2(c)) exceeds the applicable
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threshold in § 1.1411–2(d) or such (i) General rule. (e) Distributions from estates and trusts. estate’s or trust’s (as defined in (ii) Change of annual accounting period. (f) Properly allocable deductions. § 1.1411–3(a)(1)(i)) adjusted gross (e) Effective/applicability date. (1) General rule. income exceeds the amount described § 1.1411–3 Application to estates and (i) In general. trusts. (ii) Limitations and carryovers. in section 1411(a)(2)(B)(ii) and § 1.1411– (a) Estates and trusts to which tax applies. (2) Properly allocable deductions described 3(a)(1)(ii)(B)(2), such individual, estate, (1) In general. in section 62. or trust may, in the first taxable year (i) General application. (i) Deductions allocable to gross income beginning after December 31, 2013, in (ii) Calculation of tax. from rents and royalties. which section 1411 would apply to such (2) Taxable year of less than twelve (ii) Deductions allocable to gross income taxpayer, regroup its activities without months. from trades or businesses described in regard to the manner in which the (i) General rule. § 1.1411–5. (ii) Change of annual accounting period. activities were grouped in the preceding (iii) Penalty on early withdrawal of (3) Rules with respect to controlled foreign savings. taxable year. For this purpose, the corporations and passive foreign investment (3) Properly allocable deductions described determination whether section 1411 companies. in section 63(d). would apply is made without regard to (b) Exception for certain trusts. (i) In general. the effect of regrouping. A taxpayer that (c) Application to specific trusts. (A) Investment interest expense. is an individual, estate, or trust may (1) Electing small business trusts (ESBTs). (B) Investment expenses. regroup its activities for any taxable year (i) General application. (C) Taxes described in section 164(a)(3). (ii) Computation of tax. (ii) Application of limitations under that begins during 2013, if section 1411 (A) Step one. would apply to such taxpayer for such sections 67 and 68. (B) Step two. (A) Deductions subject to section 67. year. A taxpayer may regroup activities (C) Step three. (B) Deductions subject to section 68. only once pursuant to this paragraph (2) Special rules for charitable remainder (4) Loss deductions. (b)(3)(iv), and a regrouping made trusts. (g) Special rules for controlled foreign pursuant to this paragraph will apply to (i) Treatment of annuity or unitrust corporations and passive foreign investment the taxable year for which the distributions. companies. regrouping is done and all subsequent (ii) Apportionment between multiple (h) Examples. beneficiaries. (i) Effective/applicability date. years. (iii) Accumulated net investment income. (B) Effective/applicability date. This § 1.1411–5 Trades and businesses to which (3) Certain foreign trusts with United States tax applies. section applies to taxable years beneficiaries. [Reserved] (a) In general. beginning after December 31, 2013. (d) Application to specific estates. (b) Passive activity. (1) Bankruptcy estates. * * * * * (1) In general. (2) Foreign estates. Par. 4. Sections 1.1411–0 through (2) Examples. (i) General rule. 1.1411–10 are added to read as follows: (c) Trading in financial instruments or (ii) Certain foreign estates with United commodities. § 1.1411–0 Table of contents. States beneficiaries. [Reserved] (e) Calculation of undistributed net (1) Definition of financial instruments. § 1.1411–1 General rules. investment income. (2) Definition of commodities. (a) General rule. (1) In general. (d) Effective/applicability date. (b) Adjusted gross income. (2) Undistributed net investment income. § 1.1411–6 Income on investment of (c) Effective/applicability date. (3) Distributions of net investment income working capital subject to tax. § 1.1411–2 Application to individuals. to beneficiaries. (a) General rule. (a) Individual defined. (4) Deduction for amounts paid or (b) Example. (1) Individuals to whom tax applies. permanently set aside for a charitable (c) Effective/applicability date. (2) Special rules. purpose. § 1.1411–7 Exception for dispositions of (i) Joint returns in the case of a nonresident (5) Excluded income. interests in partnerships and S alien individual married to a U.S. citizen or (f) Examples. corporations. resident. (g) Effective/applicability date. (a) In general. (A) Default treatment. § 1.1411–4 Definition of net investment (1) General application. (B) Taxpayer election. income. (2) Interests to which exception applies. (1) Effect of election. (a) In general. (i) In general. (2) Procedural requirements for making (b) Ordinary course of a trade or business (ii) Nonapplication. election. exception. (b) Special rules. (ii) Grantor trusts. (c) Other gross income from a trade or (1) Installment sales. (iii) Bankruptcy estates. business described in § 1.1411–5. (i) Installment sales after the effective date (iv) Bona fide residents of U.S. territories. (1) Passive activity. of section 1411. (A) Applicability. (2) Trading in financial instruments or (ii) Installment sales prior to the effective (B) Coordination with exception for commodities. date of section 1411. nonresident aliens. (d) Net gain. (2) Sale of an interest by a Qualified (C) Definitions. (1) Definition of disposition. Subchapter S Trust. [Reserved] (1) Bona fide resident. (2) Limitation. (c) Deemed sale. (2) U.S. territory. (3) Net gain attributable to the disposition (1) In general. (b) Calculation of tax. of property. (2) Step one: Deemed sale of properties. (1) In general. (i) In general. (3) Step two: Determination of gain or loss. (2) Example. (ii) Exception for gain or loss attributable (4) Step three: Allocation of gain or loss. (c) Modified adjusted gross income. to property held in a trade or business not (5) Step four: Adjustment to gain or loss. (1) General rule. described in § 1.1411–5. (i) In general. (2) Rules with respect to controlled foreign (A) General rule. (ii) Special rules. corporations and passive foreign investment (B) Special rules for determining whether (A) Property used in more than one trade companies. property is held in a trade or business. or business. (d) Threshold amount. (C) Example. (B) Goodwill attributable to property. (1) In general. (iii) Adjustments to gain or loss attributable (iii) Negative adjustment. (2) Taxable year of less than twelve to the disposition of interests in a partnership (A) General rule. months. or S corporation. (B) Limitations.
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(iv) Positive adjustment. (2) Revocation of election. must determine his or her own net (A) General rule. (3) Time and manner for making election. investment income and modified (B) Limitations. (h) Examples. adjusted gross income. (d) Required statement of adjustment. (i) Effective/applicability date. (e) Examples. (B) Taxpayer election. Married (f) Effective/applicability date. § 1.1411–1 General rules. taxpayers who file a joint Federal § 1.1411–8 Exception for distributions from (a) General rule. Except as otherwise income tax return pursuant to a section qualified plans. provided, all Internal Revenue Code 6013(g) election for purposes of chapter (a) General rule. provisions that apply for chapter 1 1 and chapter 24 may also elect to be (b) Rules relating to distributions. purposes in determining taxable income treated as making a section 6013(g) (1) Actual distributions. election for purposes of chapter 2A (2) Amounts treated as distributed. (as defined in section 63(a)) of a taxpayer also apply in determining the (relating to the tax imposed by section (3) Amounts includible in gross income. 1411). (c) Effective/applicability date. tax imposed by section 1411. § 1.1411–9 Exception for self-employment (b) Adjusted gross income. All (1) Effect of election. For purposes of income. references to an individual’s adjusted calculating the tax imposed under (a) General rule. gross income shall be treated as section 1411(a)(1), the effect of an (b) Special rule for traders. references to adjusted gross income (as election under section 6013(g) is to (c) Examples. include the combined income of the (d) Effective/applicability date. defined in section 62), and all references to an estate’s or trust’s adjusted gross U.S. citizen or resident spouse and the § 1.1411–10 Controlled foreign corporations nonresident spouse in the section and passive foreign investment income shall be treated as references to companies. adjusted gross income (as defined in 1411(a)(1) calculation and apply the (a) In general. section 67(e)). However, there may be threshold amount for a taxpayer making (b) Amounts derived from a trade or additional adjustments to adjusted gross a joint return as set out in paragraph business described in § 1.1411–5. income because of investments in (d)(1)(i) of this section. (c) Calculation of net investment income. controlled foreign corporations or (2) Procedural requirements for (1) In general. passive foreign investment companies. making election. Taxpayers with a (2) Dividends. section 6013(g) election for chapter 1 (i) Distributions of previously taxed See § 1.1411–10(e). (c) Effective/applicability date. This and chapter 24 purposes in effect for earnings and profits. any taxable year beginning after (ii) Excess distributions constituting section applies to taxable years dividends. beginning after December 31, 2013. December 31, 2012, or taxpayers making (3) Net gain. a section 6013(g) election for chapter 1 (i) Gains treated as excess distributions. § 1.1411–2 Application to individuals. and chapter 24 purposes in any taxable (ii) Inclusions and deductions with respect (a) Individual defined—(1) year beginning after December 31, 2012, to section 1296 mark to market elections. Individuals to whom tax applies. For who want to apply their section 6013(g) (iii) Gain or loss attributable to the purposes of section 1411 and the election to chapter 2A must make the disposition of stock of controlled foreign regulations thereunder, an individual is election for the first taxable year corporations and qualified electing funds. any natural person. However, section beginning after December 31, 2013, in (iv) Gain or loss attributable to the which the U.S. taxpayer is subject to tax disposition of interests in domestic 1411 does not apply to nonresident partnerships or S corporations that own alien individuals (within the meaning of under section 1411. The determination directly or indirectly stock of controlled section 7701(b)(1)(B)). Therefore, for of whether the U.S. taxpayer is subject foreign corporations or qualified electing purposes of section 1411 and the to tax under section 1411 is made funds. regulations thereunder, an individual to without regard to the effect of the (4) Application of section 1248. whom the tax imposed under section section 6013(g) election described in (5) Amounts distributed by an estate or 1411(a)(1) applies is any citizen or paragraph (a)(2)(i)(B) of this section. In trust. resident of the United States (within the addition, taxpayers may elect to apply (d) Conforming basis adjustments. meaning of section 7701(a)(30)(A)). See their section 6013(g) election to chapter (1) Basis adjustments under sections 961 2A for a taxable year that begins before and 1293. paragraph (a)(2)(iv) of this section for (i) Stock held by individuals, estates, or special rules regarding bona fide January 1, 2014. In all cases, the election trusts. residents of U.S. territories. must be made in the manner prescribed (ii) Stock held by domestic partnerships or (2) Special rules—(i) Joint returns in by the Secretary on a timely filed S corporations. the case of a nonresident alien (including extensions) return, or (2) Special rules for partners that own individual married to a U.S. citizen or amended return, for the taxable year for interests in domestic partnerships that own resident—(A) Default treatment. In the which the election is made. Further, in directly or indirectly stock of controlled case of a U.S. citizen or resident who is all cases, once made, the duration and foreign corporations or qualified electing married (as defined in section 7703) to termination of the section 6013(g) funds. election for chapter 2A is governed by (3) Special rules for S corporation a nonresident alien individual, the shareholders that own interests in S spouses will be treated as married filing the rules of section 6013(g)(2) through corporations that own directly or indirectly separately for purposes of section 1411. (6) and the regulations thereunder. stock of controlled foreign corporations or For purposes of calculating the tax (ii) Grantor trusts. For rules regarding qualified electing funds. imposed under section 1411(a)(1), the the treatment of owners of grantor (e) Conforming adjustments to modified U.S. citizen or resident spouse will be trusts, see § 1.1411–3(b)(5). adjusted gross income and adjusted gross subject to the threshold amount for a (iii) Bankruptcy estates. A bankruptcy income. married taxpayer filing a separate return estate administered under chapter 7 (1) Individuals. in paragraph (d)(1)(ii) of this section, (relating to liquidations) or chapter 11 (2) Estates and trusts. (f) Application to estates and trusts. and the nonresident alien spouse will (relating to reorganizations) of the (g) Election with respect to controlled not be subject to tax under section 1411. Bankruptcy Code (Title 11 of the United foreign corporations and qualified electing In accordance with the rules for married States Code) of a debtor who is an funds. individuals filing separate returns, the individual shall be treated as a married (1) In general. spouse that is a U.S. citizen or resident taxpayer filing a separate return for
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purposes of section 1411. See § 1.1411– (c) Modified adjusted gross income— provisions of part I of subchapter J of 2(d)(1)(ii). (1) General rule. For purposes of section chapter 1 of subtitle A of the Internal (iv) Bona fide residents of U.S. 1411, the term modified adjusted gross Revenue Code, unless specifically territories—(A) Applicability. An income means adjusted gross income exempted by paragraph (b) of this individual who is a bona fide resident increased by the excess of— section. of a U.S. territory is subject to the tax (i) The amount excluded from gross (ii) Calculation of tax. The tax imposed by section 1411(a)(1) only if income under section 911(a)(1); over imposed by section 1411(a)(2) for each the individual is required to file an (ii) The amount of any deductions taxable year is equal to 3.8 percent of income tax return with the United (taken into account in computing the lesser of— States upon application of section 931, adjusted gross income) or exclusions (A) The estate’s or trust’s 932, 933, or 935 and the regulations disallowed under section 911(d)(6) with undistributed net investment income for thereunder. With respect to an respect to the amounts described in such taxable year; or individual described in this paragraph paragraph (c)(1)(i) of this section. (B) The excess (if any) of— (a)(2)(iv)(A), the amount excluded from (2) Rules with respect to controlled (1) The estate’s or trust’s adjusted gross income under section 931 or 933 foreign corporations and passive foreign gross income (as defined in section 67(e) and any deduction properly allocable or investment companies. Additional rules and adjusted by § 1.1411–10(e)(2), if chargeable against amounts excluded in § 1.1411–10(e)(1) apply to an applicable) for such taxable year; over from gross income under section 931 or individual that is a United States (2) The dollar amount at which the 933, respectively, is not taken into shareholder of a controlled foreign highest tax bracket in section 1(e) begins account in computing modified adjusted corporation (within the meaning of for such taxable year. gross income under paragraph (c) of this section 957(a)) or that is a United States (2) Taxable year of less than twelve section or net investment income under person that directly or indirectly owns months—(i) General rule. In the case of § 1.1411–4. an interest in a passive foreign an estate or trust that has a taxable year (B) Coordination with exception for investment company (within the consisting of less than twelve months nonresident aliens. An individual who meaning of section 1297(a)). (short taxable year), the dollar amount is both a bona fide resident of a U.S. (d) Threshold amount—(1) In general. described in paragraph (a)(1)(ii)(B)(2) of territory and a nonresident alien The term threshold amount means— this section is not reduced or prorated. individual with respect to the United (i) In the case of a taxpayer making a (ii) Change of annual accounting States is not subject to taxation under joint return under section 6013 or a period. Notwithstanding paragraph section 1411(a)(1). surviving spouse (as defined in section (a)(2)(i) of this section, an estate or trust (C) Definitions. For purposes of this 2(a)), $250,000; that has a short taxable year resulting section— (ii) In the case of a married taxpayer from a change of annual accounting (1) Bona fide resident. The term bona (as defined in section 7703) filing a period (but not from an individual’s fide resident has the meaning provided separate return, $125,000; and death) shall reduce the dollar amount under section 937(a). (iii) In any other case, $200,000. described in paragraph (a)(1)(ii)(B)(2) of (2) U.S. territory. The term U.S. (2) Taxable year of less than twelve this section to an amount that bears the territory means American Samoa, Guam, months—(i) General rule. In the case of same ratio to that dollar amount as the the Northern Mariana Islands, Puerto an individual who has a taxable year number of months in the short taxable Rico, or the United States Virgin consisting of less than twelve months year bears to twelve. Islands. (short taxable year), the threshold (3) Rules with respect to controlled (b) Calculation of tax—(1) In general. amount under paragraph (d)(1) of this foreign corporations and passive foreign In the case of an individual described in section is not reduced or prorated. For investment companies. Additional rules paragraph (a)(1) of this section, the tax example, in the case of an unmarried in § 1.1411–10 apply to an estate or trust imposed by section 1411(a)(1) for each decedent who dies on June 1, the that holds an interest in a controlled taxable year is equal to 3.8 percent of threshold amount is $200,000 for the foreign corporation (within the meaning the lesser of— decedent’s short taxable year that begins of section 957(a)) or a passive foreign (i) Net investment income (as defined on January 1 and ends on June 1. investment (within the meaning of in § 1.1411–4) for such taxable year; or (ii) Change of annual accounting section 1297(a)). (ii) The excess (if any) of— period. Notwithstanding paragraph (b) Exception for certain trusts. The (A) The modified adjusted gross (d)(2)(i) of this section, an individual following trusts are not subject to the income (as defined in paragraph (c) of who has a short taxable year resulting tax imposed by section 1411: this section) for such taxable year; over from a change of annual accounting (1) A trust all of the unexpired (B) The threshold amount (as defined period shall reduce the threshold interests in which are devoted to one or in paragraph (d) of this section). amount to an amount that bears the more of the purposes described in (2) Example. During Year 1 (a taxable year same ratio to the full threshold amount section 170(c)(2)(B). in which section 1411 is in effect), A, an provided under paragraph (d)(1) of this (2) A trust exempt from tax under unmarried U.S. citizen, has modified section as the number of months in the section 501. adjusted gross income (as defined in short taxable year bears to twelve. (3) A charitable remainder trust paragraph (c) of this section) of $190,000, (e) Effective/applicability date. This described in section 664. However, see which includes $50,000 of net investment section applies to taxable years paragraph (c)(2) of this section for income (as defined in § 1.1411–4). A has a beginning after December 31, 2013. special rules regarding the treatment of zero tax imposed under section 1411 because annuity or unitrust distributions from the threshold amount for a single individual § 1.1411–3 Application to estates and such trust to persons subject to tax is $200,000 (as provided in paragraph trusts. under section 1411. (d)(1)(iii) of this section). If during Year 2, A has modified adjusted gross income of (a) Estates and trusts to which tax (4) Any other trust, fund, or account $220,000, which includes $50,000 of net applies—(1) In general—(i) General that is statutorily exempt from taxes investment income, then the individual has application. Section 1411 and the imposed in subtitle A. For example, see a section 1411 tax of $760 (3.8 percent regulations thereunder apply to all sections 220(e)(1), 223(e)(1), 529(a), and multiplied by $20,000). estates and trusts that are subject to the 530(a).
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(5) A trust, or a portion thereof, that (1) The ESBT’s total undistributed net individual. See § 1.1411–10(c) for is treated as a grantor trust under investment income; or special rules regarding controlled subpart E of part I of subchapter J of (2) The excess of the ESBT’s adjusted foreign corporations, passive foreign chapter 1. However, in the case of any gross income (as calculated in paragraph investment companies, and estates and such trust or portion thereof, each item (c)(1)(ii)(B) of this section) over the trusts holding interests in such entities. of income or deduction that is included dollar amount at which the highest tax (2) Undistributed net investment in computing taxable income of a bracket in section 1(e) begins for the income. An estate’s or trust’s grantor or another person under section taxable year. undistributed net investment income is 671 shall be treated as if it had been (2) Special rules for charitable the estate’s or trust’s net investment received by, or paid directly to, the remainder trusts—(i) Treatment of income determined under § 1.1411–4 grantor or other person for purposes of annuity or unitrust distributions. The reduced by distributions of net calculating such person’s net net investment income of the investment income to beneficiaries and investment income. beneficiary attributable to the deductions under section 642(c) in the (6) Except to the extent provided in beneficiary’s annuity or unitrust manner described in paragraphs (e)(3) paragraph (c)(3) of this section, a foreign distribution from a charitable remainder and (e)(4) of this section. trust (as defined in section trust shall include an amount equal to (3) Distributions of net investment 7701(a)(31)(B) and § 301.7701–7(a)(2)). the lesser of— income to beneficiaries. (i) In computing (c) Application to specific trusts—(1) (A) The total amount of the the estate’s or trust’s undistributed net Electing small business trusts (ESBTs)— distributions for that year; or investment income, net investment (i) General application. The S portion (B) The current and accumulated net income shall be reduced by and non-S portion (as defined in investment income of the charitable distributions of net investment income § 1.641(c)–1(b)(2) and (3), respectively) remainder trust. made to beneficiaries. The deduction of a trust that has made an ESBT (ii) Apportionment between multiple allowed under this paragraph (e)(3) is election under section 1361(e)(3) and beneficiaries. In the case of a charitable limited to the lesser of the amount § 1.1361–1(m)(2) shall be treated as remainder trust with more than one deductible to the estate or trust under separate trusts for purposes of the annuity or unitrust beneficiary, the net section 651 or section 661, as computation of undistributed net investment income shall be apportioned applicable, or the net investment investment income in the manner among such beneficiaries based on their income of the estate or trust. In the case described in paragraph (e) of this respective shares of the total annuity or of a deduction under section 651 or section, but shall be treated as a single unitrust amount paid by the charitable section 661 that consists of both net trust for purposes of determining the remainder trust for that taxable year. investment income and excluded amount subject to tax under section (iii) Accumulated net investment income (as defined in paragraph (e)(5) of 1411. If a grantor or another person is income. The accumulated net this section), the distribution must be treated as the owner of a portion of the investment income of a charitable allocated between net investment ESBT, the items of income and remainder trust is the total amount of income and excluded income in a deduction attributable to the grantor net investment income received by a manner similar to § 1.661(b)–1 as if net portion (as defined in § 1.641(c)–1(b)(1)) charitable remainder trust for all taxable investment income constituted gross shall be included in the grantor’s years that begin after December 31, income and excluded income calculation of net investment income 2012, less the total amount of net constituted amounts not includible in and shall not be included in the ESBT’s investment income distributed for all gross income. See § 1.661(c)–1 and computation of tax described in prior taxable years of the trust that begin Example 1 in paragraph (f) of this paragraph (c)(1)(ii) of this section. after December 31, 2012. section. (ii) Computation of tax. This (3) Certain foreign trusts with United (ii) If one or more items of net paragraph (c)(1)(ii) provides the method States beneficiaries. [Reserved] investment income comprise all or part for an ESBT to compute the tax under (d) Application to specific estates—(1) of a distribution for which a deduction section 1411. See Example 3 in Bankruptcy estates. A bankruptcy estate is allowed under paragraph (e)(3)(i) of paragraph (f) of this section. in which the debtor is an individual is this section, such items retain their (A) Step one: The S portion and non- treated as a married taxpayer filing a character as net investment income S portion shall compute each portion’s separate return for purposes of section under section 652(b) or section 662(b), undistributed net investment income as 1411. See §§ 1.1411–2(a)(2)(iii) and as applicable, for purposes of computing separate trusts in the manner described 1.1411–2(d)(1)(ii). net investment income of the recipient in paragraph (e) of this section and then (2) Foreign estates—(i) General rule. of the distribution who is subject to tax combine these amounts to calculate the Except to the extent provided in under section 1411. The provisions of ESBT’s undistributed net investment paragraph (d)(2)(ii) of this section, the this paragraph (e)(3)(ii) also apply to income. tax imposed by section 1411 does not distributions to United States (B) Step two: The ESBT will calculate apply to a foreign estate (as defined in beneficiaries of current year income its adjusted gross income (as defined in section 7701(a)(31)(A)). described in section 652 or section 662 paragraph (a)(1)(ii)(B)(1) of this section). (ii) Certain foreign estates with United from foreign nongrantor trusts. The ESBT’s adjusted gross income is the States beneficiaries. [Reserved] (4) Deduction for amounts paid or non-S portion’s adjusted gross income, (e) Calculation of undistributed net permanently set aside for a charitable increased or decreased by the net investment income—(1) In general. This purpose. In computing the estate’s or income or net loss of the S portion, after paragraph (e)(1) provides special rules trust’s undistributed net investment taking into account all deductions, for the computation of certain income, the estate or trust shall be carryovers, and loss limitations deductions and for the allocation of net allowed a deduction for amounts of net applicable to the S portion, as a single investment income between an estate or investment income that are allocated to item of ordinary income (or ordinary trust and its beneficiaries. Generally, an amounts allowable under section 642(c). loss). estate’s or trust’s net investment income In the case of an estate or trust that has (C) Step three: The ESBT will pay tax (as defined in § 1.1411–4) is calculated items of income consisting of both net on the lesser of— in the same manner as that of an investment income and excluded
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income (as defined in paragraph (e)(5) of $10,000 distribution, nor does it qualify for undistributed net investment income, Trust’s this section), the allowable deduction the deduction under section 661. net investment income is reduced by $5,000 under this paragraph (e)(4) must be (iii) Trust’s net investment income is under paragraph (e)(4) of this section allocated between net investment $30,000 ($15,000 in dividends plus $10,000 (dividend income of $3,000, interest income in interest plus $5,000 in capital gain). of $2,000, but with no reduction for amounts income and excluded income in Trust’s $60,000 of taxable income attributable attributable to the individual retirement accordance with § 1.642(c)–2(b) as if net to the individual retirement account is account of $5,000). investment income constituted gross excluded income (within the meaning of (iv) With respect to the discretionary income and excluded income paragraph (e)(5) of this section) because it is distribution to B, Trust’s remaining constituted amounts not includible in excluded from net investment income under distributable net income is $10,000. Trust’s gross income. For an estate or trust with § 1.1411–8. Trust’s undistributed net remaining undistributed net investment deductions under both sections 642(c) investment income under paragraph (e)(2) of income is $10,000. Trust’s deduction under and 661, see § 1.662(b)–2 and Example this section is $25,000, which is Trust’s net section 661 for the distribution to B is investment income ($30,000) less the amount 2 in paragraph (f) of this section. $10,000. The $10,000 distribution equals 20 of dividend income ($3,000) and interest percent of distributable net income ($10,000 (5) Excluded income. The term income ($2,000) distributed to A. The divided by $50,000). Therefore, the excluded income means— $25,000 of undistributed net investment distribution consists of dividend income of (i) Items of income excluded from income is comprised of the capital gain $3,000, interest income of $2,000, and gross income in chapter 1; allocated to principal ($5,000), the remaining ordinary income attributable to the (ii) Items of income not included in undistributed dividend income ($12,000), individual retirement account of $5,000. B’s net investment income, as determined and the remaining undistributed interest distribution consists of $5,000 of net under § 1.1411–4; and income ($8,000). investment income and $5,000 of excluded (iii) Items of gross income and net (iv) Under paragraph (e)(3) of this section income. gain specifically excluded by section and pursuant to § 1.1411–4(a)(1), A’s net (v) Trust’s undistributed net investment investment income includes dividend 1411, the regulations thereunder, or income is $5,000 after taking into account income of $3,000 and interest income of distribution deductions and section 642(c) in other guidance published in the Internal $2,000, but does not include the $5,000 of accordance with paragraphs (e)(3) and (e)(4) Revenue Bulletin. See §§ 1.1411–7, –8, ordinary income attributable to the of this section, respectively. To arrive at and –9. individual retirement account because it is Trust’s undistributed net investment income (f) Examples. In each example, unless excluded from net investment income under of $5,000, Trust’s net investment income of otherwise indicated, the taxpayer uses a § 1.1411–8. $30,000 is reduced by $15,000 of the calendar taxable year, the taxpayer is Example 2. Calculation of undistributed mandatory distribution to A, $5,000 of the not a foreign trust, and Year 1 is a net investment income (with deduction under section 642(c) deduction, and $5,000 of the taxable year in which section 1411 is in section 642(c)). (i) Same facts as Example 1, discretionary distribution to B. except Trust is required to distribute $30,000 effect: Example 3. Calculation of an ESBT’s tax to A. In addition, Trust has a $10,000 for purposes of section 1411. (i) In Year 1, the Example 1. Calculation of undistributed deduction under section 642(c) (deduction non-S portion of Trust, an ESBT, has net investment income (with no deduction for amounts paid for a charitable purpose). dividend income of $15,000, interest income under section 642(c)). (i) In Year 1, Trust has Trust also makes an additional discretionary of $10,000, and capital gain of $5,000. Trust’s dividend income of $15,000, interest income distribution of $10,000 to B, a beneficiary of S portion has net rental income of $21,000 of $10,000, capital gain of $5,000, and Trust. As in Example 1, Trust’s net and a capital loss of $7,000. The Trustee’s $60,000 of taxable income relating to a investment income is $30,000 ($15,000 in annual fee of $1,000 is allocated 60 percent distribution from an individual retirement dividends plus $10,000 in interest plus to the non-S portion and 40 percent to the account (as defined under section 408). Trust $5,000 in capital gain). In accordance with S portion. Trust makes a distribution from has no expenses. Trust distributes $10,000 of §§ 1.661(b)–2 and 1.662(b)–2, the items of income to a single beneficiary of $9,000. its current year trust accounting income to A, income must be allocated between the (ii) Step one. (A) Trust must compute the a beneficiary of Trust. For trust accounting mandatory distribution to A, the undistributed net investment income for the purposes, $25,000 of the distribution from discretionary distribution to B, and the S portion and non-S portion in the manner the individual retirement account is $10,000 distribution to a charity. described in paragraph (c)(1) of this section. attributable to income. Trust allocates the (ii) For purposes of the mandatory The undistributed net investment income remaining $35,000 of taxable income from distribution to A, Trust’s distributable net for the S portion is $20,600 and is the individual retirement account and the income is $50,000. See § 1.662(b)–2, Example determined as follows: $5,000 of capital gain to principal, and 1(b). Trust’s deduction under section 661 for Net Rental Income ...... $21,000 therefore these amounts do not enter into the the distribution to A is $30,000. Under Trustee Annual Fee ...... (400) calculation of Trust’s distributable net § 1.662(b)–1, the deduction reduces each income for Year 1. class of income comprising distributable net Total S portion undistributed (ii) Trust’s distributable net income is income on a proportional basis. The $30,000 net investment income ...... 20,600 $50,000 ($15,000 in dividends plus $10,000 distribution equals 60 percent of in interest plus $25,000 of taxable income distributable net income ($30,000 divided by (B) No portion of the capital loss is allowed from an individual retirement account), from $50,000). Therefore, the distribution consists because, pursuant to § 1.1411–4(d)(2), net which the $10,000 distribution to A is paid. of dividend income of $9,000, interest gain cannot be less than zero and excess Trust’s deduction under section 661 is income of $6,000, and ordinary income capital losses are not properly allocable $10,000. Under § 1.662(b)–1, the deduction attributable to the individual retirement deductions under § 1.1411–4(f). See Example reduces each class of income comprising account of $15,000. A’s mandatory 1 of § 1.1411–4(h). In addition, pursuant to distributable net income on a proportional distribution thus consists of $15,000 of net § 1.641(c)–1(i), no portion of the $9,000 basis. The $10,000 distribution equals 20 investment income and $15,000 of excluded distribution is allocable to the S portion. percent of distributable net income ($10,000 income. The undistributed net investment income divided by $50,000). Therefore, the (iii) Trust’s remaining distributable net for the non-S portion is $20,400 and is distribution consists of dividend income of income is $20,000. Trust’s remaining determined as follows: $3,000, interest income of $2,000, and undistributed net investment income is Dividend Income ...... $15,000 ordinary income attributable to the $15,000. The $10,000 deduction under Interest Income ...... 10,000 individual retirement account of $5,000. section 642(c) is allocated in the same Capital Gain ...... 5,000 Because the $5,000 of capital gain allocated manner as the distribution to A, where the Trustee Annual Fee ...... (600) to principal for trust accounting purposes did $10,000 distribution equals 20 percent of Distributable net income dis- not enter into distributable net income, no distributable net income ($10,000 divided by tribution ...... (9,000 ) portion of that amount is included in the $50,000). For purposes of determining
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Total non-S portion undis- course of a trade or business exception true even though UTP is engaged in a trade tributed net investment in- described in paragraph (b) of this or business. Accordingly, the ordinary course come ...... 20,400 section; of a trade or business exception described in (ii) Other gross income derived from paragraph (b) of this section does not apply, (C) Trust will combine the undistributed and A’s $5,000 of dividends is net net investment income of the S portion and a trade or business described in investment income under paragraph (a)(1)(i) non-S portion from (ii)(A) and (B) to arrive § 1.1411–5; and of this section. at Trust’s combined undistributed net (iii) Net gain (to the extent taken into Example 2. Entity engaged in trading in investment income. account in computing taxable income) financial instruments. B, an individual, owns S portion’s undistributed net in- attributable to the disposition of an interest in PRS, a partnership, which is vestment income ...... $20,600 property, except to the extent excluded engaged in a trade or business of trading in Non-S portion’s undistributed by the exception described in paragraph financial instruments (as defined in § 1.1411– net investment income ...... 20,400 (d)(3)(ii)(A) for gain or loss attributable 5(a)(2)). PRS’ trade or business is not a passive activity (within the meaning of Combined undistributed net to property held in a trade or business section 469) with respect to B. In addition, investment income ...... 41,000 not described in § 1.1411–5; over B is not directly engaged in a trade or (2) The deductions allowed by business of trading in financial instruments (iii) Step two. (A) The ESBT will calculate subtitle A that are properly allocable to its adjusted gross income. Pursuant to or commodities. PRS earns interest of paragraph (c)(1)(ii)(B) of this section, the such gross income or net gain (as $50,000, and B’s distributive share of the ESBT’s adjusted gross income is the non-S determined in paragraph (f) of this interest is $25,000. Because PRS is engaged portion’s adjusted gross income increased or section). in a trade or business described in § 1.1411– decreased by the net income or net loss of the (b) Ordinary course of a trade or 5(a)(2), the ordinary course of a trade or S portion. business exception. Gross income business exception described in paragraph (b) of this section does not apply, and B’s (B) The adjusted gross income for the ESBT described in paragraph (a)(1)(i) of this $25,000 distributive share of the interest is is $38,000 and is determined as follows: section is excluded from net investment net investment income under paragraph Dividend Income ...... $15,000 income if it is derived in the ordinary (a)(1)(i) of this section. Interest Income ...... 10,000 course of a trade or business not Example 3. Application of ordinary course Capital Gain ...... 5,000 described in § 1.1411–5. See § 1.1411–6 of a trade or business exception. C, an Trustee Annual Fee ...... (600) for rules regarding working capital. To individual, owns stock in S corporation, S. S Distributable net income dis- is engaged in a banking trade or business tribution ...... (9,000) determine whether gross income described in paragraph (a)(1)(i) of this (that is not a trade or business of trading in S Portion Income (see (iii)(C)) .... 17,600 financial instruments or commodities), and section is derived in a trade or business, S’s trade or business is not a passive activity Adjusted gross income ...... 38,000 the following rules apply. (within the meaning of section 469) with (C) The S portion’s single item of ordinary (1) In the case of an individual, estate, respect to C. S earns $100,000 of interest in income used in the ESBT’s adjusted gross or trust that owns or engages in a trade the ordinary course of its trade or business, income calculation is $17,600. This item of or business directly (or indirectly of which $5,000 is C’s pro rata share. Because income is determined by starting with net through ownership of an interest in an S is not engaged in a trade or business rental income of $21,000 and reducing it— entity that is disregarded as an entity described in § 1.1411–5(a)(2) and because S’s (1) By the S portion’s $400 share of the separate from its owner under trade or business is not a passive activity annual trustee fee; and § 301.7701–3), the determination of with respect to C (as described in § 1.1411– (2) As allowed by section 1211(b)(1), 5(a)(1)), the ordinary course of a trade or whether gross income described in business exception described in paragraph $3,000 of the $7,000 capital loss. paragraph (a)(1)(i) of this section is (iv) Step three. Trust will pay tax on the (b) of this section applies, and C’s $5,000 of lesser of— derived in a trade or business is made interest is not included under paragraph (A) The combined undistributed net at the individual level. (a)(1)(i) of this section. investment income ($41,000 calculated in (2) In the case of an individual, estate, (c) Other gross income from a trade or (ii)(C)); or or trust that owns an interest in a trade business described in § 1.1411–5—(1) (B) The excess of adjusted gross income or business through one or more Passive activity. For a trade or business ($38,000 calculated in (iii)(B)) over the dollar passthrough entities for Federal tax amount at which the highest tax bracket in described in § 1.1411–5(a)(1), paragraph purposes (for example, through a (a)(1)(ii) of this section includes other section 1(e) applicable to a trust begins for partnership or S corporation), the the taxable year. gross income that is not gross income determination of whether gross income described in paragraph (a)(1)(i) of this (g) Effective/applicability date. This described in paragraph (a)(1)(i) of this section or net gain described in section applies to taxable years section is— paragraph (a)(1)(iii) of this section. beginning after December 31, 2013, (i) Derived in a trade or business Thus, for a trade or business described except that paragraph (c)(2) of this described in § 1.1411–5(a)(1) is made at in § 1.1411–5(a)(1), if an item of gross section shall apply to taxable years of the owner level; and income or net gain is subject to charitable remainder trusts that begin (ii) Derived in a trade or business paragraph (a)(1)(i) or (iii) of this section, after December 31, 2012. described in § 1.1411–5(a)(2) is made at it is generally not other gross income the entity level. described in paragraph (a)(1)(ii) of this § 1.1411–4 Definition of net investment (3) The following examples illustrate income. section. the provisions of this paragraph (b). (a) In general. For purposes of section (2) Trading in financial instruments 1411 and the regulations thereunder, net Example 1. Multiple passthrough entities. or commodities. For a trade or business investment income means the excess (if A, an individual, owns an interest in UTP, described in § 1.1411–5(a)(2)), a partnership, which is engaged in a trade or any) of— paragraph (a)(1)(ii) of this section business. UTP owns an interest in LTP, also includes all other gross income that is (1) The sum of— a partnership, which is not engaged in a trade (i) Gross income from interest, or business. LTP receives $10,000 in not gross income described in paragraph dividends, annuities, royalties, rents, dividends, $5,000 of which is allocated to A (a)(1)(i) of this section. For example, any substitute interest payments, and through UTP. The $5,000 of dividends is not gain from marking to market under substitute dividend payments, except to derived in a trade or business because LTP section 475(f) or section 1256 and any the extent excluded by the ordinary is not engaged in a trade or business. This is realized gain from the disposition of
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property held in the trade or business is separate from its owner under section. Any deductions described in classified as other gross income subject § 301.7701–3), the determination of this paragraph (f) in excess of such gross to paragraph (a)(1)(ii) of this section whether net gain described in paragraph income and net gain shall not be taken (and not classified as net gain under (a)(1)(iii) of this section is attributable to into account in determining net paragraph (a)(1)(iii) of this section). property held in a trade or business is investment income in any other taxable (d) Net gain. This paragraph (d) made at the individual level. year, except as allowed under chapter 1. describes special rules for purposes of (3) In the case of an individual, estate, However, in no event will a net paragraph (a)(1)(iii) of this section. or trust that owns an interest in a trade operating loss deduction allowed under (1) Definition of disposition. For or business through one or more section 172 be taken into account in purposes of section 1411 and the passthrough entities for Federal tax determining net investment income for regulations thereunder, the term purposes (for example, through a any taxable year. See Example 3 of disposition means a sale, exchange, partnership or S corporation), the paragraph (h) of this section. transfer, conversion, cash settlement, determination of whether net gain (2) Properly allocable deductions cancellation, termination, lapse, described in paragraph (a)(1)(iii) of this described in section 62—(i) Deductions expiration, or other disposition. section from such entity is attributable allocable to gross income from rents and (2) Limitation. The calculation of net to— royalties. Deductions described in gain shall not be less than zero. Losses (i) Property held in a trade or business section 62(a)(4) allocable to rents and allowable under section 1211(b) are described in § 1.1411–5(a)(1) is made at royalties described in paragraph (a)(1)(i) permitted to offset gain from the the owner level; and of this section (and that therefore disposition of assets other than capital (ii) Property held in a trade or constitute net investment income) shall assets that are subject to section 1411. business described in § 1.1411–5(a)(2) is be taken into account in determining net (3) Net gain attributable to the made at the entity level. investment income. disposition of property—(i) In general. (ii) Deductions allocable to gross Net gain attributable to the disposition (C) Example. Gain from rental activity. A, income from trades or businesses of property is the gain described in an unmarried individual, rents a boat to B for $100,000 in Year 1. A’s rental activity does described in § 1.1411–5. Deductions section 61(a)(3) recognized from the not involve the conduct of a section 162 trade described in section 62(a)(1) allocable to disposition of property reduced, but not or business, but under section 469(c)(2), A’s income from a trade or business below zero, by losses deductible under rental activity is a passive activity. In Year described in § 1.1411–5 shall be taken section 165, including losses 2, A sells the boat to B, and A realizes and into account in determining net attributable to casualty, theft, and recognizes taxable gain attributable to the investment income to the extent the abandonment or other worthlessness. disposition of the boat of $500,000. Because deductions have not been taken into The rules in subchapter O of chapter 1 the exception provided in paragraph account in determining self- and the regulations thereunder apply. (d)(3)(ii)(A) of this section requires a trade or employment income within the See, for example, § 1.61–6(b). Net gain business, this exception is inapplicable, and therefore, A’s $500,000 gain will be taken meaning of § 1.1411–9. shall include gain or loss attributable to into account under § 1.1411–4(a)(1)(iii). (iii) Penalty on early withdrawal of the disposition of property from the savings. Net investment income shall investment of working capital. See (iii) Adjustments to gain or loss take into account deductions described § 1.1411–6. attributable to the disposition of in section 62(a)(9). (ii) Exception for gain or loss interests in a partnership or S (3) Properly allocable deductions attributable to property held in a corporation. Net gain shall be adjusted described in section 63(d)—(i) In trade or business not described in as provided in § 1.1411–7 in the case of general. Net investment income shall § 1.1411–5—(A) General rule. Net gain the disposition of an interest in a take into account the following itemized shall not include gain or loss partnership or S corporation. deductions: attributable to property (other than (e) Distributions from estates and (A) Investment interest expense. property from the investment of trusts. Net investment income includes Investment interest (as defined in working capital (as described in a beneficiary’s share of distributable net section 163(d)(3)) to the extent allowed § 1.1411–6)) held in a trade or business income, as described in sections 652(a) under section 163(d)(1). Any investment not described in § 1.1411–5. and 662(a), to the extent that, under interest not allowed under section (B) Special rules for determining sections 652(b) and 662(b), the character 163(d)(1) shall be treated as investment whether property is held in a trade or of such income constitutes gross income interest paid or accrued by the taxpayer business. To determine whether net gain from items described in paragraph in the succeeding taxable year. described in paragraph (a)(1)(iii) of this (a)(1)(i) and (ii) of this section or net (B) Investment expenses. Investment section is from property held in a trade gain attributable to items described in expenses (as defined in section or business— paragraph (a)(1)(iii) of this section, with 163(d)(4)(C)). (1) A partnership interest or S further computations consistent with (C) Taxes described in section corporation stock generally is not the principles of this section, as 164(a)(3). In the case of taxes that are property held in a trade or business. provided in § 1.1411–3(e). deductible under section 164(a)(3) and Therefore, gain from the sale of a (f) Properly allocable deductions—(1) imposed on both gross income partnership interest or S corporation General rule—(i) In general. Unless (including net gain) described in stock is generally gain described in specifically stated otherwise, only § 1.1411–4(a)(1) and gross income (as paragraph (a)(1)(iii) of this section. See properly allocable deductions described defined under section 61(a)) that is not § 1.1411–7 for rules relating to in this paragraph (f) may be taken into described in § 1.1411–4(a)(1), the dispositions of interests in partnerships account in determining net investment portion of the deduction that is properly or S corporations. income. allocable to gross income (including net (2) In the case of an individual, estate, (ii) Limitations and carryovers. gain) described in § 1.1411–4(a)(1) may or trust that owns or engages in a trade Deductions allowed under this be determined by taxpayers using any or business directly (or indirectly paragraph (f) shall not exceed the total reasonable method. For purposes of the through ownership of an interest in an amount of gross income and net gain prior sentence, an allocation of the entity that is disregarded as an entity described in paragraph (a)(1) of this deduction based on the ratio of the
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amount of a taxpayer’s gross income (d) of this section, and only to the extent loss of $40,000 on the sale of the P stock. A’s (including net gain) described in of gains. $20,000 gain on the sale of Rental Property § 1.1411–4(a)(1) to the amount of the (g) Special rules for controlled foreign D is reduced to the extent of the $3,000 loss taxpayer’s gross income (as defined corporations and passive foreign allowed under section 1211(b). Therefore, A’s net gain for Year 1 is $17,000 ($20,000 gain under section 61(a)) is an example of a investment companies. For purposes of treated as ordinary income on the sale of reasonable method. calculating net investment income, Rental Property D reduced by $3,000 loss (ii) Application of limitations under additional rules in § 1.1411–10(c) apply allowed under section 1211). sections 67 and 68. Any deductions to an individual, an estate, or a trust that Example 3. Section 172 net operating loss described in this paragraph (f)(3) that is a United States shareholder that owns deduction. (i) In Year 1, A, an unmarried are subject to section 67 (the 2-percent an interest in a controlled foreign individual, has the following items of income floor on miscellaneous itemized corporation (within the meaning of and deduction: $60,000 in wages, $20,000 in deductions) or section 68 (the overall gross income from a trade or business of section 957(a)) or that is a United States trading in financial instruments or limitation on itemized deductions) are person that directly or indirectly owns commodities (as defined in § 1.1411–5(a)(2)) allowed in determining net investment an interest in passive foreign investment (trading activity), $70,000 in loss from his income only to the extent the items are companies (within the meaning of sole proprietorship (which is not a trade or deductible for chapter 1 purposes after section 1297(a)). business described in § 1.1411–5), and the application of sections 67 and 68. (h) Examples. The following examples $30,000 in trading activity expense For this purpose, section 67 is applied illustrate the provisions of this section. deductions. As a result, for income tax before section 68. The amounts that may In each example, unless otherwise purposes A sustains a section 172(c) net be deducted in determining net operating loss of $20,000. A makes an indicated, the taxpayer uses a calendar election under section 172(b)(3) to waive the investment income after the application taxable year, the taxpayer is a U.S. carryback period for this net operating loss. of sections 67 and 68 shall be citizen, and Year 1 is a taxable year in (ii) For purposes of section 1411, A’s net determined as described in paragraph which section 1411 is in effect. investment income for Year 1 is the excess (f)(3)(ii)(A) and (B) of this section. Example 1. Calculation of net gain. (i) In (if any) of the $20,000 in gross income from (A) Deductions subject to section 67. Year 1, A, an unmarried individual, realizes the trading activity over the $30,000 The amount of miscellaneous itemized a capital loss of $40,000 on the sale of P stock deduction for the trading activity expenses. deductions tentatively deductible in and realizes a capital gain of $10,000 on the Net investment income cannot be less than determining net investment income sale of Q stock, resulting in a net capital loss zero for a taxable year. Therefore, A’s net investment income for Year 1 is $0. after applying section 67 (but before of $30,000. Both P and Q are C corporations. (iii) For Year 2, A has $200,000 of wages, A has no other capital gain or capital loss in applying section 68) is determined by $100,000 of gross income from the trading Year 1. In addition, A receives wages of multiplying a taxpayer’s miscellaneous activity, $80,000 of income from his sole $300,000 and earns $5,000 of gross income itemized deductions otherwise proprietorship, and $10,000 in trading allowable under this paragraph (f)(3) by from interest. For income tax purposes, activity expense deductions. For income tax a fraction. The numerator of the fraction under section 1211(b), A may use $3,000 of purposes, A’s $20,000 net operating loss the net capital loss against other income. carryover from Year 1 will be allowed as a is the total miscellaneous itemized Under section 1212(b)(1), the remaining deductions allowed after the application deduction. In addition, under § 1.1411–2(c), $27,000 is a capital loss carryover. For A’s Year 1 $20,000 net operating loss will be of section 67, but before the application purposes of determining A’s Year 1 net gain of section 68. The denominator of the allowed as a deduction in computing A’s under paragraph (a)(1)(iii) of this section, A’s Year 2 modified adjusted gross income. fraction is the total miscellaneous gain of $10,000 on the sale of the Q stock is (iv) For purposes of section 1411, A’s itemized deductions before the reduced by A’s loss of $40,000 on the sale of $20,000 net operating loss carryover from application of sections 67 and 68. See the P stock. However, because net gain may Year 1 is not allowed in computing A’s Year Example 6 of paragraph (h) of this not be less than zero, A may not reduce net 2 net investment income. As a result, A’s section. investment income by the $3,000 of the Year 2 net investment income is $90,000 (B) Deductions subject to section 68. excess of capital losses over capital gains ($100,000 gross income from the trading The amount of itemized deductions allowed for income tax purposes under activity minus the $10,000 of trading activity section 1211(b). expenses). allowed in determining net investment (ii) In Year 2, A has a capital gain of income after applying sections 67 and Example 4. Section 121(a) exclusion. (i) In $30,000 on the sale of Y stock. Y is a C Year 1, A, an unmarried individual, sells a 68 is determined by multiplying a corporation. A has no other capital gain or house that he has owned and used as his taxpayer’s itemized deductions capital loss in Year 2. For income tax principal residence for five years and realizes otherwise allowable under this purposes, A may reduce the $30,000 gain by $200,000 in gain. In addition to the gain paragraph (f)(3), after the application of the Year 1 section 1212(b) $27,000 capital realized from the sale of his principal section 67, by a fraction. The numerator loss carryover. For purposes of determining residence, A also realizes $7,000 in long-term of the fraction is the total itemized A’s Year 2 net gain under paragraph (a)(1)(iii) capital gain. A has a $5,000 short-term deductions allowed after the application of this section, A’s $30,000 gain may also be capital loss carryover from a year preceding reduced by the $27,000 capital loss carryover the effective date of section 1411. of sections 67 and 68. The denominator from Year 1. Therefore, in Year 2, A has of the fraction is the total itemized (ii) For income tax purposes, under section $3,000 of net gain for purposes of paragraph 121(a), A excludes the $200,000 gain realized deductions allowed after the application (a)(1)(iii) of this section. from the sale of his principal residence from of section 67, but before the application Example 2. Calculation of net gain. The his Year 1 gross income. In determining A’s of section 68. For this purpose, the term facts are the same as in Example 1, except Year 1 adjusted gross income, A also reduces itemized deductions does not include that in Year 1, A also realizes a gain of the $7,000 capital gain by the $5,000 capital any deduction described in section $20,000 on the sale of Rental Property D, all loss carryover allowed under section 1211(b). 68(c). of which is treated as ordinary income under (iii) For section 1411 purposes, under (4) Loss deductions. Deductions section 1250. For income tax purposes, under section 121(a), A excludes the $200,000 gain allowed under this paragraph (f) do not section 1211(b), A may use $3,000 of the net realized from the sale of his principal capital loss against other income. Under include losses described in section 165, residence from his Year 1 gross income and, section 1212(b)(1) the remaining $27,000 is a consequently, net investment income. In whether described in section 62 or capital loss carryover. For purposes of determining A’s Year 1 net gain under section 63(d). Losses deductible under determining A’s net gain under paragraph paragraph (a)(1)(iii) of this section, A reduces section 165 are deductible only in (a)(1)(iii) of this section, A’s gain of $10,000 the $7,000 capital gain by the $5,000 capital determining net gain under paragraph on the sale of the Q stock is reduced by A’s loss carryover allowed under section 1211(b).
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Example 5. Section 163(d) limitation. (i) In $4,000 carryforward of interest expense net investment income. Of the state income Year 1, A, an unmarried individual, pays disallowed in Year 1 may be deducted in tax expense, $20,000 is properly allocable to interest of $4,000 on debt incurred to Year 2. net investment income and $100,000 is not purchase stock. Under § 1.163–8T, this Example 6. Sections 67 and 68 limitations properly allocable to net investment income. interest is allocable to the stock and is on itemized deductions. (i) A, an unmarried (ii) A’s 2-percent floor under section 67 is investment interest within the meaning of individual, has adjusted gross income in Year $40,000 (2 percent of $2,000,000). For Year section 163(d)(3). A has no investment 1 as follows: 1, assume the section 68 limitation starts at income as defined by section 163(d)(4). A has Wages ...... $1,600,000 adjusted gross income of $200,000. The $10,000 of income from a trade or business Interest income ...... 400,000 section 68 overall limitation disallows that is a passive activity (as defined in $54,000 of A’s itemized deductions that are § 1.1411–5(a)(1)) with respect to A. For Adjusted gross income .... 2,000,000 subject to section 68 (3 percent of the excess income tax purposes, under section 163(d)(1) In addition, A has the following items of of $2,000,000 adjusted gross income over the A may not deduct the $4,000 investment expense qualifying as itemized deductions: interest in Year 1. Under section 163(d)(2), $200,000 limitation threshold). the $4,000 investment interest is a Investment expenses ...... $70,000 (iii)(A) A’s total miscellaneous itemized carryforward of disallowed interest that is Job-related expenses ...... 30,000 deductions allowable before the application treated as investment interest paid by A in Investment interest expense ...... 80,000 of section 67 is $100,000 ($70,000 in the succeeding taxable year. Similarly, for State income taxes ...... 120,000 investment expenses plus $30,000 in job- purposes of determining A’s Year 1 net A’s investment expenses and job-related related expenses), and the total investment income, A may not deduct the expenses are miscellaneous itemized miscellaneous deductions allowed after the $4,000 investment interest. deductions. In addition, A’s investment application of section 67 is $60,000 (ii) In Year 2, A has $5,000 of section interest expense and investment expenses are ($100,000 minus $40,000). 163(d)(4) net investment income. For both properly allocable to net investment income (B) The amount of the deduction allowed income tax purposes and for determining (within the meaning of this section). A’s job- for investment expenses after the application section 1411 net investment income, A’s related expenses are not properly allocable to of section 67 is computed as follows:
(C) The amount of the deduction allowed for job-related expenses after the application of section 67 is computed as follows:
(iv)(A) Under section 68, the $80,000 Investment expenses ...... $42,000 amount allowed after the application of deduction for the investment interest Job-related expenses ...... 18,000 section 68 is $126,000 ($180,000 minus the expense is not subject to the section 68 State income tax ...... 120,000 $54,000 disallowed in paragraph (ii) of this limitation on itemized deductions. Example 6). (B) A’s itemized deductions subject to the Deductions subject to section (D) The amount of the investment expense limitation under section 68 and allowed after 68 ...... 180,000 deduction allowed after the application of application of section 67, but before the (C) Of A’s itemized deductions that are section 68 is determined as follows: application of section 68, are the following: subject to the limitation under section 68, the
(E) The amount of the state income tax section 68 and properly allocable to net deduction allowed after the application of investment income is determined as follows:
(F) The itemized deductions allowed after Investment expenses ...... 29,400 (G) The amount of the state income tax applying sections 67 and 68 and properly State income taxes ...... 14,000 deduction allowed after the application of allocable to A’s net investment income are section 68 and not properly allocable to net the following: Itemized deductions properly investment income is determined as follows: allocable to net investment Investment interest expense ...... $80,000 income ...... 123,400
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(H) The job-related expenses deduction unless otherwise indicated, the taxpayer the meaning of § 1.1411–4(a)(1)(i)). While and $70,000 of the state income tax uses a calendar taxable year, the $275,000 of the gross income from the deduction are not properly allocable taxpayer is a U.S. citizen, and Year 1 is equipment leasing activity meets the deductions for purposes of section 1411. a taxable year in which section 1411 is definition of rents in § 1.1411–4(a)(1)(i), the Example 7. Section 1031 like-kind activity meets one of the exceptions to rental exchange. (i) In Year 1, A, an unmarried in effect: activity in § 1.469–1T(e)(3)(ii) and B individual who is not a dealer in real estate, Example 1. Rental activity. A, an materially participates in the activity. purchases Greenacre, a piece of undeveloped unmarried individual, rents a commercial Therefore, the trade or business is not a land, for $10,000. A intends to hold building to B for $50,000 in Year 1. A’s rental passive activity with respect to B for Greenacre for investment. activity does not involve the conduct of a purposes of paragraph (b)(1)(ii) of this (ii) In Year 3, A enters into an exchange in section 162 trade or business, but under section, and because the rents are derived in which he transfers Greenacre, now valued at section 469(c)(2), A’s rental activity is a the ordinary course of a trade or business not $20,000, and $5,000 cash for Blackacre, passive activity. Because paragraph (b)(1)(i) described in paragraph (a) of this section, the another piece of undeveloped land, which of this section is not satisfied, A’s rental ordinary course of a trade or business has a fair market value of $25,000. The income of $50,000 is not derived from a trade exception in § 1.1411–4(b) applies, which exchange is a transaction for which no gain or business described in paragraph (b)(1) of means that the rents are not subject to or loss is recognized under section 1031. this section. However, A’s rental income of § 1.1411–4(a)(1)(i). Furthermore, because the (iii) In Year 3, for income tax purposes A $50,000 will still constitute gross income equipment leasing trade or business is not a does not recognize any gain from the from rents within the meaning of § 1.1411– trade or business described in paragraph exchange of Greenacre for Blackacre. A’s 4(a)(1)(i) because § 1.1411–4(a)(1)(i) does not (a)(1) or (a)(2) of this section, the $25,000 of basis in Blackacre is $15,000 ($10,000 require a trade or business. other gross income is not subject to § 1.1411– substituted basis in Greenacre plus $5,000 Example 2. Application of grouping rules 4(a)(1)(ii). Finally, gain or loss from the sale additional cost of acquisition). For purposes under section 469. In Year 1, A, an of the property held in the equipment leasing of section 1411, A’s net investment income unmarried individual, owns an interest in activity will not be subject to § 1.1411– for Year 3 does not include any realized gain PRS, a partnership for Federal income tax 4(a)(1)(iii) because although it is attributable from the exchange of Greenacre for purposes. PRS is engaged in two activities, X to a trade or business, it is not a trade or Blackacre. and Y, which constitute trades or businesses business to which the section 1411 tax (iv) In Year 5, A sells Blackacre to an (within the meaning of section 162), and applies. unrelated party for $35,000 in cash. neither of which constitute trading in Example 4. Application of section 469 and (v) In Year 5, for income tax purposes B financial instruments or commodities (within other gross income under § 1.1411–4(a)(1)(ii). recognizes capital gain of $20,000 ($35,000 the meaning of paragraph (a)(2) of this Same facts as Example 3, except B does not sale price minus $15,000 basis). For purposes section). Pursuant to § 1.469–4, A has materially participate in the equipment of section 1411, A’s net investment income properly grouped X and Y (the grouped leasing trade or business and therefore the includes the $20,000 gain recognized from activity). A participates in X for more than trade or business is a passive activity with the sale of Blackacre. 500 hours during Year 1 and would be respect to B for purposes of paragraph (i) Effective/applicability date. This treated as materially participating in the (b)(1)(ii) of this section. Accordingly, the section applies to taxable years activity within the meaning of § 1.469– $275,000 of gross income from rents is 5T(a)(1). A only participates in Y for 50 hours subject to § 1.1411–4(a)(1)(i) because the beginning after December 31, 2013. during Year 1, and, but for the grouping of rents are derived from a trade or business § 1.1411–5 Trades or businesses to which the two activities together, A would not be described in paragraph (a)(1) of this section tax applies. treated as materially participating in Y (that is, the ordinary course of a trade or within the meaning of § 1.469–5T(a). business exception in § 1.1411–4(b) is (a) In general. A trade or business is However, pursuant to §§ 1.469–4 and 1.469– inapplicable). Furthermore, the $25,000 of described in this section if such trade or 5T(a)(1), A materially participates in the other gross income from the equipment business involves the conduct of a trade grouped activity, and therefore, for purposes leasing trade or business is subject to or business (within the meaning of of paragraph (b)(1)(ii) of this section, neither § 1.1411–4(a)(1)(ii) because the gross income section 162), and such trade or business X nor Y is a passive activity with respect to is derived from a trade or business described is either— A. Accordingly, with respect to A, neither X in paragraph (a)(1) of this section. Finally, (1) A passive activity (within the nor Y is a trade or business described in gain or loss from the sale of the property used meaning of paragraph (b) of this section) paragraph (b)(1) of this section. in the equipment leasing trade or business is with respect to the taxpayer; or Example 3. Application of the rental subject to § 1.1411–4(a)(1)(iii) because the (2) The trade or business of a trader activity exceptions. B, an unmarried trade or business is a passive activity with individual, is a partner in PRS, which is respect to B, as described in paragraph trading in financial instruments (as engaged in an equipment leasing activity. (b)(1)(ii) of this section. defined in paragraph (c)(1) of this The average period of customer use of the Example 5. Application of the portfolio section) or commodities (as defined in equipment is seven days or less (and income rule and section 469. C, an unmarried paragraph (c)(2) of this section). therefore meets the exception in § 1.469– individual, is a partner in PRS, a partnership (b) Passive activity—(1) In general. A 1T(e)(3)(ii)(A)). B materially participates in engaged in a trade or business (within the passive activity is described in this the equipment leasing activity (within the meaning of section 162) that does not involve section if— meaning of § 1.469–5T(a)). The equipment a rental activity. C does not materially (i) Such activity is a trade or business leasing activity constitutes a trade or participate in PRS within the meaning of (within the meaning of section 162); and business within the meaning of section 162. § 1.469–5T(a), and therefore the trade or (ii) Such trade or business is a passive In Year 1, B has modified adjusted gross business of PRS is a passive activity with activity within the meaning of section income (as defined in § 1.1411–2(c)) of respect to C for purposes of paragraph (a)(1) $300,000, all of which is derived from PRS. of this section. C’s $500,000 allocable share 469 and the regulations thereunder. All of the income from PRS is derived in the of PRS’s income consists of $450,000 of gross (2) Examples. The following examples ordinary course of the equipment leasing income from a trade or business and $50,000 illustrate the principles of paragraph activity, and all of PRS’s property is held in of gross income from dividends and interest (b)(1) of this section and the ordinary the equipment leasing activity. Of B’s (within the meaning of § 1.1411–4(a)(1)(i)) course of a trade or business exception allocable share of income from PRS, $275,000 that is not derived in the ordinary course of in § 1.1411–4(b). In each example, constitutes gross income from rents (within the trade or business of PRS. Thus, under
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section 469(e)(1)(A)(i)(I) and the regulations respect to A. A owns and conducts the (B) With respect to the partnership or thereunder, C’s allocable share of gross restaurant business through S, an S S corporation interest disposed of, the income from dividends and interest consists corporation wholly-owned by A. S is able to transferor is engaged in at least one of portfolio income. Therefore, C’s $500,000 pay all of the restaurant’s current obligations trade or business that is not described allocable share of PRS’s income is subject to with cash flow generated by the restaurant. in § 1.1411–5(a)(1) (passive activity with section 1411. C’s $50,000 allocable share of S utilizes an interest-bearing checking PRS’s income from dividends and interest is account at a local bank to make daily respect to the transferor). subject to § 1.1411–4(a)(1)(i) because the deposits of cash receipts generated by the (ii) Nonapplication. This section does share is gross income from dividends and restaurant, and also to pay the recurring not apply to the disposition of stock in interest that is not derived in the ordinary ordinary and necessary business expenses of an S corporation if an election under course of a trade or business (that is, the the restaurant. The average daily balance of section 338(h)(10) is made. ordinary course of a trade or business the checking account is approximately (b) Special rules—(1) Installment exception in § 1.1411–4(b) is inapplicable). $2,500, but at any given time the balance may sales—(i) Installment sales on or after C’s $450,000 allocable share of PRS’s income be significantly more or less than this amount the effective date of section 1411. In the is subject to § 1.1411–4(a)(1)(ii) because it is depending on the short-term cash flow needs case of a disposition of an interest in a gross income from a trade or business that is of the business. In addition, S has set aside partnership or S corporation in an a passive activity. $20,000 for the potential future needs of the installment sale to which section 453 (c) Trading in financial instruments or business in case the daily cash flow into and from the checking account becomes applies, any adjustment to net gain commodities—(1) Definition of financial insufficient to pay the restaurant’s recurring under this section is determined in the instruments. For purposes of section business expenses. S does not currently need year of disposition and shall be taken 1411 and the regulations thereunder, the to spend or use the $20,000 capital to into account in the same proportion of term financial instruments includes conduct the restaurant business, and S the total gain as is taken into account stocks and other equity interests, deposits and maintains the $20,000 in an under section 453. evidences of indebtedness, options, interest-bearing savings account at a local (ii) Installment sales prior to the forward or futures contracts, notional bank. Both the $2,500 average daily balance effective date of section 1411. In the principal contracts, any other of the checking account and the $20,000 case of a disposition before the effective derivatives, or any evidence of an savings account balance constitute working date of section 1411 of an interest in a capital and, pursuant to paragraph (a) of this partnership or S corporation in an interest in any of the items described in section, the interest generated by this this paragraph (c)(1). An evidence of an working capital will not be treated as derived installment sale to which section 453 interest in any of the items described in in the ordinary course of S’s restaurant applies, taxpayers that want to make an this paragraph (c)(1) includes, but is not business. Accordingly, the interest income irrevocable election to have this section limited to, short positions or partial derived by S from its checking and savings apply must file the computational units in any of the items described in accounts and allocated to A under section statement required by paragraph (d) of this paragraph (c)(1). 1366 will be subject to tax under § 1.1411– this section with the taxpayer’s original (2) Definition of commodities. For 4(a)(1)(i). or amended return for the first taxable purposes of section 1411 and the (c) Effective/applicability date. This year beginning after December 31, 2013, regulations thereunder, the term section applies to taxable years in which the taxpayer is subject to tax commodities refers to items described in beginning after December 31, 2013. under section 1411. The determination section 475(e)(2). of whether the taxpayer is subject to tax (d) Effective/applicability date. This § 1.1411–7 Exception for dispositions of under section 1411 is made without section applies to taxable years interests in partnerships and S regard to the effect of the election. In corporations. beginning after December 31, 2013. addition, a taxpayer may make an (a) In general—(1) General irrevocable election to have this section § 1.1411–6 Income on investment of application. In the case of a disposition apply for a taxable year that begins working capital subject to tax. of an interest in a partnership or S before January 1, 2014, by filing the (a) General rule. For purposes of corporation described in paragraph computational statement required by section 1411, any item of gross income (a)(2) of this section, the gain or loss paragraph (d) of this section with the from the investment of working capital from such disposition taken into taxpayer’s original or amended return will be treated as not derived in the account under § 1.1411–4(a)(1)(iii) shall for the taxable year. If the election is ordinary course of a trade or business, be adjusted in accordance with made under this section, the taxpayer and any net gain that is attributable to paragraph (c) of this section. The shall calculate the gain or loss the investment of working capital will adjustment reflects the net gain or net adjustment under this section and such be treated as not derived in the ordinary loss that would have been taken into adjustment shall be taken into account course of a trade or business. In account by the transferor if all property under § 1.1411–4(a)(1)(iii). determining whether any item is gross of the partnership or S corporation were (2) Sale of an interest by a Qualified income from or net gain attributable to sold for fair market value immediately Subchapter S Trust. [Reserved] an investment of working capital, before the disposition of such interest (a (c) Deemed sale—(1) In general. In the principles similar to those described in deemed sale). case of a disposition of an interest in a § 1.469–2T(c)(3)(iii) apply. See (2) Interests to which exception partnership or S corporation described § 1.1411–4(f) for rules regarding applies—(i) In general. The adjustment in paragraph (a)(2)(i) of this section, the properly allocable deductions with provided by this section applies only to amount of gain or loss from such respect to an investment of working dispositions of interests in partnerships disposition taken into account for capital; § 1.1411–7 for rules relating to or S corporations if— purposes of § 1.1411–4(a)(1)(iii) must be the adjustment to net gain on the (A) The partnership or S corporation adjusted in accordance with this disposition of interests in a partnership is engaged in one or more trades or paragraph (c). or S corporation. businesses (within the meaning of (2) Step one: deemed sale of (b) Example. A, an unmarried individual, section 162), and at least one of its properties. The partnership or S operates a restaurant, which is a section 162 trades or businesses is not described in corporation is deemed to dispose of all trade or business but is not a trade or § 1.1411–5(a)(2) (trading in financial of the entity’s properties in a fully business described in § 1.1411–5(a)(1) with instruments or commodities); and taxable transaction (in a manner similar
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to § 1.743–1(d)(2)) for cash equal to the month period ending on the date of the loss (determined without regard to fair market value of the entity’s disposition, the fair market value and section 1411(c)(4) and this paragraph properties immediately before the the adjusted basis of such property must (c)). If the transferor has a gain disposition of the partnership or S be allocated among such trades or (determined without regard to section corporation interest. businesses on a basis that reasonably 1411(c)(4) and this paragraph (c)) from (3) Step two: determination of gain or reflects the use of such property during the disposition of the partnership or S loss. The partnership or S corporation such twelve-month period. See Example corporation interest, the positive determines the amount of gain or loss 7 of paragraph (e) of this section adjustment shall not be taken into attributable to each property by regarding multiple trades or businesses. account. comparing the fair market value of each (B) Goodwill attributable to property. (d) Required statement of adjustment. property with the adjusted basis of each If the transferor is allocated gain or loss Any transferor making an adjustment property. The gain or loss for each from goodwill in the deemed sale under under paragraph (c) of this section must property must be treated as a separate paragraph (c)(4) of this section and if the attach a statement to the transferor’s item. entity is engaged in a trade or business, return for the year of disposition. The (4) Step three: allocation of gain or the transferor shall treat such gain or statement must include— loss. Applying the rules of chapter 1, the loss as gain or loss from the disposition (1) A description of the disposed-of partnership or S corporation determines of property held in that trade or interest; the amount of gain or loss for each business. If the entity is engaged in (2) The name and taxpayer property that is allocable to the interest more than one trade or business, the identification number of the entity disposed of by the transferor. An transferor’s gain or loss from goodwill disposed of; allocation of gain or loss to a transferor will be attributable to the entity’s trades partner must comply with the or businesses based on the relative fair (3) The fair market value of each requirements in sections 704(b) and market value of the property (other than property of the entity; 704(c) and the regulations thereunder, cash) held in each trade or business. See (4) The entity’s adjusted basis in each and basis adjustments under section 743 Example 8 of paragraph (e) of this property; with respect to the transferor must be section. (5) The transferor’s allocable share of taken into account. In the case of an S (iii) Negative adjustment—(A) gain or loss with respect to each corporation, the amount of gain or loss General rule. Subject to the limitations property of the entity; allocated to the transferor is determined described in paragraph (c)(5)(iii)(B) of (6) Information regarding whether the under section 1366(a), and the this section, if the amount determined property was held in (or attributable to) allocation should not take into account under paragraph (c)(5)(i) of this section a trade or business not described in any reduction in the transferor’s is a net gain, a negative adjustment of § 1.1411–5; distributive share in section 1366(f)(2) such amount shall be taken into account (7) The amount of the net gain under resulting from the hypothetical in computing the amount of the § 1.1411–4(a)(1)(iii) on the disposition imposition of tax under section 1374 as transferor’s net gain in § 1.1411– of the interest; and a result of the deemed sale. See § 1.460– 4(a)(1)(iii). (8) The computation of the adjustment 4(k)(3)(v)(B) for a rule relating to the (B) Limitations. If the transferor has a under paragraph (c) of this section. gain (determined without regard to computation of income or loss that (e) Examples. The following examples section 1411(c)(4) and this paragraph would be allocated to the transferor illustrate the principles of this section. (c)) from the disposition of the from a contract accounted for under a In each example, unless otherwise partnership or S corporation interest, long-term contract method of indicated, the taxpayer uses a calendar the negative adjustment taken into accounting as a result of the deemed taxable year, the taxpayer is a U.S. account is limited to the amount of the sale of properties. citizen, the partnership (PRS) or S (5) Step four: adjustment to gain or gain (determined without regard to corporation (S) is not engaged in a trade loss—(i) In general. If the amount of section 1411(c)(4) and this paragraph or business of trading in financial gain or loss allocable to the transferor in (c)). If the transferor has a loss instruments or commodities (as defined paragraph (c)(4) of this section is (determined without regard to section in § 1.1411–5(a)(2)), and Year 1 is a attributable to property held (as 1411(c)(4) and this paragraph (c)) from taxable year in which section 1411 is in modified by paragraph (c)(5)(ii) of this the disposition of the partnership or S effect: section, if applicable) in a trade or corporation interest, the negative business not described in § 1.1411–5(a), adjustment shall not be taken into Example 1. Basic application. (i) Facts. such gain or loss is aggregated to create account. Individuals A and B are shareholders of S a net gain (which results in a negative (iv) Positive adjustment—(A) General Corporation (S). A owns 75 percent of the adjustment) or a net loss (which results rule. Subject to the limitations described stock in S, and B owns 25 percent of the stock in S. During Year 1, S is engaged in a in a positive adjustment). Then, in in paragraph (c)(5)(iv)(B) of this section, single trade or business. With respect to S’s accordance with paragraph (c)(5)(iii) or if the amount determined under trade or business, A is not engaged in a trade (iv) of this section, the transferor must paragraph (c)(5)(i) of this section is a net or business described in § 1.1411–5(a)(1), and adjust the transferor’s gain or loss from loss, a positive adjustment of such B is engaged in a trade or business described the disposition of the partnership or S amount shall be taken into account in in § 1.1411–5(a)(1). S has three properties (1, corporation interest as determined in computing the amount of the 2, and 3) held exclusively in S’s trade or § 1.1411–4(a)(1)(iii) (without application transferor’s net gain in § 1.1411– business that have an aggregate fair market of this section). 4(a)(1)(iii). value of $120,000. On September 1 of Year (ii) Special rules—(A) Property used (B) Limitations. If the transferor has a 1, A and B sell their S stock to C for the fair in more than one trade or business. In loss (determined without regard to market value of S’s properties (that is, A sells for $90,000 and B sells for $30,000). At the the case of the disposition of a section 1411(c)(4) and this paragraph time of the disposition, A’s adjusted basis in partnership or S corporation interest in (c)) from the disposition of the his S stock is $75,000, and B’s adjusted basis which property of the partnership or S partnership or S corporation interest, in his S stock is $25,000. S’s properties have corporation is held in more than one the positive adjustment taken into the following adjusted bases and fair market trade or business during the twelve- account is limited to the amount of the values immediately before the disposition:
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of $20,000 on the disposition of the interest Adjusted Fair mar- Property Adjusted Fair mar- Gain or Property basis ket value under § 1.1411–4(a)(1)(iii) is reduced by basis ket value loss $15,000, and A has $5,000 net gain with 1 ...... $10,000 $50,000 respect to the stock disposition for purposes 1 ...... $10,000 $50,000 $40,000 2 ...... 70,000 30,000 of § 1.1411–4(a)(1)(iii). 2 ...... 70,000 30,000 (40,000 ) 3 ...... 20,000 40,000 Example 3. Limitation of adjustment. (i) 3 ...... 20,000 40,000 20,000 Facts. Same facts as Example 1, except that 4 ...... 20,000 100,000 80,000 (ii) Calculation of net gain under § 1.1411– A’s adjusted basis in his S stock is $80,000. 4(a)(1)(iii). On the stock sale to C, A (ii) Analysis. On the stock sale to C, A (3) Step three: allocation of gain or loss. recognizes a gain of $15,000 ($90,000 minus recognizes a gain of $10,000 ($90,000 minus Under section 1366, A is allocated $30,000 $75,000), which is subject to § 1.1411– $80,000), which is subject to § 1.1411– gain from Property 1, $30,000 loss from 4(a)(1)(iii), and B recognizes a gain of $5,000 4(a)(1)(iii). The deemed sale would result in Property 2, $15,000 gain from Property 3, and ($30,000 minus $25,000), which is subject to a negative adjustment of $15,000 ($30,000 $60,000 gain from Property 4. § 1.1411–4(a)(1)(iii). minus $30,000 plus $15,000). Under (4) Step four: adjustment to net gain. (iii) Application of section 1411(c)(4)—(A) paragraph (c)(5) of this section, A’s net gain Because S’s trade or business is not a trade In general. Section 1411(c)(4) is applicable to of $10,000 on the disposition of the interest or business described in § 1.1411–5(a)(1) A because with respect to S’s trade or under § 1.1411–4(a)(1)(iii) is reduced by the with respect to A, A must make an business, A is not engaged in a trade or negative adjustment, but the negative adjustment under paragraph (c)(5) of this business described in § 1.1411–5(a)(1). On adjustment under § 1.1411–7(c)(5)(iii)(B) is section to the amount of gain determined the other hand, with respect to B, S’s trade limited to $10,000 (the amount of A’s gain under § 1.1411–4(a)(1)(iii). Because Property or business is described in § 1.1411–5(a)(1) determined without regard to § 1.1411–7). As 4 is not held in S’s trade or business, A’s because it is a passive trade or business with a result, A has zero net gain with respect to $60,000 gain from Property 4 is not taken respect to B within the meaning of § 1.1411– the stock disposition for purposes of into account under paragraph (c)(5) of this 5(a)(1). Accordingly, section 1411(c)(4) is § 1.1411–4(a)(1)(iii). section. The gain or loss on Property 1, inapplicable to B, and B may not make any Example 4. Loss on disposition. (i) Facts. Property 2, and Property 3 are added together adjustment to his $5,000 gain upon the stock Same facts as Example 1, except that (A) A’s ($30,000 minus $30,000 plus $15,000), disposition. adjusted basis in his stock is $105,000, (B) resulting in a negative adjustment of $15,000. (B) Deemed sale—(1) Step one: deemed Property 3 has an adjusted basis of $60,000 Under paragraph (c)(5) of this section, A’s net sale of properties. Upon a hypothetical and fair market value of $10,000, and (C) A gain of $75,000 under § 1.1411–4(a)(1)(iii) on disposition of S’s properties for cash equal to sells his interest for $67,500. the disposition of the interest is reduced by fair market value, S would receive $50,000 (ii) Analysis. On the stock sale to C, A $15,000, and A has $60,000 net gain with for Property 1, $30,000 for Property 2, and recognizes a loss of $37,500 ($67,500 minus respect to the stock disposition for purposes $40,000 for Property 3. $105,000), which is subject to § 1.1411– of § 1.1411–4(a)(1)(iii). (2) Step two: determination of gain or loss. 4(a)(1)(iii). In the deemed sale, A would be Example 6. Calculation of gain in general. The determination of gain or loss on the allocated $30,000 gain from Property 1, (i) Facts. D and E are equal partners in PRS, deemed sale of S’s properties is as follows: $30,000 loss from Property 2, and $37,500 a partnership, and PRS’s partnership loss from Property 3. The deemed sale would agreement provides that allocations are 50 result in a positive adjustment of $37,500 percent to D and 50 percent to E. PRS is Property Adjusted Fair mar- Gain or basis ket value loss ($30,000 minus $30,000 minus $37,500). engaged in a single trade or business. D Under paragraph (c)(5) of this section, A’s contributed Property 1 with an adjusted basis 1 ...... $10,000 $50,000 $40,000 loss of $37,500 on the disposition of the of $100,000 and a fair market value of 2 ...... 70,000 30,000 (40,000 ) interest under § 1.1411–4(a)(1)(iii) is $200,000 at the time of the contribution. E 3 ...... 20,000 40,000 20,000 increased by the positive adjustment of contributed Property 2 with an adjusted basis $37,500, and A has zero loss with respect to of $120,000 and a fair market value of (3) Step three: allocation of gain or loss. the stock disposition for purposes of $200,000 at the time of the contribution. PRS Under section 1366, A is allocated $30,000 § 1.1411–4(a)(1)(iii). is engaged in a single trade or business in gain from Property 1, $30,000 loss from Example 5. Property not held in trade or which both Property 1 and Property 2 are Property 2, and $15,000 gain from Property business. (i) Facts. Same facts as Example 1, used. PRS’s trade or business is not a trade 3. except that S owns a fourth property or business described in § 1.1411–5(a)(1) (4) Step four: adjustment to net gain. (adjusted basis of $20,000 and fair market with respect to D. On November 1 of Year 1, Because all three properties are held in S’s value of $100,000) that is not held in S’s D sells his interest in PRS to F for $320,000, trade or business, A must make an trade or business and only A sells his S stock which is based on the fair market value of adjustment under paragraph (c)(5) of this to C for A’s proportionate share of the fair PRS’s properties. At the time of the sale, D section to the amount of net gain determined market value of S’s properties. At the time of has an adjusted basis in his partnership under § 1.1411–4(a)(1)(iii). The gain or loss the disposition, A’s adjusted basis in his S interest of $100,000 and the properties of on each of the three properties are added stock is $90,000. PRS have the following adjusted bases and together ($30,000 minus $30,000 plus (ii) Calculation of net gain under § 1.1411– fair market values: $15,000), resulting in a negative adjustment 4(a)(1)(iii). On the stock sale to C, A of $15,000. Under paragraph (c)(5) of this recognizes a gain of $75,000 ($165,000 minus Property Adjusted Fair mar- section, A’s gain of $15,000 on the $90,000), which is subject to § 1.1411– basis ket value disposition of the interest under § 1.1411– 4(a)(1)(iii). 4(a)(1)(iii) is reduced by $15,000, and A has (iii) Application of section 1411(c)(4)—(A) 1 ...... $100,000 $240,000 zero gain with respect to the stock In general. Section 1411(c)(4) is applicable to 2 ...... 120,000 400,000 disposition for purposes of § 1.1411– A because S’s trade or business is not a trade 4(a)(1)(iii). or business described in § 1.1411–5(a)(1) (ii) Calculation of net gain under § 1.1411– Example 2. Inside-outside basis disparity. with respect to A. 4(a)(1)(iii). D recognizes $220,000 ($320,000 (i) Facts. Same facts as Example 1, except (B) Deemed sale—(1) Step one: deemed minus $100,000) of gain on the sale of his that A’s adjusted basis in his S stock is sale of properties. Upon a hypothetical partnership interest to F, and such gain is $70,000. disposition of S’s properties for cash equal to subject to § 1.1411–4(a)(1)(iii). (ii) Analysis. On the stock sale to C, A fair market value, S would receive $50,000 (iii) Application of section 1411(c)(4)—(A) recognizes a gain of $20,000 ($90,000 minus for Property 1, $30,000 for Property 2, In general. Section 1411(c)(4) is applicable to $70,000), which is subject to § 1.1411– $40,000 for Property 3, and $100,000 for D because PRS’s trade or business is not a 4(a)(1)(iii). The deemed sale would result in Property 4. trade or business described in § 1.1411– a negative adjustment of $15,000 ($30,000 (2) Step two: determination of gain or loss. 5(a)(1) with respect to A. minus $30,000 plus $15,000). Under The determination of gain or loss on the (B) Deemed sale—(1) Step one: deemed paragraph (c)(5) of this section, A’s net gain deemed sale of S’s properties is as follows: sale of properties. Upon a hypothetical
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disposition of PRS’s properties for cash equal to property held in Business X and not to Adjusted Fair mar- to fair market value, PRS would receive property held in Business Y (because Property basis ket value $240,000 for Property 1 and $400,000 for Business Y is a trade or business described Property 2. in § 1.1411–5(a)(1) with respect to A). 1 ...... $5,000 $10,000 (2) Step two: determination of PRS’s gain (B) Deemed sale—(1) Step one: deemed 2 ...... 5,000 5,000 or loss. The determination of gain or loss on sale of properties. Upon a hypothetical 3 ...... 0 10,000 the deemed sale of PRS’s properties is as disposition of S’s properties for cash equal to 4 ...... 20,000 30,000 follows: fair market value, S would receive $30,000 5 ...... 10,000 15,000 for Property 1, $30,000 for Property 2, Cash ...... 10,000 10,000 Property Adjusted Fair mar- Gain or $40,000 for Property 3, $100,000 for Property Goodwill ...... 10,000 30,000 basis ket value loss 4, and $120,000 for Property 5. (2) Step two: determination of gain or loss. (ii) Calculation of gain under § 1.1411– 1 ...... $100,000 $240,000 $140,000 The determination of gain or loss on the 4(a)(1)(iii). On the stock sale to C, A 2 ...... 120,000 400,000 280,000 deemed sale of S’s properties is as follows: recognizes a gain of $25,000 ($55,000 minus $30,000), which is subject to § 1.1411– (3) Step three: allocation of gain or loss. Adjusted Fair mar- Gain or 4(a)(1)(iii). Pursuant to section 704(c), D is allocated Property basis ket value loss (iii) Application of section 1411(c)(4)—(A) $120,000 gain from the deemed sale of In general. Section 1411(c)(4) is applicable to Property 1 and $100,000 gain from the 1 ...... $10,000 $30,000 $20,000 A. However, any adjustment will only relate deemed sale of Property 2. 2 ...... 70,000 30,000 (40,000 ) to property used in Business X and not to (4) Step four: adjustment to net gain. 3 ...... 20,000 40,000 20,000 property used in Business Y (because Because both properties are used in PRS’s in 4 ...... 20,000 100,000 80,000 Business Y is a trade or business described trade or business, D must make an 5 ...... 100,000 120,000 20,000 in § 1.1411–5(a)(1) with respect to A). adjustment under paragraph (c)(5)(i) of this (B) Deemed sale—(1) Step one: deemed section to the amount of net gain determined (3) Step three: allocation of gain or loss. sale of properties. Upon a hypothetical under § 1.1411–4(a)(1)(iii). The total gain Under section 1366, A is allocated $10,000 disposition of S’s properties for cash equal to allocated to D in the deemed sale is $220,000 gain from Property 1, $20,000 loss from fair market value, S would receive $10,000 ($120,000 plus $100,000), resulting in a Property 2, $10,000 gain from Property 3, for Property 1, $5,000 for Property 2, $10,000 negative adjustment of $220,000. Under $40,000 gain from Property 4, and $10,000 for Property 3, $30,000 for Property 4, paragraph (c)(5) of this section, D’s net gain gain from Property 5. $15,000 for Property 5, $10,000 for the cash, of $220,000 under § 1.1411–4(a)(1)(iii) on the (4) Step four: adjustment to net gain. A and $30,000 for goodwill. disposition of the interest is reduced by (2) Step two: determination of gain or loss. $220,000, and D has zero net gain with must make an adjustment under paragraph (c)(5) of this section to the amount of net gain The determination of gain or loss on the respect to the partnership interest disposition deemed sale of S’s properties is as follows: for purposes of § 1.1411–4(a)(1)(iii). determined under § 1.1411–4(a)(1)(iii), but Example 7. Multiple trades or businesses. only with respect to the gain or loss on the properties used in Business X (that is, Adjusted Fair mar- Gain or (i) Facts. Individuals A and B are Property basis ket value loss shareholders of an S corporation (S). A owns Property 1, Property 2, and a portion of 50 percent of the stock in S. During Year 2, Property 5). Because Property 5 is used 50 1 ...... $5,000 $10,000 5,000 S is engaged in two trades or businesses percent of the time in Business X, under 2 ...... 5,000 5,000 0 (Business X and Business Y). With respect to paragraph (c)(5)(ii)(A) of this section, 50 3 ...... 0 10,000 10,000 Business X, A is not engaged in a trade or percent of the gain would be attributable to 4 ...... 20,000 30,000 10,000 business described in § 1.1411–5(a)(1), but Business X (and A’s share would be $5,000). 5 ...... 10,000 15,000 5,000 with respect to Business Y, A is engaged in The gain or loss on Property 1, Property 2, Cash ... 10,000 10,000 0 a trade or business is described in § 1.1411– and Property 5 are added together ($10,000 Good- 5(a)(1). S has five properties. Property 1 and minus $20,000 plus $5,000), and results in a will ... 10,000 30,000 20,000 Property 2 are held exclusively in Business positive adjustment of $5,000. Under X, and Property 3 and Property 4 are held paragraph (c)(5)(iv)(B) of this section, (3) Step three: allocation of gain or loss. exclusively in Business Y. Property 5 is used because A had a gain of $50,000 on the stock Under section 1366, A is allocated a $25,000 half of the time in Business X and the rest disposition, A does not take the positive gain ($2,500 gain from Property 1, $0 gain of the time in Business Y. On December 1 of adjustment of $5,000 into account and A has from Property 2, $5,000 gain from Property Year 2, A sells his S stock to C for A’s a $50,000 gain for purposes of § 1.1411– 3, $5,000 gain from Property 4, $2,500 gain proportionate share of the fair market value 4(a)(1)(iii). from Property 5, $0 from cash, and $10,000 of S’s properties. At the time of the Example 8. Goodwill and multiple trades from goodwill). disposition, A’s adjusted basis in his S stock or businesses. (i) Facts. Individuals A and B (4) Step four: adjustment to net gain. A is $110,000. S’s properties have the following are shareholders of an S corporation (S). A must make an adjustment under paragraph adjusted bases and fair market values owns 50 percent of the stock in S. During (c)(5) of this section to the amount of net gain immediately before the disposition: Year 2, S is engaged in two trades or determined under § 1.1411–4(a)(1)(iii), but businesses (Business X and Business Y). only with respect to the gain or loss on the With respect to Business X, A is not engaged properties used in Business X (that is, Property Adjusted Fair mar- basis ket value in a trade or business described in § 1.1411– Property 1, Property 2, and a portion of the 5(a)(1), but with respect to Business Y, A is goodwill). Under paragraph (c)(5)(ii)(B) of 1 ...... $10,000 $30,000 engaged in a trade or business described in this section, the goodwill is allocated to 2 ...... 70,000 30,000 § 1.1411–5(a)(1). In addition to cash and Business X and Business Y based on the 3 ...... 20,000 40,000 goodwill, S has five properties. Property 1 relative fair market value of the property 4 ...... 20,000 100,000 and Property 2 are used exclusively in (other than cash) held for use in each trade 5 ...... 100,000 120,000 Business X. Property 3 is not held for use in or business. For this purpose, the fair market either Business X or Business Y. Property 4 value of the property held for use in Business (ii) Calculation of gain under § 1.1411– and Property 5 are used exclusively in X is $15,000, and the fair market value of the 4(a)(1)(iii). On the stock sale to C, A Business Y. On June 1 of Year 2, A sells his property held for use in Business Y is recognizes a gain of $50,000 ($160,000 minus S stock to C for A’s proportionate share of the $45,000. Therefore, 25 percent of A’s gain on $110,000), which is subject to § 1.1411– fair market value of S’s properties. At the the goodwill is attributable to Business X (or 4(a)(1)(iii). time of the disposition, A’s adjusted basis in $2,500). A’s share of the gain on Property 1, (iii) Application of section 1411(c)(4)—(A) his S stock is $30,000. S’s properties have the Property 2, and goodwill are added together In general. Section 1411(c)(4) is applicable to following adjusted basis and fair market ($2,500 plus zero plus $2,500), which results A. However, any adjustment will only relate value immediately before the disposition: in a negative adjustment of $5,000. Under
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paragraph (c)(5) of this section, A takes into (c) Effective/applicability date. This (c) Examples. The following examples account the negative adjustment of $5,000, section applies to taxable years illustrate the provisions of this section: and A has a $20,000 gain ($25,000 minus beginning after December 31, 2013. $5,000 adjustment) for purposes of § 1.1411– Example 1. Exclusion from self- employment income. A is a general partner 4(a)(1)(iii). § 1.1411–9 Exception for self-employment in PRS, a partnership carrying on a trade or income. (f) Effective/applicability date. This business that is not a trade or business of section applies to taxable years (a) General rule. Except as provided in trading in financial instruments or beginning after December 31, 2013. paragraph (b) of this section, net commodities (within the meaning of investment income (as defined in § 1.1411–5(a)(2)). During Year 1, A’s § 1.1411–8 Exception for distributions distributive share from PRS is $1 million, from qualified plans. § 1.1411–4) does not include any item $300,000 of which is attributable to the gain taken into account in determining self- (a) General rule. Net investment on the sale of PRS’s capital assets. Section employment income that is subject to income (as defined in § 1.1411–4) does 1402(a)(3)(A) provides an exclusion from net tax under section 1401(b) for such not include any distribution from a earnings from self-employment for any gain taxable year. For purposes of section or loss from the sale or exchange of a capital qualified plan or arrangement. For this 1411(c)(6) and this section, taken into asset. For Year 1, A has $700,000 self- purpose, the term qualified plan or account means income included and employment income subject to self- arrangement means any plan or deductions allowed in determining net employment tax. This $700,000 subject to arrangement described in section 401(a), self-employment tax is not included as part earnings from self-employment. 403(a), 403(b), 408, 408A, or 457(b). of net investment income. However, the (b) Rules relating to distributions. However, amounts excepted in $300,000 attributable to the gain on PRS’s This paragraph (b) provides rules for determining net earnings from self- sale of a capital asset is excluded from net purposes of paragraph (a) of this section. employment under section 1402(a)(1)– earnings from self-employment and self- employment income and thus is not covered For purposes of section 1411(c)(5) and (17), and thus excluded from self- employment income under section by the exception in section 1411(c)(6). The this section, a distribution means the $300,000 attributable to the gain on PRS’s following: 1402(b), are not taken into account in determining self-employment income sale of a capital asset is included as part of (1) Actual distributions. Any amount net investment income if the other actually distributed from a qualified and thus may be included in net requirements of section 1411 are satisfied. plan or arrangement, as defined in investment income if such amounts are Example 2. Two trades or businesses. B is paragraph (a) of this section, is a described in § 1.1411–4. Except as an individual engaged in two trades or distribution within the meaning of provided in paragraph (b) of this businesses, Business X and Business Y, section 1411(c)(5), and thus is not section, if net earnings from self- neither of which is the trade or business of employment consist of income or loss trading in financial instruments or included in net investment income. commodities (as described in § 1.1411– Examples include a rollover to an from more than one trade or business, all items taken into account in 5(a)(2)). B carries on Business X as a sole eligible retirement plan within the proprietor and B is also a general partner in meaning of section 402(c)(8)(B), a determining the net earnings from self- a partnership that carries on Business Y. distribution of a plan loan offset amount employment with respect to these trades During Year 1, B had net earnings from self- within the meaning of Q&A–13(b) of or businesses (see § 1.1402(a)–2(c)) are employment consisting of the aggregate of a § 1.72(p)–1, and certain corrective considered taken into account in $50,000 loss (that is, after application of the distributions under the Internal determining the amount of self- exclusions under section 1402(a)(1)–(17)) employment income that is subject to from Business X that is attributable to passive Revenue Code. activities, and $70,000 in income (after (2) Amounts treated as distributed. tax under section 1401(b) and therefore not included in net investment income. application of the exclusions under section Any amount that is treated as 1402(a)(1)–(17)) from B’s distributive share distributed from a qualified plan or (b) Special rule for traders. In the case from the partnership from carrying on arrangement under the Internal Revenue of gross income described in § 1.1411– Business Y. Thus, B’s net earnings from self- Code for purposes of income tax is a 4(a)(1)(ii) derived from a trade or employment in Year 1 are $20,000. For Year distribution within the meaning of business of trading in financial 1, all of B’s income, deductions, gains, and section 1411(c)(5), and thus is not instruments or commodities (as losses from Business X and distributive share included in net investment income. described in § 1.1411–5(a)(2)), the from the partnership carrying on Business Y, other than those amounts excluded due to Examples include a conversion to a deductions described in § 1.1411– application of section 1402(a)(1)–(17), are Roth IRA described in section 408A and 4(f)(2)(ii) properly allocable to the taken into account in determining B’s net a deemed distribution under section taxpayer’s trade or business of trading in earnings from self-employment and self- 72(p). financial instruments or commodities employment income for such taxable year. (3) Amounts includible in gross are taken into account in determining Accordingly, in calculating B’s net income. Any amount that is not treated the taxpayer’s self-employment income investment income (as defined in § 1.1411– as a distribution but is otherwise only to the extent that such deductions 4) for Year 1, the items of income, loss, gain, includible in gross income pursuant to reduce the taxpayer’s net earnings from and deduction that comprise B’s $50,000 loss attributable to Business X (after application a rule relating to amounts held in a self-employment (after aggregating of the exclusions under section 1402(a)(1)– qualified plan or arrangement described under § 1.1402(a)–2(c) the net earnings (17)), and the items of income, loss, gain, and in paragraph (a) of this section is a from self-employment from any trade or deduction that comprise B’s $70,000 distribution within the meaning of business carried on by the taxpayer as distributable share attributable to B’s general section 1411(c)(5), and thus is not an individual or as a member of a partnership interest (after application of the included in net investment income. For partnership). Any deductions described exclusions under section 1402(a)(1)–(17)), are example, any income of the trust of a in § 1.1411–4(f)(2)(ii) that exceed the not considered. Rather, only items of income, qualified plan or arrangement that is amount of net earnings from self- loss, gain, and deduction from the two separate businesses that were excluded from applied to purchase a participant’s life employment, in the aggregate (if the calculation of B’s net earnings from self- insurance coverage (the P.S. 58 costs) is applicable), shall be allowed in employment income due to the application of a distribution within the meaning of determining the taxpayer’s net the exclusions under section 1402(a)(1)–(17), section 1411(c)(5), and thus is not investment income under section 1411 such as any capital gains and losses excluded included in net investment income. and the regulations thereunder. under section 1402(a)(3), are considered for
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purposes of calculating B’s net investment corporation (within the meaning of are or have been included in gross income for Year 1 in connection with these section 957(a)), or that is a United States income for chapter 1 purposes under two trades or businesses. person that directly or indirectly owns section 951(a) or section 1293(a) shall be Example 3. Special rule for trader with an interest in a passive foreign considered first attributable to such single trade or business. D is an individual engaged in the trade or business of trading in investment company (within the earnings and profits, if any, derived commodities (as described in § 1.1411– meaning of section 1297(a)). In addition, from the current taxable year, and then 5(a)(2)). D made an election under section this section provides rules that apply to from prior taxable years beginning with 475(f)(2). D derives $400,000 of gross income an individual, estate, or trust that owns the most recent prior taxable year. With described in § 1.1411–4(a)(1)(ii) and $150,000 an interest in a domestic partnership or respect to such distributions from of expenses described in § 1.1411–4(f)(2)(ii) an S corporation that either is a United controlled foreign corporations, a from carrying on the trade or business. States shareholder of a controlled distribution shall be attributable first to Pursuant to sections 475(f)(1)(D) and foreign corporation or that has made an earnings and profits derived from the 1402(a)(3)(A), none of the gross income is election under section 1295 to treat a taken into account in determining D’s net current taxable year and then from prior earnings from self-employment and self- passive foreign investment company as taxable years beginning with the most employment income, and therefore, under a qualified electing fund. recent prior taxable year, without regard paragraph (a) of this section, the $400,000 of (b) Amounts derived from a trade or to whether the earnings and profits are gross income is not covered by the exception business described in § 1.1411–5. An described in section 959(c)(1) or section in section 1411(c)(6). Under paragraph (b) of amount included in gross income under 959(c)(2). this section and § 1.1411–4(f)(2)(ii), because section 951(a) or section 1293(a) that is (ii) Excess distributions constituting the $150,000 of deductions did not reduce income derived from a trade or business dividends. To the extent an excess D’s net earnings from self-employment described in section 1411(c)(2) and (because D had $0 net earnings from self- distribution within the meaning of § 1.1411–5 is taken into account as net section 1291(b) constitutes a dividend employment), for purposes of section investment income under section 1411(c)(6), the $150,000 of deductions are within the meaning of section 316(a), not taken into account in determining D’s net 1411(c)(1)(A)(ii) and § 1.1411–4(a)(1)(ii) the amount is included in net earnings from self-employment and self- for purposes of section 1411 when it is investment income for purposes of employment income, and therefore the taken into account for purposes of section 1411(c)(1)(A)(i) and § 1.1411– $150,000 of deductions may reduce D’s gross chapter 1, and the rules in paragraphs 4(a)(1)(i). income of $400,000 for purposes of section (c) through (g) of this section do not 1411. (3) Net gain. For purposes of section apply to such amounts. For purposes of 1411(c)(1)(A)(iii) and § 1.1411– Example 4. Special rule for trader with section 1411, an amount included in multiple trades or businesses. E is an 4(a)(1)(iii), the rules in this paragraph gross income under section 1296(a) that (c)(3) apply in determining net gain individual engaged in two trades or is also income derived from a trade or businesses, Business X (which is not a trade attributable to the disposition of business described in section 1411(c)(2) or business of trading in financial property. and § 1.1411–5 is net investment instruments or commodities) and Business Y (i) Gains treated as excess income within the meaning of section (which is a trade or business of trading in distributions. Gains treated as excess 1411(c)(1)(A)(ii) and § 1.1411–4(a)(1)(ii), financial instruments or commodities (as distributions under section 1291(a)(2) described in § 1.1411–5(a)(2))). E has made and the rules in paragraphs (c) through an election under section 475(f) with respect (f) of this section do not apply to such are included in determining net gain to Business Y. During Year 1, E had net amount. attributable to the disposition of earnings from self-employment from (c) Calculation of net investment property for purposes of section Business X of $35,000. During Year 1, E also income—(1) In general. For purposes of 1411(c)(1)(A)(iii) and § 1.1411– had $300,000 of gross income described in section 1411 and the regulations 4(a)(1)(iii). § 1.1411–4(a)(1)(ii) and $75,000 of expenses (ii) Inclusions and deductions with described in § 1.1411–4(f)(2)(ii) from thereunder, net investment income means net investment income as respect to section 1296 mark to market Business Y. E’s $300,000 of gross income elections. Amounts included in gross from Business Y is excluded from net defined in § 1.1411–4, adjusted earnings from self-employment and self- pursuant to the rules described in this income under section 1296(a)(1) and employment income pursuant to sections paragraph (c). amounts allowed as a deduction under 475(f)(1)(D) and 1402(a)(3)(A). E’s $75,000 of (2) Dividends. For purposes of section section 1296(a)(2) are taken into account deductions from Business Y reduce E’s 1411(c)(1)(A)(i) and § 1.1411–4(a)(1)(i), in determining net gain attributable to $35,000 of net earnings from self- net investment income is calculated by the disposition of property for purposes employment from Business X to $0. Pursuant taking into account the amount of of section 1411(c)(1)(A)(iii) and to paragraph (b) of this section and § 1.1411– dividends described in this paragraph § 1.1411–4(a)(1)(iii). 4(f)(2)(ii), the remaining $40,000 of (c)(2). (iii) Gain or loss attributable to the deductions from Business Y are taken into (i) Distributions of previously taxed disposition of stock of controlled foreign account in determining E’s net investment income (by reducing E’s gross income of earnings and profits. If no election is corporations and qualified electing $300,000 from Business Y to $260,000) for made pursuant to paragraph (g) of this funds. If no election is made pursuant purposes of section 1411. section, a distribution of earnings and to paragraph (g) of this section, for profits that is not treated as a dividend purposes of calculating net gain in (d) Effective/applicability date. This for chapter 1 purposes under section §§ 1.1411–4(a)(1)(iii) and 1.1411–4(d)(3) section applies to taxable years 959(d) or section 1293(c) is a dividend attributable to the direct or indirect beginning after December 31, 2013. for purposes of section 1411(c)(1)(A)(i) disposition of stock of a controlled § 1.1411–10 Controlled foreign and § 1.1411–4(a)(1)(i) if the distribution foreign corporation or qualified electing corporations and passive foreign is attributable to amounts that are or fund (including for purposes of investment companies. have been included in gross income for determining gain or loss on the direct or (a) In general. This section provides chapter 1 purposes under section 951(a) indirect disposition of stock of a rules that apply to an individual, estate, or section 1293(a) in a taxable year controlled foreign corporation or a or trust that is a United States beginning after December 31, 2012. For qualified electing fund by a domestic shareholder (within the meaning of this purpose, distributions of earnings partnership or S corporation), basis section 951(b)) of a controlled foreign and profits attributable to amounts that shall be determined in accordance with
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the provisions of paragraph (d) of this sections 961(a) and 1293(d) for amounts 705(a)(1)(A) to that partner for chapter section. included in gross income for chapter 1 1 purposes that are attributable to (iv) Gain or loss attributable to the purposes under sections 951(a) and amounts that a domestic partnership disposition of interests in domestic 1293(a) in taxable years beginning after included in gross income under section partnerships or S corporations that own December 31, 2012, are not taken into 951(a) or section 1293(a) for a taxable directly or indirectly stock of controlled account for purposes of section 1411; year beginning after December 31, 2012, foreign corporations or qualified and are not taken into account for purposes electing funds. If no election is made (B) The basis decreases made by the of section 1411. In such case, the pursuant to paragraph (g) of this section, individual, estate or trust pursuant to partner’s adjusted basis in the for purposes of calculating net gain in sections 961(b) and 1293(d) attributable partnership interest is increased by the §§ 1.1411–4(a)(1)(iii) and 1.1411–4(d)(3) to distributions treated as dividends for distributions to the partnership from the attributable to the disposition of an purposes of section 1411 under controlled foreign corporation or interest in a domestic partnership or S paragraph (c)(2)(i) of this section are not qualified electing fund that are treated corporation that directly or indirectly taken into account for purposes of as dividends for purposes of section owns stock of a controlled foreign section 1411. 1411 under paragraph (c)(2)(i) of this corporation or a qualified electing fund, (ii) Stock held by domestic section. The amount of the basis basis shall be determined in accordance partnerships or S corporations. If an increase is calculated based on the with the provisions of paragraph (d) of individual, estate, or trust is a partner’s share of the distribution this section. shareholder of an S corporation, or if an received by the domestic partnership. (4) Application of section 1248. If no individual, estate, or trust directly, or Similar rules apply when the stock of election is made pursuant to paragraph through one or more tiers of the controlled foreign corporation or (g) of this section, for purposes of passthrough entities (including an S qualified electing fund is held in a section 1411 and § 1.1411–4: corporation), owns an interest in a tiered partnership structure. For (i) For purposes of determining the domestic partnership, the domestic purposes of determining net investment gain recognized on the sale or exchange partnership or S corporation, as the case income under section 1411 and the of a foreign corporation for section may be, will not take into account for regulations thereunder, the partner’s 1248(a) purposes, basis is determined in purposes of section 1411 the basis adjusted basis in the partnership accordance with the provisions of increases made by the domestic interest as calculated under this paragraph (d) of this section; and partnership or S corporation pursuant to (ii) Section 1248(a) applies without paragraph (d)(2) shall be used to sections 961(a) and 1293(d) for amounts determine all tax consequences related regard to the exclusion for certain included in gross income for chapter 1 earnings and profits under section to tax basis (for example, loss limitation purposes under sections 951(a) and rules and the characterization of 1248(d)(1) and (d)(6), except that such 1293(a) for taxable years beginning after partnership distributions). exclusions will apply with respect to December 31, 2012, and the basis the earnings and profits of a foreign decreases made by the domestic (3) Special rules for S corporation corporation that are attributable to partnership or S corporation pursuant to shareholders that own interests in S amounts previously included in gross sections 961(b) and 1293(d) attributable corporations that own directly or income for chapter 1 purposes under to amounts that are treated as dividends indirectly stock of controlled foreign section 951(a) or section 1293(a) in a for section 1411 purposes under corporations or qualified electing funds. taxable year beginning before December paragraph (c)(2)(i) of this section (the If no election is made by a shareholder 31, 2012, and that have not yet been section 1411 recalculated basis). If the pursuant to paragraph (g) of this section, distributed. For this purpose, the domestic partnership or S corporation the basis increases provided in section determination of whether earnings and disposes of its stock of a controlled 1367(a)(1)(A) to the shareholder for profits attributable to amounts foreign corporation or qualified electing chapter 1 purposes that are attributable previously taxed in a taxable year fund, the section 1411 recalculated basis to amounts that an S corporation beginning before December 31, 2012, will be used to determine the included in gross income for chapter 1 have been distributed shall be distributive share or pro rata share of purposes under section 951(a) or section determined based on the rules described the gain or loss for section 1411 1293(a) for taxable years beginning after in paragraph (c)(2)(i) of this section. purposes for partners or shareholders December 31, 2012, are not taken into (5) Amounts distributed by an estate that do not make an election pursuant account for purposes of section 1411. In or trust. Net investment income of a to paragraph (g) of this section. If a such case, the shareholder’s adjusted beneficiary of an estate or trust includes partner or shareholder makes an basis of stock in the S corporation is the beneficiary’s share of distributable election pursuant to paragraph (g) of increased by the distributions to the S net income, as described in sections 652 this section, the partner’s distributive corporation from the controlled foreign and 662 and as modified by paragraph share or the shareholder’s pro rata share corporation or qualified electing fund (f) of this section, to the extent that the of the gain or loss for section 1411 that are treated as dividends for beneficiary’s share of distributable net purposes is the same as the distributive purposes of section 1411 under income includes items that, if they had share or pro rata share of the gain or loss paragraph (c)(2)(i) of this section. The been received directly by the calculated for chapter 1 purposes. See amount of the basis increase is beneficiary, would have been described Example 6 of paragraph (h) of this calculated based on the shareholder’s in this paragraph (c). section. pro rata share of the distribution (d) Conforming basis adjustments—(1) (2) Special rules for partners that own received by the S corporation. Similar Basis adjustments under sections 961 interests in domestic partnerships that rules apply when the S corporation and 1293—(i) Stock held by individuals, own directly or indirectly stock of holds an interest in a controlled foreign estates, or trusts. If no election is made controlled foreign corporations or corporation or qualified electing fund by an individual, estate or trust qualified electing funds. If no election is through a partnership. For purposes of pursuant to paragraph (g) of this section: made by a partner pursuant to determining net investment income (A) The basis increases made by the paragraph (g) of this section, the basis under section 1411 and the regulations individual, estate or trust pursuant to increases provided in section thereunder, the shareholder’s adjusted
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basis in the stock of the S corporation (e)(2)(ii), and (e)(2)(iii) of this section, paragraph (g)(3) for a taxable year that as calculated under this paragraph (d)(3) regardless of whether the estate or trust begins before January 1, 2014. In all shall be used to determine all tax receives those amounts directly or cases, the election must be made in the consequences related to tax basis (for indirectly through another estate or manner prescribed by the Secretary on example, loss limitation rules and the trust, shall increase or decrease, as or before the due date, determined with characterization of S corporation applicable, the estate’s or trust’s regard to any extension of time, for distributions). distributable net income. The estate or filing the individual’s, estate’s, or trust’s (e) Conforming adjustments to trust, or the beneficiaries thereof, shall income tax return for the taxable year modified adjusted gross income and take such amounts into account in a for which the election is made. Further, adjusted gross income—(1) Individuals. manner reasonably consistent with the in all cases, once made, the election Solely for purposes of section general operating rules for estates and applies to the taxable year for which it 1411(a)(1)(B)(i) and the regulations trusts in § 1.1411–3 and subchapter J in is made and all subsequent years unless thereunder, the term modified adjusted computing the undistributed net revoked pursuant to paragraph (g)(2) of gross income means modified adjusted investment income of the estate or trust this section. gross income as defined in and the net investment income of the (h) Examples. The following examples § 1.1411–2(c)(1)— beneficiaries. illustrate the rules of this section. In (i) Increased by amounts included in (g) Election with respect to controlled each example, unless otherwise net investment income under foreign corporations and qualified indicated, the individuals, the foreign paragraphs (c)(2)(i), (c)(2)(ii), (c)(3)(i), electing funds—(1) In general. An corporation (FC), the qualified electing and (c)(5) of this section that are not individual, estate, or trust may make an fund (QEF), and the partnership (PRS) otherwise included in gross income for election under this paragraph (g) with use a calendar taxable year. Further, the chapter 1 purposes; respect to all interests in controlled gross income or gain with respect to an (ii) Increased or decreased, as foreign corporations and qualified interest in FC is not derived in a trade applicable, by the difference between electing funds held directly or indirectly or business described in § 1.1411–5. the amount calculated with respect to a by the individual, estate, or trust (other than as provided in paragraph (b) of this Example 1. (i) Facts. A, a U.S. citizen, is disposition under paragraphs (c)(3)(iii) the sole shareholder of FC, a controlled and (c)(3)(iv) of this section and the section) in the year of the election or foreign corporation (within the meaning of amount of the gain or loss attributable acquired in subsequent years. The section 957). A is a United States shareholder to the relevant disposition as calculated election, if made, for an estate or trust (within the meaning of section 951(b)) with for chapter 1 purposes; and shall be made by the fiduciary of that respect to FC. On December 31, 2012, A’s (iii) Decreased by any amount estate or trust. If the election is made, basis in the stock of FC for chapter 1 included in gross income for chapter 1 amounts included in gross income purposes is $500,000, which includes an purposes under section 951(a) or section under section 951(a) or section increase to basis under section 961(a) of 1293(a) if no election is made pursuant 1293(a)(1)(A) in taxable years beginning $40,000.The amount of FC’s earnings and profits that are described in section 959(c)(2) to paragraph (g) of this section. with the year for which the election is is $40,000, the amount of FC’s earnings and (2) Estates and trusts. Solely for made are treated as net investment profits that are described in section 959(c)(3) purposes of section 1411(a)(2)(B)(i) and income for purposes of § 1.1411– is $20,000, and FC does not have any the regulations thereunder, the term 4(a)(1)(i), and amounts included in gross earnings and profits that are described in adjusted gross income means adjusted income under section 1293(a)(1)(B) in section 959(c)(1). No election is made gross income as defined in § 1.1411– taxable years beginning with the year for pursuant to paragraph (g) of this section. 3(a)(1)(ii)(B)(1) adjusted by the which the election is made are taken During 2013, A does not include any following amounts to the extent those into account in calculating net gain amounts in income under section 951(a) with amounts are not distributed by the attributable to the disposition of respect to FC, A does not receive any distributions from FC, and there is no change estate or trust— property under § 1.1411–4(a)(1)(iii). in the amount of FC’s earnings and profits. (i) Increased by amounts included in (2) Revocation of election. An election In 2014, A includes $10,000 in gross income net investment income under under paragraph (g) of this section may for chapter 1 purposes under section paragraphs (c)(2)(i), (c)(2)(ii), (c)(3)(i), only be revoked if the Commissioner, in 951(a)(1)(A) with respect to FC. As a result, and (c)(5) of this section that are not the Commissioner’s discretion, consents A’s basis in the stock of FC for chapter 1 otherwise included in gross income for to the individual’s, estate’s, or trust’s purposes increases by $10,000 to $510,000 chapter 1 purposes; request to revoke the election. pursuant to section 961(a). During 2015, FC (ii) Increased or decreased, as (3) Time and manner for making distributes $30,000 to A, which is not treated applicable, by the difference between election. Except as otherwise provided as a dividend for purposes of chapter 1 under the amount calculated with respect to a in this paragraph (g)(3), an individual, section 959(d). As a result, A’s basis in the disposition under paragraphs (c)(3)(iii) estate, or trust that wants to make the stock of FC for chapter 1 purposes is election under this paragraph (g) must decreased by $30,000 to $480,000 pursuant to and (c)(3)(iv) of this section and the section 961(b). amount of the gain or loss attributable make the election for the first taxable (ii) Results for section 1411 purposes. In to the relevant disposition as calculated year beginning after December 31, 2013, 2014, A does not include the $10,000 section for chapter 1 purposes; and during which the individual, estate, or 951(a) income inclusion in A’s net (iii) Decreased by any amount trust directly or indirectly holds stock of investment income under section included in gross income for chapter 1 a controlled foreign corporation or 1411(c)(1)(A)(i) and § 1.1411–4(a)(1)(i). purposes under section 951(a) or section qualified electing fund and the Pursuant to paragraph (e)(1)(iii) of this 1293(a) if no election is made pursuant individual, estate, or trust is subject to section, A decreases A’s modified adjusted to paragraph (g) of this section. tax under section 1411 or would be gross income for section 1411 purposes by (f) Application to estates and trusts. subject to tax under section 1411 if the $10,000 in 2014, and pursuant to paragraph (d)(1)(i) of this section, A’s adjusted basis is All of the items described in paragraph election were made with respect to the not increased by $10,000 and remains at (c) of this section shall be included in stock of the controlled foreign $500,000. In 2015, pursuant to paragraph the net investment income of an estate corporation or qualified electing fund. (c)(2)(i) of this section, A includes $10,000 of or trust or its beneficiaries. The amounts In addition, an individual, estate, or the distribution of previously taxed earnings described in paragraphs (e)(2)(i), trust may make an election under this and profits as a dividend for purposes of
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determining A’s net investment income dividend under section 1411(c)(1)(A)(i) and section, and D and E do not make an election because $10,000 of the $30,000 distribution § 1.1411–4(a)(1)(i) and $35,000 as a gain under paragraph (g) of this section. is attributable to amounts that A included in under section 1411(c)(1)(A)(iii) and § 1.1411– (C) During 2015, QEF distributes $60,000 gross income for chapter 1 purposes under 4(a)(1)(iii). to PRS. PRS has no income for the year. section 951(a) in a tax year that began after Example 3. (i) Facts. Same facts as (ii) Results for 2014. (A) For chapter 1 December 31, 2012. Pursuant to paragraph Example 2, except that A timely makes an purposes, as a result of the $40,000 income (e)(1)(i) of this section, A increases A’s election pursuant to paragraph (g) of this inclusion under section 1293(a), PRS’s basis modified adjusted gross income for section section for 2014 (and thus for all subsequent in its QEF stock is increased by $40,000 1411 purposes by $10,000 in 2015. Under years). under section 1293(d)(1) to $120,000. Under paragraph (d)(1)(i) of this section, A’s (ii) Results for section 1411 purposes. A § 1.1293–1(c)(1) and section 702, C’s, D’s, and adjusted basis is not decreased by the does not have any adjustments to A’s E’s distributive shares of the section 1293(a) $10,000 that is treated as a dividend for modified adjusted gross income for section income inclusion are $20,000, $10,000, and section 1411 purposes, and thus, A’s adjusted 1411 purposes for 2014, 2015, 2016 or 2017 $10,000, respectively. Under section basis in FC for section 1411 purposes is because the election under paragraph (g) of 705(a)(1)(A), C increases his adjusted basis in decreased under section 961 only by $20,000 this section was timely made. Pursuant to his partnership interest by $20,000 to to $480,000. paragraph (g)(1) of this section, for purposes $120,000, and D and E each increase his Example 2. (i) Facts. Same facts as of calculating A’s net investment income in adjusted basis in his partnership interest by Example 1. In addition, during 2016, A 2014, the $10,000 that A included in income $10,000 to $60,000. includes $15,000 in gross income for chapter for chapter 1 purposes under section 951(a) (B) For section 1411 purposes, pursuant to 1 purposes under section 951(a)(1)(A) with is net investment income for purposes of paragraph (d)(1)(ii) of this section, PRS’s respect to FC. As a result, A’s basis in the section 1411(c)(1)(A)(i) and § 1.1411– basis in QEF is not increased by the $40,000 stock of FC for chapter 1 purposes increases 4(a)(1)(i). A has no amount of net investment income inclusion (it remains at $80,000). by $15,000 to $495,000 pursuant to section income with respect to FC in 2015. Pursuant Because C made an election under paragraph 961(a). During 2017, A sells all of A’s shares to paragraph (g)(1) of this section, for (g) of this section, C has net investment of FC for $550,000 and, prior to the purposes of calculating A’s net investment income of $20,000 as a result of the income application of section 1248, recognizes income in 2016, the $15,000 that A included inclusion, and his adjusted basis in his $55,000 ($550,000 minus $495,000) of long- in income for chapter 1 purposes under interest in PRS is increased by $20,000 to term capital gain for chapter 1 purposes. For section 951(a) is net investment income for $120,000. C does not make any adjustments purposes of calculating the amount included purposes of section 1411(c)(1)(A)(i) and to his modified adjusted gross income. in income as a dividend pursuant to section § 1.1411–4(a)(1)(i). For purposes of Because D and E did not make an election 1248(a) for chapter 1 purposes, the earnings calculating A’s net investment income in under paragraph (g) of this section, D and E and profits of FC attributable to A’s shares in 2017, the amount of gain on the disposition do not have net investment income with FC which were accumulated after December of the FC shares is the same as the amount respect to the income inclusion, and 31,1962 and during the period which A held calculated for chapter 1 purposes. Applying pursuant to paragraph (d)(2) of this section, the stock while FC was a controlled foreign section 1248, A includes $35,000 as a gain they do not increase their adjusted bases in corporation is $55,000, $35,000 of which is under section 1411(c)(1)(A)(iii) and § 1.1411– their interests in PRS (each remains at excluded pursuant to section 1248(d)(1). 4(a)(1)(iii), and $20,000 as a dividend under $50,000). Pursuant to paragraph (e)(1)(ii) of Therefore, after the application of section section 1411(c)(1)(A)(i) and § 1.1411– this section, D and E each reduce their 1248, for chapter 1 purposes, upon the sale 4(a)(1)(i). modified adjusted gross income by $10,000. of the FC stock, A recognizes $35,000 of long- Example 4. Domestic partnership holding (iii) Results for 2015. (A) For chapter 1 term capital gain and a $20,000 dividend. QEF stock. (i) Facts. (A) C, a U.S. citizen, purposes, the distribution of $60,000 from (ii) Results for section 1411 purposes. (A) owns a 50 percent interest in PRS, a domestic QEF to PRS is not a dividend under section In 2016, A does not include the $15,000 partnership. D, a U.S. citizen, and E, a U.S. 1293(c), and PRS decreases its basis in QEF section 951(a)(1)(A) income inclusion in A’s citizen, each own a 25 percent interest in by $60,000 under section 1293(d)(2) to net investment income under section PRS. All allocations of partnership income $60,000. 1411(c)(1)(A)(i) and § 1411(c)(1)(A)(i). and losses are pro rata based on ownership (B) Pursuant to paragraph (c)(2)(i) of this Pursuant to paragraph (e)(1)(ii) of this interests. PRS owns an interest in QEF, a section, $40,000 of the distribution is a section, A decreases A’s modified adjusted foreign corporation that is a passive foreign dividend for section 1411 purposes because gross income for section 1411 purposes by investment company (within the meaning of PRS included $40,000 in gross income for $15,000, and, pursuant to paragraph (d)(1)(i) section 1297(a)). PRS, a United States person, chapter 1 purposes under section 1293(a) in of this section, A’s adjusted basis remains at made an election under section 1295 with a tax year that began after December 31, 2012. $480,000. respect to QEF applicable to the first year of For section 1411 purposes, pursuant to (B) During 2017, prior to the application of its holding period in QEF. As of December paragraph (d)(1)(ii) of this section, section section 1248, A recognizes $70,000 ($550,000 31, 2012, for chapter 1 purposes, C’s basis in 1293(d) will not apply to reduce PRS’s basis minus $480,000) of gain for section 1411 his partnership interest is $100,000, D’s basis in QEF to the extent of the $40,000 of the purposes. Pursuant to paragraph (c)(4) of this in his partnership interest is $50,000, E’s distribution that is treated as a dividend section, for section 1411 purposes, section basis in his partnership interest is $50,000, under paragraph (c)(2)(i) of this section. 1248(a) applies to the gain on the sale of FC and PRS’s adjusted basis in its QEF stock is Thus, PRS’s basis in QEF is decreased only calculated for section 1411 purposes $80,000, which includes an increase in basis by $20,000 for purposes of section 1411 and ($70,000) and section 1248(d)(1) does not under section 1293(d) of $40,000. As of is $60,000. The $40,000 distribution of apply, except with respect to the $20,000 of December 31, 2012, the amount of QEF’s previously taxed earnings and profits that is earnings and profits of FC that are earnings that have been included in income treated as a dividend for section 1411 attributable to amounts previously included by PRS under section 1293(a), but have not purposes is allocated $20,000 to C, $10,000 in income for chapter 1 purposes under been distributed by QEF, is $40,000. PRS also to D, and $10,000 to E. Because C made an section 951 for a taxable year beginning has cash of $60,000 and domestic C election under paragraph (g) of this section, before December 31, 2012. Accordingly, for corporation stock with an adjusted basis of C has zero net investment income as a result purposes of calculating the amount of income $60,000. During 2013, PRS does not include of the distribution of previously taxed includible as a dividend under section any amounts in income under section 1293(a) amounts of $20,000, his adjusted basis in his 1248(a), A has $55,000 of earnings and with respect to QEF, PRS does not receive interest in PRS remains at $120,000, and he profits, $20,000 of which is excluded any distributions from QEF, and there are no does not make any adjustments to his pursuant to section 1248(d)(1). Therefore, adjustments to the basis of C, D, or E in their modified adjusted gross income. Because D after the application of section 1248, for interests in PRS. and E did not make an election under section 1411 purposes A has $35,000 of long (B) During 2014, PRS has income of paragraph (g) of this section, pursuant to term capital gain and a $35,000 dividend. For $40,000 under section 1293(a) with respect to paragraph (c)(2)(i) of this section, D and E purposes of calculating net investment QEF and has no other partnership income. C each has $10,000 of net investment income income in 2016, A includes $35,000 as a makes an election under paragraph (g) of this as a result of the distribution by QEF, and
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pursuant to paragraph (d)(2) of this section, $15,000 respectively. Under section percent ($12,500) to D, and 25 percent D and E each increases his adjusted basis in 705(a)(1)(A), C increases his adjusted basis in ($12,500) to E. PRS by $10,000 to $60,000. Pursuant to his partnership interest by $30,000 to (B) Based on PRS’s basis in the stock of paragraph (e)(1)(i) of this section, D and E $150,000, and D and E each increases his QEF for section 1411 purposes, PRS has a each increases his modified adjusted gross adjusted basis in his partnership interest by gain for section 1411 purposes of $110,000 income by $10,000. $15,000 to $75,000. ($170,000 minus $60,000), which in the Example 5. Sale of partnership interest. (i) (B) For section 1411 purposes, pursuant to absence of a partner election under paragraph Facts. Same facts as Example 4. In addition, paragraph (d)(1)(ii) of this section, PRS’s (g) of this section, would result in gain of in 2016, D sells his entire interest in PRS to basis in QEF is not increased by the $60,000 $55,000 to C, $27,500 to D, and $27,500 to F for $100,000. income inclusion (it remains at $60,000). E. However, pursuant to paragraph (d)(1)(ii) (ii) Results for 2016. For chapter 1 Because C made an election under paragraph of this section, because C made an election purposes, D has a gain of $40,000 ($100,000 (g) of this section, C has net investment under paragraph (g) of this section, C’s gain minus $60,000). For section 1411 purposes, income of $30,000 as a result of the income for section 1411 purposes is the same as his D has a gain of $40,000 ($100,000 minus inclusion, and his adjusted basis in his gain for chapter 1 purposes ($25,000). $60,000), and thus, has net investment interest in PRS is increased by $30,000 to Because neither D nor E made an election income of $40,000. No adjustments to $150,000. C does not make any adjustments under paragraph (g) of this section, D and E modified adjusted gross income are necessary each have a gain of $27,500 and therefore net under paragraph (e) of this section. to his modified adjusted gross income. Because D and E did not make an election investment income of $27,500. Pursuant to Example 6. Domestic partnership’s sale of paragraph (e)(1)(ii) of this section, D and E QEF stock. (i) Facts. Same facts as Example under paragraph (g) of this section, D and E do not have net investment income with each increase their modified adjusted gross 4. In addition, in 2016 PRS has income of income by $15,000. $60,000 under section 1293(a) with respect to respect to the income inclusion, and QEF, and in 2017, PRS sells its entire interest pursuant to paragraph (d)(2) of this section, they do not increase their adjusted bases in (i) Effective/applicability date. This in QEF for $170,000. section applies to taxable years (ii) Results for 2016. (A) For chapter 1 their interests in PRS (each remains at purposes, as a result of the $60,000 income $60,000). Pursuant to paragraph (e)(1)(ii) of beginning after December 31, 2013. inclusion under section 1293(a), PRS’s basis this section, D and E each reduce their Steven T. Miller, in its QEF stock is increased by $60,000 modified adjusted gross income by $15,000. Deputy Commissioner for Services and under section 1293(d)(1) to $120,000. Under (iii) Results for 2017. (A) For chapter 1 Enforcement. § 1.1293–1(c)(1) and section 702, C’s, D’s, and purposes, PRS has a gain of $50,000 E’s distributive shares of the section 1293(a) ($170,000 minus $120,000), which is [FR Doc. 2012–29238 Filed 11–30–12; 2:00 pm] income inclusion are $30,000, $15,000, and allocated 50 percent ($25,000) to C, 25 BILLING CODE 4830–01–P
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Part VI
Department of Agriculture
Office of Procurement and Property Management 7 CFR Part 3201 Designation of Product Categories for Federal Procurement; Proposed Rule
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DEPARTMENT OF AGRICULTURE communication for regulatory II. Background information (Braille, large print, Section 9002 provides for the Office of Procurement and Property audiotape, etc.) should contact the preferred procurement of biobased Management USDA TARGET Center at (202) 720– products by Federal procuring agencies 2600 (voice) and (202) 690–0942 (TTY). and is referred to hereafter in this 7 CFR Part 3201 FOR FURTHER INFORMATION CONTACT: Ron Federal Register notice as the ‘‘Federal RIN 0599–AA16 Buckhalt, USDA, Office of Procurement preferred procurement program.’’ The and Property Management, Room 361, definition of ‘‘procuring agency’’ in Designation of Product Categories for Reporters Building, 300 7th St. SW., section 9002 includes both Federal Federal Procurement Washington, DC 20024; email: agencies and ‘‘a person that is a party to a contract with any Federal agency, with AGENCY: Office of Procurement and [email protected]; phone (202) respect to work performed under such a Property Management, USDA. 205–4008. Information regarding the Federal preferred procurement program contract.’’ Thus, Federal contractors, as ACTION: Notice of proposed rulemaking. (one part of the BioPreferred Program) is well as Federal agencies, are expressly subject to the procurement preference SUMMARY: The U.S. Department of available on the Internet at http:// provisions of section 9002. Agriculture (USDA) is proposing to www.biopreferred.gov. The term ‘‘product category’’ is used amend the Guidelines for Designating SUPPLEMENTARY INFORMATION: The in the designation process to mean a Biobased Products for Federal information presented in this preamble generic grouping of specific products Procurement (Guidelines) to add eight is organized as follows: that perform a similar function, such as sections that will designate the the various brands of paint removers or following product categories within I. Authority engine crankcase oils. Once USDA which biobased products would be II. Background designates a product category, procuring afforded Federal procurement III. Summary of Today’s Proposed Rule agencies are required generally to preference: Aircraft and boat cleaners; IV. Designation of Product Categories, purchase biobased products within automotive care products; engine Minimum Biobased Contents, and Time Frame these designated product categories crankcase oil; gasoline fuel additives; A. Background where the purchase price of the metal cleaners and corrosion removers; B. Product Categories Proposed for procurement product exceeds $10,000 microbial cleaning products; paint Designation or where the quantity of such products removers; and water turbine bearing C. New Subcategories Proposed for or the functionally equivalent products oils. USDA is also proposing to add the Designation purchased over the preceding fiscal year following subcategories to previously D. Minimum Biobased Contents equaled $10,000 or more. Procuring designated product categories: E. Compliance Date for Procurement agencies must procure biobased Countertops to the composite panels Preference and Incorporation Into products within each product category category; and wheel bearing and chassis Specifications unless they determine that products grease to the greases category. USDA is V. Where can agencies get more information within a product category are not also proposing minimum biobased on these USDA-designated product reasonably available within a reasonable contents for each of these product categories? period of time, fail to meet the categories and subcategories. VI. Regulatory Information A. Executive Order 12866: Regulatory reasonable performance standards of the DATES: USDA will accept public Planning and Review and Executive procuring agencies, or are available only comments on this proposed rule until Order 13563: Improving Regulation and at an unreasonable price. As stated in 7 February 4, 2013. Regulatory Review CFR part 3201—‘‘Guidelines for ADDRESSES: You may submit comments B. Regulatory Flexibility Act (RFA) Designating Biobased Products for by any of the following methods. All C. Executive Order 12630: Governmental Federal Procurement’’ (Guidelines), submissions received must include the Actions and Interference With biobased products that are merely agency name and Regulatory Constitutionally Protected Property incidental to Federal funding are Information Number (RIN). The RIN for Rights excluded from the Federal preferred this rulemaking is 0599–AA16. Also, D. Executive Order 12988: Civil Justice Reform procurement program; that is, the please identify submittals as pertaining E. Executive Order 13132: Federalism requirements to purchase biobased to the ‘‘Proposed Designation of Product F. Unfunded Mandates Reform Act of 1995 products do not apply to such purchases Categories.’’ G. Executive Order 12372: if they are unrelated to or incidental to • Federal eRulemaking Portal: http:// Intergovernmental Review of Federal the purpose of the Federal contract. In www.regulations.gov. Follow the Programs implementing the Federal preferred instructions for submitting comments. H. Executive Order 13175: Consultation procurement program for biobased • Email: [email protected]. and Coordination With Indian Tribal products, procuring agencies should Include RIN number 0599–AA16 and Governments follow their procurement rules and ‘‘Proposed Designation of Product I. Paperwork Reduction Act Office of Federal Procurement Policy Categories’’ on the subject line. Please J. E-Government Act guidance on buying non-biobased include your name and address in your I. Authority products when biobased products exist message. and should document exceptions taken • Mail/commercial/hand delivery: The designation of these product for price, performance, and availability. Mail or deliver your comments to: Ron categories is proposed under the USDA recognizes that the Buckhalt, USDA, Office of Procurement authority of section 9002 of the Farm performance needs for a given and Property Management, Room 361, Security and Rural Investment Act of application are important criteria in Reporters Building, 300 7th St. SW., 2002 (FSRIA), as amended by the Food, making procurement decisions. USDA is Washington, DC 20024. Conservation, and Energy Act of 2008 not requiring procuring agencies to limit • Persons with disabilities who (FCEA), 7 U.S.C. 8102 (referred to in their choices to biobased products that require alternative means for this document as ‘‘section 9002’’). fall under the product categories
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proposed for designation in this either designate the product category other factors including product proposed rule. Rather, the effect of the without creating subcategories (i.e., performance information. USDA designation of the product categories is defer the creation of subcategories) or evaluates this information to determine to require procuring agencies to designate one subcategory and defer whether some products that may have a determine their performance needs, designation of other subcategories lower biobased content also have determine whether there are qualified within the product category until unique performance or applicability biobased products that fall under the additional information is obtained. attributes that would justify setting the designated product categories that meet Once USDA has received sufficient minimum biobased content at a level the reasonable performance standards additional information to justify the that would include these products. For for those needs, and purchase such designation of a subcategory, the example, a lubricant product that has a qualified biobased products to the subcategory will be designated through lower biobased content than others maximum extent practicable as required the proposed and final rulemaking within a product category but is by section 9002. process. formulated to perform over a wider Section 9002(a)(3)(B) requires USDA Within today’s proposed rule, USDA temperature range than the other to provide information to procuring is proposing to subcategorize three of products may be more desirable to agencies on the availability, relative the product categories. Those product Federal agencies. Thus, it would be price, performance, and environmental categories are: Aircraft and boat beneficial to set the minimum biobased and public health benefits of such cleaners; metal cleaners and corrosion content for the product category at a products and to recommend, where removers; and microbial cleaning level that would include the product appropriate, the minimum level of products. The proposed subcategories with superior performance features. biobased content to be contained in the for the aircraft and boat cleaners USDA also considers the overall range procured products. product category are: Aircraft cleaners of the tested biobased contents within a Subcategorization. Most of the and boat cleaners. For the metal product category, groupings of similar product categories USDA is considering cleaners and corrosion removers values, and breaks (significant gaps for designation for Federal preferred product category, the proposed between two groups of values) in the procurement cover a wide range of subcategories are: Stainless steel biobased content test data array. For products. For some product categories, cleaners; other metal cleaners; and example, the biobased contents of 7 there are subgroups of products that corrosion removers. For the microbial tested products within a product meet different requirements, uses and/or cleaning products category, the category being proposed for designation different performance specifications. proposed subcategories are: Drain today range from 17 to 100 percent, as For example, within the product maintenance products; general cleaners; follows: 17, 41, 78, 79, 94, 98, and 100 category ‘‘hand cleaners and sanitizers,’’ and wastewater maintenance products. percent. Because this is a very wide products that are used in medical offices USDA is also proposing to add a range, and because there is a significant may be required to meet performance subcategory for countertops to the gap in the data between the 41 percent specifications for sanitizing, while other composite panels product category biobased product and the 78 percent products that are intended for general designated in Round 2 (73 FR 27954, biobased product, USDA reviewed the purpose hand washing may not need to May 14, 2008) and a subcategory for product literature to determine whether meet these specifications. Where such wheel bearing and chassis grease to the subcategories could be created within subgroups exist, USDA intends to create greases product category designated in this product category. USDA found that subcategories. Thus, for example, for the Round 3 (73 FR 27974, May 14, 2008). the available product information did product category ‘‘hand cleaners and In addition, public comments and not justify creating a subcategory based sanitizers,’’ USDA determined that it additional data are being requested for on the 17 percent product or the 41 was reasonable to create a ‘‘hand several other product categories and percent biobased content product. cleaner’’ subcategory and a ‘‘hand subcategories may be created in a future Further, USDA did not find any sanitizer’’ subcategory. Sanitizing rulemaking. performance claims that would justify specifications are applicable to the latter Minimum Biobased Contents. The setting the minimum biobased content subcategory, but not the former. In sum, minimum biobased contents being based on either the 17 percent or the 41 USDA looks at the products within each proposed with today’s rule are based on percent biobased content products. product category to evaluate whether products for which USDA has biobased Thus, USDA is proposing to set the there are groups of products within the content test data. Because the minimum biobased content for this category that have different submission of product samples for product category based on the product characteristics or that meet different biobased content testing is on a strictly with a tested biobased content of 78 performance specifications and, where voluntary basis, USDA was able to percent. USDA believes that this USDA finds these types of differences, obtain samples only from those evaluation process allows it to establish it intends to create subcategories with manufacturers who volunteered to minimum biobased contents based on a the minimum biobased content based on invest the resources required to submit broad set of factors to assist the Federal the tested products within the the samples. USDA has, however, begun procurement community in its decisions subcategory. to receive biobased content data to purchase biobased products. For some product categories, associated with manufacturer’s USDA makes every effort to obtain however, USDA may not have sufficient applications for certification to use the biobased content test data on multiple information at the time of proposal to USDA Certified Biobased Product label. products within each product category. create subcategories. For example, As discussed later in this preamble, For most designated product categories, USDA may know that there are different these test results will also be considered USDA has biobased content test data on performance specifications that metal when proposing the minimum biobased more than one product within the cleaners and corrosion remover content levels for designated product category. However, in some cases, products are required to meet, but it categories. USDA has been able to obtain biobased may have information on only one type In addition to considering the content data for only a single product of metal cleaner and corrosion remover biobased content test data for each within a designated product category. product. In such instances, USDA may product category, USDA also considers As USDA obtains additional data on the
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biobased contents of products within Practice for Evaluating and Reporting lubricating oils.’’ EPA provides these designated product categories or Environmental Performance of Biobased recovered materials content their subcategories, USDA will evaluate Products,’’ or the Building for recommendations for these recovered whether the minimum biobased content Environmental and Economic content products in Recovered Materials for a designated product category or Sustainability (BEES) analysis for Advisory Notice (RMAN) I. The RMAN subcategory will be revised. evaluating and reporting on recommendations for these CPG USDA anticipates that the minimum environmental performance of biobased products can be found by accessing biobased content for a product category products). Federal agencies may then EPA’s Web site http://www.epa.gov/ that is based on a single product is more use this information to make purchasing epaoswer/non-hw/procure/ likely to change as additional products decisions based on the sustainability products.htm and then clicking on the within that category are identified and features of the products. Detailed appropriate product name. tested. In today’s proposed rule, the information on ASTM Standard D7075, Federal Government Purchase of proposed minimum biobased content and other ASTM standards, can be Sustainable Products. The Federal for the water turbine bearing oils found on ASTM’s Web site at http:// government’s sustainable purchasing category is based on a single tested www.astm.org. Information on the BEES program includes the following three product. analytical tool can be found on the Web statutory preference programs for Where USDA receives additional site http://www.bfrl.nist.gov/oae/ designated products: the BioPreferred biobased content test data for products software/bees.html. Program, the EPA’s Comprehensive within these proposed product Section 6002 of RCRA requires a Procurement Guideline for products categories during the public comment procuring agency procuring a product containing recovered materials, and the period, USDA will take that information designated by EPA generally to procure Environmentally Preferable Purchasing into consideration when establishing such a product composed of the highest program. The Office of the Federal the minimum biobased content when percentage of recovered materials Environmental Executive (OFEE) and the product categories are designated in content practicable. However, a the Office of Management and Budget the final rulemaking. procuring agency may decide not to (OMB) encourage agencies to implement Overlap with EPA’s Comprehensive procure such a product based on a these components comprehensively Procurement Guideline program for determination that it fails to meet the when purchasing products and services. recovered content products under the reasonable performance standards or Procuring agencies should note that Resource Conservation and Recovery specifications of the procuring agency. not all biobased products are Act (RCRA) Section 6002. Some of the A product with recovered materials ‘‘environmentally preferable.’’ For products that are within biobased content may not meet reasonable example, unless cleaning products product categories designated for performance standards or specifications, contain no or reduced levels of metals Federal preferred procurement under for example, if the use of the product and toxic and hazardous constituents, this program may also be within with recovered materials content would they can be harmful to aquatic life, the categories the Environmental Protection jeopardize the intended end use of the environment, and/or workers. Agency (EPA) has designated under the product. Household cleaning products that are EPA’s Comprehensive Procurement Where a biobased product is used for formulated to be disinfectants are Guideline (CPG) for products containing the same purposes and to meet the same required, under the Federal Insecticide, recovered materials. In situations where Federal agency performance Fungicide and Rodenticide Act (FIFRA), it believes there may be an overlap, requirements as an EPA-designated to be registered with EPA and must USDA is asking manufacturers of recovered content product, the Federal meet specific labeling requirements qualifying biobased products to make agency must purchase the recovered warning of the potential risks associated additional product and performance content product. For example, if a with misuse of such products. When information available to Federal biobased hydraulic fluid is to be used as purchasing environmentally preferable agencies conducting market research to a fluid in hydraulic systems and cleaning products, many Federal assist them in determining whether the because ‘‘lubricating oils containing re- agencies specify that products must biobased products in question are, or are refined oil’’ has already been designated meet Green Seal standards for not, the same products for the same uses by EPA for that purpose, then the institutional cleaning products or that as the recovered content products. Federal agency must purchase the EPA- the products have been reformulated in Manufacturers are asked to provide designated recovered content product, accordance with recommendations from information highlighting the sustainable ‘‘lubricating oils containing re-refined the EPA’s Design for the Environment features of their biobased products and oil.’’ If, on the other hand, that biobased (DfE) program. Both the Green Seal to indicate the various suggested uses of hydraulic fluid is to be used to address standards and the DfE program identify their product and the performance a Federal agency’s certain chemicals of concern in cleaning standards against which a particular environmental or health performance products. These include zinc and other product has been tested. In addition, requirements that the EPA-designated metals, formaldehyde, ammonia, alkyl depending on the type of biobased recovered content product would not phenol ethoxylates, ethylene glycol, and product, manufacturers are being asked meet, then the biobased product should volatile organic compounds. In to provide other types of information, be given preference, subject to addition, both require that cleaning such as whether the product contains reasonable price, availability, and products have neutral or less caustic fossil energy-based components performance considerations. pH. (including petroleum, coal, and natural This proposed rule designates one In contrast, some biobased products gas) and whether the product contains product category for Federal preferred may be more environmentally preferable recovered materials. Federal agencies procurement for which there may be than some products that meet Green also may review available information overlap with an EPA-designated Seal standards for institutional cleaning on a product’s biobased content and its recovered content product. The product products or that have been reformulated profile against environmental and category is engine crankcase oils, which in accordance with EPA’s DfE program. health measures and life-cycle costs (the may overlap with the EPA-designated To fully compare products, one must ASTM Standard D7075,’’Standard recovered content product ‘‘Re-refined look at the ‘‘cradle-to-grave’’ impacts of
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the manufacture, use, and disposal of products within other product often if significant changes are made to products. Biobased products that will be categories being proposed for the list. available for Federal preferred designation today may be available III. Summary of Today’s Proposed Rule procurement under this program have through the AbilityOne Program in the been assessed as to their ‘‘cradle-to- future. Procurement of biobased USDA is proposing to designate the grave’’ impacts. products through the AbilityOne following product categories for Federal One consideration of a product’s Program would further the objectives of preferred procurement: Aircraft and impact on the environment is whether both the AbilityOne Program and the boat cleaners; automotive care products; (and to what degree) it introduces new, Federal preferred procurement program. engine crankcase oil; gasoline fuel fossil carbon into the atmosphere. Fossil Outreach. To augment its own additives; metal cleaners and corrosion carbon is derived from non-renewable research, USDA consults with industry removers; microbial cleaning products; sources (typically fossil fuels such as and Federal stakeholders to the Federal paint removers; and water turbine coal and oil), whereas renewable preferred procurement program during bearing oils. USDA is also proposing to biomass carbon is derived from the development of the rulemaking add the following subcategories to renewable sources (biomass). Qualifying packages for the designation of product previously designated product biobased products offer the user the categories. USDA consults with categories: ‘‘countertops’’ to the opportunity to manage the carbon cycle stakeholders to gather information used composite panels category and ‘‘wheel and reduce the introduction of new in determining the order of product bearing and chassis grease’’ to the fossil carbon into the atmosphere. category designation and in identifying: greases category. In addition, USDA is Manufacturers of qualifying biobased Manufacturers producing and marketing proposing a minimum biobased content products designated under the Federal products that fall within a product for each of these product categories and subcategories. Lastly, USDA is preferred procurement program will be category proposed for designation; proposing a date by which Federal able to provide, at the request of Federal performance standards used by Federal agencies must incorporate these agencies, factual information on agencies evaluating products to be designated product categories into their environmental and human health effects procured; and warranty information of their products, including the results procurement specifications (see Section used by manufacturers of end user of the ASTM D7075, or the comparable IV.E). equipment and other products with BEES analysis, which examines 12 In today’s proposed rule, USDA is regard to biobased products. different environmental parameters, providing information on its findings as including human health. Therefore, Future Designations. In making future to the availability, economic and USDA encourages Federal procurement designations, USDA will continue to technical feasibility, environmental and agencies to consider that USDA has conduct market searches to identify public health benefits, and life-cycle already examined all available manufacturers of biobased products costs for each of the designated product information on the environmental and within product categories. USDA will categories. Information on the human health effects of biopreferred then contact the identified availability, relative price, performance, products when making their purchasing manufacturers to solicit samples of their and environmental and public health decisions. products for voluntary submission for benefits of individual products within Other Federal Preferred Procurement biobased content testing. Based on these each of these product categories is not Programs. Federal procurement officials results, USDA will then propose new presented in this notice. Further, USDA should also note that biobased products product categories for designation for has reached an understanding with may be available for purchase by Federal preferred procurement. manufacturers not to publish their Federal agencies through the AbilityOne USDA has developed a preliminary names in conjunction with specific Program (formerly known as the Javits- list of product categories for future product data published in the Federal Wagner-O’Day (JWOD) program). Under designation and has posted this Register when designating product this program, members of organizations preliminary list on the BioPreferred categories. This understanding was including the National Industries for the Web site. While this list presents an reached to encourage manufacturers to Blind (NIB) and NISH offer products initial prioritization of product submit products for testing to support and services for preferred procurement categories for designation, USDA cannot the designation of a product category. by Federal agencies. A search of the identify with certainty which product Once a product category has been AbilityOne Program’s online catalog categories will be presented in each of designated, USDA will encourage the (www.abilityone.gov) indicated that the future rulemakings. In response to manufacturers of products within the products within three of the product comments from other Federal agencies, product category to voluntarily make categories, or subcategories, being USDA intends to give increased priority their names and other contact proposed today are available through to those product categories that contain information available for the the AbilityOne Program. These are: the highest biobased content. In BioPreferred Web site. Composite Panels—Countertops, Metal addition, as the program matures, Warranties. Some of the product Cleaners and Corrosion Removers— manufacturers of biobased products categories being proposed for Stainless Steel Cleaners, and Metal within some industry segments have designation today may affect original Cleaners and Corrosion Removers— become more responsive to USDA’s equipment manufacturers’ (OEMs) Other Metal Cleaners. While there is no requests for technical information than warranties for equipment in which the specific product within these product those in other segments. Thus, product product categories are used. For categories identified in the AbilityOne categories with high biobased content example, the manufacturer of a piece of online catalog as being a biobased and for which sufficient technical equipment that requires lubrication product, it is possible that such information can be obtained quickly typically includes a list of biobased products are available or will may be added or moved up on the recommended lubricants in the owner/ be available in the future. Also, because prioritization list. USDA intends to operators manual that accompanies the additional categories of products are update the list of product categories for equipment when purchased. If the frequently added to the AbilityOne future designation on the Biopreferred purchaser of the equipment uses a Program, it is possible that biobased Web site every six months, or more lubricant (including a biobased
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lubricant) that is not among the product information; participating in subcategories within the product lubricants recommended by the industry conferences and meetings to categories that should be considered. equipment manufacturer, the educate companies on program benefits 4. As discussed above, the effect that manufacturer may cite that as a reason and requirements; and communicating the use of biobased products may have not to honor the warranty on the the potential for expanded markets on original equipment manufacturers’ equipment. At this time, USDA does not beyond the Federal government, to warranties is uncertain. USDA requests have information available as to the include State and local governments, as comments and supporting information extent that OEMs have included, or will well as the general public markets. on any aspect of this issue. include, biobased products among their Section V provides instructions to 5. Today’s proposed rule is expected recommended lubricants (or other agencies on how to obtain this to have both positive and negative similar operating components). This information on products within these impacts on individual businesses, does not necessarily mean that use of product categories through the including small businesses. USDA biobased products will void warranties, following Web site: http:// anticipates that the biobased Federal only that USDA does not currently have www.biopreferred.gov. preferred procurement program will such information. USDA is requesting Comments. USDA invites comment provide additional opportunities for comments and information on this on the proposed designation of these businesses and manufacturers to begin topic, but cannot be held responsible if product categories, including the supplying products under the proposed damage were to occur. USDA definition, proposed minimum biobased designated biobased product categories encourages manufacturers of biobased content, and any of the relevant to Federal agencies and their products to test their products against analyses performed during the selection contractors. However, other businesses all relevant standards, including those of these product categories. In addition, and manufacturers that supply only that affect warranties, and to work with USDA invites comments and non-qualifying products and do not OEMs to ensure that biobased products information in the following areas: offer biobased alternatives may are accepted and recommended for use. 1. We have attempted to identify experience a decrease in demand from Whenever manufacturers of biobased relevant and appropriate performance Federal agencies and their contractors. products find that existing performance standards and other relevant measures Because USDA has been unable to standards for warranties are not relevant of performance for each of the proposed determine the number of businesses, or appropriate for biobased products, product categories. If you know of other including small businesses, that may be USDA is willing to assist them in such standards or relevant measures of adversely affected by today’s proposed working with the appropriate OEMs to performance for any of the proposed rule, USDA requests comment on how develop tests that are relevant and product categories, USDA requests that many small entities may be affected by appropriate for the end uses in which you submit information identifying such this rule and on the nature and extent biobased products are intended. In standards and measures, including their of that effect. addition to outreach to biobased name (and other identifying information All comments should be submitted as product manufacturers and Federal as necessary), identifying who is using directed in the ADDRESSES section Agencies, USDA will, as time and the standard/measure, and describing above. resources allow, work with OEMs on the circumstances under which the To assist you in developing your addressing any effect the use of product is being used. comments, the background information biobased products may have on their 2. Many biobased products within the used in proposing these product warranties. If, in spite of these efforts, product categories being proposed for categories for designation has been there is insufficient information designation will have positive posted on the BioPreferred Web site. regarding the use of a biobased product environmental and human health The background information can be and its effect on warranties, the attributes. USDA is seeking comments located by clicking on the ‘‘Federal procurement agent would not be on such attributes in order to provide Procurement Preference’’ link on the required to buy such a product. As additional information on the right side of the BioPreferred Web site’s information is available on warranties, BioPreferred Web site. This information home page (http:// USDA will make such information will then be available to Federal www.biopreferred.gov) and then on the available on the BioPreferred Web site. procuring agencies and will assist them ‘‘Rules and Regulations’’ link. At the Additional Information. USDA is in making informed sustainable next screen, click on the Supporting working with manufacturers and procurement decisions. When possible, Documentation link under Round 10 vendors to make all relevant product please provide appropriate Designation under the Proposed and manufacturer contact information documentation to support the Regulations section. available on the BioPreferred Web site environmental and human health IV. Designation of Product Categories, before a procuring agency asks for it, in attributes you describe. Minimum Biobased Contents, and Time order to make the Federal preferred 3. Several product categories being Frame procurement program more efficient. proposed for designation today have Steps USDA has implemented, or will wide ranges of tested biobased contents. A. Background implement, include: Making direct For the reasons discussed later in this In order to designate product contact with submitting companies preamble, USDA is proposing a categories for Federal preferred through email and phone conversations minimum biobased content for most of procurement, section 9002 requires to encourage completion of product these product categories that would USDA to consider: (1) The availability listing; coordinating outreach efforts allow many of the tested products to be of biobased products within the product with intermediate material producers to eligible for Federal preferred categories and (2) the economic and encourage participation of their procurement. USDA welcomes technological feasibility of using those customer base; conducting targeted comments on the appropriateness of the products, including the life-cycle costs outreach with industry and commodity proposed minimum biobased contents of the products. groups to educate stakeholders on the for these product categories and In considering a product’s importance of providing complete whether there are potential availability, USDA uses several sources
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of information. USDA performs Internet vendors to make this information Section IV.B), the functional searches, contacts trade associations available on the BioPreferred Web site performance test methods, performance (such as the Bio organization) and in order to make the Federal preferred standards, product certifications, and commodity groups, searches the procurement program more efficient. other measures of performance Thomas Register (a database, used as a As discussed earlier, USDA has also associated with the functional aspects of resource for finding companies and implemented, or will implement, products identified during the products manufactured in North several other steps intended to educate development of this Federal Register America, containing over 173,000 the manufacturers and other notice for these product categories. entries), and contacts manufacturers and stakeholders on the benefits of this While this process identifies many of vendors to identify those manufacturers program and the need to make this the relevant test methods and standards, and vendors with biobased products information, including manufacturer USDA recognizes that those identified within product categories being contact information, available on the herein do not represent all of the considered for designation. USDA uses BioPreferred Web site in order to then methods and standards that may be the results of these same searches to make it available to procurement applicable for a product category or for determine if a product category is officials. Additional information on any individual product within the generally available. specific products within the product category. As noted earlier in this In considering a product category’s categories proposed for designation may preamble, USDA is requesting economic and technological feasibility, also be obtained directly from the identification of other relevant USDA examines evidence pointing to manufacturers of the products. USDA performance standards and measures of the general commercial use of a product has also provided a link on the performance. As the program becomes and its life-cycle cost and performance BioPreferred Web site to a document fully implemented, these and other characteristics. This information is that offers useful information to additional relevant performance obtained from the sources used to assess manufacturers and vendors who wish to standards will be available on the a product’s availability. Commercial position their businesses as BioPreferred BioPreferred Web site. use, in turn, is evidenced by any vendors to the Federal Government. In gathering information relevant to manufacturer and vendor information This document can be accessed by the analyses discussed above for this on the availability, relative prices, and clicking on the ‘‘Sell Biobased proposed rule, USDA has made performance of their products as well as Products’’ tab on the right side of the extensive efforts to contact and request by evidence of a product being home page of the BioPreferred Web site, information and product samples within purchased by a procuring agency or then on the ‘‘Resources for Business’’ the product categories proposed for other entity, where available. In sum, tab under ‘‘Related Topics’’ on the right designation. For product information, USDA considers a product category side of the next page, and then on the USDA has attempted to contact economically and technologically document titled ‘‘Selling Biobased representatives of the manufacturers of feasible for purposes of designation if Products to the Federal Government’’ in biobased products identified by the products within that product category the middle of the page. Federal preferred procurement program. are being offered and used in the USDA recognizes that information For product samples on which to marketplace. related to the functional performance of conduct biobased content tests and In considering the life-cycle costs of biobased products is a primary factor in BEES analysis, USDA has attempted to product categories proposed for making the decision to purchase these obtain samples and BEES input designation, USDA has obtained the products. USDA is gathering information for at least five different necessary input information (on a information on industry standard test suppliers of products within each voluntary basis) from manufacturers of methods and performance standards product category in today’s proposed biobased products and has used the that manufacturers are using to evaluate rule. However, because the submission BEES analytical tool to analyze the functional performance of their of information and samples is on a individual products within each products. (Test methods are procedures strictly voluntary basis, USDA was able proposed product category. The BEES used to provide information on a certain to obtain information and samples only analytical tool measures the attribute of a product. For example, a from those manufacturers who environmental performance and the test method might determine how many volunteered to invest the resources economic performance of a product. The bacteria are killed. Performance required to gather and submit the environmental performance scores, standards identify the level at which a information and samples. The data impact values, and economic product must perform in order for it to presented are all the data that were performance results for products within be ‘‘acceptable’’ to the entity that set the submitted in response to USDA requests the Round 10 designated product performance standard. For example, a for information from manufacturers of categories analyzed using the BEES performance standard might require that the products within the product analytical tool can be found on the a certain percentage (e.g., 95 percent) of categories proposed for designation. BioPreferred Web site (http:// the bacteria must be killed through the While USDA would prefer to have www.biopreferred.gov) under the use of the product.) The primary sources complete data on the full range of Supporting Documentation link of information on these test methods products within each product category, mentioned above. and performance standards are the data that were submitted support In addition to the BEES analytical manufacturers of biobased products designation of the product categories in tool, manufacturers wishing to make within these product categories. today’s proposed rule. similar life-cycle information available Additional test methods and To propose a product category for may choose to use the ASTM Standard performance standards are also designation, USDA must have sufficient D7075 analysis. The ASTM Standard identified during meetings of the information on a sufficient number of D7075 product analysis includes Interagency council and during the products within the category to be able information on environmental review process for each proposed rule. to assess its availability and its performance, human health impacts, We have listed, under the detailed economic and technological feasibility, and economic performance. USDA is discussion of each product category including its life-cycle costs. For some working with manufacturers and proposed for designation (presented in product categories, there may be
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numerous products available. For • Is there Federal demand for the their economic and technological others, there may be very few products product? feasibility, including life-cycle costs. currently available. Given the infancy of • Are Federal procurement personnel Exemptions. Products exempt from the market for some product categories, looking for biobased products? the biobased procurement preference • it is expected that categories with only Will a product category create a are military equipment, defined as any a single product will be identified. high demand for biobased feed stock? • product or system designed or procured Further, given that the intent of section Does manufacturing of products for combat or combat-related missions, 9002 is largely to stimulate the within this product category increase and spacecraft systems and launch production of new biobased products potential for rural development? support equipment. However, agencies After completing this evaluation, and to energize emerging markets for may purchase biobased products USDA prioritizes the list of product those products, USDA has determined it wherever performance, availability and categories for designation. USDA then is appropriate to designate a product reasonable price indicates that such gathers information on products within category or subcategory for Federal purchases are justified. the highest priority product categories preferred procurement even when there Although each product category in is only a single product with a single and, as sufficient information becomes available for a group of product today’s proposed rule would be exempt supplier, though this will generally from the procurement preference occur once other products with high categories, a new rulemaking package is developed to designate the product requirement when used in spacecraft biobased content and two or more systems or launch support application producers are first designated. However, categories within that group. USDA points out that the list of product or in military equipment used in combat USDA has also determined that in such and combat-related applications, this situations it is appropriate to defer the categories may change, with some being added or dropped, and that the order in exemption does not extend to effective Federal preferred procurement contractors performing work other than date until such time that more than one which they are proposed for designation is likely to change because the direct maintenance and support of the supplier is identified in order to provide spacecraft or launch support equipment choice to procuring agencies. Similarly, information necessary to designate a product category may take more time to or combat or combat-related missions. the documented availability, benefits, For example, if a contractor is applying and life-cycle costs of even a very small obtain than one lower on the list. In today’s proposed rule, USDA is a paint remover product as a step in percentage of all products that may exist proposing to designate the following refurbishing office furniture on a within a product category are also product categories for the Federal military base, the paint remover the considered sufficient to support preferred procurement program: Aircraft contractor purchases should be a designation. and boat cleaners; automotive care qualifying biobased paint remover. The B. Product Categories Proposed for products; engine crankcase oil; gasoline exemption does apply, however, if the Designation fuel additives; metal cleaners and product being purchased by the contractor is for use in combat or USDA uses a model (as summarized corrosion removers; microbial cleaning products; paint removers; and water combat-related missions or for use in below) to identify and prioritize product space or launch applications. After categories for designation. Through this turbine bearing oils. USDA is also proposing to add the following reviewing the regulatory requirement model, USDA has identified over 100 and the relevant contract, where product categories for potential subcategories to previously designated product categories: ‘‘countertops’’ to the contractors have any questions on the designation under the Federal preferred exemption, they should contact the procurement program. A list of these composite panels category and ‘‘wheel bearing and chassis grease’’ to the cognizant contracting officer. product categories and information on USDA points out that it is not the the model can be accessed on the greases category. USDA has determined that each of these product categories intent of these exemptions to imply that BioPreferred Web site at http:// biobased products are inferior to non- www.biopreferred.gov. and subcategories meets the necessary statutory requirements—namely, that biobased products. If manufacturers of In general, product categories are they are being produced with biobased biobased products can meet the developed and prioritized for products and that their procurement by concerns of these two agencies, USDA is designation by evaluating them against procuring agencies will carry out the willing to reconsider such exemptions program criteria established by USDA following objectives of section 9002: on an case-by-case basis. Any changes to and by gathering information from other • To increase demand for biobased the current exemptions would be government agencies, private industry products, which would in turn increase announced in a proposed rule groups, and manufacturers. These demand for agricultural commodities amendment with an opportunity for evaluations begin by looking at the cost, that can serve as feedstocks for the public comment. performance, and availability of production of biobased products; Each of the proposed designated products within each product category. • To spur development of the product categories are discussed in the USDA then considers the following industrial base through value-added following sections. points: agricultural processing and • Are there manufacturers interested manufacturing in rural communities; 1. Aircraft and Boat Cleaners (Minimum in providing the necessary test and Biobased Content: 48 Percent for information on products within a • To enhance the Nation’s energy Aircraft Cleaners; 38 Percent for Boat particular product category? security by substituting biobased Cleaners)1 • Are there a number of products for products derived from Aircraft and boat cleaners are manufacturers producing biobased imported oil and natural gas. products designed to remove built-on products in this product category? Further, USDA has sufficient grease, oil, dirt, pollution, insect reside, • Are there products available in this information on these product categories
product category? to determine their availability and to 1 • Additional information on the determination of What level of difficulty is expected conduct the requisite analyses to minimum biobased content is presented in Section when designating this product category? determine their biobased content and IV,D of this Preamble.
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or impact soils on both interior and • Lockheed Martin FMS2004 Type II materials and supplies, which is higher exterior of aircraft and/or boats. F–16, F–22, F–35 General Purpose level coding than the proposed USDA identified 6 manufacturers and Cleaner; designated product categories. Using suppliers of 8 biobased aircraft cleaners • Lockheed Martin LAC 41–4939 terms that best match the product and 13 manufacturers and suppliers of Cleaning Solvent, Environmentally categories in today’s proposed rule, 24 biobased boat cleaners. These 19 Compliant; USDA queried the GSA database for manufacturers and suppliers do not • Lockheed Martin LMA–MN040 Federal purchases of products within necessarily include all manufacturers Type II F–16, F–22, F–35 General today’s proposed product categories. and suppliers of biobased aircraft Purpose Cleaner; The results indicate purchases of cleaners and boat cleaners, merely those • Military Performance Specification products within product categories in identified during USDA information 85570D Cleaning Compounds, Aircraft, today’s proposed rule. The results of gathering activities. Relevant product Exterior; this inquiry can be found in the • information supplied by these Military Performance Specification background information for Round 10, manufacturers and suppliers indicates 87937D Cleaning Compound, Aerospace which is posted on the BioPreferred that these products are being used Equipment, Type IV Heavy Duty Water Web site. Also, the purchasing of such commercially. In addition, Dilutable Cleaning Compound * Tested materials as part of contracted services manufacturers and stakeholders by SMI, ref # 04JAN940; and with individual purchase cards • identified 22 test method (as shown New York City Transit S–70–01–96 used to purchase products locally leads below) used in evaluating products Bus Wash Alkaline Cleaner—Tile to less accurate data on purchases of within the aircraft cleaners and boat Cleaning Procedure; specific products. • SAE International AMS 3167B cleaners subcategories. While there may USDA also investigated the Web site Solvents, Wipe for Cleaning Prior to be additional test methods, as well as FEDBIZOPPS.gov, a site which lists Application of Primer and Top Coat performance standards, product Federal contract purchase opportunities certifications, and other measures of Materials, or Sealing Compounds; • SAE International ARP 1755B Effect and awards greater than $25,000. The performance, applicable to products information provided on this Web site, within this product category, the 22 test of Cleaning Agents on Aircraft Engine Materials; however, is for broad categories of methods identified by the • services and products rather than the manufacturers are: South Coast Air Quality Management District Method 313–91 specific types of products that are Test Methods Clean Air Solvent—Eligibility; ATCC included in today’s proposed rule. • Biosafety Level 1; Minimal potential for Therefore, USDA has been unable to Aerospace Material Specifications obtain data on the amount of aircraft 1526 Cleaner for Aircraft Exterior causing diseases in humans, plants, animals and aquatic life; and boat cleaners purchased by Surfaces, Pressure Spraying Type; • procuring agencies. However, many • ASTM International D877 Standard NSF Cat. 61; Pretreatment of Potable Water Sources; and Federal agencies routinely perform, or Test Method for Dielectric Breakdown • procure contract services to perform, the Voltage of Insulating Liquids Using Disk EPA/600/4–90/027; Methods for Measuring the Acute Toxicity of types of cleaning activities that use Electrodes; these products. Thus, they have a need • ASTM International F1110 Effluents and Receiving Waters to for aircraft cleaners and boat cleaners Standard Test Method for Sandwich Freshwater and Marine Organisms. and for services that require the use of Corrosion Test; USDA contacted procurement these cleaners. Designation of aircraft • ASTM International F1111 officials with various policy-making and cleaners and boat cleaners will promote Standard Test Method for Corrosion of procuring agencies in an effort to gather the use of biobased products, furthering Low-Embrittling Cadmium Plate by information on the purchases of aircraft the objectives of this program. Aircraft Maintenance Chemicals; and boat cleaners, as well as • ASTM International F483 Standard information on products within the Specific product information, Test Method for Total Immersion other seven product categories proposed including company contact, intended Corrosion Test for Aircraft Maintenance for designation today. These agencies use, biobased content, and performance Chemicals; included GSA, several offices within the characteristics, have been collected on 8 • ASTM International F484 Standard DLA, OFEE, USDA Departmental aircraft cleaners and 21 boat cleaners. Test Method for Stress Crazing of Administration, the National Park Analyses of the environmental and Acrylic Plastics in Contact with Liquid Service, EPA, a Department of Energy human health benefits and the life-cycle or Semi-Liquid Compounds; laboratory, and OMB. Communications costs of aircraft cleaners were performed • ASTM International F502 Standard with these Federal officials led to the for three products using the BEES Test Method for Effects of Cleaning and conclusion that obtaining current usage analytical tool. The results of those Chemical Maintenance Materials on statistics and specific potential markets analyses are presented in the Painted Aircraft Surfaces; within the Federal government for background information for Round 10, • ASTM International F519 Standard biobased products within the eight which can be found on the BioPreferred Test Method for Mechanical Hydrogen proposed designated product categories Web site. Embrittlement Evaluation of Plating/ is not possible at this time. 2. Automotive Care Products (Minimum Most of the contacted officials Coating Processes and Service Biobased Content 75 Percent) Environments; reported that procurement data are • Boeing BAC 5763E Emulsion appropriately reported in higher level Automotive care products are Cleaning & Aqueous Degreasing, Type groupings of Federal Supply Codes2 for formulated for cleaning and protecting II, Class 2, Grades A & B; automotive surfaces. Typical products • Boeing D6–17487N Exterior and 2 The Federal Supply Code (FSC) is a four-digit include waxes, buffing compounds, General Cleaners and Liquid Waxes; code used by government buying offices to classify polishes, degreasers, soaps, wheel and • and identify, in broad terms, the products and Environmental Protection Agency supplies that the government buys and uses. The Method 796.3100 Aerobic Aquatic FSC is the first four digits in the much more is assigned to all government purchases for Biodegradation; detailed 13-digit National Stock Number (NSN) that purposes of identification and inventory control.
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tire cleaners, leather care products, wear protection for four-cycle gasoline Specific product information, interior cleaners, and fragrances. or diesel engines. including company contact, intended USDA identified 12 manufacturers USDA identified five manufacturers use, biobased content, and performance and suppliers of 30 different biobased and suppliers of eight different biobased characteristics have been collected on automotive care products. These 12 engine crankcase oils. These five six engine crankcase oils. Analyses of manufacturers and suppliers do not manufacturers and suppliers do not the environmental and human health necessarily include all manufacturers necessarily include all manufacturers benefits and the life-cycle costs of and suppliers of biobased automotive and suppliers of biobased engine engine crankcase oils were performed care products, merely those identified crankcase oils, merely those identified for two of the products using the BEES during USDA information gathering during USDA information gathering analytical tool. The results of those activities. Information supplied by these activities. Information supplied by these analyses are presented in the manufacturers and suppliers indicates manufacturers and suppliers indicates background information for Round 10, that these products are being used that these products are being used which can be found on the BioPreferred commercially. However, manufacturers commercially. In addition, Web site. and stakeholders contacted by USDA manufacturers and stakeholders identified nine performance standards 4. Gasoline Fuel Additives (Minimum did not identify any applicable Biobased Content 92 Percent) performance standards, test methods, or and test methods (as shown below) used other industry measures of performance in evaluating products within this Gasoline fuel additives are chemical against which these products have been product category. While there may be agents added to gasoline to increase tested. USDA points out that the lack of additional performance standards, test octane levels, improve lubricity, and identified performance standards is not methods, product certifications, and provide engine cleaning properties to relevant to the designation of a product other measures of performance, gasoline-fired engines. category for Federal preferred applicable to products within this USDA identified 115 manufacturers procurement because it is not one of the product category, the nine performance and suppliers of 117 gasoline fuel criteria section 9002 requires USDA to standards and test methods identified additives. These 115 manufacturers and consider in order to designate a product by the manufacturers are: suppliers do not necessarily include all category for Federal preferred Test Methods manufacturers and suppliers of gasoline procurement. If and when performance • fuel additives, merely those identified standards, test methods, and other ASTM International D2619 during USDA information gathering relevant measures of performance are Standard Test Method for Hydrolytic activities. Information supplied by these identified for this product category, Stability of Hydraulic Fluids (Beverage manufacturers and suppliers indicates Bottle Method); USDA will provide such information on • that these products are being used the BioPreferred Web site. ASTM International D665 Standard commercially. However, manufacturers Test Method for Rust-Preventing USDA attempted to gather data on the and stakeholders contacted by USDA Characteristics of Inhibited Mineral Oil potential market for automotive care did not identify any applicable in the Presence of Water; products within the Federal government performance standards, test methods, or • ASTM International D892 Standard as discussed in the section on aircraft other industry measures of performance Test Method for Foaming Characteristics and boat cleaners. These attempts were against which these products have been of Lubricating Oils; tested. USDA points out that the lack of largely unsuccessful. However, Federal • SAE International 0W20 J300 identified performance standards is not agencies use or contract for services that Engine Oil Viscosity Classification; use such products in maintaining fleets • SAE International 10W40 J300 relevant to the designation of a product of automobiles. Thus, they have a need Engine Oil Viscosity Classification; category for Federal preferred for automotive care products and for • SAE International 15W50 J300 procurement because it is not one of the services that require the use of Engine Oil Viscosity Classification; criteria section 9002 requires USDA to automotive care products. Designation • SAE International 20W60 J300 consider in order to designate a product of automotive care products will Engine Oil Viscosity Classification; category for Federal preferred promote the use of biobased products, • SAE International 20W70 J300 procurement. If and when performance furthering the objectives of this Engine Oil Viscosity Classification; and standards, test methods, and other program. • SAE International 5W30 J300 relevant measures of performance are Specific product information, Engine Oil Viscosity Classification. identified for this product category, including company contact, intended USDA attempted to gather data on the USDA will provide such information on use, biobased content, and performance potential market for engine crankcase the BioPreferred Web site. characteristics have been collected on oils within the Federal government as USDA attempted to gather data on the 13 automotive care products. Analyses discussed in the section on aircraft and potential market for gasoline fuel of the environmental and human health boat cleaners. These attempts were additives within the Federal benefits and the life-cycle costs of largely unsuccessful. However, many government as discussed in the section automotive care products were Federal agencies operate motor vehicle on aircraft and boat cleaners. These performed for two of the products using fleet maintenance facilities where attempts were largely unsuccessful. the BEES analytical tool. The results of engine crankcase oils are used. In However, many Federal agencies those analyses are presented in the addition, Federal agencies may contract operate motor vehicle fleet facilities background information for Round 10, for services involving the use of such where gasoline fuel additives are used. which can be found on the BioPreferred products. Thus, they have a need for In addition, Federal agencies may Web site. engine crankcase oils and for services contract for services involving the use of that require the use of engine crankcase such products. Thus, they have a need 3. Engine Crankcase Oils (Minimum oils. Designation of engine crankcase for gasoline fuel additives and for Biobased Content 18 Percent) oils will promote the use of biobased services that require the use of gasoline Engine crankcase oils are products products, furthering the objectives of fuel additives. Designation of gasoline formulated to provide lubrication and this program. fuel additives will promote the use of
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biobased products, furthering the ingredient for potential human health fixtures, sewage systems, wastewater objectives of this program. and environmental effects; treatment systems, or on a variety of Specific product information, • ASTM D4488—Standard Guide for other surfaces. These products typically including company contact, intended Testing Cleaning Performance of include organisms that digest protein, use, biobased content, and performance Products Intended for Use on Resilient starch, fat, and cellulose. characteristics have been collected on Flooring and Washable Walls; USDA identified 163 manufacturers • two gasoline fuel additives. Analyses of GS–37—Green Seal Environmental and suppliers of 490 microbial cleaners. the environmental and human health Standard for General-Purpose, Based on the information evaluated, benefits and the life-cycle costs of Bathroom, Glass, and Carpet Cleaners USDA believes that it is appropriate to biobased gasoline fuel additives were Used for Industrial and Institutional subcategorize this product category into performed for two products using the Purposes; three subcategories: Drain maintenance • BEES analytical tool. The results of OECD G.L. 203—Guidelines for the products, wastewater maintenance Testing of Chemicals, Organization; products, and general cleaners. Of the those analyses are presented in the • background information for Round 10, Ecologo CCD–146—Environmental 490 products identified, 241 were Leadership of Hard Surface Cleaners; formulated specifically for drain which can be found on the BioPreferred • Web site. Boeing BAC 5750 Section 5.1s maintenance, 186 were formulated for Glidsafe Prepsolv—95% minimum d- wastewater maintenance, and 63 were 5. Metal Cleaners and Corrosion Limonone for Solvent Cleaning; • general purpose cleaning products. Removers (Minimum Biobased Content: OECD 301F-Manometric The 163 manufacturers and suppliers 71 Percent for Corrosion Removers; 75 Respirometry Test; and • do not necessarily include all Percent for Stainless Steel Cleaners; and NSF H1—Lubricants with manufacturers of microbial cleaners, 56 Percent for Other Metal Cleaners) incidental contact. merely those identified during USDA USDA attempted to gather data on the information gathering activities. Metal cleaners and corrosion potential market for metal cleaners and removers are products that are designed Information supplied by the corrosion removers within the Federal manufacturers and supplier indicates to clean and remove grease, oil, dirt, government as discussed in the section stains, soils, and rust from metal that these products are being used on aircraft and boat cleaners. These commercially. In addition, surfaces. Corrosion removers are attempts were largely unsuccessful. formulated to remove corrosion (rust) manufacturers and stakeholders However, Federal agencies procure identified 15 performance standards and through chemical action, although metal cleaners and corrosion removers mechanical actions may be used to test methods (as shown below) used in for use in facilities such as vehicle evaluating products within this product speed the process. maintenance shops, metal fabrication USDA identified 43 manufacturers category. While there may be additional shops, hospitals, and office buildings. performance standards, test methods, and suppliers of 62 metal cleaners and Also, many Federal agencies often corrosion removers. Based on the product certifications, and other procure contract services that use these measures of performance, applicable to information evaluated, USDA believes products. Thus, they have a need for that it is appropriate to subcategorize products within this product category, metal cleaners and corrosion removers the 15 performance standards and test this product category into three and for services that require the use of subcategories: Corrosion removers, methods identified by the metal cleaners and corrosion removers. manufacturers are: stainless steel cleaners, and other metal Designation of metal cleaners and cleaners. Of the 62 products identified, corrosion removers will promote the use Test Methods—Drain Maintenance 12 were formulated specifically as of biobased products, furthering the Products corrosion removers, 7 were formulated objectives of this program. • EPA SW–846—Test Methods for for cleaning stainless steel, and 24 were Specific product information, Evaluating Solid Waste, Physical/ formulated for cleaning other metals. including company contact, intended Chemical Methods; The 43 manufacturers and suppliers use, biobased content, and performance • DfE Qualifying Product—The DfE do not necessarily include all characteristics have been collected on review team has screened each manufacturers and suppliers of metal 36 metal cleaners and corrosion ingredient for potential human health cleaners and corrosion removers, merely removers. Analyses of the and environmental effects; and those identified during USDA environmental and human health • ATCC Biosafety Level 1—Minimal information gathering activities. benefits and the life-cycle costs of potential for causing diseases in Information supplied by these biobased metal cleaners and corrosion humans, plants, animals and aquatic manufacturers and suppliers indicates removers were performed for two life. that these products are being used products using the BEES analytical tool. commercially. In addition, The results of those analyses are Test Methods—Wastewater manufacturers and stakeholders presented in the background Maintenance Products identified eight test methods (as shown information for Round 10, which can be • Navsea 6840—U.S. Navy surface below) used in evaluating products found on the BioPreferred Web site. ship (non-submarine) authorized within the other metal cleaners chemical cleaning products and 6. Microbial Cleaning Products subcategory. While other test methods dispensing systems; and measures of performance, as well as (Minimum Biobased Content: 45 Percent • EPA/600/4–90/027—Methods for performance standards, applicable to for Drain Maintenance Products; 44 Measuring the Acute Toxicity of products within this product category Percent for Wastewater Maintenance Effluents and Receiving Waters to may exist, the eight test methods Products; and 50 Percent for General Freshwater and Marine Organisms; identified by manufacturers are: Cleaners) • EPA SW–846—Test Methods for Microbial cleaning products are Evaluating Solid Waste, Physical/ Test Methods cleaning agents that use microscopic Chemical Methods; • DfE Qualifying Product—The DfE organisms to treat or eliminate waste • EPA Method 418.1—Petroleum review team has screened each materials within drains, plumbing Hydrocarbons, Total Recoverable for
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determining total petroleum 7. Paint Removers (Minimum Biobased 8. Water Turbine Bearing Oils hydrocarbons (TPH) in water; Content 41 Percent) (Minimum Biobased Content 46 • DfE Qualifying Product—The DfE Percent) Paint removers are products review team has screened each Water turbine bearing oils are ingredient for potential human health formulated to loosen and remove paint from painted surfaces. lubricants that are specifically and environmental effects; formulated for use in the bearings found • ATCC Biosafety Level 1—Minimal USDA identified 29 manufacturers of in water turbines. potential for causing diseases in 42 biobased paint removers. The 29 USDA identified four manufacturers humans, plants, animals and aquatic manufacturers do not necessarily and suppliers of six water turbine life; include all manufacturers of biobased bearing oils. These four manufacturers • ASTM E96—Standard Test Methods paint removers, merely those identified and suppliers do not necessarily include for Water Vapor Transmission of during USDA information gathering all manufacturers and suppliers of water Materials; activities. Information supplied by these turbine bearing oils, merely those • ASTM D792—Standard Test manufacturers indicates that these identified during USDA information Methods for Density and Specific products are being used commercially. gathering activities. Information Gravity (Relative Density) of Plastics by However, manufacturers and supplied by these manufacturers and Displacement; stakeholders contacted by USDA did not suppliers indicates that these products • ASTM D638—Standard Test identify any applicable performance are being used commercially. In Method for Tensile Properties of standards, test methods, or other addition, manufacturers and Plastics; industry measures of performance stakeholders identified 12 test methods • ASTM D4060—Standard Test against which these products have been (as shown below) used in evaluating Method for Abrasion Resistance of tested. USDA points out that the lack of products within this product category. Organic Coatings by the Taber Abraser; identified performance standards is not While other test methods and measures and relevant to the designation of a product of performance, as well as performance standards, applicable to products within • ASTM D2240—Standard Test category for Federal preferred procurement because it is not one of the this product category may exist, the 12 Method for Rubber Property— test methods identified by Durometer Hardness. criteria section 9002 requires USDA to consider in order to designate a product manufacturers are: Test Methods—General Cleaners category for Federal preferred Test Methods • ATCC Biosafety Level 1—Minimal procurement. If and when performance • ASTM D665 Standard Test Method potential for causing diseases in standards, test methods, and other for Rust-Preventing Characteristics of humans, plants, animals, and aquatic relevant measures of performance are Inhibited Mineral Oil in the Presence of life. identified for this product category, Water; USDA attempted to gather data on the USDA will provide such information on • ASTM D2619 Standard Test potential market for microbial cleaners the BioPreferred Web site. Method for Hydrolytic Stability of within the Federal government using USDA attempted to gather data on the Hydraulic Fluids (Beverage Bottle the procedure described in the section potential market for paint removers Method); on aircraft and boat cleaners. These within the Federal government as • ASTM D892 Standard Test Method attempts were largely unsuccessful. discussed in the section on aircraft and for Foaming Characteristics of However, most Federal agencies boat cleaners. These attempts were Lubricating Oils; routinely operate, or contract for the largely unsuccessful. However, many • ASTM D5864 Standard Test operation of, facilities that include Federal agencies use, and procure Method for Determining Aerobic drains and wastewater systems that services that use, paint removers in the Aquatic Biodegradation of Lubricants or require periodic cleaning. In addition, construction, renovation, and Their Components; • many Federal agencies engage in the maintenance of facilities and DIN 51354–1—Testing of types of cleaning operations where equipment. Thus, they have a need for lubricants; FZG gear test rig; general general purpose cleaners are used for paint removers and for services that working principles; cleaning oily or greasy surfaces. Thus, • require the use of paint removers. American Petroleum Institute they have a need for products such as Designation of paint removers will Ashless GL–3 Lubricant with light EP microbial cleaners. Designation of promote the use of biobased products, effect for transmissions and non-hypoid microbial cleaners will promote the use furthering the objectives of this gear drives; of biobased products, furthering the • program. API GL–3 Automotive Gear objectives of this program. Lubricant Service Categories; Specific product information Specific product information, • ISO 46 Designates Oil Viscosity including company contact, intended including company contact, intended Grade; use, biobased content, and performance use, biobased content, and performance • OECD 201 Algal Growth Inhibition characteristics have been collected on characteristics have been collected on Test; 95 microbial cleaners. Analyses of the nine paint removers. Analyses of the • OECD 202 Acute Immobilization environmental and human health environmental and human health Test and Reproduction Test; benefits and the life-cycle costs of two benefits and the life-cycle costs of • OECD 203 Fish Acute Toxicity Test; products (one drain maintenance biobased paint removers were and product and one general cleaner) were performed for four products using the • OECD 301B Guideline for Testing of performed using the BEES analytical BEES analytical tool. The results of Chemicals, Ready Biodegradability: tool. The results of those analyses are those analyses are presented in the Modified Sturm Test. presented in the background background information for Round 10, USDA attempted to gather data on the information for Round 10, which can be which can be found on the BioPreferred potential market for water turbine found on the BioPreferred Web site. Web site. bearing oils within the Federal
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government as discussed in the section identified 12 test methods (as shown Specific product information, on aircraft and boat cleaners. These below) used in evaluating products including company contact, intended attempts were largely unsuccessful. within this product category. While use, biobased content, and performance However, many Federal agencies are other test methods and measures of characteristics have been collected on responsible for maintaining water performance, as well as performance 20 composite panels—countertops supply systems and routinely procure standards, applicable to products within products. This information is presented water turbine bearing oils, or contract this product category may exist, the 12 in the background information for with services that procure these test methods identified by Round 10, which can be found on the products. Thus, they have a need for manufacturers are: BioPreferred Web site. water turbine bearing oils and for services that require the use of water Test Methods 2. Greases—Wheel Bearing and Chassis (Minimum Biobased Content 50 turbine bearing oils. Designation of • ASTM D256—Standard Test Percent) water turbine bearing oils will promote Methods for Determining the Izod the use of biobased products, furthering Pendulum Impact Resistance of Plastics; Wheel bearing and chassis greases are the objectives of this program. • ASTM D3023—Standard Practice lubricants that meet ASTM D4950 Specific product information, for Determination of Resistance of Standard Classification as GC and LB including company contact, intended Factory-Applied Coatings on Wood (wheel bearing and chassis). These use, biobased content, and performance Products to Stains and Reagents; greases are for mild to severe duty characteristics have been collected on • ASTM D570—Standard Test wheel bearing and chassis applications one water turbine bearing oils. Analyses Method for Water Absorption of commonly found in automotive, truck, of the environmental and human health Plastics; heavy duty, industrial and agricultural benefits and the life-cycle costs of • ASTM D635—Standard Test applications. Common applications biobased water turbine bearing oils were Method for Rate of Burning and/or include disc and drum brakes, wheel performed for one product using the Extent and Time of Burning of Plastics bearings, trailer bearings, chassis parts BEES analytical tool. The results of in a Horizontal Position; and industrial equipment and those analyses are presented in the • ASTM D638—Standard Test machinery. These greases are also used background information for Round 10, Method for Tensile Properties of where there is a broad temperature which can be found on the BioPreferred Plastics; requirement and where they may be Web site. • ASTM D648—Standard Test subject to high pressure or heavy load. USDA identified six manufacturers C. New Subcategories Proposed for Method for Deflection Temperature of and suppliers of eight biobased wheel Designation Plastics Under Flexural Load in the Edgewise Position; bearing and chassis greases. These six On May 14, 2008, USDA finalized the • manufacturers and suppliers do not designation of several product ASTM D695—Compressive Strength, Tensile, Modulus of Elasticity; necessarily include all manufacturers categories including one for composite • and suppliers of biobased wheel bearing panels (73 FR 27954) and one for ASTM D785 Standard Test Method for Rockwell Hardness of Plastics and and chassis greases, merely those greases (73 FR 27974). Each of these identified during USDA information product categories included Electrical Insulating Materials; • ASTM D790 Standard Test Methods gathering activities. Information subcategories. Since that time, USDA supplied by these manufacturers and has obtained additional information on for Flexural Properties of Unreinforced and Reinforced Plastics and Electrical suppliers indicates that these products products within these two product are being used commercially. In categories and is now proposing to add Insulating Materials; • ASTM G122—Standard Test addition, manufacturers and one new subcategory within each of the stakeholders identified 10 test methods two product categories. Method for Evaluating the Effectiveness of Cleaning Agents; (as shown below) used in evaluating 1. Composite Panels—Countertops • ASTM E84—Standard Test Method products within this product category. (Minimum Biobased Content 89 for Surface Burning Characteristics of While other test methods and measures Percent) Building Materials; and of performance, as well as performance standards, applicable to products within • ASTM D4060—Standard Test Composite panels—countertops are this product category may exist, the 10 Method for Abrasion Resistance of engineered products that are flat panels test methods identified by Organic Coatings by the Taber Abraser. designed to serve as horizontal work manufacturers are: surfaces in locations such as kitchens, USDA attempted to gather data on the break rooms or other food preparation potential market for composite panels— Test Methods areas, bathrooms or lavatories, and countertops within the Federal • ASTM D1742—D1742 Standard workrooms. government as discussed in the section Test Method for Oil Separation from USDA identified 27 manufacturers on aircraft and boat cleaners. These Lubricating Grease During Storage; and suppliers of 52 biobased composite attempts were largely unsuccessful. • ASTM D217—D217 Standard Test panels—countertops products. These 27 However, many Federal agencies use, Methods for Cone Penetration of manufacturers and suppliers do not and procure services that use, Lubricating Grease; necessarily include all manufacturers countertops in the construction, • ASTM D2265—D2265 Standard and suppliers of biobased composite renovation, and maintenance of Test Method for Dropping Point of panels—countertops products, merely residential, medical, and office Lubricating Grease Over Wide those identified during USDA facilities. Thus, they have a need for Temperature; information gathering activities. countertops and for services that require • ASTM D2266—D2266 Standard Information supplied by these the use of countertops. Designation of Test Method for Wear Preventive manufacturers and suppliers indicates composite panels—countertops will Characteristics of Lubricating Grease that these products are being used promote the use of biobased products, (Four-Ball Method); commercially. In addition, furthering the objectives of this • ASTM D2270—D2270 Standard manufacturers and stakeholders program. Practice for Calculating Viscosity Index
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From Kinematic Viscosity at 40 and 100 biobased products in performance and category that have the highest biobased °C; economics. Setting the minimum content will be listed first and others • ASTM D2509—D2509 Standard biobased content for a product category will be listed in descending order. Test Method for Measurement of Load- at a level met by several of the tested USDA is specifically requesting Carrying Capacity of Lubricating Grease products will provide more products comments on the proposed minimum (Timken Method); from which procurement officials may biobased contents and also requests • ASTM D2596—D2596 Standard choose, will encourage the most additional data that can be used to re- Test Method for Measurement of widespread usage of biobased products evaluate the appropriateness of the Extreme-Pressure Properties of by procuring agencies, and is expected proposed minimum biobased contents. Lubricating Grease (Four-Ball Method); to accomplish the objectives of section As the market for biobased products • ASTM D3233—D3233 Standard 9002. develops and USDA obtains additional Test Methods for Measurement of As discussed in Section IV.A of this biobased content data, it will re-evaluate Extreme Pressure Properties of Fluid preamble, USDA relied entirely on the established minimum biobased Lubricants (Falex Pin and Vee Block manufacturers’ voluntary submission of contents of designated product Methods); samples to support the proposed • categories and consider raising them ASTM D445—D445 Standard Test designation of these product categories. whenever justified. Method for Kinematic Viscosity of However, in selecting the proposed The following paragraphs summarize Transparent and Opaque Liquids (and minimum biobased content for each the information that USDA used to Calculation of Dynamic Viscosity); and product category, USDA also considered • propose minimum biobased contents ASTM D92—D92 Standard Test the biobased content of several products within each proposed designated Method for Flash and Fire Points by for which manufacturers have requested product category. Cleveland Open Cup Tester. certification to use the USDA Certified USDA attempted to gather data on the Biobased Product label. USDA 1. Aircraft and Boat Cleaners potential market for wheel bearing and considered these data points to be valid Twenty eight biobased aircraft and chassis greases within the Federal and useful in setting the proposed boat cleaners have been tested for government as discussed in the section minimum biobased content because the biobased content using ASTM D6866.3 on aircraft and boat cleaners. These labeling program specifies that the The biobased contents of 15 biobased attempts were largely unsuccessful. reported biobased content must be aircraft cleaners range from 14 percent However, many Federal agencies use, determined by a third-party testing to 100 percent, as follows: 14, 29, 51, 59, and procure services that use, wheel entity that is ISO 9001 conformant. 74, 79, 80, 81, 94, 94, 97, 98, 98, 99, and bearing and chassis greases in the Thus, the biobased content data 100 percent. Because there is a maintenance of vehicles and equipment. presented in the following paragraphs significant break between the 29 percent Thus, they have a need for wheel includes test results from the labeling product and the 51 percent product, bearing and chassis greases and for portion of the BioPreferred program as USDA considered the need to create services that require the use of wheel well as the test results from all of the another subcategory within this product bearing and chassis greases. Designation product samples that were submitted for category. However, USDA found that of wheel bearing and chassis greases analysis under the Federal biobased there was not sufficient information on will promote the use of biobased products preferred procurement the performance or applicability of the products, furthering the objectives of program. two products with the 14 and 29 percent this program. As a result of public comments biobased content to justify creating a Specific product information, received on the first designated product subcategory based on those products. including company contact, intended categories rulemaking proposal, USDA Because the biobased contents of the use, biobased content, and performance decided to account for the slight remaining 13 products are somewhat characteristics have been collected on imprecision in the analytical method uniformly distributed between 50 and seven wheel bearing and chassis used to determine biobased content of 100 percent with no obvious gaps or greases. This information is presented in products when establishing the breaks in the data, USDA is proposing the background information for Round minimum biobased content. Thus, to set the minimum biobased content for 10, which can be found on the rather than establishing the minimum aircraft cleaners at 48 percent, based on BioPreferred Web site. biobased content for a product category the product with a tested biobased at the tested biobased content of the D. Minimum Biobased Contents content of 51 percent. product selected as the basis for the Thirteen biobased boat cleaners have USDA has determined that setting a minimum value, USDA is establishing been tested for biobased content using minimum biobased content for the minimum biobased content at a ASTM D6866. The biobased contents of designated product categories is level three (3) percentage points less these 13 biobased boat cleaners range appropriate. Establishing a minimum than the tested value. USDA believes from 2 percent to 98 percent, as follows: biobased content will encourage that this adjustment is appropriate to 2, 3, 4, 41, 42, 43, 53, 74, 79, 82, 94, 97, competition among manufacturers to account for the expected variations in and 98 percent. Because the biobased develop products with higher biobased analytical results. contents of three of the products are contents and will prevent products with USDA encourages procuring agencies extremely low, USDA did not consider de minimis biobased content from being to seek products with the highest setting the minimum biobased content purchased as a means of satisfying the biobased content that is practicable in for the subcategory based on these requirements of section 9002. USDA all of the proposed designated product believes that it is in the best interest of categories. To assist the procuring 3 ASTM D6866, ‘‘Standard Test Methods for the Federal preferred procurement agencies in determining which products Determining the Biobased Content of Solid, Liquid, program for minimum biobased have the highest biobased content, and Gaseous Samples Using Radiocarbon contents to be set at levels that will USDA will update the information in Analysis,’’ is used to distinguish between carbon from fossil resources (non-biobased carbon) and realistically allow products to possess the biobased products catalog to include carbon from renewable sources (biobased carbon). the necessary performance attributes the biobased content of each product. The biobased content is expressed as the percentage and allow them to compete with non- Those products within each product of total carbon that is biobased carbon.
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products. The biobased contents of 4 of gasoline fuel additives are 20, 95, and 98 percent; for wastewater maintenance the remaining 10 products fall within 97 percent. USDA did not find any products, 47, 53, 53, 58, 59, 70, 74, 95, the narrow range of 41 percent to 53 performance or applicability features 96, and 99 percent; and for general percent. USDA believes these products that would justify setting the minimum cleaners, 19, 27, 53, 53, 54, 69, 73, 74, are representative of those within the biobased content on the 20 percent 81, 91, 95, 96, 98, 99, and 100 percent. subcategory and is proposing to set the biobased product. USDA is, therefore, For the drain maintenance and the minimum biobased content for boat proposing to set the minimum biobased wastewater subcategories, the test cleaners at 38 percent, based on the content for this product category at 92 results cover a wide range but are fairly product with a tested biobased content percent, based on the product with the evenly distributed, with several of 41 percent. lowest biobased content of the other two products having biobased contents in products tested. the 50 percent range. USDA is, 2. Automotive Care Products USDA will continue to gather therefore, proposing to set the minimum Seven biobased automotive care information on products within this biobased content for microbial cleaners products have been tested for biobased product category, and if sufficient at 45 percent for drain maintenance content using ASTM D6866. The supporting information becomes products and 44 percent for wastewater biobased contents of these seven available, will consider establishing maintenance products based on the biobased automotive care products subcategories based on formulation, products with the lowest biobased range from 17 percent to 100 percent, as performance, or applicability. content within each data set. For general follows: 17, 41, 78, 79, 94, 98, and 100 cleaners, there is a significant gap 5. Metal Cleaners and Corrosion percent. Because there is a significant between the 27 and the 53 percent Removers break between the values for the two products. USDA found no unique products with the lowest biobased Twenty five biobased metal cleaners performance characteristics that justify contents and the five products with the and corrosion removers have been setting the minimum biobased content highest biobased contents, USDA tested for biobased content using ASTM based on the 19 percent or the 27 considered the need to subcategorize D6866. The biobased contents of these percent products. The remaining this product category. However, USDA 25 biobased metal cleaners and products are fairly even distributed found that there was not sufficient corrosion removers are as follows: for between 53 and 100 percent. Thus, information on the performance or corrosion removers, 14, 74, 79, 90, 91, USDA is proposing to set the minimum applicability of the two products with 91, 91, 91, 92, 92, 96, 97, 98, and 98 biobased content at 50 percent for the the lowest biobased contents to justify percent; for stainless steel cleaners, 12, general cleaners subcategory, based on creating a subcategory based on those 78, 79, 81, 83, 92, and 96 percent; for the product with the tested biobased products. Because the biobased contents other metal cleaners, 19, 59, 79, and 98 content of 53 percent. of the remaining five products are percent. USDA is proposing to set the 7. Paint Removers within a narrow range, USDA is minimum biobased content for the proposing to set the minimum biobased corrosion removers subcategory at 71 Eight biobased paint removers have content for automotive care products at percent, based on the product with the been tested for biobased content using 75 percent, based on the product with tested biobased content of 74 percent. ASTM D6866. The biobased contents of a tested biobased content of 78 percent. USDA found no justification for setting these eight biobased paint removers USDA will continue to gather the minimum based on the 14 percent range from 24 to 100 percent, as follows: information on products within this biobased product and all of the 24, 30, 44, 55, 63, 87, 100, and 100 product category, and if sufficient remaining tested products are between percent. USDA found no performance or supporting information becomes 74 and 98 percent biobased. For the applicability claims to justify setting the available, will consider establishing stainless steel cleaners subcategory, minimum biobased content for this subcategories based on formulation, USDA found no unique performance product category based on the 24 or 30 performance, or applicability. features that would justify setting the percent products. Because three of the minimum based on the product with the remaining six products have biobased 3. Engine Crankcase Oils one tested biobased content of 12 contents within a narrow range of from Eleven biobased engine crankcase oils percent. USDA is, therefore, proposing 44 to 63 percent, USDA is proposing to have been tested for biobased content to set the minimum biobased content at set the minimum biobased content for using ASTM D6866. The biobased 75 percent, based on the product with paint removers at 41 percent, based on contents of these eleven biobased engine the tested biobased content of 78 the product with a tested biobased crankcase oils range from 2 percent to percent. USDA also found no reason to content of 44 percent. 53 percent, as follows: 2, 2, 21, 30, 31, set the minimum for the other metal 36, 37, 37, 50, 51, and 53 percent. cleaners subcategory based on the 8. Water Turbine Bearing Oils Because the biobased contents of two of product with the tested biobased One of the biobased water turbine the products are extremely low and the content of 19 percent. Therefore, the bearing oils has been tested for biobased biobased contents of the remaining nine proposed minimum biobased content content using ASTM D6866. The products are all within the range of 21 for this subcategory is 56 percent, based biobased content of this biobased water to 53 percent, USDA is proposing to set on the product with the tested biobased turbine bearing oil is 49 percent. USDA the minimum biobased content for content of 59 percent. believes that this one product is typical engine crankcase oils at 18 percent, of available biobased products within 6. Microbial Cleaning Products based on the product with a tested this product category and is proposing biobased content of 21 percent. Forty biobased microbial cleaners to set the minimum biobased content for have been tested for biobased content this product category at 46 percent. 4. Gasoline Fuel Additives using ASTM D6866. The biobased USDA will continue to gather Three biobased gasoline fuel additives contents of these 40 biobased microbial information on products within this have been tested for biobased content cleaners are as follows: for drain product category, and if sufficient using ASTM D6866. The biobased maintenance products, 48, 51, 51, 53, supporting information becomes contents of these three biobased 53, 53, 70, 74, 74, 74, 80, 91, 94, 95, and available, will consider establishing
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subcategories based on formulation, need time to evaluate the economic and date information. Procuring agencies performance, or applicability. technological feasibility of the available should contact the manufacturers and biobased products for their agency- vendors directly to discuss specific 9. Composite Panels—Countertops specific uses and for compliance with needs and to obtain detailed Seven biobased composite panels— agency-specific requirements, including information on the availability and countertops have been tested for manufacturers’ warranties for prices of biobased products meeting biobased content using ASTM D6866. machinery in which the biobased those needs. The biobased contents of these seven products would be used. By accessing the BioPreferred Web biobased countertops range from 18 to By the time these product categories site, agencies will also be able to obtain 100 percent, as follows: 18, 18, 44, 92, and subcategories are promulgated for the voluntarily-posted information on 95, 100, and 100 percent. USDA found designation, Federal agencies will have each product concerning: Relative price; no performance or applicability claims had a minimum of 18 months (from the life-cycle costs; hot links directly to a to justify setting the minimum biobased date of this Federal Register notice), manufacturer’s or vendor’s Web site (if content for this product category based and much longer considering when the available); performance standards on the two 18 percent products or the Guidelines were first proposed and (industry, government, military, ASTM/ 44 percent product. Because four of the these requirements were first laid out, to ISO) that the product has been tested remaining five products have biobased implement these requirements. against; and environmental and public contents within a narrow range of from For these reasons, USDA proposes health information from the BEES 92 to 100 percent, USDA is proposing to that the mandatory preference for analysis or the alternative analysis set the minimum biobased content for biobased products under the designated embedded in the ASTM Standard the countertops subcategory of product categories and subcategories D7075, ‘‘Standard Practice for composite panels at 89 percent, based take effect one year after promulgation Evaluating and Reporting on the product with a tested biobased of the final rule. The one-year period Environmental Performance of Biobased content of 92 percent. provides these agencies with ample time Products.’’ to evaluate the economic and 10. Greases—Wheel Bearing and Chassis technological feasibility of biobased VI. Regulatory Information Five biobased wheel bearing and products for a specific use and to revise A. Executive Order 12866: Regulatory chassis greases have been tested for the specifications accordingly. However, Planning and Review and Executive biobased content using ASTM D6866. some agencies may be able to complete Order 13563: Improving Regulation and The biobased contents of these five these processes more expeditiously, and Regulatory Review biobased greases range from 53 to 90 not all uses will require extensive percent, as follows: 53, 54, 54, 63, and analysis or revision of existing Executive Order 12866, as 90 percent. Because four of the five specifications. Although it is allowing supplemented by Executive Order products have biobased contents within up to one year, USDA encourages 13563, requires agencies to determine a narrow range of from 53 to 63 percent, procuring agencies to implement the whether a regulatory action is USDA is proposing to set the minimum procurement preferences as early as ‘‘significant.’’ The Order defines a biobased content for the wheel bearing practicable for procurement actions ‘‘significant regulatory action’’ as one and chassis greases subcategory at 50 involving any of the designated product that is likely to result in a rule that may: percent, based on the product with a categories or subcategories. ‘‘(1) Have an annual effect on the tested biobased content of 53 percent. economy of $100 million or more or V. Where can agencies get more adversely affect, in a material way, the E. Compliance Date for Procurement information on these USDA-designated economy, a sector of the economy, Preference and Incorporation into product categories? productivity, competition, jobs, the Specifications The background information used to environment, public health or safety, or USDA intends for the final rule to develop this proposed rule can be State, local, or tribal governments or take effect thirty (30) days after located by clicking on the ‘‘Federal communities; (2) Create a serious publication of the final rule. However, Procurement Preference’’ link on the inconsistency or otherwise interfere as proposed, procuring agencies would right side of the BioPreferred Web site’s with an action taken or planned by have a one-year transition period, home page (http:// another agency; (3) Materially alter the starting from the date of publication of www.biopreferred.gov) and then on the budgetary impact of entitlements, the final rule, before the procurement ‘‘Rules and Regulations’’ link. At the grants, user fees, or loan programs or the preference for biobased products within next screen, click on the Supporting rights and obligations of recipients a designated product category or Documentation link under Round 10 thereof; or (4) Raise novel legal or policy subcategory would take effect. Designation under the Proposed issues arising out of legal mandates, the USDA is proposing a one-year period Regulations section. President’s priorities, or the principles before the procurement preferences Further, once the product category set forth in this Executive Order.’’ would take effect because it recognizes designations in today’s proposal become Today’s proposed rule has been that Federal agencies will need time to final, manufacturers and vendors determined by the Office of incorporate the preferences into voluntarily may make available Management and Budget to be not procurement documents and to revise information on specific products, significant for purposes of Executive existing standardized specifications. including product and contact Order 12866. We are not able to quantify Both section 9002(a)(3) and 7 CFR information, for posting by the Agency the annual economic effect associated 3201(c) explicitly acknowledge the need on the BioPreferred Web site. USDA has with today’s proposed rule. As for Federal agencies to have sufficient begun performing periodic audits of the discussed earlier in this preamble, time to revise the affected specifications information displayed on the USDA made extensive efforts to obtain to give preference to biobased products BioPreferred Web site and, where information on the Federal agencies’ when purchasing products within the questions arise, is contacting the usage within the eight designated designated product categories or manufacturer or vendor to verify, product categories. These efforts were subcategories. Procuring agencies will correct, or remove incorrect or out-of- largely unsuccessful. Therefore,
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attempts to determine the economic materials used in these product Because the program is still in its impacts of today’s proposed rule would categories. infancy, however, it is unknown how require estimation of the anticipated many businesses will ultimately be 3. Costs of the Proposed Rule market penetration of biobased products affected. While USDA has no data on based upon many assumptions. In Like the benefits, the costs of today’s the number of small businesses that may addition, because agencies have the proposed rule have not been quantified. choose to develop and market biobased option of not purchasing products Two types of costs are involved: Costs products within the product categories within designated product categories if to producers of products that will designated by this rulemaking, the price is ‘‘unreasonable,’’ the product is compete with the preferred products number is expected to be small. Because not readily available, or the product and costs to Federal agencies to provide biobased products represent a small does not demonstrate necessary procurement preference for the emerging market, only a small performance characteristics, certain preferred products. Producers of percentage of all manufacturers, large or assumptions may not be valid. While competing products may face a decrease small, are expected to develop and facing these quantitative challenges, in demand for their products to the market biobased products. Thus, the USDA relied upon a qualitative extent Federal agencies refrain from number of small businesses assessment to determine the impacts of purchasing their products. However, it manufacturing biobased products today’s proposed rule. Consideration is not known to what extent this may affected by this rulemaking is not was also given to the fact that agencies occur. Pre-award procurement costs for expected to be substantial. may choose not to procure products Federal agencies may rise minimally as The Federal preferred procurement within designated product categories the contracting officials conduct market program may decrease opportunities for due to unreasonable price. research to evaluate the performance, businesses that manufacture or sell non- availability and price reasonableness of biobased products or provide 1. Summary of Impacts preferred products before making a components for the manufacturing of Today’s proposed rule is expected to purchase. such products. Most manufacturers of have both positive and negative impacts B. Regulatory Flexibility Act (RFA) non-biobased products within the to individual businesses, including product categories being proposed for small businesses. USDA anticipates that The RFA, 5 U.S.C. 601–602, generally designation for Federal preferred the biobased Federal preferred requires an agency to prepare a procurement in this rule are expected to procurement program will provide regulatory flexibility analysis of any rule be included under the following NAICS additional opportunities for businesses subject to notice and comment codes: 321999 (all other wood product and manufacturers to begin supplying rulemaking requirements under the manufacturing), 324191 (petroleum products under the proposed designated Administrative Procedure Act or any lubricating oil and grease biobased product categories to Federal other statute unless the agency certifies manufacturing), 325510 (paint and agencies and their contractors. However, that the rule will not have a significant coating manufacturing), and 325612 other businesses and manufacturers that economic impact on a substantial (polish and other sanitation goods supply only non-qualifying products number of small entities. Small entities manufacturing). USDA obtained and do not offer biobased alternatives include small businesses, small information on these four NAICS may experience a decrease in demand organizations, and small governmental categories from the U.S. Census from Federal agencies and their jurisdictions. Bureau’s Economic Census database. contractors. USDA is unable to USDA evaluated the potential impacts USDA found that the Economic Census determine the number of businesses, of its proposed designation of these reports about 4,270 companies within including small businesses, that may be product categories to determine whether these 4 NAICS categories and that these adversely affected by today’s proposed its actions would have a significant companies own a total of about 4,860 rule. The proposed rule, however, will impact on a substantial number of small establishments. Thus, the average not affect existing purchase orders, nor entities. Because the Federal preferred number of establishments per company will it preclude businesses from procurement program established under is about 1.14. The Census data also modifying their product lines to meet section 9002 applies only to Federal reported that of the 4,860 individual new requirements for designated agencies and their contractors, small establishments, about 4,850 (99 percent) biobased products. Because the extent to governmental (city, county, etc.) have fewer than 500 employees. USDA which procuring agencies will find the agencies are not affected. Thus, the also found that the overall average performance, availability and/or price of proposal, if promulgated, will not have number of employees per company biobased products acceptable is a significant economic impact on small among these industries is about 30 and unknown, it is impossible to quantify governmental jurisdictions. that the petroleum lubricating oil and the actual economic effect of the rule. USDA anticipates that this program grease industry has the highest average will affect entities, both large and small, number of employees per company with 2. Benefits of the Proposed Rule that manufacture or sell biobased an average of almost 50. Thus, nearly all The designation of these product products. For example, the designation of the businesses fall within the Small categories provides the benefits outlined of product categories for Federal Business Administration’s definition of in the objectives of section 9002; to preferred procurement will provide a small business (less than 500 increase domestic demand for many additional opportunities for businesses employees, in most NAICS categories). agricultural commodities that can serve to manufacture and sell biobased USDA does not have data on the as feedstocks for production of biobased products to Federal agencies and their potential adverse impacts on products, and to spur development of contractors. Similar opportunities will manufacturers of non-biobased products the industrial base through value-added be provided for entities that supply within the product categories being agricultural processing and biobased materials to manufacturers. designated, but believes that the impact manufacturing in rural communities. On The intent of section 9002 is largely will not be significant. Most of the a national and regional level, today’s to stimulate the production of new product categories being proposed for proposed rule can result in expanding biobased products and to energize designation in this rulemaking are and strengthening markets for biobased emerging markets for those products. typical consumer products widely used
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by the general public and by industrial/ Assessment. Provisions of this proposed please contact Ron Buckhalt at (202) commercial establishments that are not rule will not have a substantial direct 205–4008. subject to this rulemaking. Thus, USDA effect on States or their political List of Subjects in 7 CFR Part 3201 believes that the number of small subdivisions or on the distribution of businesses manufacturing non-biobased power and responsibilities among the Biobased products, Procurement. products within the product categories various government levels. For the reasons stated in the being designated and selling significant preamble, the Department of Agriculture F. Unfunded Mandates Reform Act of quantities of those products to proposes to amend 7 CFR part 3201 as 1995 government agencies affected by this follows: rulemaking to be relatively low. Also, This proposed rule contains no this proposed rule will not affect Federal mandates under the regulatory PART 3201—GUIDELINES FOR existing purchase orders and it will not provisions of Title II of the Unfunded DESIGNATING BIOBASED PRODUCTS preclude procuring agencies from Mandates Reform Act of 1995 (UMRA), FOR FEDERAL PROCUREMENT 2 U.S.C. 1531–1538, for State, local, and continuing to purchase non-biobased 1. The authority citation for part 3201 tribal governments, or the private sector. products when biobased products do continues to read as follows: not meet the availability, performance, Therefore, a statement under section or reasonable price criteria. This 202 of UMRA is not required. Authority: 7 U.S.C. 8102. proposed rule will also not preclude G. Executive Order 12372: 2. Amend § 3201.19 by adding businesses from modifying their product Intergovernmental Review of Federal paragraphs (a)(6) and (b)(6) and revising lines to meet new specifications or Programs paragraph (c) to read as follows: solicitation requirements for these products containing biobased materials. For the reasons set forth in the Final § 3201.19 Composite panels. After considering the economic Rule Related Notice for 7 CFR part 3015, (a) * * * impacts of this proposed rule on small subpart V (48 FR 29115, June 24, 1983), (6) Countertops. Engineered products entities, USDA certifies that this action this program is excluded from the scope designed to serve as horizontal work will not have a significant economic of the Executive Order 12372, which surfaces in locations such as kitchens, impact on a substantial number of small requires intergovernmental consultation break rooms or other food preparation entities. with State and local officials. This areas, bathrooms or lavatories, and While not a factor relevant to program does not directly affect State workrooms. determining whether the proposed rule and local governments. (b) * * * (6) Countertops—89 percent. will have a significant impact for RFA H. Executive Order 13175: Consultation purposes, USDA has concluded that the (c) Preference compliance dates. (1) and Coordination With Indian Tribal No later than May 14, 2009, procuring effect of the rule will be to provide Governments positive opportunities to businesses agencies, in accordance with this part, engaged in the manufacture of these Today’s proposed rule does not will give a procurement preference for biobased products. Purchase and use of significantly or uniquely affect ‘‘one or those qualifying biobased composite these biobased products by procuring more Indian tribes, * * * the panels specified in paragraphs (a)(1) agencies increase demand for these relationship between the Federal through (5) of this section. By that date, products and result in private sector Government and Indian tribes, or * * * Federal agencies that have the development of new technologies, the distribution of power and responsibility for drafting or reviewing creating business and employment responsibilities between the Federal specifications for items to be procured opportunities that enhance local, Government and Indian tribes.’’ Thus, shall ensure that the relevant regional, and national economies. no further action is required under specifications require the use of Executive Order 13175. biobased composite panels. C. Executive Order 12630: (2) No later than [DATE ONE YEAR I. Paperwork Reduction Act Governmental Actions and Interference AFTER THE DATE OF PUBLICATION With Constitutionally Protected Property In accordance with the Paperwork OF THE FINAL RULE], procuring Rights Reduction Act of 1995 (44 U.S.C. 3501 agencies, in accordance with this part, This proposed rule has been reviewed through 3520), the information will give a procurement preference for in accordance with Executive Order collection under this proposed rule is those qualifying biobased composite 12630, Governmental Actions and currently approved under OMB control panels specified in paragraph (a)(6) of Interference with Constitutionally number 0503–0011. this section. By that date, Federal Protected Property Rights, and does not J. E-Government Act Compliance agencies that have the responsibility for contain policies that would have drafting or reviewing specifications for implications for these rights. USDA is committed to compliance items to be procured shall ensure that with the E-Government Act, which the relevant specifications require the D. Executive Order 12988: Civil Justice requires Government agencies in general use of biobased composite panels. Reform to provide the public the option of * * * * * submitting information or transacting This rule has been reviewed in 3. Amend § 3201.31 by: accordance with Executive Order 12988, business electronically to the maximum a. Revising paragraph (a)(2)(v); Civil Justice Reform. This rule does not extent possible. USDA is implementing b. Adding paragraph (a)(2)(vi); preempt State or local laws, is not an electronic information system for c. Revising paragraph (b)(5); intended to have retroactive effect, and posting information voluntarily d. Adding paragraph (b)(6); and does not involve administrative appeals. submitted by manufacturers or vendors e. Revising paragraph (c). on the products they intend to offer for E. Executive Order 13132: Federalism The revisions and additions read as Federal preferred procurement under follows: This proposed rule does not have each designated product category. For sufficient federalism implications to information pertinent to E-Government § 3201.31 Greases. warrant the preparation of a Federalism Act compliance related to this rule, (a) * * *
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(2) * * * (2) Aircraft and boat cleaners for § 3201.102 Engine crankcase oils. (v) Wheel bearing and chassis greases. which Federal preferred procurement (a) Definition. Lubricating products Lubricants that meet ASTM D4950 applies are: formulated to provide lubrication and Standard Classification as GC and LB (i) Aircraft cleaners. Cleaning wear protection for four-cycle gasoline (wheel bearing and chassis) and that are products designed to remove built-on or diesel engines. formulated for mild to severe duty grease, oil, dirt, pollution, insect reside, (b) Minimum biobased content. The wheel bearing and chassis applications or impact soils on both interior and Federal preferred procurement product commonly found in automotive, truck, exterior of aircraft. must have a minimum biobased content heavy duty, industrial and agricultural (ii) Boat cleaners. Cleaning products of at least 18 percent, which shall be applications. designed to remove built-on grease, oil, based on the amount of qualifying (vi) Greases not elsewhere specified. dirt, pollution, insect reside, or impact biobased carbon in the product as a Lubricants that meet the general soils on both interior and exterior of percent of the weight (mass) of the total definition of greases as defined in boats. organic carbon in the finished product. paragraph (a)(1) of this section, but are (b) Minimum biobased content. The (c) Preference compliance date. No not otherwise covered by paragraphs minimum biobased content for all later than [date one year after the date (a)(2)(i) through (v) of this section. aircraft and boat cleaners shall be based of publication of the final rule], * * * * * on the amount of qualifying biobased procuring agencies, in accordance with (b) * * * carbon in the product as a percent of the this part, will give a procurement (5) Wheel bearing and chassis weight (mass) of the total organic carbon preference for qualifying biobased grease—50 percent. in the finished product. The applicable engine crankcase oils. By that date, Federal agencies that have the (6) Greases not elsewhere specified— minimum biobased contents for the responsibility for drafting or reviewing 75 percent. Federal preferred procurement products are: specifications for products to be (c) Preference compliance dates. (1) (1) Aircraft cleaners—48 percent. procured shall ensure that the relevant No later than May 14, 2009, procuring specifications require the use of agencies, in accordance with this part, (2) Boat cleaners—38 percent. (c) Preference compliance date. No biobased engine crankcase oils. will give a procurement preference for (d) Determining overlap with an EPA- those qualifying biobased greases later than [DATE ONE YEAR AFTER THE DATE OF PUBLICATION OF THE designated recovered content product. specified in paragraphs (a)(2)(i) through Qualifying products within this item (iv) and (vi) of this section. By that date, FINAL RULE], procuring agencies, in accordance with this part, will give a may overlap with the EPA-designated Federal agencies that have the recovered content product: Re-refined responsibility for drafting or reviewing procurement preference for qualifying biobased aircraft and boat cleaners. By lubricating oils. USDA is requesting that specifications for items to be procured manufacturers of these qualifying shall ensure that the relevant that date, Federal agencies that have the responsibility for drafting or reviewing biobased products provide information specifications require the use of on the USDA Web site of qualifying biobased greases. specifications for products to be procured shall ensure that the relevant biobased products about the intended (2) No later than [date one year after uses of the product, information on the date of publication of the final rule], specifications require the use of biobased aircraft and boat cleaners. whether or not the product contains any procuring agencies, in accordance with recovered material, in addition to this part, will give a procurement § 3201.101 Automotive care products. biobased ingredients, and performance preference for those qualifying biobased (a) Definition. Products such as standards against which the product has greases specified in paragraph (a)(2)(v) waxes, buffing compounds, polishes, been tested. This information will assist of this section. By that date, Federal degreasers, soaps, wheel and tire Federal agencies in determining agencies that have the responsibility for cleaners, leather care products, interior whether or not a qualifying biobased drafting or reviewing specifications for cleaners, and fragrances that are product overlaps with EPA-designated items to be procured shall ensure that formulated for cleaning and protecting re-refined lubricating oil products and the relevant specifications require the automotive surfaces. which product should be afforded the use of biobased greases. (b) Minimum biobased content. The preference in purchasing. * * * * * Federal preferred procurement product Note to paragraph (d): Engine crankcase 4. Add §§ 3201.100 through 3201.107 must have a minimum biobased content oils within this designated product category to subpart B to read as follows: of at least 75 percent, which shall be can compete with similar re-refined Sec. based on the amount of qualifying lubricating oil products with recycled 3201.100 Aircraft and boat cleaners. biobased carbon in the product as a content. Under the Resource Conservation 3201.101 Automotive care products. percent of the weight (mass) of the total and Recovery Act of 1976, section 6002, the 3201.102 Engine crankcase oil. organic carbon in the finished product. U.S. Environmental Protection Agency 3201.103 Gasoline fuel additives. designated re-refined lubricating oil products (c) Preference compliance date. No containing recovered materials as products 3201.104 Metal cleaners and corrosion later than [date one year after the date removers. for which Federal agencies must give 3201.105 Microbial cleaning products. of publication of the final rule], preference in their purchasing programs. The 3201.106 Paint removers. procuring agencies, in accordance with designation can be found in the 3201.107 Water turbine bearing oils. this part, will give a procurement Comprehensive Procurement Guideline, 40 preference for qualifying biobased CFR 247.17. § 3201.100 Aircraft and boat cleaners. automotive care products. By that date, (a) Definition. (1) Aircraft and boat Federal agencies that have the § 3201.103 Gasoline fuel additives. cleaners are products designed to responsibility for drafting or reviewing (a) Definition. Chemical agents added remove built-on grease, oil, dirt, specifications for products to be to gasoline to increase octane levels, pollution, insect reside, or impact soils procured shall ensure that the relevant improve lubricity, and provide engine on both interior and exterior of aircraft specifications require the use of cleaning properties to gasoline-fired and/or boats. biobased automotive care products. engines.
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(b) Minimum biobased content. The biobased metal cleaners and corrosion specifications require the use of Federal preferred procurement product removers. By that date, Federal agencies biobased microbial cleaning products. must have a minimum biobased content that have the responsibility for drafting of at least 92 percent, which shall be or reviewing specifications for products § 3201.106 Paint removers. based on the amount of qualifying to be procured shall ensure that the (a) Definition. Products formulated to biobased carbon in the product as a relevant specifications require the use of loosen and remove paint from painted percent of the weight (mass) of the total biobased metal cleaners and corrosion surfaces. organic carbon in the finished product. removers. (b) Minimum biobased content. The (c) Preference compliance date. No § 3201.105 Microbial cleaning products. Federal preferred procurement product later than [date one year after the date must have a minimum biobased content of publication of the final rule], (a) Definition. (1) Cleaning agents that of at least 41 percent, which shall be procuring agencies, in accordance with use microscopic organisms to treat or based on the amount of qualifying this part, will give a procurement eliminate waste materials within drains, biobased carbon in the product as a preference for qualifying biobased plumbing fixtures, sewage systems, percent of the weight (mass) of the total gasoline fuel additives. By that date, wastewater treatment systems, or on a organic carbon in the finished product. variety of other surfaces. These products Federal agencies that have the (c) Preference compliance date. No responsibility for drafting or reviewing typically include organisms that digest protein, starch, fat, and cellulose. later than [date one year after the date specifications for products to be of publication of the final rule], procured shall ensure that the relevant (2) Microbial cleaning products for which Federal preferred procurement procuring agencies, in accordance with specifications require the use of this part, will give a procurement biobased gasoline fuel additives. applies are: (i) Drain maintenance products. preference for qualifying biobased paint § 3201.104 Metal cleaners and corrosion Products containing microbial agents removers. By that date, Federal agencies removers. that are intended for use in plumbing that have the responsibility for drafting (a) Definition. (1) Products that are systems such as sinks, showers, and or reviewing specifications for products designed to clean and remove grease, tubs. to be procured shall ensure that the oil, dirt, stains, soils, and rust from (ii) Wastewater maintenance relevant specifications require the use of metal surfaces. products. Products containing microbial biobased paint removers. (2) Metal cleaners and corrosion agents that are intended for use in § 3201.107 Water turbine bearing oils. removers for which Federal preferred wastewater systems such as sewer lines procurement applies are: and septic tanks. (a) Definition. Lubricants that are (i) Corrosion removers. Products that (iii) General cleaners. Products specifically formulated for use in the are designed to remove rust from metal containing microbial agents that are bearings found in water turbines. surfaces through chemical action. intended for multi-purpose cleaning in (b) Minimum biobased content. The (ii) Stainless steel cleaners. Products locations such as residential and Federal preferred procurement product that are designed to clean and remove commercial kitchens and bathrooms. must have a minimum biobased content grease, oil, dirt, stains, and soils from (b) Minimum biobased content. The of at least 46 percent, which shall be stainless steel surfaces. minimum biobased content for all based on the amount of qualifying (iii) Other metal cleaners. Products microbial cleaning products shall be biobased carbon in the product as a that are designed to clean and remove based on the amount of qualifying percent of the weight (mass) of the total grease, oil, dirt, stains, and soils from biobased carbon in the product as a organic carbon in the finished product. metal surfaces other than stainless steel. percent of the weight (mass) of the total (c) Preference compliance date. No (b) Minimum biobased content. The organic carbon in the finished product. later than [date one year after the date minimum biobased content for all metal The applicable minimum biobased of publication of the final rule], cleaners and corrosion removers shall contents for the Federal preferred procuring agencies, in accordance with be based on the amount of qualifying procurement products are: this part, will give a procurement biobased carbon in the product as a (1) Drain maintenance products—45 preference for qualifying biobased water percent of the weight (mass) of the total percent. turbine bearing oils. By that date, organic carbon in the finished product. (2) Wastewater maintenance Federal agencies that have the The applicable minimum biobased products—44 percent. responsibility for drafting or reviewing contents for the Federal preferred (3) General cleaners—50 percent. specifications for products to be (c) Preference compliance date. No procurement products are: procured shall ensure that the relevant later than [date one year after the date (1) Corrosion removers—71 percent. specifications require the use of of publication of the final rule], (2) Stainless steel cleaners—75 biobased water turbine bearing oils. percent. procuring agencies, in accordance with (3) Other metal cleaners—56 percent. this part, will give a procurement Dated: November 26, 2012. (c) Preference compliance date. No preference for qualifying biobased Gregory L. Parham, later than [DATE ONE YEAR AFTER microbial cleaning products. By that Acting Assistant Secretary for THE DATE OF PUBLICATION OF THE date, Federal agencies that have the Administration, U.S. Department of FINAL RULE], procuring agencies, in responsibility for drafting or reviewing Agriculture. accordance with this part, will give a specifications for products to be [FR Doc. 2012–29093 Filed 12–4–12; 8:45 am] procurement preference for qualifying procured shall ensure that the relevant BILLING CODE 3410–93–P
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Part VII
The President
Proclamation 8910—Critical Infrastructure Protection and Resilience Month, 2012 Proclamation 8911—National Impaired Driving Prevention Month, 2012 Proclamation 8912—Minority Enterprise Development Week, 2012
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Federal Register Presidential Documents Vol. 77, No. 234
Wednesday, December 5, 2012
Title 3— Proclamation 8910 of November 30, 2012
The President Critical Infrastructure Protection and Resilience Month, 2012
By the President of the United States of America
A Proclamation Every day, Americans across our country—from entrepreneurs and college students to families and community leaders—rely on critical infrastructure to travel and communicate, work and play. The assets and systems we depend on are essential to our way of life, and during Critical Infrastructure Protection and Resilience Month, we maintain our commitment to keeping our critical infrastructure and our communities safe and resilient. Our Nation’s critical infrastructure is complex and interconnected, and we must understand not only its strengths, but also its vulnerabilities to emerging threats. Cyber incidents can have devastating consequences on both physical and virtual infrastructure, which is why my Administration continues to make cybersecurity a national security priority. As we continue to work within existing authorities to fortify our country against cyber risks, com- prehensive legislation remains essential to improving infrastructure security, enhancing cyber information sharing between government and the private sector, and protecting the privacy and civil liberties of the American people. Physical threats also put our Nation’s most important assets at risk. Destruc- tion caused by devastating storms and other natural disasters this year underscored our reliance on our critical infrastructure. Yet, these tragic events also demonstrated once again the strength and resolve of the American people when we work together to recover and rebuild. As long as we keep fortifying partnerships between Federal, State, and local governments and among community leaders and the private sector, we can continue to modernize our critical infrastructure and bolster our ability to overcome whatever challenges we may face. All Americans have a part to play in protecting our critical infrastructure and making it more resilient, and my Administration continues to engage stakeholders in doing what it takes to keep our people safe and our assets secure. This month, we rededicate ourselves to raising awareness of the importance of critical infrastructure and to doing all we can to protect it. Americans can learn more about how they can get involved by visiting www.Ready.gov. NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim December 2012 as Critical Infrastructure Protection and Resilience Month. I call upon the people of the United States to recognize the importance of protecting our Nation’s resources and to observe this month with appropriate events and training to enhance our national security and resilience.
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IN WITNESS WHEREOF, I have hereunto set my hand this thirtieth day of November, in the year of our Lord two thousand twelve, and of the Independence of the United States of America the two hundred and thirty- seventh.
[FR Doc. 2012–29573 Filed 12–4–12; 11:15 am] Billing code 3295–F3
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Proclamation 8911 of November 30, 2012
National Impaired Driving Prevention Month, 2012
By the President of the United States of America
A Proclamation As Americans gather with friends and family to share in the holiday season, National Impaired Driving Prevention Month reminds us of the importance of celebrating safely. Every year, accidents involving drunk, drugged, or distracted driving claim thousands of lives, leaving families to face the heartbreak of losing a loved one. We stand with all those who have known the tragic consequences of drugged or drunk driving, and we rededicate ourselves to preventing it this December and throughout the year. Alcohol and drugs present serious risks to all drivers. It is well known that drugs, including some prescription medications, can impair the skills necessary for safe and responsible driving. Distractions like using mobile phones and other electronics behind the wheel also make our roads more hazardous. To reduce the prevalence of impaired driving, my Administration is working to raise public awareness, improve impaired driving screening procedures, and ensure law enforcement officers get the training they need. We are also striving to stop substance abuse before it starts by supporting local prevention programs and providing youth with the facts about alcohol and drug use. Families play an essential part in stopping impaired driving. By talking about the risks and setting clear expectations, parents and other caregivers can help their children stay safe, sober, and focused on the road. Educators, health care providers, and community leaders can join in that important work by promoting responsible decisionmaking and encouraging young peo- ple to live free of drugs and alcohol. This month, we recommit to keeping our streets safe, our families healthy, and our communities strong. To learn more about impaired driving and how all of us can work to prevent it, visit www.WhiteHouse.gov/ONDCP and www.NHTSA.gov/Impaired. NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim December 2012 as National Impaired Driving Prevention Month. I urge all Americans to make responsible decisions and take appropriate measures to prevent im- paired driving.
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IN WITNESS WHEREOF, I have hereunto set my hand this thirtieth day of November, in the year of our Lord two thousand twelve, and of the Independence of the United States of America the two hundred and thirty- seventh.
[FR Doc. 2012–29575 Filed 12–4–12; 11:15 am] Billing code 3295–F3
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Proclamation 8912 of November 30, 2012
Minority Enterprise Development Week, 2012
By the President of the United States of America
A Proclamation At the core of who we are as a Nation is a fundamental belief: that no matter who you are, no matter what you look like, no matter where you come from, if you have an idea and a willingness to work hard, you can succeed. It is this belief that leads a worker to leave a job to become her own boss, propels a basement inventor to sell a new product, or drives an amateur chef to open a restaurant. It is this belief that has drawn millions to our shores and spurred America’s prosperity for centuries. The belief in tomorrow’s promise is guiding minority entrepreneurs across our country to start the kinds of businesses that make up the backbone of our economy. With a combined economic output of $1 trillion, minority- owned firms are key producers in an array of industries, hubs of innovation and new technology, and engines of job creation in our communities. Because the continued growth and success of minority enterprises is essential to our economic recovery, my Administration has taken steps to help bolster these businesses. Through the Minority Business Development Agency, we are providing access to capital, consulting, contracts, and markets to minority entrepreneurs seeking to expand their businesses at home and overseas. We are also making it easier for business owners to find Federal resources with www.BusinessUSA.gov, a centralized, one-stop platform for businesses to access services to help them grow and hire. As the number and size of minority-owned firms continue to expand, we must harness the diversity and power of these businesses to help strengthen our economy and put people back to work. As we celebrate the 30th anniver- sary of Minority Enterprise Development Week, let us honor the role Amer- ica’s minority-owned businesses play in spurring our prosperity and recom- mit to equipping them with the tools for success in the 21st century. NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim December 2 through December 8, 2012, as Minority Enterprise Development Week. I call upon all Americans to celebrate this week with appropriate programs, ceremonies, and activities to recognize the many contributions of our Nation’s minority enterprises.
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IN WITNESS WHEREOF, I have hereunto set my hand this thirtieth day of November, in the year of our Lord two thousand twelve, and of the Independence of the United States of America the two hundred and thirty- seventh.
[FR Doc. 2012–29576 Filed 12–4–12; 11:15 am] Billing code 3295–F3
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Reader Aids Federal Register Vol. 77, No. 234 Wednesday, December 5, 2012
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