This action corrects the final rule published on November 8, 2011 (76 FR 69120). Specifically, the new section in Title 10 of the Code of Federal Regulations (10 CFR) Part 40 is added as § 40.56 rather than § 40.52. This change is necessary because 10 CFR 40.52 through 40.55 were proposed to be added by a previous NRC rulemaking (75 FR 43425; July 26, 2010) that the NRC now intends to publish as a final rule. A conforming change is being made to the revised 10 CFR 40.13(c)(5)(v) provision, so that it will contain the proper cross-reference to § 40.56. These amendments are administrative in that they make no substantive changes to requirements, and the NRC accordingly finds that notice and opportunity for public comment on this corrective action is unnecessary.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; 5 U.S.C. 552 and 553; and the Energy Policy Act of 2005; Public Law 109-58, 119 Stat. 594 (2005); the NRC is adopting the following amendments to 10 CFR part 40.

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to include an AD that would apply to the specified products. That NPRM was published in theFederal Registeron August 22, 2011 (76 FR 52288). That NPRM proposed to correct an unsafe condition for the specified products. The MCAI states:

The corrective action includes inspection of the tubes and replacement of the associated clips. The fretting and thinning of the fuel tubes is caused by relative movement between the tubes and the clips. You may obtain further information by examining the MCAI in the AD docket.

We gave the public the opportunity to participate in developing this AD. We considered the comments received.

A commenter, Air New Zealand, requested that we change the service bulletin reference from “RB.211-73-D685” to “RB.211-73-AD685.”

We agree. The changed the AD to correct the service bulletin reference.

Three commenters, American Airlines (American), Delta Airlines (Delta), and the Boeing Company (Boeing), suggested that we change compliance from Revision 5 to Revision 6 of the Rolls-Royce Service Bulletin.

We agree. We changed the AD to use RR SB RB.211-73-AD685, Revision 6, dated February 21, 2011, which is the latest version of the service bulletin.

One commenter, Delta, asked that engines previously inspected per Revision 3 of SB RB.211-73-AD685, dated August 18, 2009; or Revision 4 of SB RB.211-73-AD685, dated January 20, 2010 or Revision 5 of SB RB.211-73-AD685, dated August 18, 2010; to have met the initial inspection requirements of the AD.

We agree. We added a new paragraph to the AD called “Previous Inspection Credit” which provides credit for performing the initial inspection according to the requirements of Revisions 3, 4, or 5 of the SB.

A commenter, American Airlines, requested that the cost estimate per engine be increased to $905. American noted that the AD creates repetitive not one-time expenses due to the need for repetitive inspections. American also asserted that the estimate in the NPRM (76 FR 52288, August 22, 2011) of labor hours to comply with the AD was not accurate. American suggested 8 labor hours per inspection is a realistic figure.

We agree in part. While the AD does require repetitive inspections, we do not agree with including repetitive expenses for inspections in our cost estimate. We only include the cost of one inspection cycle, even if the AD requires repetitive inspections, in our cost estimates. We agree our labor estimate should be increased. We accept that 8 labor hours is a realistic estimate of labor hours and allows us to make a more accurate assessment of labor cost. We changed the estimate of work hours in the AD from 3 to 8. We also corrected the cost of the parts required from $225 in the NPRM to $884. We revised the total cost to comply with the AD from $52,800 to $172,040.

A commenter, Boeing, requested that the Initial Inspection paragraph be revised by including the following: “Inspect the Fuel Oil Heat Exchanged (FOHE) mounting hardware for signs of damage. Use paragraph 3.A.(4) of the Service Bulletin RB.211-73-AD685, Revision 6, dated February 21, 2011.” Boeing noted that damage or wear to FOHE mounts may contribute to low pressure (LP) fuel tube cracking. Delta Airlines commented further that EASA AD 2010-0188 requires this FOHE mount inspection because it requires accomplishment of the entire service bulletin when doing the inspection. For clarity, Delta requested that the final rule include a comment that the inspection requirements do not mandate the FOHE mount inspections.

We do not agree. The requirement of this AD to inspect the fuel tubes is sufficient to ensure safe operation. The repetitive inspection intervals for fuel tubes required by this AD consider observed FOHE mount wear. This AD does not require inspection of the FOHE mounts. We did not change the AD based on this comment.

Two commenters, Boeing and Delta, requested clarification regarding when to replace fuel tubes. Boeing requested that under “Actions and Compliance” the following requirement be included: “Removal and replacement of damaged fuel tubes (P/N FK23986) in accordance with paragraph 3.A.(5) of the Service Bulletin RB.211-73-AD685, Revision 6, dated February 21, 2011.” Boeing indicated that rejected fuel tubes need to be replaced to avoid fuel leaks. Delta indicated that the On-wing Inspection and In-shop Inspection paragraphs do not include information about replacing tubes when needed as the result of inspections. Delta also noted that the Repetitive Inspection paragraph does discuss replacement of these parts when needed.

We agree in part. Although parts that fail inspection may not be returned to service, we agree that clarifying when fuel tubes are replaced would help. We revised the On-wing Inspection and In-shop Inspection paragraphs to indicate that the tubes should be replaced if they fail inspection.

One commenter, Delta, noted that under the Initial Inspection paragraph, one of the options for complying with the AD is to do the initial inspection before 3,000 hours since last inspection. Delta requested that we clarify the meaning of “last inspection.”

We agree. We added a definition paragraph to indicate that our reference to 3,000 hours since last inspection refers to the inspection of the fan case LP fuel tubes for frettage between the securing clips and the tube outer surface part numbers FK22617, FK19213, and FK23986.

One commenter, Delta, asked that the final rule clarify how to handle the clips that hold the fuel tubes in place. Delta noted that paragraphs 3.A.(2) and 3.A.(3) (on-wing) and 3.B.(2) and 3.B.(3) of RR SB RB.211-73-AD685, which are referenced in the NPRM (76 FR 52288), do not include inspection criteria for the clips. Delta requested that we either require inspection or replacement of the clips with a new or serviceable part per the note in Paragraph 3.A. of the RR SB RB.211-73-AD685, which says that “clips should be removed and replaced one at a time to prevent pre-loading of the clip position.”

We agree. The fretting and thinning of the fuel tubes is caused by relative movement between the tubes and the clips. Worn or fretted clips cause increased relative movement between the tubes and the clips and thus more tube wear and fretting. Clip wear is not repairable and so the clips cannot be reused. We, therefore, revised the AD by changing the On-wing Inspection and In-shop Inspection paragraphs to indicate that the clips must be replaced during the initial inspection and during every repeat inspection.

One commenter, Delta, requested clarification of the Repeat Inspections paragraph. Delta noted that this paragraph might be misinterpreted to mean inspection and tube replacement should be accomplished per paragraphs 3.A.(2), 3.A.(3), 3.B.(2), and 3.B.(3) of RR SB RB.211-73-AD685. Since these paragraphs only apply to replacement of the tubes, Delta believes the language should be clarified.

We agree. We revised the Repeat Inspections paragraph to clarify that paragraphs 3.A.(1) through 3.A.(3) (On-wing) or 3.B.(1) through 3.B.(3) (In-shop) of RR SB RB.211-78-AD685 apply to the inspection.

We reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting the AD with the changes described previously. We determined that these changes will not increase the economic burden on any operator nor increase the scope of the AD.

We estimate that this AD affects about 110 products of U.S. registry. We also estimate that it will take about 8 work-hours per product to comply with this AD. The average labor rate is $85 per work-hour. Required parts cost about $884 per product. Based on these figures, we estimate the cost of the AD on U.S. operators to be $172,040.

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

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

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

For the reasons discussed above, I certify this AD:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

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

We prepared a regulatory evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

You may examine the AD docket on the Internet athttp://www.regulations.gov;or in person at the Docket Operations office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (phone: (800) 647-5527) is provided in theADDRESSESsection. Comments will be available in the AD docket shortly after receipt.

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFRpart 39 to supersede AD 2002-13-04, amendment 39-12792 (67 FR 43230, June 27, 2002). That AD applies to the specified products. The NPRM published in theFederal Registeron June 28, 2011 (76 FR 37682). That NPRM proposed to continue to require replacement of certain magnetos if they fall within the specified S/N range, inspection of the removed magneto to verify that the stop pin is still in place, and, if the stop pin is not in place, inspection of the engine gear train, crankcase, and accessory case. That NPRM also proposed to correct the range of S/Ns affected and add R-RM C-125, C-145, O-300, IO-360, TSIO-360, and LTSIO-520-AE series reciprocating engines to the applicability. We are issuing this AD to prevent engine failure and loss of control of the airplane due to migration of the magneto impulse coupling stop pin out of the magneto frame and into the gear train of the engine.

We gave the public the opportunity to participate in developing this AD. The following presents the comment received on the proposal and the FAA's response to this comment.

A commenter, not further identified, asked why the AD was issued against TCM and not “Slick.”

We do not agree. We write ADs against either a product or an appliance. In the case of this AD, magnetos are part of the engine type certificate and, therefore, considered part of the product (the engine). We did not change the AD as a result of this comment.

We reviewed the relevant data, considered the comment received, and determined that air safety and the public interest require adopting the AD as proposed.

We estimate that this AD affects 100 R-RM C-125, C-145, O-300, IO-360, TSIO-360, and LTSIO-520-AE series reciprocating engines installed on airplanes of U.S. registry. We also estimate that it will take about 2 work-hours per engine to perform the inspections, and that the average labor rate is $85 per work-hour. Based on these figures, we estimate the total cost of this AD to U.S. operators to be $17,000. Our cost estimate is exclusive of possible warranty coverage.

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

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

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

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

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

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

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

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

This rule amends Title 14, Code of Federal Regulations, part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (FDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of Title 14 of the Code of Federal Regulations.

The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in theFederal Registerexpensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained in FAA form documents is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAP and the corresponding effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP as modified by FDC/P-NOTAMs.

The SIAPs, as modified by FDC P-NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard forTerminal Instrument Procedures (TERPS). In developing these changes to SIAPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for all these SIAP amendments requires making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, part 97, 14 CFR part 97, is amended by amending Standard Instrument Approach Procedures, effective at 0901 UTC on the dates specified, as follows:

This rule amends Title 14 of the Code of Federal Regulations, part 97 (14 CFR part 97), by establishing, amending, suspending, or revoking SIAPS, Takeoff Minimums and/or ODPS. The complete regulators description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA Forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

The large number of SIAPs, Takeoff Minimums and ODPs, in addition to their complex nature and the need for a special format make publication in theFederal Registerexpensive and impractical. Furthermore, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their depiction on charts printed by publishers of aeronautical materials. The advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA forms is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAPs and the effective dates of the, associated Takeoff Minimums and ODPs. This amendment also identifies the airport and its location, the procedure, and the amendment number.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as contained in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPS and Takeoff Minimums and ODPS, an effective date at least 30 days after publication is provided.

Further, the SIAPs and Takeoff Minimums and ODPS contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPS and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedures before adopting these SIAPS, Takeoff Minimums and ODPs are impracticable and contrary to the public interest and, where applicable, that good cause existsfor making some SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule ” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or revoking Standard Instrument Approach Procedures and/or Takeoff Minimums and/or Obstacle Departure Procedures effective at 0902 UTC on the dates specified, as follows:

Title 15 Part 285 of the Code of Federal Regulations sets out procedures and general requirements under which the National Voluntary Laboratory Accreditation Program (NVLAP) operates as an unbiased third party to accredit both testing and calibration laboratories. NVLAP establishes laboratory accreditation programs (LAPs) in response to legislation or requests from government agencies and private sector entities.

The NVLAP procedures were first published in theFederal Registeron February 25, 1976, and have been revised several times. In 2001, major revisions to the procedures were published to ensure their consistency with certain international standards and guidance documents, and to reorganize and simplify Part 285 for ease of use and understanding. While the existing regulations were accurate, the language was complex and difficult to understand; therefore, the procedures were rewritten in plain English and their subparts consolidated in order to make the regulations more user friendly.

The purpose of this rule is to amend section 285.4,Establishment of laboratory accreditation programs (LAPs) within NVLAP,so that it conforms to the intent of the 2001 revisions to Part 285 of Title 15 of the CFR and makes the regulations easier to understand. NIST is amending the last sentence in section 285.4 as follows: change the third instance of the word “and” to “or,” and add the words “to ensure open participation” after the phrase “other means.”

As a signatory to the International Laboratory Accreditation Cooperation (ILAC) Mutual Recognition Arrangement (MRA), NVLAP complies with the requirements of ISO/IEC 17011,Conformity assessment—General requirements for accreditation bodies accrediting conformity assessment bodies.The change will allow NVLAP more flexibility in determining how to best fulfill the requirements for impartiality found in ISO/IEC 17011, 4.3.2, by assuring a balanced representation of interested parties when evaluating the need for a requested LAP.

The original intent of the last sentence of section 285.4 was to allow NVLAP the flexibility to employ the most appropriate means to ensure open participation of stakeholders; however, the use of the word “and” may be misinterpreted to mean that a public workshop is required for each and every LAP request. There are numerous means by which consultation with interested parties may be accomplished exclusive of a workshop, which include, but are not limited to meeting with government and individual industry stakeholders on a frequent basis, attending consortia and conferences at which regulators, specifiers, and requesters are in attendance, and soliciting public comments via public notices, electronic communications, and news articles. Further, the use of the word “or” does not preclude the use of both workshops and other means to collect the necessary information.

On March 29, 2011, the National Institute of Standards and Technology published a notice of proposed rulemaking and request for comments in theFederal Register(76 FR 17367) pertaining to the proposed amendment to section 285.4 of Part 285 of Title 15 of the CFR. The comment period closed on April 28, 2011. No comments were received and there is no other reason to believe that any alteration to the proposed rule is necessary; therefore,NIST will implement the rulemaking as proposed.

This rule is not a significant rule for the purposes of Executive Order 12866.

This rule does not contain policies with Federalism implications sufficient to warrant preparation of a Federalism assessment under Executive Order 12612.

The Chief Counsel for Regulation, Department of Commerce, certified to the Chief Counsel for Advocacy, Small Business Administration, at the proposed rule stage, under the provisions of the Regulatory Flexibility Act (5 U.S.C. 605(b)), that this rule will not have a significant economic impact on a substantial number of small entities for the following reasons: (1) The regulation is procedural and has no impact on any entity unless that entity chooses to participate, in which case, the cost to the participant is the same cost for any size participant; (2) access to NVLAP's accreditation system is not conditional upon the size of a laboratory or membership of any association or group, nor are there undue financial conditions to restrict participation; and (3) the technical criteria, against which individual laboratories are assessed, are not changed by this rule. No comments were received on this certification; therefore no regulatory flexibility analysis is required and none was prepared.

This rule does not involve a new collection of information subject to the Paperwork Reduction Act (PRA). The collection of information for NVLAP has been approved by the Office of Management and Budget (OMB) under control number 0693-0003. Notwithstanding any other provision of the law, no person is required to comply, nor shall any person be subject to penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act, unless that collection of information displays a currently valid OMB Control Number.

This rule will not significantly affect the quality of the human environment. Therefore, an environmental assessment or Environmental Impact Statement is not required to be prepared under the National Environmental Policy Act of 1969.

For the reasons set forth in the preamble, title 15 of the Code of Federal Regulations is amended as follows:

Novartis Animal Health US, Inc., 3200 Northline Ave., suite 300, Greensboro, NC 27408, filed NADA 141-329 that provides for the use of ATOPICA for Cats (cyclosporine oral solution, USP (MODIFIED)) by veterinary prescription for the control of feline allergic dermatitis in cats at least 6 months of age and weighing at least 3 pounds. The NADA is approved as of August 8, 2011, and 21 CFR 520.522 is amended to reflect the approval.

A summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

The Agency has determined under 21 CFR 25.33 that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 520 is amended as follows:

The collection of information contained in the final regulations was previously reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-1570. The collection of information is in § 1.6695-2(b)(1) and (b)(4) of the final regulations, and is an increase in the total annual burden from the burden in the prior regulations. The collection of this information will improve the IRS' ability to enforce compliance with the due diligence requirements under section 6695(g) with respect to determining eligibility for, or the amount of, the earned income credit (EIC) under section 32.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the Office of Management and Budget.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law.

This document contains amendments to the Income Tax Regulations (26 CFR part 1) under section 6695 of the Code.

The Treasury Department and the IRS published a notice of proposed rulemaking (REG-140280-09) in theFederal Register, 76 FR 62689, on October 11, 2011 (the NPRM). A public hearing was scheduled for November 7, 2011. The IRS did not receive any requests to testify at the public hearing, and the public hearing was cancelled. Written comments responding to the NPRM were received and are available for public inspection athttp://www.regulations.govor upon request. After consideration of all the comments, the proposed regulations are adopted as amended by this Treasury decision. The revisions to the regulations are discussed in this preamble.

The IRS received nine written comments in response to the NPRM, and this section addresses those public comments. This section also describes the significant differences between the rules proposed in the NPRM and those adopted in the final regulations.

On October 21, 2011, section 501 of the United States-Korea Free Trade Agreement Implementation Act, Public Law 112-41, 125 Stat 428, amended section 6695(g) of the Code by increasing the amount of the penalty from $100 to $500. To account for this change in the law, § 1.6695-2(a) of the final regulations has been conformed to the statutory language of section 6695(g), as amended.

Two commenters stated that the proposed amendments to the due diligence standards in the NPRM were unnecessary in light of recent regulatory changes requiring tax return preparers to register with the IRS and comply with the ethical standards governing practice before the IRS (Circular 230), as well as the tax return preparer penalties under section 6694. They suggested that the IRS can apply these existing provisions to address misconduct by tax return preparers, including improper determination of eligibility for, and amount of, EIC by both individual tax return preparers and firms.

As reflected in section 6695(g), Congress has determined that noncompliance with the EIC rules poses a sufficiently significant problem to merit imposing unique due diligence requirements on tax return preparers involved in determining eligibility for, or amount of, the EIC. By recently quintupling the amount of the penalty for failure to comply with these requirements, Congress reaffirmed the need for specific rules to reduce EIC noncompliance. In order to address noncompliance with the EIC rules, the final regulations modify the due diligence requirements under section 6695(g) that have been in place for over a decade. Treasury and the IRS concluded that these regulations are consistent with section 6695(g), and no modification is made in the final regulations in response to these comments.

Section 1.6695-2(b)(1)(i) of the proposed regulations required that the Form 8867, “Paid Preparer's Earned Income Credit Checklist,” be submitted to the IRS in the manner required by forms, instructions, or other appropriate guidance. One commenter noted, in part, that tax return preparers sometimes provide a paper copy of the completed tax return or claim for refund to the taxpayer for submission by the taxpayer. A tax return preparer's ability to provide a paper copy, as opposed to filing the tax return electronically, is subject to the rules and limitations in § 301.6011-7 and related guidance. Another commenter stated that the proposed regulations were unclear in how they apply to nonsigning tax return preparers. The due diligence requirements and the penalty for failure to comply with them apply to any tax return preparer, including a nonsigning tax return preparer, who determines eligibility for, or amount of, the EIC.

After consideration of these comments, Treasury and the IRS have concluded that the rules in the regulations should be clarified to provide how tax return preparers who prepare a tax return or claim for refund but do not submit it directly to the IRS can satisfy the requirement under proposed § 1.6695-2(b)(1)(i) to submit the completed Form 8867 to the IRS. In response to these comments, § 1.6695-2(b)(1)(i) of the final regulations provides that tax return preparers who prepare a tax return or claim for refund but do not submit it directly to the IRS may satisfy this aspect of their due diligence obligation by providing the form to the taxpayer or the signing tax return preparer, as appropriate, for submission with the tax return or claim for refund.

One commenter suggested that the Form 8867 be a stand-alone form that the taxpayer signs and submits as an affidavit of EIC eligibility. After consideration of this comment, Treasury and the IRS have concluded that imposing such an obligation on taxpayers, rather than on tax return preparers, would be contrary to the purpose of section 6695(g), which is to discourage tax return preparers from preparing EIC tax returns or claims for refund without performing basic due diligence. No modification is made in the final regulations in response to this comment.

Section 1.6695-2(b)(1)(i) of the proposed regulations required submission of Form 8867 to the IRS, and § 1.6695-2(b)(4)(i)(C) of the proposed regulations required retention of a copy of any document that was provided by the taxpayer and on which the tax return preparer relied to complete Form 8867 or the Earned Income Credit Worksheet. Two commenters suggested that these additional requirements increased a tax return preparer's burden under the knowledge requirement of existing § 1.6695-2(b)(3) because a tax return preparer would now be obligated to verify taxpayers' responses to the eligibility questions and also to verify nonsigning tax return preparers' (if any) completion of the Form 8867. The proposed regulations, however, do not expand tax return preparers' obligation to verify information provided by taxpayers and other tax return preparers under existing § 1.6695-2(b)(3).

Under § 1.6695-2(b)(3) of the current regulations, tax return preparers are already required to complete Form 8867, prohibited from ignoring the implications of information provided, obligated to make reasonable inquiries if the information provided appears incorrect, inconsistent, or incomplete, and required to contemporaneously document their reasonable inquiries and the taxpayer's responses. For purposes of § 1.6695-2(b)(3), tax return preparers would not be held to a higher standard under the proposed regulations than they are under the existing regulations. A tax return preparer can generally rely on the information furnished by a taxpayer (or other tax return preparer who determines eligibility for, or amount of, the EIC) as long as the tax return preparer does not know, or have reason to know, that the information is incorrect, inconsistent, or incomplete. A signing tax return preparer who satisfies the knowledge requirement in § 1.6695-2(b)(3), therefore, will ordinarily be able to rely on the information furnished to the signing tax return preparer by a taxpayer or nonsigning tax return preparer regarding the EIC. The additional requirements in proposed § 1.6695-2(b)(1)(i) and (b)(4)(i)(C) are not unduly burdensome and will improve the IRS' ability to determine whether a tax return preparer has complied with the EIC due diligence requirements that already exist. No modification is made in the final regulations in response to these comments.

Two commenters expressed concern that expanding the due diligence requirements and penalty to nonsigning tax return preparers would subject individuals to the section 6695(g) penalty who are beyond the intended scope of these rules. The commenters provided the example of individuals hired by tax preparation software companies to answer discrete questions for taxpayers who are using tax preparation software to prepare their own tax return or claim for refund. These individuals provide general resource information for the taxpayers who are preparing their own tax return or claim for refund, and they do not know all of the specific facts relating to the taxpayer's tax return or claim for refund. The commenters reasoned that these individuals might be nonsigning tax return preparers and would arguably be subject to these due diligence requirements and related penalty.

The term “nonsigning tax return preparer” is specifically defined in § 301.7701-15(b)(2) and is limited to those who prepare all or a substantial portion of a tax return or claim for refund within the meaning of § 301.7701-15(b)(3). Under § 301.7701-15(b)(3), a person who renders tax advice on a position that is directly relevant to the existence or amount of an entry on a tax return or claim for refund is regarded as having prepared that entry. Section 301.7701-15(b)(3) further provides that whether a schedule, entry, or other portion of a tax return or claim for refund is a substantial portion is determined based upon whether the person knows or reasonably should know that the tax attributable to the schedule, entry, or other portion of a tax return or claim for refund is a substantial portion of the tax required to be shown on the tax return or claim for refund. Also, § 301.7701-15(f)(1)(viii) provides an exception from the definition of tax return preparer for any individual providing only typing, reproduction, or other mechanical assistance in the preparation of a tax return or claim for refund.

Treasury and the IRS have concluded that, in the routine situation described by these commenters, the individuals employed at the tax preparation software companies as described in the comments are not nonsigning tax return preparers as long as they either (i) fall within the mechanical exception because they are not exercising independent judgment on the taxpayer's underlying tax positions, or (ii) do not know (and reasonably should not know) that any generic advice provided relating to the EIC is a substantial portion of the tax required to be shown. On the other hand, in rare instances when any such individual is both exercising independent judgment and knows or reasonably should know that specific advice provided to a taxpayerrelating to EIC is a substantial portion of the tax return or claim for refund within the meaning of § 301.7701-15(b)(3), the individual is a nonsigning tax return preparer subject to the due diligence rules. No modification is made to the final regulations in response to this comment.

By replacing “signing tax return preparer” with “tax return preparer,” § 1.6695-2(a) of the proposed regulations effectively provided that a firm that employs a person to prepare for compensation a tax return or claim for refund may be subject to the penalty for its employee's failure to comply with the due diligence requirements. Two commenters questioned the proposed application of the due diligence requirements and penalty to firms. Section 6695(g) imposes a penalty on “[a]ny person who is a tax return preparer” that fails to comply with the due diligence requirements “with respect to determining eligibility for, or the amount of, the credit allowable by section 32.” Under section 7701(a)(36), a “tax return preparer” is “any person who prepares for compensation, or who employs one or more persons to prepare for compensation, any return of tax imposed by title or any claim for refund of tax imposed by this title.” After consideration of these comments, Treasury and the IRS have concluded that it is appropriate to apply the due diligence requirements to firms as provided in the proposed regulations. This position is consistent with the long-standing application of the section 6694 tax return preparer penalties to firms under the rules provided in §§ 1.6694-2(a)(2) and 1.6694-3(a)(2). No modification is made to the final regulations in response to these comments.

Proposed § 1.6695-2(c) provided generally that a firm cannot be subject to a penalty under section 6695(g) unless one of the following three conditions is satisfied: (1) A member of the principal management of the firm knew of the failure to comply with the due diligence requirements; (2) the firm failed to establish reasonable and appropriate procedures to ensure compliance with the due diligence requirements; or (3) the firm failed to comply with its reasonable and appropriate compliance procedures through willfulness, recklessness, or gross indifference. Two commenters expressed concern with the conditions required for application of the penalty to a firm, as set forth in proposed § 1.6695-2(c).

One of these commenters noted that, if management became aware through the firm's reasonable and appropriate compliance procedures that an employee failed to comply with the due diligence requirements, then the firm would be subject to a penalty under proposed § 1.6695-2(c)(1) because management knew of the failure. The commenter suggested that the final regulations provide that the penalty not apply to the firm if management knew and took reasonable action to resolve the problem before the penalty is assessed. After consideration of this comment, Treasury and the IRS have concluded that, if management knows of the failure to comply prior to the date the tax return or claim for refund is filed, the only acceptable remedial action would be to satisfy the due diligence requirements prior to filing, in which case there would be no penalty. If, on the other hand, management does not know of the failure to comply until after the tax return or claim for refund is filed, the appropriate analysis is whether the firm had reasonable and appropriate compliance procedures and disregarded those procedures through willfulness, recklessness, or gross indifference, as described in § 1.6695-2(c)(3), and management's knowledge is relevant only insofar as it is a factor in that analysis. In response to this comment, the final regulations provide that a firm is only subject to a penalty under § 1.6695-2(c)(1) if the manager knew of an employee's failure to comply with the due diligence requirements prior to the date the tax return or claim for refund was filed.

The other commenter suggested that the IRS might determine under proposed § 1.6695-2(c)(3) that a single failure to submit Form 8867 with a tax return by an otherwise compliant firm qualifies as disregard of reasonable and appropriate compliance procedures through gross indifference. Section 1.6695-2(c)(3) of the proposed regulations established a heightened standard, in part, by imposing liability for the penalty against a firm that disregarded its reasonable and appropriate compliance procedures through willfulness, recklessness, or gross indifference. A single, accidental failure to submit Form 8867 with a tax return by an otherwise compliant firm would not constitute disregard of compliance procedures through willfulness, recklessness, or gross indifference, and the firm would not be subject to the penalty in that situation. After consideration of this comment, Treasury and the IRS have concluded that the heightened standards in proposed § 1.6695-2(c)(3) would adequately protect firms against isolated and inadvertent instances of disregard of their compliance procedures. No modification is made to the final regulations in response to this comment.

Proposed § 1.6695-2(b)(4)(ii) required that a tax return preparer must retain the records described in § 1.6695-2(b)(4)(i) for the period ending three years after the later of the date the tax return or claim for refund was due or the date it was filed. One commenter stated that the record retention date should not be tied to the date the tax return or claim for refund was filed because, if the tax return preparer who prepares the tax return or claim for refund is not the individual who files it, that tax return preparer might not know when it is filed and when the retention period expires. In response to the comment, the final regulations require a tax return preparer to retain the records described in § 1.6695-2(b)(4)(i) for the period ending three years after the later of the date the tax return or claim for refund was due or the date it was transferred in final form by the tax return preparer to the next person in the course of the filing process. In the case of a signing tax return preparer who electronically files the tax return or claim for refund, the next step in the filing process will be to electronically file the tax return or claim for refund, so the relevant date is the date the tax return or claim for refund is filed. In the case of a signing tax return preparer who does not electronically file the tax return or claim for refund, the next person in the course of the filing process will be the taxpayer, so the relevant date is the date the tax return or claim for refund is presented to the taxpayer for signature. In the case of a nonsigning tax return preparer, the next person in the course of the filing process will be the signing tax return preparer, so the relevant date is the date the nonsigning tax return preparer submitted to the signing tax return preparer that portion of the tax return or claim for refund for which the nonsigning tax return preparer was responsible.

The record retention date under the final regulations will be the same for nonsigning tax return preparers supervised by a signing tax return preparer in the same firm and nonsigning tax return preparers who are employed by a different firm than the signing tax return preparer. In both cases, the records must be retained until three years from the later of the due date of the tax return or the date the taxreturn or claim for refund is submitted in final form to the signing tax return preparer. As a practical matter, however, a supervised nonsigning tax return preparer and the supervising signing tax return preparer can satisfy both of their record retention obligations under the final regulations by retaining a single paper or electronic copy of the records described in § 1.6695-2(b)(4)(i). The supervised nonsigning tax return preparer's record retention period may, nevertheless, expire before the signing tax return preparer's record retention period. In such cases, the supervising signing tax return preparer is required to retain the records until the expiration of his or her record retention period under § 1.6695-2(b)(4)(ii), regardless of when the supervised nonsigning tax return preparer's record retention period expires.

One commenter stated that the 30-day comment period provided under the proposed regulations was inadequate. Numerous substantive comments were, in fact, received addressing the proposed regulations. Treasury and the IRS have concluded that the duration of the comment period provided in the proposed regulations was in compliance with all of the applicable procedural rules and requirements governing regulations.

Three commenters stated that the proposed effective date of the regulations would not provide tax return preparers and computer software providers sufficient time to adjust their procedures and products to reflect the proposed amendments. The proposed regulations provided that they will apply to tax returns and claims for refund for tax years ending on or after December 31, 2011. The IRS publicly announced in Spring 2011 that the IRS was exploring the implementation of a new requirement for tax return preparers to submit the Form 8867 with a taxpayer's tax return or claim for refund. Treasury and the IRS have concluded that implementation of these rules for the upcoming filing season is consistent with the best interests of tax administration.

It has been determined that this final rule is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to the final regulations.

When an agency issues a rulemaking, the Regulatory Flexibility Act (RFA) (5 U.S.C. chapter 6), requires the agency to “prepare and make available for public comment an initial regulatory flexibility analysis” that will “describe the impact of the proposed rule on small entities.” (5 U.S.C. 603(a)). Section 605 of the RFA provides an exception to this requirement if the agency certifies that the rulemaking will not have a significant economic impact on a substantial number of small entities.

The final rules affect tax return preparers who determine the eligibility for, or the amount of, EIC. The NAICS code that relates to tax preparation services (NAICS code 541213) is the appropriate code for tax return preparers subject to the final regulations. Entities identified as tax preparation services are considered small under the Small Business Administration size standards (13 CFR 121.201) if their annual revenue is less than $7 million. The IRS estimates that approximately 75 to 85 percent of the 550,000 persons who work at firms or are self-employed tax return preparers are operating as or employed by small entities. The IRS has determined that the final rules will have an impact on a substantial number of small entities.

The IRS has determined, however, that the economic impact on entities affected by the final rules will not be significant. The prior regulations under section 6695(g) required tax return preparers to complete the Form 8867 or otherwise record in their files the information necessary to complete the form. Tax return preparers were also required to maintain records of the checklists and EIC computations, as well as a record of how and when the information used to compute the EIC was obtained by the tax return preparer. The amount of time necessary to submit, record, and retain the additional information required in the final regulations, therefore, should be minimal for these tax return preparers.

Based on these facts, the IRS hereby certifies that the collection of information contained in the final regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, a Regulatory Flexibility Analysis is not required.

Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding the final regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business and no comments were received.

The principal author of the final regulations is Spence Hanemann, Office of the Associate Chief Counsel (Procedure and Administration).

Accordingly, 26 CFR part 1 is amended as follows:

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the Coast Guard did not receive notice of the fireworks display until December 1, 2011. As a result, the Coast Guard did not have sufficient time to publish an NPRM and to receive public comments prior to the fireworks display. Any delay in the effective date of this rule would be contrary to the public interest because immediate action is needed to minimize potential danger to the public during the fireworks display.

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

The legal basis for the rule is the Coast Guard's authority to establish regulated navigation areas and other limited access areas: 33 U.S.C. 1231; 46 U.S.C. chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, 160.5; Public Law 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.

The purpose of the rule is to protect the public from the hazards associated with launching fireworks over navigable waters of the United States.

On New Year's Eve, a fireworks display will be held in Beaufort, South Carolina. The fireworks will be launched from a barge, which will be located on the Beaufort River. The fireworks will explode over the Beaufort River. The fireworks display is scheduled to commence at 6 p.m. and conclude at 6:20 p.m.

The temporary safety zone encompasses certain waters of the Beaufort River in Beaufort, South Carolina. The safety zone will be enforced from 5:30 p.m. on December 31, 2011, 30 minutes prior to the scheduled commencement of the fireworks display at approximately 6 p.m., to ensure the safety zone is clear of persons and vessels. Enforcement of the safety zone will cease at 6:50 p.m. on December 31, 2011, 30 minutes after the scheduled conclusion of the fireworks display, to account for possible delays. Persons and vessels are prohibited from entering, transiting through, anchoring in, or remaining within the safety zone unless authorized by the Captain of the Port Charleston or a designated representative. Persons and vessels desiring to enter, transit through, anchor in, or remain within the safety zone may contact the Captain of the Port Charleston by telephone at (843) 740-7050, or a designated representative via VHF radio on channel 16, to request authorization. If authorization to enter, transit through, anchor in, or remain within the safety zone is granted by the Captain of the Port Charleston or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the Captain of the Port Charleston or a designated representative. The Coast Guard will provide notice of the safety zone by Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene designated representatives.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

Executive Orders 13563, Improving Regulation and Regulatory Review, and 12866, Regulatory Planning and Review, direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a significant regulatory action under section 3(f) of Executive Order 12866. Accordingly, the Office of Management and Budget has not reviewed this regulation under Executive Order 12866.

The economic impact of this rule is not significant for the following reasons: (1) The safety zone will be enforced for only one hour and twenty minutes; (2) although persons and vessels will not be able to enter, transit through, anchor in, or remain within the safety zone without authorization from the Captain of the Port Charleston or a designated representative, they may operate in the surrounding area during the enforcement period; (3) persons and vessels may still enter, transit through, anchor in, or remain within the safety zone if authorized by the Captain of the Port Charleston or a designated representative; and (4) the Coast Guard will provide advance notification of the safety zone to the local maritime community by Local Notice to Mariners and Broadcast Notice to Mariners.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities. This rule may affect the following entities, some of which may be small entities: the owners or operators of vessels intending to enter, transit through, anchor in, or remain within that portion of the Beaufort River encompassed within the safety zone from 5:30 p.m. until 6:50 p.m. on December 31, 2011. For the reasons discussed in the Regulatory Planning and Review section above, this rule will not have a significant economic impact on a substantial number of small entities.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we offer to assist small entities in understanding the rule so that they can better evaluate its effects on them and participate in the rulemaking process.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determinecompliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-(888) 734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this rule under that Order and have determined that it does not have implications for federalism.

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

This rule will not effect a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.

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

We have analyzed this rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule is categorically excluded, under figure 2-1, paragraph (34)(g), of the Instruction. This rule involves establishing a temporary safety zone that will be enforced for a total of one hour and twenty minutes. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated underADDRESSES.

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

On June 23, 2010, VA published in theFederal Register(75 FR 35711) a proposed rule that would revise the evaluation criterion for amyotrophic lateral sclerosis (ALS) in the VA Schedule for Rating Disabilities (diagnostic code 8017 in 38 CFR 4.124a, the schedule of ratings for neurological conditions and convulsive disorders). The schedule previously provided a minimum evaluation of 30 percent for ALS; however, we determined that providing a 100-percent evaluation in all cases would obviate the need to reassess and reevaluate veterans with ALS repeatedly over a short period of time, as the condition worsens and inevitably and relentlessly progresses to total disability, and we proposed to increase the minimum evaluation for ALS to 100 percent.

A 30-day comment period ended July 23, 2010, and we received comments from 17 individual members of the general public and 1 from the Amyotrophic Lateral Sclerosis Association. The comments from the general public included 5 from veterans who have ALS, 3 from family members of veterans who have ALS or who died from ALS, and 1 from an individual raising claim-specific issues. Fifteen of the individual commenters expressed support for the rule. Two of the 15 said they support the rule “wholeheartedly,” and others used expressions such as “it is imperative” and “it is absolutely vital.” We are not making any changes to the final rule based on these supportive comments.

In addition, the Amyotrophic Lateral Sclerosis (ALS) Association strongly endorsed the proposed rule. It stated that the establishment of an evaluation of 100 percent for ALS in all cases, plus the note under the evaluation criterion that recommends consideration of special monthly compensation (SMC) (an additional monthly amount of compensation that may be paid to veterans with certain serious disabilities) will help ensure that veterans with ALS are compensated appropriately. The ALS Association recommended that VA adopt special processing procedures to expedite ALS claims; however, VA has already established procedures for handling hardship cases involving seriously disabled veterans. Therefore, we are not making any changes to the final rule based on this comment.

One commenter said that he would like to see the 100-percent rating for this disease given to all veterans, whether or not they are service-connected. However, under current law, 38 U.S.C. 1110 and 1131, VA's authority is limited to providing compensation to veterans with service-connected disabilities. Therefore, as VA is prohibited from taking the action the commenter requests, we are not making any changes to the final rule based on this comment.

One commenter expressed the belief that revision of the VA rating schedule in the proposed rulemaking would be “arbitrary,” arguing that ALS was being evaluated differently from other neurological disorders. The comment expressed the belief that the proposed rule would “rate multiple disabilities as a single disability” when a possibility of entitlement to SMC exists, and that the proposed rule would “produce decisions which result in payment at a rate lower than the veteran is entitled to now.”

VA appreciates this comment; however, this rule does not change the procedure for evaluating service-connected disabilities. It only prescribes a higher minimum disability rating for ALS. VA remains required to provide an evaluation for all service-connected disabilities, regardless of whether a veteran already has received a 100-percent disability rating for one. Therefore, all veterans will continue to receive thorough evaluations for all service-connected disabilities and disorders. All veterans who would be eligible for SMC or ancillary benefits before the promulgation of this regulation will remain so.

As the proposed rule explained, ALS is a rapidly progressing disease, and establishment of a 100-percent evaluation for ALS will not adversely affect how ALS is evaluated for rating purposes. Although a veteran may receive compensation at the 100-percent rate based either on a 100-percent evaluation specifically for ALS or on a combined evaluation for ALS and other service-connected conditions, on either basis VA may consider the veteran forvarying levels of SMC, which is an amount of compensation in addition to amounts payable for service-connected disability, including disabilities rated 100-percent disabling, where applicable. Indeed, as amended, 38 CFR 4.124a includes a note to the rater: “Consider the need for special monthly compensation.” Furthermore, because this rule does not alter VA's procedures regarding evaluation of all disabilities and disorders, any ancillary benefits to which a veteran may be entitled will be preserved. We thus make no changes to the regulation based on this comment.

One general public commenter raised claim-specific issues that are unrelated to this rulemaking. We thus are making no changes to the proposed rule based on this comment.

Therefore, based on the rationale set forth in the proposed rule and this document, we are adopting the provisions of the proposed rule as a final rule with no changes.

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

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” which requires review by the Office of Management and Budget (OMB), as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined and it has been determined not to be a significant regulatory action under Executive Order 12866.

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

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. The rule could affect only VA beneficiaries and will not directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), this rule is exempt from the initial and final regulatory flexibility analyses requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance program numbers and titles for this rule are as follows: 64.109, Veterans Compensation for Service-Connected Disability; and 64.110, Veterans Dependency and Indemnity Compensation for Service-Connected Death.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. John R. Gingrich, Chief of Staff, Department of Veterans Affairs, approved this document on October 7, 2011, for publication.

For the reasons set out in the preamble, 38 CFR part 4, subpart B, is amended as set forth below:

Under 38 U.S.C. 1722A(a), VA must require veterans to pay a $2 copayment for each 30-day supply of medication furnished on an outpatient basis for the treatment of a nonservice-connected disability or condition. Under 38 U.S.C. 1722A(b), VA “may,” by regulation, increase that copayment and establish a maximum annual copayment (a “cap”). We interpret section 1722A(b) to mean that VA has discretion to determine the appropriate copayment amount and annual cap amount for medication furnished on an outpatient basis for covered treatment, provided that any decision by VA to increase the copayment amount or annual cap amount is the subject of a rulemaking proceeding. The copayment amount cannot exceed the cost to the Secretary of this medication (including administrative costs). In 66 Fed Reg 63499 we determined a method for calculating this cost. We have implemented this statute in 38 CFR 17.110.

Under current 38 CFR 17.110(b)(1), veterans are “obligated to pay VA a copayment for each 30-day or less supply of medication provided by VA on an outpatient basis (other than medication administered during treatment).” Under the current regulation, for the period from July 1, 2010, through December 31, 2011, “the copayment amount for veterans in priority categories 2 through 6 of VA's health care system * * * is $8.” 38 CFR 17.110(b)(1)(ii). “For veterans in priority categories 7 and 8 of VA's health care system (see § 17.36), the copayment amount from July 1, 2010, through December 31, 2011, is $9.” 38 CFR 17.110(b)(1)(iii). Thereafter, the copayment amount for all affected veterans is to be established using a formula based on the prescription drug component of the Medical Consumer Price Index, set forth in 38 CFR 17.110(b)(1)(iv).

Current § 17.110(b)(2) also includes a “cap” on the total amount of copayments in a calendar year for a veteran enrolled in one of VA's health care enrollment system priority categories 2 through 6. Through December 31, 2011, that cap is set at $960. Thereafter, the cap is to “increase[ ] by $120 for each $1 increase in the copayment amount” applicable to veterans enrolled in one of VA's health care enrollment system priority categories 2 through 6.

On February 22, 2011, we published a final rulemaking that established the copayment amounts discussed above, effective through December 31, 2011. 76 FR 9646. In the interim final rule which announced our intent to freeze copayments through December 31, 2011, we made clear that we would return to the CPI-P methodology “unless additional rulemaking is initiated.” 75 FR 32670. We are now undertaking “additional rulemaking” to extend the freeze in copayment rates.

In our prior rulemaking, we indicated that we were reviewing whether to revise the current regulatory formula. 76 FR 9647. We are still considering such revision, and will continue to review the matter in 2012. Therefore, as before, we continue to believe that a freeze is appropriate in light of this anticipated review and given the current economic climate, and propose to continue to delay implementation of the increase in the copayment amount (and the corresponding $120 increase in the cap) until the completion of our review for veterans in priority categories 2 through 6 of VA's health care system. 76 FR 9647. We continue to believe that it is appropriate to maintain the current copayment amount for these groups while we review our overall copayment methodology because these groups would be impacted more by the increase in the copayment due to their likely greater need for medical care due to their disabilities or conditions of service. Therefore, we will continue the copayment amount at the current $8 rate for veterans in priority categories 2 through 6 through December 31, 2012, in order to complete the review of indicators to base our copayment amounts. The cap will also remain at the current level ($960) for these veterans. Depending on the results of the review described above, the Secretary may initiate a new rulemaking on this subject rather than continue to rely on the CPI-P escalator provision to determine the copayment amount.

At the end of calendar year 2012, unless additional rulemaking is initiated, VA will once again utilize the CPI-P methodology in § 17.110(b)(1)(iv) to determine whether to increase copayments and calculate any mandated increase in the copayment amount for veterans in priority categories 2 through 6. At that time, the CPI-P as of September 30, 2012, will be divided by the index as of September 30, 2001, which was 304.8. The ratio will then be multiplied by the original copayment amount of $7. The copayment amount of the new calendar year will be rounded down to the whole dollar amount. As mandated by current § 17.110(b)(2), the annual cap will be calculated by increasing the cap by $120 for each $1 increase in the copayment amount. Any change in the copayment amount and cap, along with the associated calculations explaining the basis for the increase, will be published in aFederal Registernotice. Thus, the intended effect of this rule is to temporarily prevent increases in copayment amounts and the copayment cap for veterans in priority categories 2 through 6, following which copayments and the copayment cap will increase as prescribed in current § 17.110(b).

At the same time, in light of the statutory requirement to share costs under 38 U.S.C. 1722A and the distinctions noted above regarding veterans in priority categories 2 through 6, we will not implement a freeze on any copayment increase pursuant to the regulatory formula for veterans in priority categories 7 and 8. A copayment increase for these veterans will depend upon the Medical Consumer Price Index.

We note that we have not yet proposed a new methodology to establish copayments and, for that reason, request public comment only on the effect of this rulemaking, which isto freeze the copayment amount for veterans in priority categories 2 through 6 while we study alternative methodologies to calculate appropriate copayment amounts for all veterans.

In accordance with 5 U.S.C. 553(b)(3)(B) and (d)(3), the Secretary of Veterans Affairs finds that there is good cause to dispense with the opportunity for advance notice and opportunity for public comment and good cause to publish this rule with an immediate effective date. As stated above, this rule freezes at current rates the prescription drug copayment that VA charges certain veterans. The Secretary finds that it is impracticable and contrary to the public interest to delay this rule for the purpose of soliciting advance public comment or to have a delayed effective date. Increasing the copayment amount on January 1, 2012, might cause a significant financial hardship for some veterans.

For the above reason, the Secretary issues this rule as an interim final rule. VA will consider and address comments that are received within 60 days of the date this interim final rule is published in theFederal Register.

The Code of Federal Regulations, as revised by this rulemaking, would represent the exclusive legal authority on this subject. No contrary rules or procedures are authorized. All VA guidance must be read to conform with this rulemaking if possible or, if not possible, such guidance is superseded by this rulemaking.

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

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” which requires review by the Office of Management and Budget (OMB), as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined and it has been determined to be a significant regulatory action. Accordingly, the Office of Management and Budget has reviewed this interim final rule.

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

The Secretary hereby certifies that this interim final rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This interim final rule will temporarily freeze the copayments that certain veterans are required to pay for prescription drugs furnished by VA. The interim final rule affects individuals and has no impact on any small entities. Therefore, pursuant to 5 U.S.C. 605(b), this rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance program number and title for this rule are as follows: 64.005, Grants to States for Construction of State Home Facilities; 64.007, Blind Rehabilitation Centers; 64.008, Veterans Domiciliary Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing Home Care; 64.011, Veterans Dental Care; 64.012, Veterans Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, Veterans State Domiciliary Care; 64.015, Veterans State Nursing Home Care; 64.016, Veterans State Hospital Care; 64.018, Sharing Specialized Medical Resources; 64.019, Veterans Rehabilitation Alcohol and Drug Dependence; 64.022, Veterans Home Based Primary Care; and 64.024, VA Homeless Providers Grant and Per Diem Program.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. John R. Gingrich, Chief of Staff, Department of Veterans Affairs, approved this document on December 2, 2011, for publication.

For the reasons set forth in the preamble, VA amends 38 CFR part 17 as follows:

Under 38 U.S.C. chapter 37, VA guarantees loans made by private lenders to veterans for the purchase, construction, and refinancing of homes owned and occupied by veterans.

On February 1, 2008, VA published in theFederal Register(73 FR 6294) a final rule that extensively revised 38 CFR part 36 to modernize procedures for servicing VA-guaranteed home loans. A new subpart F was added to include § 36.4815, which provided detailed parameters for private loan servicers to modify delinquent loans without seeking prior approval from VA, thereby enabling servicers to quickly assist veteran borrowers in avoiding foreclosure. On June 15, 2010, VA published in theFederal Register(75 FR 33704) a final rule that redesignated subpart F (the 36.4800 series) to replace obsolete subpart B (the 36.4300 series) in its entirety. On February 7, 2011, VA published in theFederal Register(76 FR 6555) an interim final rule that (1) restructured § 36.4315 to clarify that holders may seek VA approval for a loan modification if the proposed modification does not otherwise meet the conditions prescribed in § 36.4315(a), (2) revised the methodology for determining the maximum interest rate on a modified loan, and (3) allowed foreclosure costs actually incurred to be capitalized into the modified loan balance.

The public comment period on the interim final rule closed on April 8, 2011. VA received comments from six entities about the rule. One comment was from a mortgage industry trade association, three were from mortgage servicers, and two were from nonprofit law firms writing on behalf of veteran borrowers. The final rule has been revised to incorporate changes that VA agrees are necessary in light of, or as the logical outgrowth of the comments provided. The following paragraphs discuss the comments VA received on the interim final rule. The comments are presented in order by the paragraph to which the comments apply, and similar comments are grouped together.

Comment:VA should change the establishment of the maximum interest rate from the date the modification is executed to the date the modification is approved.

VA Response:VA concurs. As indicated in the interim final rule, VA based its revision to the establishment of the maximum interest rate allowable on a loan modification to a large extent on a Department of Housing and Urban Development (HUD) Mortgagee Letter (2009-35), which stated that the maximum rate would be computed as of the date of execution of the Modification Agreement. However, several comments mentioned that a subsequent Loan Modification Frequently Asked Questions (FAQ) document posted by HUD on its Web site (athttp://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm) stated that the maximum interest rate on a loan modification should actually be calculated as of the date the Mortgagee approves the modification. This is a more beneficial position for a veteran borrower, as it allows the maximum rate to be calculated when the servicer is underwriting the modification, without the possibility of an interest rate increase occurring before execution of the modification that might result in an increase in the interest rate. In addition, it is more feasible from a processing standpoint for the servicer, because it allows the rate to be fixed without concern that documents may be sent to the borrower to be signed, but the Modification Agreement may be in violation of the regulation if rates decrease before the modification is executed. Therefore, § 36.4315(a)(8)(i) is changed by replacing the word “executed” with the word “approved”.

Comment:VA should require that the interest rate on a modified loan be lower than the existing rate, or that any interest rate increase on a modified loan be submitted to VA for approval.

VA Response:VA does not concur. As discussed in the preamble to the interim final rule, a modification typically allows capitalization of past due amounts over a very long repayment term, sometimes as long as 10 years past the original maturity date of the loan (or even longer if the original term was less than 30 years), which is easier to maintain than a short term repayment arrangement, but will likely increase the monthly payments by a small amount. This benefits the veteran by eliminating the delinquency and granting a “fresh start” on payment of the loan. The servicer is required to determine that the borrower is a reasonable credit risk based on income, expenses and other obligations, so even though the interest rate may be increasing on a modification, future payments will still be affordable. Requiring VA to review every case with a small interest rate increase would place an undue burden on limited staff, while providing no tangible benefit to veterans. Allowing modification at a market interest rate, which may be lower or higher than the existing interest rate, serves as an incentive for the servicer to complete the modification at a rate that will allow it to re-pool the modified loan without taking a loss to do so. However, if the proposed interest rate for the modification is more than one percent above the existing rate, then VA believes it is appropriate to review the case to determine if the increased rate, in addition to the capitalization of the delinquency, could raise serious questions about the veteran's ability to repay the modified loan. That would give VA the opportunity to consider refunding the loan at a lower rate in order to make the modification even more affordable for the veteran borrower. If the servicer decides that a veteran is not a reasonable credit risk for a loan modification, then VA has the opportunity through its oversight to consider refunding the loan at a rate thatwill make the loan affordable, if that is possible. This is the position that VA believes best balances the goals of the VA home loan program to provide a benefit to our nation's veterans, while also exercising appropriate judgment in the use of taxpayer funds to acquire loans that will yield much lower than market rates.

Comment:VA should mandate lower payments on a modified loan. For circumstances in which: (1) The interest rate will be the same or higher, (2) even a reduced interest rate will not result in a lower payment, or (3) the interest rate cannot be reduced (such as on a loan held by a state housing-finance authority), VA should require reduction in the principal balance so that the payment will be reduced.

VA Response:VA does not concur. As stated above, the purpose of a loan modification is to give a borrower a fresh start by resetting the terms of the loan to make payments affordable. Reducing a loan payment does not necessarily guarantee that future payments will be affordable for a borrower, as that requires an analysis of income and other expenses. If a borrower can afford future payments that are slightly higher than existing payments, but cannot afford to pay the accrued delinquency, then there is no need to require that payments on a modified loan be lower than the existing payments, only that the delinquency be eliminated via the modification. As far as requiring that a servicer waive a portion of the principal balance in order to reduce payments, VA does not have any specific authority to do so. VA does have the option to assist a veteran borrower in need of lower payments by refunding a loan and reducing the interest rate well below the market rate to make payments affordable. However, that authority to refund must be balanced against the fact that taxpayer funds will be used to acquire a loan that will be modified to yield much less than market interest rates.

Comment:VA should ensure that veterans are not overcharged for foreclosure expenses, perhaps by setting a limit of $1,000 on legal fees that may be capitalized when a loan is modified.

VA Response:VA partially agrees. This subparagraph presently limits the amount that may be included in the modified indebtedness to “actual legal fees and foreclosure costs related to the cancelled foreclosure.” Existing § 36.4314 limits the amount of legal fees for foreclosure that may be included in the computation of a guaranty claim, based on the reasonable and customary amounts the Secretary has determined appropriate in each state. In order to ensure that veterans are not charged in excess of the maximum amount allowable for a completed foreclosure, § 36.4315(a)(10) is amended to limit the amount of legal fees and costs that may be included in the modified indebtedness to the maximum amounts prescribed in § 36.4314 by inserting after “canceled foreclosure” the phrase “(subject to the maximum amounts prescribed in § 36.4314).”

VA does not believe it is appropriate to set a maximum $1,000 for the limit on cancelled foreclosure costs and fees that may be included in the modified loan balance, as costs vary from state to state, and the amount of work completed on a foreclosure will also very from case to case. The language limiting costs to “actual” fees and costs clearly indicates that the maximum allowable charge should not be made unless those fees and costs have actually been incurred.

Comment:VA should promulgate new regulations requiring that loan holders engage in mandatory loss mitigation efforts prior to initiation of foreclosure.

VA Response:VA does not concur. VA believes its existing regulations both require and encourage loss mitigation efforts by loan holders and their mortgage servicers prior to the initiation of foreclosure. In § 36.4350, VA requires establishment of a system for servicing delinquent loans and prescribes collection actions designed to determine reasons for loan defaults and to explore loss mitigation options. In § 36.4319, VA provides an incentive structure to encourage successful loss mitigation efforts by loan servicers. This final rule (§ 36.4315) allows servicers wide latitude in modifying delinquent loans without the prior approval of VA in order to resolve defaults. VA also authorizes servicers to pursue short sale and deeds in lieu of foreclosure (§ 36.4322) when home retention is not possible and the servicing requirements in VA's regulations are satisfied. Furthermore, in order to ensure that a servicer has sufficient time to explore all possible loss mitigation options, in calculating the guaranty claim payable on a terminated loan, VA allows inclusion of interest for 210 days from the due date of the last paid installment, plus the reasonable period that VA has established for completion of termination in the jurisdiction where the loan is located. We believe all these existing requirements, plus the oversight efforts of dedicated VA Loan Technicians, has resulted in ensuring that veterans receive excellent opportunities to retain their homes when feasible, or to avoid foreclosure when retention is not possible. As a demonstration of this point, for the past 2 years the Mortgage Bankers Association quarterly National Delinquency Survey has reported that VA-guaranteed loans have the lowest foreclosure starts and foreclosure inventory of any loan type.

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

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

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action,” which requires review by the Office of Management and Budget (OMB), as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipientsthereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined and it has been determined not to be a significant regulatory action under Executive Order 12866.

The Secretary hereby certifies that this final rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. The vast majority of VA loans are serviced by very large financial companies. Only a handful of small entities service VA loans and they service only a very small number of loans. This final rule, which only impacts veterans, other individual obligors with guaranteed loans, and companies that service VA loans, will have very minor economic impact on a very small number of small entities servicing such loans. Therefore, pursuant to 5 U.S.C. 605(b), this rule is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

The Catalog of Federal Domestic Assistance number and title for the program affected by this document is 64.114, Veterans Housing—Guaranteed and Insured Loans.

The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. John R. Gingrich, Chief of Staff, Department of Veterans Affairs, approved this document on October 24, 2011, for publication.

For the reasons stated in the preamble, VA amends 38 CFR part 36 as follows:

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

Table 1 lists the rule we are approving with the date that it was adopted by the local air agency and submitted by the California Air Resources Board (CARB).

On October 24, 2011, EPA determined that the submittal for SCAQMD Rule 2005 met the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPA review.

Table 2 lists the previous version of this rule approved into the SIP.

NOXhelps produce ground-level ozone, smog and particulate matter, which harm human health and the environment. Section 110(a) of the CAA requires States to submit regulations that control NOXemissions.

The RECLAIM program was initially adopted by SCAQMD in October 1993. The program established for many of the largest NOXand SOxfacilities in the South Coast Air Basin a regional NOXand regional SOxemissions cap and trade program, with the regional emissions caps declining over time until 2003. SCAQMD amended RECLAIM to lower the NOXand SOxemissions caps in 2005 and 2010 respectively. The program was designed to provide incentives for facilities to reduce emissions and advance pollution control technologies by giving facilities added flexibility in meeting emission reduction requirements. A NOXor SOxRECLAIM Trading Credit (RTC) is a limited authorization to emit one pound of NOXor SOxduring a specified one year period. A RECLAIM facility's emissions may not exceed its RTC holding in any compliance year. A RECLAIM facility may comply with this requirement by installing control equipment, modifying their activities, or purchasing RTCs from other facilities.

The purpose of Rule 2005 was to address how the New Source Review (NSR) program requirements would be implemented in the context of a cap and trade program. Rule 2005 sets forth the pre-construction review requirements for new or modified equipment or processes at RECLAIM facilities.

The rule revision affects existing RECLAIM facilities subject to Rule 2005 whose annual allocations1 do not exceed its 1994 starting allocation plus non-tradable credits. While such facilities are required to hold sufficient RTCs to offset emissions increases by the beginning of the first year, this rule revision eliminates the requirement to hold sufficient RTCs to offset emissions increases at the beginning of the second and subsequent years. SCAQMD states that the primary purpose of the revision to Rule 2005 was to alleviate the disincentives to existing facilities to modernize and replace older, more polluting equipment with newer and cleaner equipment.

Generally, SIP rules must be enforceable (see section 110(a) of the Act), must require Reasonably Available Control Technology (RACT) for each category of sources covered by a Control Techniques Guidelines (CTG) document as well as each NOXor VOC major source in nonattainment areas (see sections 182(a)(2) and 182(f) of the Act), and must not relax existing requirements (see sections 110(l) and 193 of the Act). The SCAQMD regulates an ozone nonattainment area classified as extreme for the 8-hour ozone NAAQS (40 CFR 81.305), so the RECLAIM Program must fulfill RACT.

Guidance and policy documents that we use to evaluate enforceability and RACT requirements consistently include the following:

We believe this rule is consistent with the relevant policy and guidance regarding enforceability and SIPrelaxations. While the CAA RACT requirements apply to the RECLAIM program as a whole, the requirements do not specifically apply to Rule 2005 because Rule 2005 addresses the NSR permit program requirements. In EPA's original approval of the RECLAIM program, EPA determined that the RECLAIM program met the CAA RACT requirements. This amendment does not change EPA's previous determination. This revision has no effect on allowable emissions and would not result in emissions increases. Furthermore, this revision is consistent with EPA's original understanding of how the NSR offset requirement would be implemented in the RECLAIM program. EPA's November 8, 1996 limited approval and limited disapproval of RECLAIM (61 FR 57775) stated, “The NSR offset requirements would only be triggered if a particular facility exceeded its initial RECLAIM allocation plus nontradeable emission allocation.” (see 61 FR 57777) The Technical Support Document (TSD) has more information on our evaluation.

The TSD describes additional rule revisions that we recommend for the next time the local agency modifies the RECLAIM rules.

As authorized in section 110(k)(3) of the Act, EPA is fully approving the submitted rule because we believe it fulfills all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of thisFederal Register,we are simultaneously proposing approval of the same submitted rules. If we receive adverse comments by January 19, 2012, we will publish a timely withdrawal in theFederal Registerto notify the public that the direct final approval will not take effect and we will address the comments in a subsequent final action based on the proposal. If we do not receive timely adverse comments, the direct final approval will be effective without further notice on February 21, 2012. This will incorporate the rule into the federally enforceable SIP.

Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve State choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves State law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501et seq.);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601et seq.);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• Does not provide EPA with the discretionary authority to address disproportionate human health or environmental effects with practical, appropriate, and legally permissible methods under Executive Order 12898 (59 FR 7629, February 16, 1994).

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in theFederal Register. A major rule cannot take effect until 60 days after it is published in theFederal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Part 52, chapter I, title 40 of the Code of Federal Regulations is amended as follows:

This rule pertains to three hydrocarbon refrigerants: Isobutane, propane, and R-441A. Hydrocarbon refrigerants have been in use for over 15 years in countries such as Germany, the United Kingdom, Australia, and Japan in the end-uses addressed by this final rule. In Europe and Asia, equipment manufacturers have designed and tested household and commercial refrigerators and freezers to account for flammability and safety concerns associated with hydrocarbon refrigerants.

The 2010 Report of the United Nations Environment Programme (UNEP)'s Refrigeration, Air Conditioning and Heat Pumps Technical Options Committee (RTOC) estimates that approximately 100 million household refrigerators and freezers are manufactured annually worldwide. One-third of these now use either isobutane or an isobutane/propane blend, and this proportion is expected to increase to 75 percent by 2020. In the retail sector, the RTOC observes that hydrocarbon refrigerants continue to gain market share in Europe and Japan.1

Because hydrocarbon refrigerants have zero ozone depletion potential (ODP) and very low global warming potential (GWP) compared to other refrigerants, many companies are interested in using them in the United States (U.S.) as well. In this action, EPA addresses SNAP submissions for use of three hydrocarbon refrigerants in two end-uses: (1) Household refrigerators, freezers, and combination refrigerators and freezers; and (2) retail food refrigerators and freezers (stand-alone units only).

The submitter of R-441A—A.S. Trust and Holdings—has provided documentation to EPA, available in the docket for this rulemaking, that it has withdrawn its submission for the blend originally submitted as “HCR-188C.” Because the submission is no longer pending before EPA, we are notfinalizing a SNAP listing for that blend. Any person wishing to introduce that blend into interstate commerce would be required to submit a new SNAP application under EPA regulations.2

Isobutane and propane are hydrocarbons, and R-441A is a blend of hydrocarbons. Hydrocarbons are flammable organic compounds made up of hydrogen and carbon.

Isobutane, also called 2-methylpropane, has four carbon atoms, the chemical formula C4H10, and a branched structure. It is often written as CH(CH3)2-CH3to distinguish it from butane, a straight-chain hydrocarbon with the same chemical formula. Isobutane's Chemical Abstracts Service (CAS) Registry Number is 75-28-5. As a refrigerant, isobutane is designated as R-600a by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) Standard 34-2010 “Designation and Safety Classification of Refrigerants” (ASHRAE, 2010). It is also referred to as HC-600a and iso-C4H10.

Propane has three carbon atoms, the chemical formula C3H8, and the CAS Number 74-98-6. As a refrigerant, propane has ASHRAE designation R-290. It is also referred to as HC-290 and CH3CH2CH3.

R-441A is a blend of four hydrocarbons: Ethane (3.1 percent by mass), propane (54.8 percent by mass), isobutane (6.0 percent by mass), and butane (36.1 percent by mass). This blend was originally submitted to EPA under the trade name “HCR-188C1,” and EPA used that nomenclature in the proposed rule (75 FR 25799). In February 2011, this blend received the designation R-441A under ASHRAE Standard 34-2010.3 Throughout this final rule, we refer to that blend as R-441A.

ASHRAE Standard 34-2010 categorizes isobutane, propane, and R-441A in the A3 safety group. ASHRAE's safety group classification consists of two alphanumeric characters (e.g.,A2 or B1). The capital letter indicates the toxicity, and the numeral denotes the flammability.

Figure 1 illustrates these safety group classifications.

ASHRAE classifies Class A refrigerants as refrigerants for which toxicity has not been identified at concentrations less than 400 ppm by volume, based on data used to determine a workplace exposure limit for long-term exposure, such as a threshold limit value-time-weighted average (TLV-TWA) or consistent indices. Class B refrigerants show evidence of toxicity below 400 ppm on an 8-hour time-weighted average (TWA).

Refrigerants also receive one of three possible flammability classifications: 1 (no flame propagation), 2 (lower flammability), or 3 (higher flammability). Class 3 refrigerants exhibit flame propagation at 60 °C and 101.3 kPa, and have either a lower flammability limit (LFL) of less than or equal to 0.10 kg/m3or a heat of combustion greater than or equal to 19,000 kJ/kg.

This end-use, which we refer to as “household refrigeration” in this preamble, consists of appliances that are intended primarily for residential use, although they may be used outside the home. Household freezers offer storage space only at freezing temperatures. Products with both a refrigerator and freezer in a single unit are most common. This final rule includes a use condition that limits the refrigerant charge in this end-use to 57 grams (2.0 ounces) or less for each sealed refrigeration system (i.e.,compressor, condenser, evaporator, and refrigerant piping). EPA is also requiring other use conditions as described in Section III (“What did EPA propose, and what are we finalizing?”) below.

This end-use, which we refer to as “retail food refrigeration” in this preamble, includes the refrigeration systems, including cold storage cases, designed to chill food or keep it at a cold temperature for commercial sale. This final rule addresses the use of hydrocarbons in stand-alone units only.A stand-alone appliance is one using a hermetically-sealed compressor and for which all refrigerant-containing components, including but not limited to at least one compressor, condenser, and evaporator, are assembled into a single piece of equipment before delivery to the ultimate consumer or user. Such equipment does not require addition or removal of refrigerant when placed into initial operation. Stand-alone equipment is used to store chilled beverages or frozen products. Examples include reach-in beverage coolers and stand-alone ice cream cabinets. Our acceptability determination does not apply to large refrigeration systems such as walk-in coolers or the direct expansion refrigeration systems typically found in retail food stores. It also does not apply to vending machines.

This final rule includes a use condition that limits the refrigerant charge in this end-use to 150 grams (5.3 ounces) or less. EPA is also requiring other use conditions as described in Section III (“What Did EPA Propose, and What are we finalizing?”) below.

This final rule lists the use of three alternative refrigerants in two end-uses: Household refrigerators, freezers, and combination refrigerators and freezers; and retail food refrigerators and freezers (stand-alone units only). Potentially regulated entities that may use isobutane (R-600a) or R-441A in household refrigeration or propane (R-290) in retail food refrigeration include:

This table is not intended to be exhaustive, but rather functions as a guide regarding entities that are likely to use the substitute whose use is regulated by this action. If you have any questions about whether this action applies to a particular entity, consult the person listed in the preceding section,FOR FURTHER INFORMATION CONTACT.

Below is a list of acronyms and abbreviations used in the preamble of this rule.

Section 612 of the Clean Air Act (CAA) requires EPA to develop a program for evaluating alternatives to ozone-depleting substances (ODS). EPA refers to this program as the Significant New Alternatives Policy (SNAP) program. The major provisions of section 612 are:

Section 612(c) requires EPA to promulgate rules making it unlawful to replace any class I substance (i.e.,chlorofluorocarbon, halon, carbon tetrachloride, methyl chloroform, methyl bromide, and hydrobromofluorocarbon) or class II substance (i.e.,hydrochlorofluorocarbon) with any substitute that the Administrator determines may present adverse effects to human health or the environment where the Administrator has identified an alternative that (1) reduces the overall risk to human health and the environment, and (2) is currently or potentially available.

Section 612(c) requires EPA to publish a list of the substitutes unacceptable for specific uses and topublish a corresponding list of acceptable alternatives for specific uses. The list of acceptable substitutes is found athttp://www.epa.gov/ozone/snap/lists/index.html,and the lists of substitutes that are “unacceptable,” “acceptable subject to use conditions,” and “acceptable subject to narrowed use limits” are in subpart G of 40 CFR part 82.

Section 612(d) grants the right to any person to petition EPA to add a substance to, or delete a substance from, the lists published in accordance with section 612(c). The Agency has 90 days to grant or deny a petition. Where the Agency grants the petition, EPA must publish the revised lists within an additional six months.

Section 612(e) directs EPA to require any person who produces a chemical substitute for a class I substance to notify the Agency not less than 90 days before new or existing chemicals are introduced into interstate commerce for significant new uses as substitutes for a class I substance. The producer must also provide the Agency with the producer's unpublished health and safety studies on such substitutes.

Section 612(b)(1) states that the Administrator shall seek to maximize the use of federal research facilities and resources to assist users of class I and II substances in identifying and developing alternatives to the use of such substances in key commercial applications.

Section 612(b)(4) requires the Agency to set up a public clearinghouse of alternative chemicals, product substitutes, and alternative manufacturing processes that are available for products and manufacturing processes which use class I and II substances.

On March 18, 1994, EPA published the original rulemaking (59 FR 13044) which established the process for administering the SNAP program and issued EPA's first lists identifying acceptable and unacceptable substitutes in the major industrial use sectors (subpart G of 40 CFR part 82). These sectors—refrigeration and air conditioning; foam blowing; cleaning solvents; fire suppression and explosion protection; sterilants; aerosols; adhesives, coatings and inks; and tobacco expansion—are the principal industrial sectors that historically consumed the largest volumes of ODS.

Section 612 of the CAA requires EPA to ensure that substitutes found acceptable do not present a significantly greater risk to human health and the environment than other substitutes that are currently or potentially available.

Under the SNAP regulations, anyone who plans to market or produce a substitute to replace a class I substance or class II substance in one of the eight major industrial use sectors must provide notice to the Agency, including health and safety information on the substitute, at least 90 days before introducing it into interstate commerce for significant new use as an alternative. This requirement applies to the persons planning to introduce the substitute into interstate commerce,4 which typically are chemical manufacturers but may include importers, formulators, equipment manufacturers, and end-users.5 The regulations identify certain narrow exemptions from the notification requirement, such as research and development and test marketing (40 CFR 82.176(b)(4) and (5), respectively).

The Agency has identified four possible decision categories for substitutes that are submitted for evaluation: Acceptable; acceptable subject to use conditions; acceptable subject to narrowed use limits; and unacceptable (40 CFR 82.180(b)). Use conditions and narrowed use limits are both considered “use restrictions” and are explained in the paragraphs below. Substitutes that are deemed acceptable with no use restrictions (no use conditions or narrowed use limits) can be used for all applications within the relevant end-uses in the sector.

After reviewing a substitute, the Agency may determine that a substitute is acceptable only if certain conditions in the way that the substitute is used are met to minimize risks to human health and the environment. EPA describes such substitutes as “acceptable subject to use conditions.” Entities that use these substitutes without meeting the associated use conditions are in violation of EPA's SNAP regulations.

For some substitutes, the Agency may permit a narrowed range of use within an end-use or sector. For example, the Agency may limit the use of a substitute to certain end-uses or specific applications within an industry sector. EPA describes these substitutes as “acceptable subject to narrowed use limits.” The Agency requires the user of a narrowed-use substitute to demonstrate that no other acceptable substitutes are available for the specific application by conducting comprehensive studies. A person using a substitute that is acceptable subject to narrowed use limits in applications and end-uses that are not consistent with the narrowed use limit is using the substitute in an unacceptable manner and is in violation of section 612 of the CAA and EPA's SNAP regulations.

The Agency publishes its SNAP program decisions in theFederal Register(FR). EPA publishes decisions concerning substitutes that are deemed acceptable subject to use restrictions (use conditions and/or narrowed use limits), or substitutes deemed unacceptable, as proposed rulemakings to provide the public with an opportunity to comment, before publishing final decisions.

In contrast, EPA publishes decisions concerning substitutes that are deemed acceptable with no restrictions in “notices of acceptability,” rather than as proposed and final rules. As described in the March 18, 1994, rule initially implementing the SNAP program, EPA does not believe that rulemaking procedures are necessary to list alternatives that are acceptable without restrictions because such listings neither impose any sanction nor prevent anyone from using a substitute.

Many SNAP listings include “Comments” or “Further Information” to provide additional information on substitutes. Since this additional information is not part of the regulatory decision, these statements are not binding for use of the substitute under the SNAP program. However, regulatory requirements so listed are binding under other regulatory programs (e.g.,worker protection regulations promulgated by the U.S. Occupational Safety and Health Administration (OSHA)). The “Further Information” classification does not necessarily include all other legal obligations pertaining to the use of the substitute. While the items listed are notlegally binding under the SNAP program, EPA encourages users of substitutes to apply all statements in the “Further Information” column in their use of these substitutes. In many instances, the information simply refers to sound operating practices that have already been identified in existing industry and/or building codes or standards. Thus many of the statements, if adopted, would not require the affected user to make significant changes in existing operating practices.

For copies of the comprehensive SNAP lists of substitutes or additional information on SNAP, refer to EPA's Ozone Layer Protection Web site at:www.epa.gov/ozone/snap/index.html.For more information on the Agency's process for administering the SNAP program or criteria for evaluation of substitutes, refer to the March 18, 1994, SNAP final rulemaking (59 FR 13044), codified at 40 CFR part 82, subpart G. A complete chronology of SNAP decisions and the appropriate citations is found at:http://www.epa.gov/ozone/snap/chron.html.

On May 10, 2010, EPA published a notice of proposed rulemaking (75 FR 25799) to list isobutane (R-600a) and the hydrocarbon blends HCR-188C and HCR-188C1 as “acceptable, subject to use conditions,” as substitutes for chlorofluorocarbon (CFC)-12 and hydrochlorofluorocarbon (HCFC)-226 in household refrigerators, freezers, and combination refrigerators and freezers.7 (This preamble refers to HCR-188C1 as R-441A.)

EPA also proposed to list propane (R-290) as “acceptable, subject to use conditions,” as a substitute for CFC-12, HCFC-22, and R-5028 in retail food refrigerators and freezers (stand-alone units only).

For each substitute, EPA proposed the following use conditions:

(1) These refrigerants may be used only in new equipment designed specifically and clearly identified for the refrigerant (i.e.,none of these substitutes may be used as a conversion or “retrofit” refrigerant for existing equipment).

(2) These refrigerants may be used only in refrigerators or freezers that meet all requirements listed in the 10th edition of Underwriters Laboratories (UL) Standard UL 250 (household refrigeration end-use) or the 9th edition (sic) of Standard UL 471 (retail food refrigeration end-use).

(3) The quantity of the substitute refrigerant (i.e.,“charge size”) in a refrigerator or freezer shall not exceed 57 grams (2.0 ounces) in the household refrigeration end-use or 150 grams (5.3 ounces) in the retail food refrigeration end-use.

(4) Similar to clauses SA6.1.1 to SA6.1.2 of UL 250 and SB6.1.2 to SB6.1.5 of UL 471, the following markings, or the equivalent, shall be provided and shall be permanent:

(a) “DANGER—Risk of Fire or Explosion. Flammable Refrigerant Used. Do Not Use Mechanical Devices To Defrost Refrigerator. Do Not Puncture Refrigerant Tubing.”

(b) “DANGER—Risk of Fire or Explosion. Flammable Refrigerant Used. To Be Repaired Only By Trained Service Personnel. Do Not Use Mechanical Devices. Do Not Puncture Refrigerant Tubing.”

(c) “CAUTION—Risk of Fire or Explosion. Flammable Refrigerant Used. Consult Repair Manual/Owner's Guide Before Attempting To Service This Product. All Safety Precautions Must be Followed.”

(d) “CAUTION—Risk of Fire or Explosion. Dispose of Properly In Accordance With Federal Or Local Regulations. Flammable Refrigerant Used.”

(e) “CAUTION—Risk of Fire or Explosion Due To Puncture Of Refrigerant Tubing; Follow Handling Instructions Carefully. Flammable Refrigerant Used.”

The marking described in clause (a) above shall be permanently attached on or near any evaporators that can be contacted by the consumer. The markings described in clauses (b) and (c) above shall be located near the machine compartment. The marking described in clause (d) above shall be permanently attached on the exterior of the refrigerator. The marking described in clause (e) above shall be permanently attached near any and all exposed refrigerant tubing. All of these markings shall be in letters no less than 6.4 mm (1/4 inch) high.

(5) The refrigerator or freezer must have red, Pantone® Matching System (PMS) #185 marked pipes, hoses, or other devices through which the refrigerant passes, typically known as the service port, to indicate the use of a flammable refrigerant. This color must be applied at all service ports and parts of the unit where service puncturing or otherwise creating an opening from the refrigerant circuit to the atmosphere might be expected, and must extend a minimum of 1 inch in both directions from such locations.

(6) The refrigerator or freezer must have service aperture fittings that differ from fittings used in equipment or containers using non-flammable refrigerant. “Differ” means that either the diameter must differ by at least 1/16 inch or the thread direction must be reversed. The unique fittings must be permanently affixed to the unit and may not be accessed with an adaptor until the end-of-life of the unit.

(7) These refrigerants may not be sold for use as a refrigerant in containers designed to contain less than 5 pounds (2.3 kg)9 of refrigerant.

The proposed rule also included several recommendations classified as “Further Information.” These addressed personal protective equipment, proximity to a Class B dry powder-type fire extinguisher, proper ventilation, use of spark-proof tools, recovery equipment, training, refrigerant storage, and evacuation.

Finally, in the proposed rule, EPA sought information and comment on several other issues:

• The availability of industry-wide training on flammable refrigerants for refrigerant technicians;

• Whether EPA should limit the use of hydrocarbon refrigerants only for use in the original equipment manufacturers' (OEMs') specific appliances, as described in the application;

• Whether the use conditions should require “spark-proof” circuits in the design of equipment using hydrocarbon refrigerants;

• The availability in the U.S. of recovery units that are designed specifically for hydrocarbons;

• Whether EPA should, in a future rulemaking, consider an exemption for hydrocarbon refrigerants from the venting prohibition under section 608 of the Clean Air Act;

• Whether EPA should require only one condition for each refrigerant: to meet the UL 250 or 471 standards; and

• Whether EPA should find hydrocarbon refrigerants unacceptable until an industry-wide standard exists for servicing refrigerators and freezers using hydrocarbon refrigerants.

After considering the comments received on the proposed rule, EPA is finalizing a listing for hydrocarbon refrigerants in the household refrigeration and retail food refrigeration end-uses.

EPA is taking action on the specific refrigerant/end-use combinations described in the proposed rule. We are: (1) Finding isobutane acceptable, subject to use conditions, in the household refrigeration end-use; (2) finding propane acceptable, subject to use conditions, in the retail food refrigeration end-use; and (3) finding R-441A (submitted as “HCR-188C1,” as discussed in Section I.A.1 above) acceptable, subject to use conditions, in the household refrigeration end-use. As discussed above, the submitter has withdrawn its application for the blend submitted as “HCR-188C,” and because that submission is no longer pending before the Agency, EPA is not finalizing a SNAP listing for that blend. The submitter has informed EPA that it is now marketing R-441A (the blend originally submitted as “HCR-188C1”) under the trade name “HCR-188C.”

For each of the listing decisions finalized in this action, we are establishing the following use conditions after considering comments on the proposed rule:

(1) EPA is finalizing the proposed requirement that these refrigerants be used only in new equipment designed specifically and clearly identified for the refrigerant (i.e.,none of these substitutes may be used as a conversion or “retrofit” refrigerant for existing equipment that is designed for other refrigerants). See Section V.B of this preamble (“New Equipment Only; Not Intended for Use as a Retrofit Alternative”).

(2) EPA is finalizing the proposed requirement that these refrigerants be used only in refrigerators or freezers that meet all requirements listed in Supplement SA to UL 250 (household refrigeration end-use) or Supplement SB to UL 471 (retail food refrigeration end-use). We clarify that the intent of this use condition is to require compliance with the provisions specifically for use with flammable refrigerants found in those supplements, rather than requiring compliance with other material in UL 250 and UL 471 that is not specific to use with flammable refrigerants. See Section V.C (“Compliance with UL Standards”).

(3) EPA is finalizing the proposed requirement for 57-gram and 150-gram charge size limitations for the household refrigeration and retail food refrigeration end-uses, respectively. We are also clarifying that the charge size limitations apply to each refrigerant circuit in a refrigerator or freezer, not necessarily the entire appliance. See Sections V.D (“Charge Size Limitation (Household Refrigeration)”) and V.E (“Charge Size Limitation (Retail Food Refrigeration)”).

(4) EPA is finalizing the marking (labeling) requirements as proposed, as discussed in Section V.F (“Labeling”), with two minor exceptions discussed in Section VI (“What Other Changes Is EPA Making in the Final Rule?”). First, we are correcting the wording of the label located at the machine compartment; second, we are clarifying the language of the requirement to more clearly link each label with its wording and location.

(5) EPA is finalizing the proposed requirement that the refrigerator or freezer have red PMS #185-marked pipes, hoses, or other devices through which the refrigerant passes. We are narrowing the applicability of this requirement by clarifying that the color must be present at all locations through which the refrigerant is serviced, and where service puncturing or otherwise creating an opening from the refrigerant circuit to the atmosphere might be expected (e.g.,process tubes), instead of all locations where the refrigerant passes. In addition, we are clarifying that the red coloring must be in place at all times and must be replaced if removed. See Section V.G (“Color-Coded Hoses and Piping”).

(6) Based on the comments received, EPA is not finalizing the proposed requirement for unique fittings at service apertures. Instead we are providing this as a recommendation in the “Further Information” column of Appendix R. See Section V.H (“Unique Fittings”).

(7) Based on the comments received, EPA is not finalizing the proposed requirement prohibiting the sale of hydrocarbon refrigerants in containers designed to contain less than 5 pounds (2.3 kg) of refrigerant. See Section V.I (“Small Containers”).

EPA is also making two other changes to the wording of the use conditions and “Further Information” provisions in Appendix R. First, we are clarifying that R-502 is one of the refrigerants for which propane is listed as a substitute in the retail food refrigeration end-use. Second, we are including in the “Further Information” column a cross-reference to relevant OSHA regulations.

To determine whether these three substitutes present risks that are lower than or comparable to risks from other substitutes that are currently or potentially available in the end-uses under consideration, we examined the criteria in 40 CFR 82.180(a)(7), focusing in particular on the following areas of concern: Impacts on stratospheric ozone and climate; volatile organic compound (VOC) emissions; flammability; asphyxiation risks for consumers and end-users; and toxicity risks to workers, consumers, and the general population.

In support of the proposed rule, in 2009, EPA performed a risk screen analysis for each of the substitutes for the end-use proposed for listing: Isobutane in household refrigeration (ICF, 2009a), propane in retail food refrigeration (ICF, 2009b), HCR-188C in household refrigeration (ICF, 2009c), and HCR-188C1 (R-441A) in household refrigeration (ICF, 2009d). In developing this final rule, EPA reviewed these risk screens and made minor changes for greater consistency and clarity, but made no substantive changes to the assumptions or to the quantitative risk calculations. (EPA did not revise the risk screen for HCR-188C, since the manufacturer withdrew the application for that refrigerant, and EPA is not finalizing an acceptability determination for the refrigerant.) The 2009 risk screens and the 2011 revisions (ICF, 2011a; ICF, 2011b; ICF, 2011c) are included in the docket for this rulemaking.

Based on the information provided in the risk screens, EPA has concluded that the overall environmental risk posed by each of the three substitutes is lower than or comparable to the environmental risks posed by other substitutes in the reviewed end-uses. With respect to public health risks, EPA has concluded that without mitigation, the risks posed by these refrigerants would be higher than other non-flammable refrigerants because individuals may not be aware that their actions could potentially cause a fire, and existing equipment has not been designed specifically to minimize flammability risks. Therefore, EPA is finalizing use conditions to ensure that the overall risks to human health and the environment posed by these substitutes are lower than or comparable to the overall risk posed by other substitutes in the same end-use.

EPA has concluded that, overall, the environmental risk posed by each of the three reviewed substitutes is lower than or comparable to the environmental risk posed by other substitutes in the reviewed end-uses. All three substitutes have zero ozone depletion potential (ODP) and very low global warming potential (GWP) compared to other refrigerants. Although the substitutes are VOCs, the emissions from the specific uses being found acceptable subject to use conditions would not significantly affect local air quality. Thus the environmental risks associated with ODP, GWP, and VOC effects for each reviewed substitute are lower than or comparable to other acceptable substitutes. These risks are discussed below.

A chemical's ODP is the ratio of its impact on stratospheric ozone compared to the impact of an identical mass of CFC-11.10 The ODP of CFC-11 is defined as 1.0. Other CFCs and HCFCs have ODPs ranging from 0.01 to 1.0 (WMO, 2011). The ODP of HCFC-22 is 0.055, and the ODP of R-502 is 0.334. The three substitutes discussed in this rule have an ODP of zero, as do other common substitutes in the same end-uses, such as HFC-134a, R-404A, and R-410A.

The GWP of a greenhouse gas (GHG) quantifies its potential integrated climate forcing relative to carbon dioxide (CO2) over a specified time horizon. The 100-year integrated GWPs of isobutane, propane, and R-441A are estimated to be 8 (GE, 2008), 3 (Ben and Jerry's, 2008), and less than 5 (A.S. Trust & Holdings, 2009),11 respectively, relative to a value of 1.0 for CO2. These are significantly lower than the 100-year integrated GWPs of the substances that they would be replacing: CFC-12 (GWP = 10,890); HCFC-22 (GWP = 1,810); and R-502 (GWP = 4,660) (WMO, 2011) and are significantly lower than those of other acceptable refrigerants in these end-uses (e.g.,GWPs of HFC-134a, R-404A, and R-410A are approximately 1,430, 3,920, and 2,090, respectively).

The overall climate impacts from the use of these refrigerants are also dependent upon the energy use by the appliances in which they are used, because the indirect climate impacts associated with electricity consumption typically exceed those from the refrigerants themselves over the full life cycle of refrigerant-containing products (ORNL, 1997). A hydrocarbon appliance that is more energy-efficient than the appliance it replaces would result in GHG emission reductions beyond those attributable to the substitute refrigerant alone. Conversely, the GHG benefits of a substitute refrigerant in a replacement hydrocarbon appliance would be offset if that appliance had lower energy efficiency than the appliance it replaces. EPA was unable to find any detailed life-cycle analysis addressing GHG emissions associated with substituting traditional ODS refrigerants with hydrocarbons. Information in the submissions indicates that energy efficiency of these refrigerants is likely to be comparable to or higher than that of ODS refrigerants and of HFC refrigerants sometimes used (e.g.,HFC-134a) (Ben & Jerry's, 2008; A.S. Trust & Holdings, 2007, 2009; GE, 2008). In the2010 Assessment Report of the Technology and Economic Assessment Panel,UNEP's Technology and Economic Assessment Panel (TEAP) discusses the energy efficiency of hydrocarbons compared to that of HFC-134a:

Hydrocarbons are regulated as VOCs under sections of the CAA that address development of State Implementation Plans to attain and maintain National Ambient Air Quality Standards for ground-level ozone, which is a respiratory irritant (see 40 CFR 51.100(s)). EPA's 1994 risk screen document (EPA, 1994) describes the potential emissions of VOCs from all substitutes for all end-uses in the refrigeration and air-conditioning sector as likely to be insignificant relative to VOCs from all other sources (i.e.,other industries, mobile sources, and biogenic sources). Analysis performed for this rulemaking indicates that in the extremely unlikely event that all appliances manufactured by each submitter in these two end-uses were to leak their entire charge over the course of a year, the resulting increase in annual VOC emissions from each substitute as a percent of all annual VOC emissions in the U.S. would be negligible.12

Therefore, the use of these hydrocarbons in the household refrigeration and retail food refrigeration end-uses is sufficiently small that a switch from an ODS or from an HFC refrigerant would not have a noticeable impact on local air quality. International experts came to a similar conclusion inSafeguarding the Ozone Layer and the Global Climate System: Special Report of the Intergovernmental Panel on Climate Change(IPCC/TEAP, 2005).

Similarly, EPA expects that additional releases of hydrocarbons into the environment from use as refrigerant will have an insignificant impact on ecosystem risks. Because hydrocarbons are volatile and break down quickly in the atmosphere into naturally-occurring compounds such as carbon dioxide, EPA would not expect there to be any significant amount of deposition that might adversely affect aquatic or terrestrial ecosystems.

Because they are flammable, isobutane, propane, and R-441A could pose a significant safety hazard for workers and consumers if handled incorrectly. Isobutane, propane, and R-441A have lower flammability limits (LFLs)13 of 18,000 ppm, 21,000 ppm, and 16,000 ppm, respectively. The ODS for which these refrigerants are substitutes—CFC-12, HCFC-22, and R-502—and other substitutes available in this end-use are not flammable. When the concentration of a flammable refrigerant reaches or exceeds its LFL in the presence of an ignition source (e.g.,a static electricity spark resulting from closing a door, use of a torch during servicing, or a short circuit in wiring that controls the motor of a compressor), an explosion or fire could occur.

Flammability risks are of particular concern because household refrigeration appliances and retail food refrigeration appliances in the United States traditionally have used refrigerants that are not flammable. Without mitigation, the risks posed by flammable refrigerants would be higher than those posed by non-flammable refrigerants because individuals may not be aware that their actions could cause a fire, andexisting appliances have not been designed specifically to minimize flammability risks.

Therefore, in order for these substitutes to be used safely, it is important to minimize the presence of potential ignition sources and to reduce the likelihood that the levels of these refrigerants will reach their LFLs. Production facilities, and other facilities where large quantities of the refrigerant are stored, should have proper safety precautions in place to minimize the risk of explosion. EPA recommends that these facilities be equipped with proper ventilation systems to minimize the risks of explosion and be designed to reduce risks from possible ignition sources.

To determine whether the three hydrocarbon refrigerants would present flammability concerns for service and manufacture personnel or for consumers, EPA reviewed the submitters' detailed assessments of the probability of events that might create a fire, as well as engineering approaches to avoid sparking from the refrigeration equipment. EPA also conducted risk screens, available in the docket for this rulemaking, evaluating reasonable worst-case scenarios to model the effects of the sudden release of the refrigerants. The worst-case scenario analysis for each of the three hydrocarbons revealed that even if the unit's full charge were emitted within one minute, the concentration would not reach the LFL for that hydrocarbon.

However, since hydrocarbon refrigerants are flammable, and manufacture personnel, service personnel, and consumers in the U.S. may not be widely familiar with refrigeration appliances containing flammable refrigerants, use conditions are necessary to create awareness of the presence of a flammable refrigerant and ensure safe handling. For this reason, this final rule includes use conditions in order to ensure that these substitutes present aggregate risks that are lower than or comparable to those of other substitutes that are currently or potentially available. This final rule also lists recommendations such as proper ventilation and storage practices, and use of appropriate tools and recovery equipment, to mitigate safety risks for manufacture and servicing personnel.

In evaluating potential human health impacts of isobutane, propane, and R-441A, EPA considered the risk of asphyxiation to workers (store employees and technicians) and consumers. The Agency evaluated a worst-case scenario that did not consider likely mitigating exposure conditions such as open doors or windows, fans, conditioned airflow, or infiltration between a door and its door frame. EPA calculated the maximum charge of each refrigerant that would result in a reduction of oxygen levels to 12 percent in air, which is the no observable adverse effect level (NOAEL) for hypoxia (ICF, 1997). Specifically, under the worst-case conditions evaluated, the charge sizes necessary to reduce the oxygen level in air to the 12-percent NOAEL in the household refrigeration end-use would be 625 grams and 535 grams (for isobutane and R-441A, respectively), which is much larger than the 57-gram charge size limitation required in the use conditions in this rule (ICF, 2011a and 2011c). Likewise, the charge size necessary to achieve the NOAEL in the retail food refrigeration end-use would be 904 grams for propane, which is six times greater than the 150-gram charge size limitations in this rule (ICF, 2011b). This risk is lower than or comparable to that of other available substitutes in these end-uses.

EPA evaluated the toxicity impacts of the three refrigerants to workers and consumers for the household refrigeration and retail food refrigeration end-uses. The Agency estimated the maximum time-weighted average (TWA)14 exposures for the hydrocarbons under different exposure scenarios and compared them to relevant industry and government exposure limits for each of the three hydrocarbons (including potential impurities in the substitutes). The risk screens, provided in the docket, describe the toxicity impact assessments in more detail (ICF, 2009a; ICF, 2009b; ICF, 2009d; ICF, 2011a, ICF, 2011b, ICF, 2011c).

To assess occupational exposure for the household refrigeration and retail food refrigeration end-uses, EPA estimated the number of refrigerant releases during appliance manufacture and disposal and the refrigerant amounts released per event. For each refrigerant, EPA used those estimates to calculate the maximum 8-hour TWA exposure, which we then compared to the corresponding workplace guidance level (WGL). EPA found that occupational exposures to these hydrocarbons should not pose a toxicity threat in either end-use because the TWAs were well below the industry and government exposure limits.

To assess consumer and end-user exposure for the household refrigeration end-use, EPA modeled 15- and 30-minute TWAs for catastrophic refrigerant release in a consumer kitchen under a reasonable worst-case scenario. Even under the very conservative modeling assumptions used, EPA found that exposures to any of the three hydrocarbons would not pose a toxicity threat to end-users in the household refrigeration end-use because the TWAs were significantly lower than the NOAEL and/or acute exposure guideline level (AEGL).

To assess consumer and end-user exposure for the retail food refrigeration end-use, EPA estimated 15- and 30-minute TWAs as acute/short-term consumer exposures resulting from catastrophic leakage of refrigerant from retail food refrigerators and compared the TWAs to standard toxicity limits. EPA concluded that none of the three hydrocarbons posed a toxicity threat to consumers in the retail end-use because the TWAs were significantly lower than the NOAEL and/or AEGL.

Finally, EPA assessed the exposure risk to the general population for the three hydrocarbons in their respective end-uses. To do so, EPA estimated factory and on-site releases of each hydrocarbon and compared them to each hydrocarbon's reference concentration (RfC).15 In all cases, the modeled exposure concentrations were significantly lower than the RfC, leading EPA to conclude that isobutane, propane, and R-441A are unlikely to pose a toxicity risk to the general population. These toxicity risks are lower than or comparable to those posed by the other acceptable substitutes in these end-uses.

In this section, EPA responds to comments on the May 10, 2010, notice of proposed rulemaking (NPRM).

Comment:Ninety-nine commenters expressed unconditional support for EPA's proposal to find isobutane and R-441A acceptable (subject to use conditions) in the household refrigeration end-use and to find propane acceptable (subject to use conditions) in the retail food refrigeration end-use.

Response:We appreciate the support for our proposed action, and we are taking final action consistent with that proposal.

Comment:One commenter observed that although hydrocarbon refrigerants provide some environmental benefit by reducing GHG emissions, they pose flammability risks that more than offset that benefit. The commenter stated that the global warming impacts of HFC refrigerants are currently small due to their low emissions (except in the case of catastrophic leaks), and practices are in place to recover refrigerant and destroy foam at an appliance's end-of-life. The commenter also observed that hydrocarbon refrigerants could enter the refrigerant recovery/recycle chain during servicing or at the end-of-life, necessitating costly upgrades to recycle/recovery equipment in order to mitigate potential flammability risks.

Response:EPA reviews substitutes according to regulatory criteria provided at 40 CFR 82.180(a)(7) and described above. EPA has evaluated the hydrocarbon refrigerants against these criteria and has concluded that they present overall environmental and human health risks that are lower than or comparable to other acceptable substitutes in the household refrigeration and retail food refrigeration end-uses. EPA agrees that flammability risks could be a concern for these refrigerants in these end-uses. But, for the two end-uses at issue in this rule, where charges are limited and there is a long history of safe use globally, EPA believes risks can be mitigated to ensure the substitutes can be used as safely as other available substitutes. We are establishing use conditions to ensure that these substitutes pose an overall risk to human health and the environment that is lower than or comparable to the overall risk posed by other substitutes in the same end-uses.

With respect to the comment regarding risks during servicing and at end-of-life, EPA agrees that flammability could pose a concern for the servicing and disposal of appliances containing hydrocarbon refrigerants. However, the use conditions in this final rule address this potential risk. For example, the labeling requirements and the requirement for coloring of tubing will serve as notification to servicing or disposal personnel that an appliance contains a flammable refrigerant.

Section V.L (below) also discusses recovery equipment. Based on comments received, EPA believes that recovery equipment designed specifically for flammable refrigerants is not yet widely manufactured or available in the U.S., although certain commenters observed that they have created their own equipment to meet this need in their own business practices.

Comment:Another commenter provided detailed comments on EPA's risk screen for the use of isobutane in the household refrigeration end-use and limited comments on EPA's risk screen for the use of propane in the retail food refrigeration end-use. The commenter stated that EPA has underestimated the safety risks associated with the use of hydrocarbon refrigerants. The comments covered the following:

1. A fault-tree analysis calculating the probability of failures that would lead to ignition of the refrigerant;

2. The results of an external leak test in a mockup kitchen to illustrate the consequences of an external leak;

3. The results of an internal leak test and a deflagration/explosion test to illustrate the consequences of an internal leak;

4. An observation about a manufacturer's major recall of certain models of isobutane refrigerators in 2009 as a result of safety incidents in Asia and Europe; and

5. A statement of similar concerns about the use of propane in small commercial refrigeration systems.

This section of the preamble summarizes these comments and EPA's response.

Comment 1:Fault tree analysis.

Comment:The commenter included a fault-tree analysis (FTA) that assessed the probability of household refrigerator ignition events due to the random coincidence of ignition sources and internal refrigerant leaks. An FTA considers how likely different events are and how resistant a system is to various faults. The commenter's FTA analyzed several potential scenarios in which ignition events could take place in household refrigerators. The commenter's FTA calculated that isobutane household refrigerators in the U.S. would experience: (a) 2.9 ignition events per year at full market penetration as a result of independent, random events, and (b) an additional 2.5 ignition events for every 10 million refrigerators that enter the market due to a specific coupled failure in which the malfunction of the defrost heater is both the cause of the leak and the ignition source. The commenter concluded that EPA potentially underestimated the risk of ignition-related failures in residential refrigerators for internal leak events. Details of the two calculations are presented below.

(a) Failure scenarios based on independent, random events. The commenter's FTA identified two events that, occurring simultaneously, could potentially lead to an ignition event: (1) An internal isobutane refrigerant leak and (2) the occurrence of an energy source with sufficient energy to cause ignition. The commenter's FTA identified and calculated probabilities for the different ways in which each of these events could happen.

To calculate the probability of an internal leak event, the commenter made assumptions regarding: The number of refrigerator repairs due to joint leakage and evaporator corrosion that might be related to a leak; the number of refrigerator repairs annually (based on the estimated amount of HFC-134a currently sold for use in servicing); and a multiplier accounting for the number of leaking refrigerators that would be thrown away instead of repaired. Based on these assumptions, the commenter estimated that isobutane refrigerators would experience approximately 260,000 internal leak failures per year in the U.S. at full market penetration (which the commenter estimated at approximately 150 million refrigerators).

To calculate the probability of an energy source with sufficient energy to cause ignition, the commenter's FTA estimated the probability of sparks from internal switches and controls, the defrost heater, and static electricity, asserting that any of these sparks would have sufficient energy to ignite a leak. The commenter's FTA calculated the likelihood of an ignition source as 11.2 in 1,000,000.

The commenter's FTA integrated the above assumptions and estimates to calculate an expected 2.9 ignition events per year at U.S. full market penetration.

(b) “Coupled leak failure” scenario. The commenter asserted that in addition to the random, independent events assessed above, the defrost heater presents a risk of a coupled failure because an electric short to the evaporator coil can be the cause of both the refrigerant leak and the ignition event. The commenter took three factors into account to determine the total number of ignition events from this coupled failure: (1) The probability that the defrost heater will short-circuit, (2) the probability that an arc from the defrost heater will cause a refrigerant leak, and (3) the probability that the refrigerant will be present in sufficient quantities to ignite (i.e.,whether the concentration will be at the LFL or higher). The commenter estimated that for every 10 million household refrigerators using isobutane that are produced, there would be an estimated 2.5 failure events in which an electrical short to the evaporator coil causes botha refrigerant leak and an ignition over the lifetime of those units. The commenter clarified that this value is in addition to the ignition events calculated in the previous FTA, which would result from the coincidence of independent, random events.

Response:While EPA believes that the commenter has overestimated failure probabilities, we agree with the commenter that the risks associated with the use of isobutane in household refrigerators are greater than zero. EPA believes, however, that these risks are sufficiently small and should not preclude a determination that isobutane is acceptable for use subject to use conditions that are for the purpose of mitigating the potential risks.

EPA's interpretation of the risk of ignition-related failures in residential refrigerators for internal leak events is based on information presented in “Risk Assessment of Flammable Refrigerants for Use in Home Appliances” (A.D. Little, 1991). The A.D. Little report, available in the docket for this rulemaking, included an FTA in which leak rate calculations were based on historical leak rate data provided by three refrigerator manufacturers. As explained in more detail below, EPA believes that many elements of the commenter's FTA are undocumented, are at odds with the industry data used in the A.D. Little report, and present internal analytical inconsistencies.

(a) Failure scenarios based on independent, random events. Regarding the failure scenarios based on independent, random events, we note that the commenter's discussion of methodology, the equation used for the calculation, and the calculations in the commenter's FTA were inconsistent with each other, making it difficult to evaluate what had been done. Based on the commenter's discussion of methodology, EPA believes that the commenter's FTA applied assumptions that are either undocumented or unsupported by industry data. One such assumption is particularly problematic: The commenter's analysis appears to have considered all leaks as potential risks for ignition. However, in order for a leak to pose a potential risk for ignition, the refrigerant must be present in amounts that meet or exceed the LFL. The ability of a refrigerant to accumulate and reach its LFL is a function of both the rate at which the leak occurs and the presence of enclosed spaces that can trap the refrigerant and allow it to build up. Neither of these conditions was accounted for in the commenter's probability calculations.

As previously mentioned, the A.D. Little report calculated leak rates from historical leak rate data provided by three refrigerator manufacturers. A.D. Little distinguished “catastrophic” leaks (the loss of a significant portion of refrigerant charge over a few minutes) from “slow” leaks, observing that only catastrophic or “fast” leaks would allow refrigerant to accumulate to a level of concern. The report goes on to calculate the “average” risk that a leak is a fast leak as 0.1 percent and the “worst-case” risk that a leak is a fast leak as 1 percent. EPA believes that the commenter's failure to distinguish “slow” from “fast” leaks causes the commenter's analysis to overestimate the risk of an ignitable leak by at least two orders of magnitude.

Furthermore, today's rule finalizes use conditions that guard against the potential that refrigerant from a “fast” leak will be able to accumulate in amounts that reach the LFL, or that an ignition source would cause an ignition event in the case of a significant leak. The use conditions require any household refrigerator using isobutane to be designed specifically for use with flammable refrigerant in a manner that complies with the UL 250 Standard. UL 250, Supplement SA, “Requirements for Refrigerators and Freezers Employing a Flammable Refrigerant in the Refrigerating System,” is intended to protect against an ignition incident in the event of a refrigerant leak. Units that are in compliance with UL 250 (particularly Supplement SA) have passed appropriate ignition or leakage tests as stipulated in the standard. Passing the leakage test (at SA 5.1.2.7 and SA 5.1.3.6) ensures that refrigerant concentrations in the event of a leak do not reach or exceed 75 percent of the LFL inside any internal or external electrical component compartments.

(b) “Coupled leak failure” scenario. EPA's concerns about the independent variables underlying the coupled leak failure scenario are the same as those articulated above for randomized events. The commenter did not provide clear documentation or a rationale for how estimates were derived.

EPA believes that the commenter overestimated the probability that a defrost heater would cause a leak and cause ignition because the calculation neglected to account for an important factor: the probability of a defrost cycle coinciding with the time period during which concentrations in the compartment reach the LFL. Even if a refrigerant is present in sufficient quantity (i.e.,at LFL), it will not ignite if there is no ignition source. For example, if the door to a compartment that contains refrigerant at LFL is opened before a new defrost cycle begins and the refrigerant dissipates to concentrations below the LFL, then no ignition event will take place, when the next defrost heater cycle begins and an arc occurs. The commenter claimed that the defrost cycle is only active 2 percent of the time (for three 10-minute periods per day). Had the commenter incorporated this factor into the calculations, the number of coupled leak failures would be approximately 50 times lower, dropping from 2.5 per 10 million units to about 0.05 per 10 million units. Since this is the probability of a coupled leak failure over the lifetime of a unit, and the average lifetime of a unit is estimated to be a minimum of 10 years, this would correspond to at most 0.08 ignition events per year at full market penetration (approximately 150 million refrigerators, according to the commenter) due to a coupled leak failure. We consider this a reasonable risk level. Moreover, use conditions in this final rule should further decrease the likelihood of such an event occurring, and that these risks are sufficiently small and should not preclude a determination that isobutane is acceptable for use, subject to use conditions that are for the purpose of mitigating potential risks.

Comment 2:External leak test.

The commenter presented results from an experiment that mimicked a leak from an isobutane refrigerator using a bottom-freezer refrigerator located inside a controlled ambient chamber and performed test measurements of isobutane levels in a mockup kitchen. The commenter stated that the experiment followed the leak procedure in the UL 250 standard, including the following setup:

• A kitchen intended to closely resemble a typical U.S. kitchen;

• A bottom-freezer refrigerator located inside a control ambient chamber;

• A 57-gram charge of isobutane; and

• Eight calibrated Henze-Hauck concentration sensors near potential ignition sources.

After running the test, the commenter stated that five sensors showed isobutane concentrations exceeding the LFL for several minutes. The commenter used these results as the basis of an assertion that EPA underestimated the risks from external leaks.

Response:To assess the commenter's experiment fully, EPA would require values for the commenter's test parameters and supporting documentation. Based on the information provided, however, we have the following responses.

We note that the commenter's experiment was meant to simulate a worst-case scenario leak. Based on industry data in the A.D. Little report, the annual probability of a catastrophic leak outside a given refrigerator is typically 3.6 × 10−7, with a worst-case probability of 9.0 × 10−6.

The commenter did not provide the make and model of the refrigerator used, and did not describe whether it was designed specifically to use isobutane as a refrigerant. Since EPA is requiring any isobutane refrigerator to be designed specifically for use with flammable refrigerant and to comply with Supplement SA of UL 250 for use with flammable refrigerants, results from a test for a refrigerator not designed to meet the requirements of Supplement SA would not reflect the risks associated with an isobutane refrigerator that is compliant with the use conditions in this final rule. Even if the refrigerator were specifically designed for use with an isobutane refrigerant and fully compliant with all portions of the UL 250 Standard, EPA believes that the leaked refrigerant at the locations of the five sensors showing isobutane concentrations at or exceeding the LFL is not likely to ignite for the reasons discussed below.

The commenter's experiment leaked an unrealistically large amount of refrigerant, causing slightly higher measurements for isobutane concentrations than could be expected in the actual event of a leak. As described in Section V.D of this preamble (Charge Size Limitation—Household Refrigeration), the proposed and final rules limit the charge size for each sealed refrigerant system to 57 grams, with a use condition for compliance with the UL 250 Standard Supplement SA, which calls for a charge size that will not leak more than 50 grams of hydrocarbon refrigerant with properties similar to isobutane. Thus, a leak of 57 grams, such as the one described in the commenter's experiment, is not consistent with a possible leak from an isobutane refrigerator that is compliant with the use conditions in this final rule.

The first of the five sensors that showed isobutane concentrations above the LFL registered a maximum level of 1.9% for approximately 0.6 minutes (36 seconds). This was just barely above the LFL of 1.8% and had a duration of less than a minute. The sensor would have measured a concentration at or above the LFL for less than 0.6 minutes, if at all, if the test had leaked a realistic amount of refrigerant based on the use conditions in the proposed and final rules.

The concentrations measured at the four other sensors likely still would have been higher than the LFL, even if a realistic amount of refrigerant had been leaked. However, EPA does not believe that there are likely ignition sources present at those locations, which are near the compressor relay, on the floor behind the refrigerator, on the floor just in front of the refrigerator, and on the floor 2.5 meters in front of the refrigerator. If the refrigerator were designed in accordance with the UL 250 Standard as required by this rule, then there would be no ignition sources in either of the first two locations, or the refrigerator would be designed in such a way that the LFL would not be reached near an ignition source in those locations.16 As for the last two sensors, EPA disagrees with the commenter's assertion that these locations are a likely source of sparks. While not impossible, we believe it is highly unlikely that a major external leak would occur and at the same time, someone would light a match or cigarette in their kitchen and then drop it on the floor. We note that the LFL was not reached at the sensor located near a more likely spark source—30 inches above the floor at an electrical outlet.

In response to the commenter's general observation that EPA's risk screen may underestimate risks, EPA revisited the assumptions made in the end-use modeling for both isobutane and R-441A in the household refrigeration end-use to identify opportunities for a more conservative analysis. The results of this analysis are provided in a memo, “Additional end-use modeling for household refrigerators and freezers” (ICF, 2011d), which is provided in the docket for this rulemaking. This exercise identified two parameters for which assumptions could be more conservative:

• Leak amounts were increased to 57 grams (representing the entire allowable charge size) rather than 50 grams (for isobutane) and 40 grams (for R-441A), which were the intended charge sizes submitted by the applicants. While a leak amount of 57 grams is greater than that allowed by the UL 250 Standard, this additional analysis conservatively accounts for the possibility of incorrect manufacturer testing of the product. (We note that a refrigerator that leaks more than 50 grams of isobutane or R-441A refrigerant would not be in compliance with UL 250, and therefore would be in violation of the use conditions of this rule.)

• Stratification was more conservatively modeled through the assumption that 95 percent of the leaked refrigerant mixes evenly into the bottom 0.2 meters (9 inches) of the room, rather than the bottom 0.4 meters as assumed in the risk screen.

Using these more conservative assumptions, EPA performed additional flammability and threshold analysis. EPA found that even with a higher leak amount and a greater degree of stratification, the LFL was not reached in the model for either refrigerant. Furthermore, it would take a 75-gram leak in an 18 m3kitchen or a 57-gram leak in a 13.8 m3kitchen to meet or exceed the LFL in the lower portion of the room for isobutane. Likewise, it would take a 59-gram leak in an 18 m3kitchen or a 57-gram leak in a 17.3 m3kitchen to meet or exceed the LFL in the lower compartment of the room for R-441A. It should be noted that a survey of kitchen sizes found the smallest kitchen volume to be 31 m3, with 99 percent of kitchens having a volume of at least 53 m3(Murray, 1997 as cited in ICF, 2009a; ICF, 2009d; ICF, 2011a; and ICF, 2011c). Thus the results of this more conservative and protective modeling do not indicate a significant cause for concern that would cause us to change our determination that isobutane and R-441A are acceptable subject to use conditions for use in the household refrigeration end-use.

Depending on the mixing conditions, it is still possible that in certain locations at floor level, or in restricted areas such as the space between a refrigerator and a wall, the concentrations of isobutane or R-441A could reach their LFLs for a few minutes, posing a threat in the presence of a spark. However, in the worst case, the annual probability of a “fast” external leak occurring and an ignition source being present simultaneously is approximately 5.0 × 10−7, or 0.5 in a million) (A.D. Little, 1991).

Comment 3:Internal leak test and explosion/deflagration experiment.

The commenter provided a cursory description of an internal leak test that measured isobutane concentrations inside the freezer compartment. The commenter concluded that refrigerant concentrations inside the freezer compartment reached 3.2 percent, which exceeds the LFL of 1.8 percent.

The commenter also described the results of a test to reproduce the deflagration/explosion when an internal leak is ignited. The commenter stated that it performed a leakage test according to UL 250 on a U.S. market refrigerator with original components, including the defrost heater, in outdoor ambient conditions. The test leaked 57 grams of refrigerant and used an unidentified sparking source to simulate a faulty defrost heater connection in the freezer compartment. The result was a violent explosion that sent heavy objects, such as the freezer door, flying up to 48 feet high. The commenter argued that this demonstrates that 57 grams of isobutane would produce enough energy to result in structural damage.

Response:As was the case for the external leak test, the commenter provided neither the make and model of the refrigerator used, nor a statement regarding whether the refrigerator was designed specifically to use isobutane. Since EPA is requiring all isobutane refrigerators to be designed specifically for use with flammable refrigerant and to comply with Supplement SA of UL 250 for use of flammable refrigerants, results from a test for a non-compliant refrigerator would not reflect the risks associated with an isobutane refrigerator that is in compliance with the use conditions in this rule. As previously noted, Supplement SA is intended to protect against an ignition incident in the event of a refrigerant leak. Units that are in compliance with Supplement SA of UL 250 have passed appropriate ignition or leakage tests as stipulated in the standard. Passing the leakage test (at SA 5.1.2.7 and SA 5.1.3.6) ensures that refrigerant concentrations in the event of a leak do not reach 75 percent of the LFL inside food compartments.

EPA also notes that the commenter's experiment was meant to simulate a worst-case scenario leak. Based on industry data in the A.D. Little report, the annual probability of a fire or explosion inside a given refrigerator is 2.7 − 10−13on average, with a worst-case probability of 7.0 − 10−12. This latter value corresponds to roughly 0.001 ignition events per year (or 1 ignition event every 1,000 years) at full market penetration (approximately 150 million refrigerators, according to the commenter) under a worst-case scenario. We consider this a reasonable risk level. Again, we note that the use conditions in this final rule should further decrease the likelihood of such an event occurring, and that these risks are small enough not to preclude a determination that isobutane is acceptable for use subject to the use conditions required by this final rule.

Comment 4:Recall of isobutane refrigerators.

The commenter described a major recall of certain models of isobutane refrigerators. In 2009 a major consumer refrigerator manufacturer announced a recall of isobutane refrigerators as a result of safety incidents that occurred in Asia and Europe. These incidents occurred despite the fact that these units were specifically designed to operate with isobutane, and were designed to eliminate potential ignition sources. The electrical insulation in the defrost mechanism in these units carbonized, leading to partial short-circuiting and sparking. The sparking corroded the adjacent tubing, which resulted in a leak of hydrocarbon refrigerant. Isobutane concentrations accumulated enough to exceed the LFL in the closed refrigerator unit. During the next defrost cycle, the faulty electrical circuit resulted in ignition of the refrigerant and an explosion.

Response:The recall discussed in this comment occurred in October 2009 and involved approximately 400,000 refrigerators in South Korea and Europe that were manufactured between March 2005 and June 2006. According to the manufacturer, the recall was triggered by an October 29, 2009, explosion of an isobutane refrigerator in Gyeonggi, South Korea. Press accounts also discuss a small number of related incidents in the United Kingdom and Germany between 2006 and 2009. Addressing the problem under the recall involved home visits to install a safety device to prevent the defrost heater from overheating.

EPA notes that this final rule requires all isobutane refrigerators to comply with the provisions of Supplement SA to UL 250. These provisions include leakage, ignition, and temperature tests, as well as an accelerated aging test of heater terminal seals and an insulation resistance test of all defrost heaters. These tests are not included in the standards established by the International Electrotechnical Commission (IEC) that would have been applicable to the appliances under recall.

EPA also notes that more than 400 million hydrocarbon refrigerator units are in use worldwide; in China alone, 75 percent of new domestic refrigerators/freezers use isobutane. Refrigerator ignition incidents resulting from leaked isobutane appear to be rare considering the widespread use of hydrocarbon refrigerators worldwide.

Comment 5:Use of propane in small commercial refrigeration systems.

The commenter includes a brief observation that the use of propane in small commercial refrigeration systems poses risks similar to use of isobutane in residential refrigerators. The commenter also argues that larger hydrocarbon charges pose a higher risk of ignition events, and that small commercial refrigeration systems are known to have much higher leakage frequencies and failure rates than residential systems.

Response:As discussed above, EPA performed a risk screen on the use of propane in small commercial refrigeration systems (ICF, 2009b, revised as ICF, 2011b), which is available in the docket for this rulemaking. The risk screen indicates that propane's LFL is not reached in the retail food refrigeration end-use where the charge size does not exceed that established by the use conditions. As described in the risk screen, under a worst-case (catastrophic) release scenario the maximum instantaneous concentration of propane in the lowest stratum of the room would be approximately 66 percent of the LFL and the concentration in the upper part of the room would be lower. Further, the SNAP application for this end-use pointed out that no catastrophic (“fast”) leaks had been reported from among the 270,000 hydrocarbon refrigerators in operation belonging to the submitter.

The commenter did not provide information to refute EPA's risk screen for retail food refrigeration. EPA's flammability assessment indicates that the risk of explosion is extremely small in this end-use.

EPA received ten comments on its proposed requirement that hydrocarbon refrigerants “be used only in new equipment designed specifically and clearly identified for the refrigerant (i.e.,none of these substitutes may be used as a conversion or “retrofit” refrigerant for existing equipment).” Nine of the commenters supported restricting the use of hydrocarbon refrigerants to new equipment only.

Comment:One commenter requested that retrofitting old household refrigerators and freezers and retail food refrigerators (stand-alone equipment only) be allowed. The commenter suggested that safety concerns could be alleviated by allowing retrofitting only by personnel who are trained to handle flammable refrigerants.

Response:Under the SNAP program, an application for SNAP approval specifies whether the proposed refrigerant use is for new equipment,retrofitted equipment, or both. None of the submissions applied for use in retrofitted equipment. The Agency did not conduct a risk analysis for use of the substitutes in retrofitted equipment, nor did any of the comments provide such an analysis. Therefore, EPA is not addressing such use at this time.

EPA would consider whether to find hydrocarbon refrigerants acceptable for use in retrofitted equipment in the future if sufficient evidence, including a risk assessment, is provided and shows that such use will present risks to human health and the environment that are lower than or comparable to risks from other available substitutes.

EPA received ten sets of comments on its proposed requirement that the hydrocarbon refrigerants be used only in refrigerators or freezers that meet all requirements listed in the Underwriters Laboratories (UL) Standard for Household Refrigerators and Freezers, UL 250 (for the household refrigeration end-use)17 and the UL Standard for Commercial Refrigerators and Freezers, UL 471 (for the retail food refrigeration end-use).18 Most commenters supported adherence to applicable UL standards, although some offered the following additional comments.

Comment:One commenter recommended that a final rule be contingent upon the existence and acceptance of a comprehensive industry-wide safety standard. The commenter also suggested that EPA could add other standards to the list of references addressing the safety of hydrocarbon refrigerants. The commenter referred to ANSI Standard Z21.24,19 ASHRAE Standard 15,20 UL Standard 21,21 EN 378,22 ISO-5149,23 the IOR Safety Code of Practice for Refrigerating Systems Utilising A2 & A3 Refrigerants,24 and AS/NZS 1677.25

Response:It is unclear what was intended by either comment. Regarding the first comment, EPA notes that the UL standards are in fact industry-wide safety standards. UL has tested equipment for flammability risk in both household and retail food refrigeration. UL also has developed acceptable safety standards including requirements for construction, for marking, and for leakage, ignition, and temperature tests, as well as an accelerated aging test of heater terminal seals and an insulation resistance test of all defrost heaters.

With respect to the second comment, it is unclear whether the commenter is suggesting that the other standards be imposed as use conditions, whether they should be included in the “Further Information” column of the regulations, or whether they should simply be described in this preamble. The commenter provided no reasoning as to why the listed standards should be included either as use conditions or in the “Further Information” column of the regulation, and we are not aware that these standards provide any additional protections that are not provided by this rule. EPA believes that the use conditions established in this final rule will ensure that these substitutes will present risks that are lower than or comparable to the risks from other available alternatives.

EPA received ten comments on its proposed charge size limitation of 57 grams (2.0 ounces) for the household refrigeration end-use.

Comment:Five commenters recommended a limit of 150 grams (5.3 ounces) to correspond to standards established by the International Electrotechnical Commission (IEC 60335-2-24), including two non-governmental organizations, a manufacturer of refrigerator compressors, and two manufacturers of household refrigerators and freezers. One of these commenters, an environmental organization, observed that over 400 million refrigerators using propane and isobutane refrigerants are in use worldwide and that they generally are certified to the 150-gram international safety standard. The commenter stated that EPA has not provided a justification for a 57-gram charge size limit.

One commenter, a manufacturer of household refrigerators and freezers, stated that the 57-gram charge size limit in some cases would reduce the efficiency of the appliance and raise the indirect GHG emissions associated with the product's energy use. Two commenters, a manufacturer of household refrigerators and freezers and an environmental organization, observed that the UL 250 standard could change in the future and recommended that EPA should modify its charge size limitation to harmonize with UL 250 as it changes over time.

Three of the commenters supported the 57-gram limitation, including a manufacturer of household refrigerators and freezers that submitted to the SNAP program for hydrocarbon refrigerant in this end use; a manufacturer of commercial refrigerators and freezers that submitted to the SNAP program for hydrocarbon refrigerant in both household and commercial refrigerators and freezers; and a manufacturer of commercial refrigerators and freezers.

Response:EPA agrees with the comments supporting the proposed requirement that the charge size not exceed 57 grams for household refrigeration. UL 250 allows a maximum leak amount of 50 grams (1.8 ounces), and the submitter used procedures outlined in the UL 250 leakage test to conclude that up to 7 grams of additional refrigerant charge could be solubilized in the oil (and assumed not to leak or immediately vaporize with the refrigerant in the event of a leak). This information was reflected in EPA's risk screen for isobutane, which modeled a maximum refrigerant release of 50 grams (ICF, 2009a and ICF, 2011a).

It is true that hundreds of millions of refrigerators and freezers using propane and isobutane refrigerants in other countries are certified to the IEC 60335-2-24 standard, which allows for a charge of hydrocarbon refrigerant up to 150 g. However, available evidence suggests that most of these appliances actually have charges that are closer to 57 g than to 150 g. For comparison, a typical U.S. household refrigerator using HFC-134a has a charge of roughly 140 g,26 and a charge of isobutane providing comparable cooling would be 40 to 50% of the charge of HFC-134a,27 or 56 to 70 g. It is EPA's understanding that most European household refrigerators are smaller than the typical U.S. household refrigerator and that they use less charge; thus, we would expect thatEuropean household refrigerators have charge sizes less than 70 g. The commenter's own Web site states, “[T]oday's hydrocarbon refrigerators, with hermetically sealed compressor systems, use between 30 to 70 grams of refrigerant, depending on the size of the refrigerator.”28 Thus, the safety record of hydrocarbon refrigerators and freezers in Europe appears to reflect experience primarily with charge sizes much smaller than 150 g.

While EPA could assess various charge sizes on a theoretical basis, we do not have the resources to perform product testing and we rely primarily on industry, national safety standard organizations, and non-governmental organizations to conduct tests on appliances. UL has tested household refrigerators, freezers, and combination refrigerators and freezers for safety, especially with respect to flammability concerns, and the U.S. insurance industry and commercial sector rely on the results of those tests. Testing by manufacturers and UL addresses flammability in the manufacturing process as well as how the product functions with different charge sizes. UL developed the 50-gram allowable leak limit as the result of testing during development of the UL 250 standard for household refrigerators and freezers. The 50-gram allowable leak limit for household refrigerators in UL 250 differs from the 150-gram allowable leak limit for commercial refrigerators and freezers in UL 471 due to factors such as the difference in the room sizes modeled for household versus retail appliances. Therefore, building on the UL allowance of a 50-gram allowable leak limit and the tests performed by the submitter, we concluded that the maximum charge size should be 57 grams for the household refrigeration end-use.

EPA did not receive specific information concerning the potential energy efficiency effects of limiting the charge size to 57 g or less. Thus, we are not able to judge the technical merits of the commenter's statement.

EPA does not have sufficient information supported by safety testing data at this time from other commenters, industry, U.S. national safety organizations, or non-governmental organizations to support a charge size limit different from one based on UL 250, such as the 150-gram limit in IEC 60335-2-24. EPA understands that the limit in UL 250 may change in the future. If that occurs, and if the appropriate safety testing data is submitted to EPA supporting safe use of a larger charge, we would consider modifying the use conditions at a future date.

We acknowledge that a larger charge size may improve the energy efficiency of an appliance and simplify its construction. However, based on the analyses available at this time, we do not have sufficient information to demonstrate that a larger charge size would not create an unacceptable level of risk as compared to other available substitutes in the household refrigeration end-use. As noted above, EPA could modify the use conditions in the future if sufficient data were submitted to support safe use of a larger charge size.

Comment:One commenter requested a more precise definition of “charge,” recognizing that the exact value of the charge depends on the accuracy of the charging equipment.

Response:EPA regulations do not provide an accuracy specification or interpretation for “charge” or “charge size.” EPA believes that such a regulatory definition is not necessary for purposes of this use condition. EPA believes that the wording in the use condition (“the quantity of the substitute refrigerant”) provides sufficient guidance and that manufacturers and service technicians have the proper instrumentation and training to judge the quantity of refrigerant being charged to an appliance.

Comment:One commenter encouraged EPA to clarify or provide a test procedure for how manufacturers should measure the potential solubility of isobutane in the oil.

Response:Providing such a test procedure is beyond the scope of this final rule. The use conditions reflect the assumption that 7 grams of a 57-gram charge could be solubilized in the refrigerant oil while still allowing compliance with UL 250. The SNAP submittal for isobutane in the household refrigeration end-use contains information on the solubility of isobutane with refrigerant oils (GE, 2008). We typically defer to the technical standard-setting agency on this type of issue unless there is convincing evidence disputing such a calculation. Moreover, we note that manufacturers that choose to use isobutane are not obligated to measure its potential solubility in oil for purposes of complying with the use conditions, since any charge below 50 grams would be in compliance with UL 250 and the charge size limitations of this rule. Thus we see no reason to establish a test procedure for performing such an analysis.

Comment:Two commenters observed that an appliance in the household refrigeration end-use might incorporate more than one sealed system and requested that the charge size limitation apply to each sealed system in an appliance, not to the entire appliance.

Response:EPA agrees and is clarifying that the 57-gram charge size limit applies to each sealed system.29 A household refrigeration appliance may incorporate multiple sealed systems. Having multiple sealed systems is less of a concern than having a single system with the same combined charge since the probability of two sealed systems leaking simultaneously is very low. In addition, hermetically sealed systems are less likely to leak, presenting a lower probability of fire or explosion. Hermetically sealed systems provide an increased level of safety in normal use.

EPA received seven sets of comments on its proposed charge size limitation of 150 grams (5.3 ounces) for the retail food refrigeration end-use. Six commenters supported the 150-gram limitation, although some offered additional comments.

Comment:One commenter recommended increasing the limit to 170 grams for three reasons: first, that EPA's 150-gram limit was calculated based on a small European-sized kitchen and reflected a 20-percent reduction from the LFL; second, that the proposed limit was based on domestic refrigerator standards and misapplied to commercial applications; and third, that the UL standard reflects 150 grams of leakage and 20 grams that remains in the oil and does not leak.

Response:EPA is finalizing the 150-gram charge size limit as proposed for this end-use. This limit is more conservative than the UL 471 standard, which reflects a leak amount of 150 grams (i.e.,not counting refrigerantsolubilized in oil). Unlike the charge limit for the household refrigeration end-use, the charge limit for the retail food refrigeration end-use does not reflect an additional amount of refrigerant assumed to be solubilized in the oil because SNAP submitters did not include test data to support this information for propane. UL 471 limits the amount of refrigerant leaked to 150 grams, based on testing performed during the development of the UL 471 standard. The commenter provided no test data showing that 20 grams (or some alternative amount) would be captured in the oil if the UL 471 standard were applied. Nor was there evidence that the leak assumptions for the household refrigeration end-use (7 of 57 grams solubilized) might apply proportionately to other equipment or other refrigerants. Therefore, because EPA does not have a sufficient analytic basis to derive a 170-gram charge size limit, EPA has no basis to support a change to the 150-gram charge size limit we proposed for this end-use.

Comment:Two commenters also observed that the IEC standards may be revised upward in the future, and that EPA's limit should reflect such changes.

Response:The IEC charge size limit has not yet increased and EPA cannot anticipate the timing or extent of such an increase. Further, EPA has not received any information showing that a larger charge size would ensure that propane would present risks in this end-use that are lower than or comparable to risks from other potentially available substitutes. If the IEC or UL standards are revised in the future or if other information becomes available that would support a change in charge size, an interested party could petition EPA to revise this aspect of the use condition.

Comment:Another commenter stated that appliances manufactured for export should be allowed to have a larger charge size corresponding to the charge size requirements that apply at the point of installation. The commenter claims that prohibiting a larger charge size for export would be a disadvantage for U.S. companies selling appliances overseas.

Response:Under section 612 of the Clean Air Act, the SNAP program is applicable to any person introducing a substitute into interstate commerce. Interstate commerce is defined in 40 CFR 82.104(n) as:

This definition applies to any appliances produced in the U.S., including appliances that will be exported. Therefore EPA cannot support the comment to apply different use conditions based on where an appliance is being exported.

Comment:One commenter observed that because an appliance might have two or more independent refrigeration systems, EPA's charge size limitation should apply to each refrigeration system in an appliance and not to each appliance.

Response:EPA received a similar comment with respect to the household refrigeration end-use, as described in Section V.D above. As was the case for the household refrigeration end-use, EPA agrees that the charge size limitation for the retail food refrigeration end-use should apply to each sealed system in an appliance. EPA is modifying the wording of the use condition to reflect this clarification.

EPA received 11 sets of comments on its proposal to require that “Danger” and “Caution” labels be permanently attached at specified locations on household and retail appliances using hydrocarbon refrigerants. The proposed wording was identical to that of UL 250 Supplement SA (household refrigeration) and UL 471 Supplement SB (retail food refrigeration), except that EPA proposed that the lettering be1/4inch (6.4 mm) rather than the1/8inch (3.2 mm) specified in the UL standards. Seven commenters expressed support for the proposed labeling use conditions, including the lettering size.

Comment:Two commenters stated that EPA and UL should require the same print color and size. Another commenter supported the proposal except for the language reflecting clause (a) in UL 471 (retail food refrigeration) for evaporators that can be contacted by a consumer; the comment stated that evaporators are never accessible to a customer in units that are “cold wall design.” Finally, one commenter specifically opposed use of the words “Danger” and “Caution.” The commenter stated that equipment is safe if it meets UL standards, that the words would scare consumers, and that service technicians know what they are dealing with.

Response:EPA is finalizing the labeling use condition as proposed (with the exception of a minor technical correction to the wording of one of the labels, described in Section VI below). EPA believes that notification is necessary to alert technicians and personnel who dispose of or recycle appliances that a refrigerant has the potential to ignite if a sparking source is nearby. This is particularly true during the years these products are first introduced into the market because most technicians in the U.S., as well as those involved in the disposal chain, are not yet familiar with flammable refrigerants.

EPA consults with UL and other national safety standards as often as possible, recognizing that the organizations differ in functions and goals. With the exception of the lettering size, EPA is adopting label wording and requirements that are identical to those in the UL 250 and UL 471 standards. The UL standards include a requirement to label evaporators in the retail end-use, and EPA is mirroring that requirement, noting that even if a customer does not have access to the labeled area, service technicians with such access still need to be made aware that a flammable refrigerant is present.

Regarding the lettering size, EPA continues to believe that it would be difficult to see warning labels with the1/8-inch lettering stipulated by UL 250 and UL 471. Three commenters specifically endorsed the1/4-inch minimum height proposed, and EPA is finalizing that requirement, making it easier for technicians, consumers, retail store-owners, and emergency first responders to see the warning labels.

EPA received 11 sets of comments on its proposed requirement that an appliance containing hydrocarbon refrigerants have red Pantone Matching System (PMS) #185-marked pipes, hoses, and other devices through which the refrigerant passes to indicate the use of a flammable refrigerant. The color would be required at all service ports and where service puncturing or otherwise creating an opening from the refrigerant circuit to the atmosphere would be expected to occur, and would extend a minimum of 1 inch in both directions from such locations. The proposed rule observed that no industry standard exists for color-coded hoses or pipe for flammable refrigerants, and sought comment on potential development of such a standard.

Three commenters supported the proposed requirement. One of the supporting commenters stated that EPA's use condition would also suffice in lieu of an industry standard. Other commenters opposed various aspects of the color-coding requirement.

Comment:One commenter stated that mandatory color-coding would impose a burdensome additional cost and is not a requirement under international standards. A second commenter stated that color-coding would be superfluous in light of the proposed labeling requirement. A third commenter stated that leak testing requirements obviate the need for color-coding. A fourth commenter identified several concerns: that hose materials could be potentially incompatible with the paint used, that the marking could be obscured by ice or insulation, and that paint on heat exchange surfaces could change the thermal resistance and water retention properties of the heat exchanger, affecting performance.

Other commenters recommended a more precise interpretation of the requirement to ensure that color-coding need only be provided where beneficial and not in locations where system performance could be hindered. One commenter observed that coloring all tubing would be costly and that locations should be selected that do not present problems for sealing of valves or for operational efficiency. Another commenter suggested that since UL 471 already requires labels near the compressor, coloring would only be necessary at discharge and charge locations. The commenter further stated that self-contained units with one compressor only need markings at two locations—at the filling tube and after the filter dryer (in the flow direction)—because such units only use one refrigerant and present no risk of mixing.

Several commenters observed that an equally effective and less costly option for some manufacturers might be to use a colored sleeve or cap that must be forcibly removed in order to access the service tube. If a manufacturer removed the sleeve or cap during service, a similar replacement would be required.

Response:EPA is finalizing a requirement to use red PMS #185 coloring on hoses and tubing. This is the same color specified in AHRI Guideline N-2008, “Assignment of Refrigerant Container Colors,” to identify containers of flammable refrigerant, such as propane, isobutane, and R-441A (AHRI, 2008). The purpose of the colored hoses and tubing in this case is to enable service technicians to identify the use of a flammable refrigerant and to take additional precautions (e.g.,reducing the use of sparking equipment) as appropriate to avert accidents, and particularly in the event that labels are no longer legible. The air-conditioning and refrigeration industry currently uses distinguishing colors to identify different refrigerants. Likewise, distinguishing coloring is used elsewhere to indicate an unusual and potentially dangerous situation, such as the use of orange-insulated wires in hybrid electric vehicles. In the U.S., household and retail appliances contain various refrigerants and it is not always clear what type of refrigerant an appliance uses.

Since red coloring is understood to represent “hot,” “stop,” or “danger,” red coloring will provide technicians, consumers, and emergency responders with an unambiguous signal that a potential hazard is present. The labeling requirement discussed in Section V.F will complement the color-coding requirement by providing a more precise warning of the potential hazards and necessary precautions. Further, it is possible that labels, particularly those on the outside of the appliance, may fall off or become illegible over time; adding red coloring on tubing inside the appliance provides additional assurance that technicians will be aware that a flammable refrigerant is present.

In response to concerns about the location of the color-coding, EPA is modifying the language for this use condition to reflect its intent more precisely. Instead of requiring PMS #185 coloration at all locations “through which the refrigerant passes,” this final rule requires coloration at locations “through which the refrigerant is serviced,” as well as areas where service puncturing or otherwise creating an opening from the refrigerant circuit to the atmosphere might be expected. EPA is also clarifying the location and extent of the coloring on the hose or process tube (if one exists).30 This does not mean that the entire hose or process tube must be colored. Rather, for process tubes the tube must be colored for at least one inch with the red mark to extend from the compressor. This way, if the process tube is cut for service, the red marking still remains after the tube is welded back together. If further servicing would leave the colored portion of the process tube less than 2.5 centimeters (1 inch) long, a new process tube would be required, with the red marking as described above. For other locations—for example, if a service port or refrigerant access valve is added to the system31 —the red mark must extend at least 1 inch in all directions from the port or valve.

To clarify that the red coloring must always be present (not just applied initially at installation), we are providing more specificity in the language of the use condition than proposed. We are changing “must be applied” to “must be present” to correct any misperceptions that once the coloring is initially placed (“applied”) at a location, it need not be replaced if damaged or removed. The word “present” conveys that the red coloring must always be at the specified location.

EPA does not believe that this requirement will impose a burdensome additional cost. The only commenter to raise this point did not provide any information about what such costs might be and why the commenter thought they would be burdensome. In this preamble we are clarifying one aspect of flexibility that could mitigate potential cost concerns. Specifically, EPA agrees with the commenters' observation that a colored sleeve or cap could be equally effective and may offer a less costly option for some manufacturers. The proposed rule specified the type, location, and dimensions of the coloration but did not specify the physical manner in which the tube should be colored. EPA believes that the use of a sleeve or cap is consistent with this use condition as long as the requirements of the use condition (use of PMS #185, location, and dimension) are met. However, in order to remain in compliance with the use condition, a technician who removes a sleeve during servicing is required to replace that sleeve on the serviced tube with another. Allowing the use of a sleeve instead of paint will also help alleviate the concern expressed by one commenter over the potential incompatibility of red paint with hose materials.

EPA recognizes that labeling is another way to provide warning of the presence of a flammable refrigerant, and—as discussed in Section V.F above—is finalizing a labeling requirement. However, since over time labels can come off or become illegible, labeling should not be the sole means ofalerting users and service technicians of the presence of a flammable refrigerant.

Comment:One commenter supported the proposed color-coding requirement but pointed out that the American Academy of Ophthalmology and the Centers for Disease Control and Prevention report that 8 percent of American males are color-blind, primarily in the colors green and red, making the need for labels even more important.

Response:The Agency recognizes that there is a color-blind population. This is one reason to use both labeling and coloring to signal that a flammable refrigerant is being used.

EPA received 13 sets of comments on its proposed requirement that appliances using isobutane or R-441A in household refrigeration and propane in retail food refrigeration end-uses have service aperture fittings that differ from fittings used in equipment or containers using non-flammable refrigerant. The proposed rule defined “differ” to mean that either the diameter must differ by at least 1/16 inch or the thread direction must be reversed (i.e.,right-handed vs. left-handed). The proposed rule specified that these different fittings must be permanently affixed to the unit and may not be accessed with an adaptor until the end-of-life of the unit.

Comments:Twelve commenters opposed the proposed requirement for various combinations of the following reasons: Adding fittings at the time of manufacture is not appropriate for certain appliance types; additional fittings presents an increased leak risk; the requirement could be easily circumvented; the risk of cross-contamination is overstated; international standards do not require unique fittings; and the requirement would be inconsistent with UL standards. One commenter, while neither supporting nor opposing the proposal, stated that if unique fittings are installed they should require the use of special tools to dissuade unauthorized personnel from opening the fittings.

Response:EPA is persuaded by the comments opposing a use condition to require unique fittings. The Agency is removing the requirement for unique fittings from the list of use conditions and is instead providing a recommendation for unique fittings in the “Further Information” column of Appendix R. The following paragraphs describe the comments and EPA's response in more detail.

Comments:Most commenters interpreted the language of the proposed requirement to mean that all appliances subject to this rule must be manufactured with unique fittings, even appliances that would not require servicing and thus would otherwise not need fittings. They observed that household and retail appliances, whether they use hydrocarbons or another type of refrigerant, typically are hermetically sealed and are manufactured without maintenance fittings or service valves. They pointed out that any service port with a mechanical connection (such as a lock ring) presents a leak risk and that requiring additional service ports for the purpose of installing unique fittings would add to that risk. One commenter also observed that equipment is highly sensitive to charge size and any leak could cause malfunction or failure. (The commenter stated that in its past experience, three-fourths of service calls were related to service ports.) One commenter observed that the presence of service ports could create incentives for untrained technicians to attempt servicing. Another commenter pointed out that UL 250 and UL 471 prohibit refrigerators or freezers that use a flammable refrigerant from employing quick-connect fittings, flare fittings, compression fittings, or packed stem valves.

Response:EPA agrees with statements that a service valve installed at the point of manufacture could increase the likelihood of leaks for these types of appliances. We recognize from the comments that the proposed requirement was worded in an overly broad manner. We intended the requirement to apply only in cases where a service port or other connection is installed subsequent to manufacture. EPA is aware that the UL 250 and UL 471 standards forbid such ports at the time of manufacture on units using flammable refrigerants. EPA recognizes that service ports (whether with standard or unique fittings) are not normally used in household refrigerators or stand-alone retail food refrigerators and freezers.

However, CAA 608(b)(2) requires all small appliances containing ODS refrigerants to be equipped with service ports that allow for the proper recovery of refrigerant during service or disposal of refrigerators and freezers because service ports act as an access point for recovery equipment. Under 40 CFR 82.154(a)(1), no refrigerant or substitute may be knowingly vented unless otherwise exempted. For this reason most hermetically sealed appliances are equipped with process tubes that are used only for end-of-life recovery and which typically do not leak.

EPA does believe, however, that some hermetically sealed systems eventually will be serviced and does not assume that such systems are always completely leak-proof. Therefore EPA continues to believe that if a service port or access valve is installed after manufacture, it should employ a unique fitting that is maintained until the end-of-life of the appliance.

One commenter specifically supported a requirement for unique fittings after the equipment is serviced and for the remainder of its life. EPA believes that such fittings, if installed, should be designed specifically for flammable refrigerants, such that those fittings would not connect to service equipment designed for non-flammable refrigerants.

Comment:Several commenters observed that cross-contamination was not a significant risk. Two commenters stated that requiring unique fittings would not necessarily protect against cross-contamination. One commenter stated that mixing of hydrocarbons and other refrigerants would not pose a safety concern unless air or oxygen were present. Another commenter asserted that since self-contained refrigerant systems use only one refrigerant, there is no possibility that an appliance would be refilled with an incorrect refrigerant. That commenter also stated that proper refrigerant practices are in place that require separate recovery cylinders for different refrigerants, that technicians need only use one more type of cylinder, and that economic incentives can foster proper recovery practices.

Response:Overall, EPA disagrees with the comment that cross-contamination is unlikely. Depending on the type of equipment being serviced, and its typical servicing patterns, it is quite possible that refrigerants could be mixed, particularly where best practices are not employed. Currently, many different refrigerants are used in refrigerators and freezers. Technicians are likely to encounter numerous refrigerants—now including hydrocarbons—raising the possibility that flammable refrigerants could be mixed with non-flammable refrigerants or that flammable refrigerants could be added to an appliance designed for non-flammable refrigerants. Not only does the mixing of refrigerants pose a risk for the cooling system of the appliance, it also can limit reclamation options. Whereas—as observed by two commenters—pure refrigerants have market value, contaminated refrigerants are costly to re-purify into their individual refrigerant components, and costly to discard properly, raising therisk of illegal venting. Nevertheless, EPA agrees with the commenters that cross-contamination itself does not pose safety issues sufficient to warrant a mandatory requirement for unique fittings.

Comment:Several commenters observed that technicians could defeat the intent of the requirement by using other kinds of fittings after first service. One commenter stated that service technicians have the tools to bypass unique fittings and would do so rather than purchase additional gauges and line sets to service the small number of hydrocarbon refrigerators. Another stated that most small appliances do not have fittings (unique or otherwise) and that technicians and the public could use line-piercing fittings if needed.

Response:EPA understands that a requirement for unique fittings would not prevent illegal or improper efforts to service appliances if a technician were determined to do so. The “Further Information” section in the regulation recommends that only technicians specifically trained in handling flammable refrigerants service refrigerators and freezers containing these refrigerants, and that technicians gain an understanding of minimizing the risk of fire and the steps to use flammable refrigerants safely. We note that, in addition to preventing the mixing of refrigerants, the proposed use condition was intended to reduce the risk of fire by ensuring that flammable refrigerants are used only in appliances designed for flammable refrigerants. The proposed use condition was intended to prevent a technician from inadvertently attempting to service a refrigerator as if it contained non-flammable refrigerant when it actually contained highly flammable hydrocarbon refrigerant, or vice versa.

Comment:Four commenters stated that education is the best tool to prevent refrigerant contamination. One suggested creating a nationwide training program; the other, which specializes in training, observed that training had proven to be an effective option in lieu of a previous proposal to require unique fittings for high-pressure HFC refrigerants.

Response:EPA supports the concept of a national training program for flammable refrigerants and welcomes industry efforts to educate technicians on proper refrigerant use and proper service and disposal practices.

EPA received nine comments on the proposed use condition to limit the sale of the hydrocarbon refrigerants in containers designed to hold less than five pounds (2.3 kg).32 This requirement was intended to prevent purchase by untrained people who lack the skills or equipment necessary to recover and charge refrigerant properly. Six commenters supported the proposed requirement. Other comments are discussed below.

Comment:Three commenters opposed this requirement, stating that a small-container sales restriction was not the appropriate vehicle to compel proper training. One observed that properly trained technicians know how to handle refrigerants safely; another noted that the proposed rule protections, such as labeling, would help mitigate the potential risk associated with technician error; and the third observed that untrained customers can already buy camping gas, which is a flammable gas like isobutane.

In addition, one of the commenters opposing the requirement stated that it would pose practicality and logistics problems for its service network for household refrigerators. The commenter stated that a five-pound minimum requirement would result in the transport of more combustibles in a service vehicle than needed and that it would be preferable to use “right-sizing” canisters containing the exact charge for the particular appliance to ensure efficient and accurate service, to minimize the load a technician needs to carry, and to prevent under- and over-charging.

Response:After considering the comments received, EPA is removing the small-container sales restriction from the use conditions. EPA agrees that requiring the sale of the three hydrocarbon refrigerants in containers of at least five pounds could cause the transport of an unnecessary amount of refrigerant and increase risks to service technicians and—in the event of a vehicular accident—to others on the road. EPA intended the proposed use condition to prevent or minimize the purchase of refrigerant by untrained people who would not have the appropriate skills or equipment to properly recover or charge the refrigerant. However, after considering the comments, EPA recognizes that an unintended consequence of restricting smaller-container sales is the prospect that appliance owners could purchase non-refrigerant-grade propane such as camping gas to service their equipment. Non-refrigerant-grade hydrocarbons could contain contaminants that might fail to be absorbed by a filter drier, mix with the oil and cause high wear on compressor bearings, or clog heat exchangers and capillary tubes. Such events could lead to equipment failure, increased servicing need, and more potential emissions of the refrigerant. These effects could increase risk to the appliance owner, service technicians, and those involved in appliance disposal.

As discussed in Section V.K of this preamble, EPA agrees with the importance of having hydrocarbon refrigerants handled only by trained technicians. The listing decisions for these three refrigerants in Appendix R to 40 CFR, part 82, subpart G, provide a recommendation that only technicians specifically trained in handling flammable refrigerants service refrigerators and freezers containing these refrigerants. We also include a recommendation that technicians gain an understanding of minimizing the risk of fire and the steps to use flammable refrigerants safely.

Comment:Three commenters requested that isobutane and propane be considered for use in both the household refrigeration and retail food refrigeration end-uses. Six other commenters specifically requested that isobutane be allowed for use in retail food refrigeration. All of these commenters reasoned that both refrigerants have similar physical characteristics (e.g.,flammability limits, toxicity profiles, handling practices, safety group classification) and that the UL 250 and UL 471 standards do not distinguish between them.

Response:EPA is finalizing acceptability determinations only for the substitutes and end-uses identified in submissions to the Agency and in the proposed rule: Isobutane and R-441A in the household refrigeration end-use, and propane in the retail food refrigeration end-use. The submitters did not request review of isobutane or R-441A in the retail food refrigeration end-use, or propane in the household refrigeration end-use, so EPA did not review those substitutes for those end-uses in this rulemaking.

The SNAP regulations at 40 CFR part 82, subpart G establish a process for the submission and review of SNAP applications and the finalization of acceptability determinations. EPA makes a listing determination after evaluation of the substitute. EPA follows a notice-and-comment rulemaking process to list substitutes that are proposed as acceptable subject to use conditions, acceptable subject tonarrowed use limits, or unacceptable. Although EPA can issue SNAP determinations for substitutes and end-uses that were not provided by an applicant, the Agency must perform the same detailed analysis, based on the criteria described in the SNAP regulations. EPA would need to make a risk screen available to the public through the notice-and-comment rulemaking process before making a listing decision. If EPA were to find those substitutes acceptable in those specific end-uses, use conditions would probably be necessary.

We recognize the stakeholders' interest in using isobutane in the retail food refrigeration end-use and propane in the household refrigeration end-use. Preliminary information supports the observations that the use profiles and handling practices for these chemicals in these end-uses are very similar to the combinations of substitutes and end-uses being finalized today. EPA may consider a subsequent rulemaking addressing the use of isobutane and R-441A in the retail food refrigeration end-use, and propane in the household refrigeration end-use.

Comment:One commenter noted that it did not have sufficient information on HCR-188C and HCR-188C1 (i.e.,R-441A) to recommend their approval for the retail food refrigeration end-use. The commenter stated, however, that if ASHRAE Standard 34 were to classify those hydrocarbon blends as A3 refrigerants then the argument could be made that they should be listed in both end-uses.

Response:In February 2011, ASHRAE issued Addendum g to Standard 34-2010, classifying R-441A as an A3 refrigerant. We agree that an applicant may be able to support a petition to find R-441A acceptable subject to use conditions in the retail food refrigeration end-use based on our current understanding that R-441A has characteristics that are similar to those of propane. However, we do not currently have the appropriate technical demonstrations before us to propose, much less finalize, such a determination. If in the future a person submits a petition supported by a technical demonstration, we could take rulemaking action on such a listing.

EPA received eight comments in response to its discussion of training in the preamble of the proposed rule. All acknowledged the value of training.

Comment:One commenter recommended against a mandatory national training program, observing that in the European Union, where hydrocarbon refrigerants are more prevalent, there is no national training program and each manufacturer handles training on its own. Another commenter, a training organization for technicians, suggested that training be a required element of a federal certification of technicians. The commenter noted that EPA intends to update the “test bank” of test questions for technician certification under CAA section 608, and so the Agency should recognize the merits of incorporating hydrocarbon refrigerants into existing programs. This commenter stated that without a recertification program, hundreds of thousands of technicians will not see the new test questions. Therefore the commenter suggested that EPA either create another “type” category of certification under CAA section 608 addressing flammable refrigerants and/or require recertification of technicians every five years because of new refrigerants. One commenter stated that EPA should strongly consider delaying any SNAP acceptability listing for isobutane until such a program can be developed and deployed industry-wide. The commenter observed that this could take two years and increase costs to consumers.

Response:EPA agrees that training is an important way for technicians to learn about the safe handling of flammable refrigerants. We recognize that there are some long-standing training programs on flammable refrigerants in other countries where hydrocarbon refrigerants are currently in wide use. We also recognize that the use of hydrocarbon refrigerants, and training on such use, is in its infancy in the U.S., and is generally tied directly to specific products or applications, rather than generally to multiple types of products.

Since the inception of the SNAP program and the section 608 refrigerant management program, we have continued to list a variety of new refrigerants as acceptable. EPA has not previously required that certified technicians be recertified as a result of the listing of the additional refrigerants. Moreover, the goals of the section 608 technician certification program reflect the need to reduce emissions during servicing, maintenance, repair and disposal. They do not substitute for the proper training that is normally provided through trade schools, apprenticeships, or other industry mechanisms. Given the extent of technical knowledge available within the industry, we believe that industry is better equipped than EPA to define the specific contents of such training, and that it is not necessary for EPA to require training in order for newly listed refrigerants to be used as safely as other refrigerants currently available.

Although we have determined not to require training as a use condition for these substitutes to ensure that they can be used as safely as other available refrigerants, we recommend that technicians receive training on the safe handling of hydrocarbon refrigerants through avenues such as industry-sponsored national training programs.

EPA considered, and sought comment on, several other options or related issues in the proposed rule, although we did not propose them. This section describes comments the Agency received on those options.

1. Use only in appliances specific to OEMs. EPA sought comment on an option that would allow isobutane and propane as a refrigerant for use only in OEM-specific appliances, as described in a SNAP application. The reason for such a limitation would be the concern that appliances from other manufacturers would not be designed with spark-proof engineering; nor would the manufacturers be able to develop recovery equipment compatible with flammable refrigerants.

Comment:EPA received two comments supporting EPA's approach to not impose such a limitation. One observed that limiting use to SNAP-reviewed equipment would be time-consuming and costly for all parties involved, with little added health and safety benefit.

Response:EPA agrees that limiting refrigerant use to SNAP-reviewed equipment would be time-consuming and costly for all parties involved. We believe that adherence to the UL standards and the use conditions in this rule will help ensure that equipment is designed to use these refrigerants safely, and that use of these substitutes will present risks that are lower than or comparable to the risks from other potential substitutes. Thus we believe it is not necessary to include such a limitation.

2. Recovery equipment. EPA observed that it had considered proposing a use condition requiring that recovery equipment used to recapture flammable refrigerants be compatible with flammable refrigerants, and sought information on whether there currently is an industry standard for recovery units for flammable refrigerants and whether specific recovery units are available that are compatible with the refrigerants addressed in today's rule.

Comment:One commenter stated a belief that there are no known manufacturers of recovery equipment for hydrocarbon refrigerants. Another commenter stated that recovery equipment used to recover flammable refrigerants must be compatible with flammable refrigerants, and in the absence of an industry standard, it has developed its own service equipment designed to recapture a flammable refrigerant in accordance with federal and state regulations. A third commenter observed that recovery units are only used in countries like the U.S. where venting is not allowed. Finally, one commenter observed that it uses a recovery device in its U.S. test market that is specifically designed for use with flammable refrigerants.

Response:The availability of recovery equipment is not necessary to ensure that the refrigerant will not pose more risk than other available substitutes in this end-use. EPA will continue to assess the need for, and availability of, recovery equipment that is compatible with flammable refrigerants.

3. Venting prohibition. EPA sought comment on whether, in a future rulemaking, it should consider exempting hydrocarbon refrigerants from the section 608 venting prohibition.

Comment:Several commenters expressed varying levels of support for exempting hydrocarbon refrigerants from the venting prohibition. Two commenters expressed unequivocal support, and four stated that they would support such an exemption if EPA were to confirm there would be no health impact. Another commenter asserted that venting would pose little environmental impact, comparing the worst-case scenario release of 150 grams from retail food refrigeration end-uses, or 57 grams from household refrigeration end-uses, to one and one-third pound, respectively, of CO2equivalent. Another commenter stated that isobutane is not dangerous, but should not be vented in enclosed spaces. Another commenter supported a venting exemption during servicing, but advocated recovery at end-of-life due to environmental risks associated with the release of refrigerant and oil captured in the refrigerant. Finally, a commenter stated that the environmental impact from venting such small charges is minimal and that safety concerns could be better mitigated through a properly designed and executed educational program. One commenter expressed reservations about allowing venting, and recommended further assessment of flammability risks as well as the potential risk associated with the release of synthetic refrigerant oil during venting.

Response:EPA appreciates the information provided by commenters. Venting is addressed by section 608 of the CAA and EPA will develop a separate rule under that authority if we determine that hydrocarbon refrigerants in the household refrigeration and retail food refrigeration end-uses should be exempted from the venting prohibition. EPA exercised such authority to exempt hydrocarbons used in industrial process refrigeration systems from the venting prohibition (see 69 FR 11946), but has not made a similar determination for hydrocarbons used in household and retail food refrigerators and freezers. Currently, EPA's regulations implementing section 608 at subpart F to 40 CFR part 82 would prohibit venting of isobutane, propane, and R-441A refrigerants during service, maintenance, repair, and disposal from the end-uses considered in this rule.

4. Requiring only one use condition. EPA sought comment on an approach that it considered (but did not propose): to require that the only use condition for each hydrocarbon refrigerant be to meet applicable UL 250 and UL 471 standards.

Comment:EPA received one comment, which opposed such a provision.

Response:As described above, and consistent with the proposal, EPA has not limited the use conditions to compliance with the UL standards.

5. “Unacceptable” finding pending industry-wide servicing standards. EPA sought comment on (but did not propose) finding hydrocarbon refrigerants unacceptable until an industry-wide standard exists for servicing appliances using hydrocarbon refrigerants.

Comment:EPA received two comments on this issue, one opposing and one supporting. Neither commenter provided a rationale for its recommendation.

Response:As described elsewhere, and consistent with the proposal, EPA is finding the three hydrocarbon refrigerants acceptable subject to use conditions.

Comment:In a comment unrelated to the specifics of the proposed rule, one commenter recommended consideration of the type of automated system it uses on its production line. This system sounds a pre-warning alarm when 20 percent of the LFL is reached and shuts down the system if 40 percent of the LFL is reached. The commenter noted that this system conforms to the European standard and is approved by TUV (Technischer Überwachungs-Verein (Technical Inspection Association)), a German safety monitoring agency.

Response:EPA does not believe it is necessary to establish a use condition requiring the type of system suggested by the commenter. OSHA addresses the use of flammable substances in the workplace, including through its regulations at 29 CFR 1910.106, as discussed in response to other comments below. To the extent a manufacturer believes that additional precautions are appropriate, we believe the manufacturer is in the best position to determine how to address the risks of installing a hydrocarbon refrigerant considering the specific characteristics of its production facilities and personnel. We note that in addition to OSHA requirements, other forces such as concerns for liability; costs of fire and casualty insurance; and reputational interests may also dictate a firm's behavior with respect to worker health and safety protections.

This final rule includes, in the “Further Information” column of Appendix R, recommendations that OEMs institute safety precautions as needed in their facilities to address potential hazards in the production of appliances using hydrocarbon refrigerants. EPA notes that OSHA regulations are in place to address such hazards. The table in Appendix M references OSHA requirements at 29 CFR part 1910, including those at 29 CFR 1910.106 (flammable and combustible liquids), 1910.110 (storage and handling of liquefied petroleum gases), and 1910.1000 (toxic and hazardous substances). Nothing in these final listing decisions, including the “Further Information” column, supersedes other regulations such as these OSHA requirements.

Comment:Another commenter recommended that the use conditions in the final rule address the use of an odorant as a warning agent to alert manufacturing personnel or technicians of the presence of a leak. Without recommending how the issue should be addressed in this final rule, the commenter offered the following observations:

• Technicians or manufacturers may use mercaptan as an odor warning agent;

• Mercaptan is corrosive and is removed by filters and driers in refrigeration systems;

• Refrigerant classification standards for Australia and New Zealand require that Group A3 refrigerants be odorizedor subject to alternative safety provisions.

Response:EPA agrees that odorization is one way to alert manufacturing or servicing personnel of the presence of a hydrocarbon refrigerant. EPA's risk screen did not evaluate these refrigerants with the addition of an odorant, nor did our proposed rule address odorants in its discussion of refrigerant composition or in its proposed use conditions. Today's final rule does not prohibit the introduction of an odorant into isobutane, propane, or R-441A refrigerant as long as the refrigerant remains within purity specifications. The use conditions in today's final rule, such as red coloring and adherence to UL standards, provide ample safeguards to alert manufacturers, service personnel, and customers of the presence of a flammable refrigerant.

In addition to changes made in response to comments, as described in Section V above, EPA is making the following minor changes:

EPA is revising the wording in the Appendix R table to correct a typographical error. As discussed above, this final rule lists propane as acceptable subject to use conditions as a substitute for CFC-12, HCFC-22, and R-502 in the retail food refrigeration end-use. In the NPRM, the proposed Appendix R table erroneously omitted R-502 (a blend of HCFC-22 and CFC-115) from the listing, although it was included in the preamble discussion. This final rule corrects the error by including R-502 as one of the refrigerants for which propane is listed as a substitute in the retail food refrigeration end-use.

The use conditions in the proposed rule included requirements for marking (e.g.,labeling) of appliances using isobutane and HCR-188C1 (i.e.,R-441A) in the household refrigeration end-use, and propane in the retail food refrigeration end-use. EPA intended that language to mirror that of the UL standards. We are making two minor changes to this requirement.

First, we are restructuring the language for the requirement. The language of the proposed rule first listed the wording required for five different types of labels, and then described where each of the labels was to be placed. For the final rule, we have moved the location requirements, so they are specified immediately before the corresponding label wording. EPA believes this minor revision in the regulatory language provides more clarity and makes the use condition easier to implement.

Second, EPA is making a minor technical correction to the wording of one of the labels. In the proposed rule, one of the labels was to read as follows:

“(b) Near the machine compartment: “DANGER—Risk of Fire or Explosion. Flammable Refrigerant Used. Do Not Use Mechanical Devices. To Be Repaired Only By Trained Service Personnel. Do Not Puncture Refrigerant Tubing.”

EPA is also modifying the recommendations listed under “Further Information” to more appropriately cross-reference existing OSHA regulations and to avoid confusion about the relationship between EPA and OSHA requirements.

The proposed rule contained, under “Further Information,” the following recommendations:

• Technicians and equipment manufacturers should wear appropriate personal protective equipment, including chemical goggles and protective gloves when handling isobutane, HCR-188C, and HCR-188C1. Special care should be taken to avoid contact with the skin since isobutane, HCR-188C, and HCR-188C1 like many refrigerants, can cause freeze burns on the skin.

• A class B dry powder type fire extinguisher should be kept nearby.

• Proper ventilation should be maintained at all times during the manufacture of appliances containing hydrocarbon refrigerant through adherence to good manufacturing practices as per 29 CFR 1910.110.33 If refrigerant levels in the air surrounding the equipment rise above one-fourth of the lower flammability limit, the space should be evacuated, and re-entry should only occur after the space has been properly ventilated.

• Technicians should only use spark-proof tools when working refrigerators and freezers with R-600a, HCR-188C, and HCR-188C1.

• Recovery equipment designed for flammable refrigerants should be used.

• Only technicians specifically trained in handling flammable refrigerants should service refrigerators and freezers containing these refrigerants. Technicians should gain an understanding of minimizing the risk of fire and the steps to use flammable refrigerants safely.

• In production facilities or other facilities where large quantities of the refrigerant would be stored, proper safety precautions should be in place to minimize the risk of explosion. These facilities should be equipped with proper ventilation systems to minimize the risks of explosion and should be properly designed and operated to reduce possible ignition sources.

• Room occupants should evacuate the space immediately following the accidental release of this refrigerant.

The Agency did not receive any comments on these recommendations. EPA believes that they are appropriate and that they serve as useful reminders of safe practices for technicians and manufacturers. EPA recognizes that some of these recommendations are reflected in OSHA regulations for worker health and safety. For this reason, EPA is adding a cross-reference to OSHA regulations at 29 CFR part 1910 (Occupational Health and Safety Standards) in order to ensure that regulated entities are aware of these requirements. Specifically, Appendix R provides a cross-reference to 29 CFR 1910.106 (flammable and combustible liquids), 1910.110 (storage and handling of liquefied petroleum gases), 1910.157 (portable fire extinguishers), and 1910.1000 (toxic and hazardous substances).

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is a “significant regulatory action.” It raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order. Accordingly, EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Orders 12866and 13563 (76 FR 3821, January 21, 2011) and any changes made in response to OMB recommendations have been documented in the docket for this action.

This action does not impose any new information collection burden. This final rule is an Agency determination. It contains no new requirements for reporting. The Office of Management and Budget (OMB) has previously approved the information collection requirements contained in the existing regulations in subpart G of 40 CFR part 82 under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501et seq.and has assigned OMB control number 2060-0226. This Information Collection Request (ICR) included five types of respondent reporting and recordkeeping activities pursuant to SNAP regulations: Submission of a SNAP petition, filing a SNAP/TSCA Addendum, notification for test marketing activity, recordkeeping for substitutes acceptable subject to use restrictions, and recordkeeping for small-volume uses. The OMB control numbers for EPA's regulations are listed in 40 CFR part 9 and 48 CFR Chapter 15.C.

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of this rule on small entities, small entity is defined as: (1) A small business as defined by Small Business Administration regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of this final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. In determining whether a rule has a significant economic impact on a substantial number of small entities, the impact of concern is any significant adverse economic impact on small entities, since the primary purpose of the regulatory flexibility analyses is to identify and address regulatory alternatives “which minimize any significant economic impact of the rule on small entities.” 5 U.S.C. 603 and 604. Thus, an agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, or otherwise has a positive economic effect on all of the small entities subject to the rule. The requirements of this final rule affect the manufacturers of household refrigerators and freezers and retail food refrigerators and freezers. Today's action allows users the additional options of using isobutane, propane, and R-441A, but does not mandate such use. Because isobutane, propane, and R-441A refrigeration systems are not yet manufactured in the U.S. (with the exception of limited test-marketing), and because the final rule actually imposes fewer requirements than the proposed rule (i.e.,removal of the unique fittings requirement), manufacturers would not be required to change business practices to meet the use conditions and thus the rule would not impose any new costs on small entities.

This action contains no Federal mandates under the provisions of Title II of the Unfunded Mandate Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 for State, local, or tribal governments or the private sector. This action imposes no enforceable duty on any State, local, or tribal governments or the private sector.

The enforceable requirements of this final rule related to integrating risk mitigation devices, markings, and procedures for maintaining the safety of household refrigerators and freezers and retail food refrigerators and freezers using hydrocarbon refrigerants affect only small number of manufacturers of these appliances and their technicians. This rule provides additional refrigerant options, allowing greater flexibility for industry in designing consumer products. Further, since appliances using hydrocarbon refrigerants are not yet widely produced in the U.S., we do not expect impacts on existing users. Thus this rule is not subject to the requirements of sections 202 or 205 of the UMRA. This action is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. This regulation applies directly to facilities that use these substances and not to governmental entities. The finding of “acceptability subject to use conditions” for isobutane, propane, and R-441A does not impact the private sector because manufacturers are not producing systems under the current regulation. This final rule does not mandate a switch to these substitutes; consequently, there is no direct economic impact on entities from this rulemaking.

This action does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. This regulation applies directly to facilities that use these substances and not to governmental entities. Thus Executive Order 13132 does not apply to this action.

This action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). It will not have substantial direct effects on tribal governments, on the relationship between the Federal government and Indian tribes, or on the distribution of power and responsibilities between the Federal government and Indian tribes, as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this action.

This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it is not economically significant as defined in Executive Order 12866, and because the Agency does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. This final rule provides both regulatory restrictions and recommended guidelines based upon risk screens conducted in order to reduce risk of fire and explosion.

This action is not a “significant energy action” as defined in ExecutiveOrder 13211 (66 FR 28355 (May 22, 2001)) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Preliminary information indicates that appliances using these hydrocarbon refrigerants may be more energy-efficient than currently available systems in some climates. Therefore, we have concluded that this rule is not likely to have any adverse energy effects.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g.,materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This final rule involves incorporation by reference of technical standards issued by Underwriters Laboratories (UL) concerning the safety and reliability of flammable refrigerants. UL standards are voluntary consensus standards. The use conditions in the rule require, for the household refrigeration end-use, adherence to the UL Standard for Household Refrigerators and Freezers, UL 250, 10th edition, 1993, updated August 2000. The use conditions also require, for the retail food refrigeration end-use, adherence to the UL Standard for Commercial Refrigerators and Freezers, UL 471, 10th edition, November 2010. Copies of UL 250 and UL 471 may be purchased athttp://ulstandardsinfonet.ul.com/.

Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population. This final rule would allow sale of appliances with refrigerant substitutes that have no ODP and low GWPs. The reduction in ODS and GHG emissions would assist in restoring the stratospheric ozone layer and provide climate benefits.

The Congressional Review Act, 5 U.S.C. 801et seq.,as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in theFederal Register.A major rule cannot take effect until 60 days after it is published in theFederal Register.

This action is not a “major rule” as defined by 5 U.S.C. 804(2). This rule will be effective February 21, 2012.

This preamble references the following documents, which are also in the Air and Radiation Docket at the address listed in Section I.B.1. Unless specified otherwise, all documents are available electronically through the Federal Docket Management System, Docket # EPA-HQ-OAR-2009-0286.

For the reasons set out in the preamble, EPA is amending 40 CFR part 82 as follows:

In order to implement section 846 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111-383), this interim rule amends DFARS subpart 225.70 by adding a new section 225.7017, Utilization of domestic photovoltaic devices, as well as an associated provision and clause in DFARS part 252 and conforming changes to DFARS part 212.

Photovoltaic devices produce direct current electricity from sunlight, which can be used to provide power to things such as DoD-owned facilities or private housing.

As specified in section 846, a “covered contract” is defined in this interim rule as an energy savings performance contract, a utility service contract, or a private housing contract, if such contract will result in DoD ownership of photovoltaic devices, by means other than DoD purchase as end products. DoD is deemed to own a photovoltaic device if the device is—

(1) Installed on DoD property or in a facility owned by DoD; and

(2) Reserved for the exclusive use of DoD for the full economic life of the device.

Prior to this definition, ownership would have required transfer of title for the equipment to the Government. Under section 846, exclusive use of thepower for the full economic life of the equipment equates to ownership and would then require compliance with 41 U.S.C. chapter 83, Buy American, unless DoD does not have exclusive rights to the power generated from the device (could be under any of the scenarios identified in (1) or (2) above) or the contract term is less than the full economic life of the photovoltaic device.

Land leases are not included in the DFARS definition of “covered contract,” because the DFARS does not cover land leases. Contracts that include purchase of photovoltaic devices as end products are covered under the standard DFARS Buy American—trade agreements provisions and clauses.

Photovoltaic devices provided under any covered contract shall comply with the Buy American statute, subject to the exceptions to that statute provided in the Trade Agreements Act of 1979 (19 U.S.C. 2501et seq.) or otherwise provided by law.

Exceptions are provided for qualifying country photovoltaic devices, Free Trade Agreement or designated country photovoltaic devices (depending on the estimated value of the photovoltaic devices), and other foreign photovoltaic devices, if covered by the Buy American statute and the cost of a domestic photovoltaic device would be unreasonable (i.e.,50 percent more than the cost of the foreign photovoltaic device).

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is a significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

DoD has not made a determination to apply the requirement of section 846 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2011 to contracts at or below the simplified acquisition threshold (SAT), but has determined to apply the rule to contracts for the acquisition of commercial items.

41 U.S.C. 1905 governs the applicability of laws to contracts or subcontracts in amounts not greater than the simplified acquisition threshold. It is intended to limit the applicability of laws to such contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision of law contains criminal or civil penalties, or if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT, the law will apply to them. DoD has not made that determination. Therefore, this rule does not apply below the simplified acquisition threshold.

41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial items, and is intended to limit the applicability of laws to contracts for the acquisition of commercial items. 41 U.S.C. 1906 provides that if a provision of law contains criminal or civil penalties, or if DoD makes a written determination that it is not in the best interest of the Federal Government to exempt commercial item contracts, the provision of law will apply to contracts for the acquisition of commercial items.

Therefore, given that the requirements of section 846 of the NDAA for FY 2011 were enacted to promote utilization of domestic photovoltaic devices, DoD has determined that it is in the best interest of the Federal Government to apply the rule to contracts for the acquisition of commercial items, as defined at FAR 2.101. An exception for contracts for the acquisition of commercial items would exclude a significant portion of contracts intended to be covered by the law, thereby undermining the overarching public policy purpose of the law.

DoD expects that this interim rule may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601,et seq.Therefore, an initial regulatory flexibility analysis has been prepared and is summarized as follows:

This interim rule implements section 846 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111-383), by providing regulatory coverage on utilization of domestic photovoltaic devices under certain covered contracts.

The objective of the rule is to promote utilization of domestic photovoltaic devices under an energy savings contract, a utility service contract, or a private housing contract, if such contract does not include DoD purchase of photovoltaic devices as end products, but will nevertheless result in DoD ownership of photovoltaic devices. According to the statute, DoD is deemed to own a photovoltaic device if the device is—

(1) Installed on DoD property or in a facility owned by DoD; and

(2) Reserved for the exclusive use of DoD for the full economic life of the device.

The legal basis for the rule is section 846 of the National Defense Authorization Act for Fiscal Year 2011.

This rule generally applies to other than small entities. When purchasing renewable power generated via on-site photovoltaic devices, DoD can either purchase the photovoltaic devices and thereby own, operate, and maintain the devices for their full economic life (already covered in DFARS part 225) or can do variations of the following:

a. Enter into an energy savings performance contract, which is a contracting method in which the contractor provides capital to facilitate energy savings projects and maintains them in exchange for a portion of the energy savings generated. Under this arrangement, the Government would take title to the devices during contract performance or at the conclusion of the contract. For example, the Defense Logistics Agency-Energy uses the master Department of Energy indefinite delivery-indefinite quantity contract and awards task orders off that contract. Of the 16 contractors, all are large businesses. There are subcontracting goals that each contractor has to meet, but the ultimate task order award is made to a large business.

b. Enter into a power purchase agreement, also referred to as a utility service contract, for the purchase of the power output of photovoltaic devices that are installed on DoD land or buildings, but owned, operated, and maintained by the contractor. At the conclusion of the contract, DoD would either require the contractor to dismantle and remove the photovoltaic equipment, abandon the equipment in place, or would re-compete the requirement and if the incumbent contractor is the successful offeror, the follow-on contract would allow for continued power purchase from the existing devices. If the incumbent contractor is not the successful offeror,the contractor would be required to dismantle and remove the devices. Prime contractors for this type of contract would generally be large businesses, based on the capital costs involved in these projects. However, many developers tend to subcontract out the majority of work to smaller companies.

We do not currently have data available on whether any of the manufacturers of photovoltaic devices are small entities. This rule will promote utilization of domestic photovoltaic devices, even when the Government does not take title to the devices.

The requirements of the rule will not apply below the simplified acquisition threshold.

Since the prime contractors subject to this rule are large businesses, the reporting requirements will not impact small entities. Since the photovoltaic devices are commercially available off-the-shelf items, there will be no requirement to track to the origin of the components, but just to inform the prime contractor of the place of manufacture.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

DoD did not identify any significant alternatives that would accomplish the objectives of the statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2011-D046), in correspondence.

The rule imposes an information collection requirement that requires the approval of the Office of Management and Budget under 44 U.S.C. chapter 35. However, the new DFARS provision at 252.225-7018, Photovoltaic Devices—Certificate, does not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 0704-0229, entitled “Defense Federal Acquisition Regulation Supplement Part 225, Foreign Acquisition, and related clauses,” currently approved through November 30, 2013, in the amount of 147,944 hours. The proposed provision is a variant of the Buy American-trade agreements provisions that are already cleared.

A determination has been made under the authority of the Secretary of Defense, that urgent and compelling reasons exist to publish an interim rule prior to affording the public an opportunity to comment. This interim rule implements section 846 of the National Defense Authorization Act for Fiscal Year 2011. This requirement became effective upon enactment, January 7, 2011. This action is necessary in order to enable contracting officers to prevent violations of the Anti-Deficiency Act by inadvertent award of a covered contract that does not contain the appropriate restrictions with regard to country of origin of photovoltaic devices to be utilized in performance of the contract. Failure to implement this requirement promptly can also have adverse effects on the U.S. photovoltaic industry, which this statute was designed to protect. However, pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD will consider public comments received in response to this interim rule in the formation of the final rule.

Therefore, 48 CFR parts 212, 225, and 252 are amended as follows: