Forest Service
National Institute of Food and Agriculture
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Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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Nuclear Regulatory Commission.
Draft regulatory guide; discontinuation and withdrawal.
The U.S. Nuclear Regulatory Commission (NRC) is announcing the discontinuation of further regulatory action on Draft Regulatory Guide (DG) DG–1216, “Plant-Specific Applicability of Transition Break Size Specified in 10 CFR 50.46a,” and its withdrawal. Draft Regulatory Guide DG–1216 was a proposed new regulatory guide written to provide implementing guidance for a proposed rule “Risk-Informed Changes to Loss-of-Coolant Accident Technical Requirements,” (Emergency core cooling system (ECCS) rulemaking)) that provided a voluntary, alternate approach for evaluating the performance of an ECCS. The NRC is discontinuing further regulatory action on the DG and not publishing the DG in final form because the NRC has discontinued the underlying rulemaking.
The effective date for discontinuance and withdrawal of the DG is December 8, 2016.
Please refer to Docket ID NRC–2010–0229 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
•
•
•
Robert L. Tregoning, telephone: 301–415–2324; email:
The NRC is announcing the discontinuation of further NRC action on DG–1216, “Plant-Specific Applicability of Transition Break Size Specified in 10 CFR 50.46a,
Draft Regulatory Guide DG–1216 was a proposed new regulatory guide written to provide implementing guidance for a proposed ECCS rulemaking which would have provided a voluntary, risk-informed alternative to the existing, deterministic requirements for evaluating ECCS performance. The proposed ECCS rule was published in the
Because the NRC discontinued the ECCS rulemaking, further NRC action to develop and adopt DG–1216 as a final guidance document is not needed. Therefore, this notice announces the NRC's decision to discontinue further action on DG–1216 and documents the final NRC action on DG–1216.
For the Nuclear Regulatory Commission.
Federal Aviation Administration (FAA), DOT.
Final special conditions.
These special conditions are issued for the BHTI Model 525 helicopter. This helicopter will have a novel or unusual design feature associated with fly-by-wire flight control system (FBW FCS) functions that affect the structural integrity of the rotorcraft. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
These special conditions are effective January 9, 2017.
Martin R. Crane, Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy, Fort Worth, TX 76177; telephone (817) 222–5110; email
On December 15, 2011, BHTI applied for a type certificate for a new transport category helicopter designated as the Model 525. The aircraft is a medium twin engine rotorcraft. The design maximum takeoff weight is 20,000 pounds, with a maximum capacity of 16 passengers and a crew of 2.
The BHTI Model 525 helicopter will be equipped with a FBW FCS. The control functions of the FBW FCS and its related systems affect the structural integrity of the rotorcraft. Current regulations do not take into account loads for the rotorcraft due to the effects of systems on structural performance including normal operation and failure conditions with strength levels related to probability of occurrence. Special conditions are needed to account for these features.
Under the provisions of 14 CFR 21.17, BHTI must show that the Model 525 helicopter meets the applicable provisions of part 29, as amended by Amendment 29–1 through 29–55 thereto. The BHTI Model 525 certification basis date is December 15, 2011, the date of application to the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the BHTI Model 525 helicopter must comply with the noise certification requirements of 14 CFR part 36, and the FAA must issue a finding of regulatory adequacy under § 611 of Public Law 92–574, the “Noise Control Act of 1972.”
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type-certification basis under § 21.17(a)(2).
The BHTI Model 525 helicopter will incorporate the following novel or unusual design features: FBW FCS, and its related systems (stability augmentation system, load alleviation system, flutter control system, and fuel management system), with control functions that affect the structural integrity of the rotorcraft. Current regulations are inadequate for considering the effects of these systems and their failures on structural performance. The general approach of accounting for the effect of system failures on structural performance would be extended to include any system where partial or complete failure, alone or in combination with any other system's partial or complete failure, would affect structural performance.
Active flight control systems are capable of providing automatic responses to inputs from sources other than the pilots. Active flight control systems have been expanded in function, effectiveness, and reliability to the point that FBW FCS systems are being installed on new rotorcraft. As a result of these advancements in flight control technology, 14 CFR part 29 does not provide a basis to achieve an acceptable level of safety for rotorcraft so equipped. Certification of these systems requires issuing special conditions under the provisions of § 21.16.
In the past, traditional rotorcraft flight control system designs have incorporated power-operated systems, stability or control augmentation with limited control authority, and autopilots that were certificated partly under § 29.672 with guidance from Advisory Circular 29–2C, Section AC 29.672. These systems are integrated into the primary flight controls and are given sufficient control authority to maneuver the rotorcraft up to its structural design limits in 14 CFR part 29 subparts C and D. The FBW FCS advanced technology with its full authority necessitates additional requirements to account for the interaction of control systems and structures.
The regulations defining the loads envelope in 14 CFR part 29 do not fully account for the effects of systems on structural performance. Automatic systems may be inoperative or they may operate in a degraded mode with less than full system authority and associated built-in protection features. Therefore, it is necessary to determine the structural factors of safety and operating margins such that the probability of structural failures due to application of loads during FBW FCS malfunctions is not greater than that found in rotorcraft equipped with traditional flight control systems. To achieve this objective and to ensure an acceptable level of safety, it is necessary to define the failure conditions and their associated frequency of occurrence.
Traditional flight control systems provide two states, either fully functioning or completely inoperative. These conditions are readily apparent to the flight crew. Newer active flight control systems have failure modes that allow the system to function in a degraded mode without full authority and associated built-in protection features. As these degraded modes are not readily apparent to the flight crew, monitoring systems are required to provide an annunciation of degraded system capability.
A notice of proposed special conditions for the BHTI Model 525 helicopter FBW FCS and its related systems was published in the
As discussed above, these special conditions are applicable to the BHTI Model 525 helicopter. Should BHTI apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, the special conditions would apply to that model as well.
This action affects only certain novel or unusual design features on one model of rotorcraft. It is not a rule of general applicability.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Bell Helicopter Textron, Inc., Model 525 helicopters when a fly-by-wire flight control system is installed:
For rotorcraft equipped with systems that affect structural performance, either directly or as a result of a failure or malfunction, the influence of these systems and their failure conditions must be taken into account when showing compliance with the requirements of Title 14, Code of Federal Regulations (14 CFR) part 29 subparts C and D.
The following criteria must be used for showing compliance with these special conditions for rotorcraft equipped with flight control systems, autopilots, stability augmentation systems, load alleviation systems, flutter control systems, fuel management systems, and other systems that either directly or as a result of failure or malfunction affect structural performance. If these special conditions are used for other systems, it may be necessary to adapt the criteria to the specific system.
(a) The criteria defined herein only address the direct structural consequences of the system responses and performance. They cannot be considered in isolation but should be included in the overall safety evaluation of the rotorcraft. These criteria may in some instances duplicate standards already established for this evaluation. These criteria are only applicable to structure whose failure could prevent continued safe flight and landing. Specific criteria that define acceptable limits on handling characteristics or stability requirements when operating in the system degraded or inoperative mode are not provided in these special conditions.
(b) Depending upon the specific characteristics of the rotorcraft, additional studies may be required that go beyond the criteria provided in this special condition in order to demonstrate the capability of the rotorcraft to meet other realistic conditions such as alternative gust or maneuver descriptions for a rotorcraft equipped with a load alleviation system.
(c) The following definitions are applicable to these special conditions:
(1) Structural performance: Capability of the rotorcraft to meet the structural requirements of 14 CFR part 29.
(2) Flight limitations: Limitations that can be applied to the rotorcraft flight conditions following an in-flight occurrence and that are included in the flight manual (
(3) Operational limitations: Limitations, including flight limitations, which can be applied to the rotorcraft operating conditions before dispatch (
(4) Probabilistic terms: The terms “improbable” and “extremely improbable” are the same as those used in § 29.1309.
(5) Failure condition: The term “failure condition” is the same as that used in § 29.1309; however, these special conditions apply only to system failure conditions that affect the structural performance of the rotorcraft (
(a)
(b)
(1) Limit loads must be derived in all normal operating configurations of the system from all the limit conditions specified in subpart C (or defined by special condition or equivalent level of safety in lieu of those specified in subpart C), taking into account any special behavior of such a system or associated functions or any effect on the structural performance of the rotorcraft that may occur up to the limit loads. In particular, any significant nonlinearity (rate of displacement of control surface, thresholds or any other system nonlinearities) must be accounted for in a realistic or conservative way when deriving limit loads from limit conditions.
(2) The rotorcraft must meet the strength requirements of part 29 (static strength, residual strength), using the specified factors to derive ultimate loads from the limit loads defined above. The effect of nonlinearities must be investigated beyond limit conditions to ensure the behavior of the system presents no anomaly compared to the behavior below limit conditions. However, conditions beyond limit conditions need not be considered when it can be shown that the rotorcraft has design features that will not allow it to exceed those limit conditions.
(3) The rotorcraft must meet the flutter and divergence requirements of § 29.629.
(c)
(1) At the time of occurrence. Starting from 1–g level flight conditions, a realistic scenario, including pilot corrective actions, must be established to determine the loads occurring at the time of failure and immediately after the failure.
(i) For static strength substantiation, these loads multiplied by an appropriate factor of safety that is related to the probability of occurrence of the failure are the ultimate loads that must be considered for design. The factor of safety is defined in Figure 1.
(ii) For residual strength substantiation, the rotorcraft must be able to withstand two-thirds of the ultimate loads defined in paragraph (c)(1)(i) of these special conditions.
(iii) Freedom from flutter and divergence must be shown under all conditions of operation including:
(A) Airspeeds up to 1.11 V
(B) Main rotor speeds from 0.95 multiplied by the minimum permitted speed up to 1.05 multiplied by the maximum permitted speed (power on and power off).
(C) The critical combinations of weight, center of gravity position, load factor, and altitude.
(iv) For failure conditions that result in excursions beyond operating limitations, freedom from flutter and divergence must be shown to increased speeds, so that the margins intended by paragraph (c)(1)(iii) of these special conditions are maintained.
(v) Failures of the system that result in forced structural vibrations (oscillatory failures) must not produce loads that could result in detrimental deformation of primary structure.
(2) For the continuation of the flight. For the rotorcraft in the system failed state, and considering all appropriate reconfiguration and flight limitations, the following apply:
(i) The loads derived from the following conditions (or defined by special conditions or equivalent level of safety in lieu of the following conditions) at speeds up to V
(A) The limit maneuvering conditions specified in §§ 29.337 and 29.339.
(B) The limit gust conditions specified in § 29.341.
(C) The limit yaw maneuvering conditions specified in § 29.351.
(D) The limit unsymmetrical conditions specified in § 29.427.
(E) The limit ground loading conditions specified in § 29.473.
(ii) For static strength substantiation, each part of the structure must be able to withstand the loads in paragraph (c)(2)(i) of these special conditions multiplied by a factor of safety depending on the probability of being in this failure state. The factor of safety is defined in Figure 2.
If P
(iii) For residual strength substantiation, the rotorcraft must be able to withstand two-thirds of the ultimate loads defined in paragraph (c)(2)(ii) of these special conditions.
(iv) If the loads induced by the failure condition have a significant effect on fatigue or damage tolerance, then their effects must be taken into account.
(v) Freedom from flutter and divergence must be shown up to 1.11 V
(vi) Freedom from flutter and divergence must also be shown up to 1.11 V
(3) Consideration of certain failure conditions may be required by other sections of 14 CFR part 29 regardless of calculated system reliability. Where the failure analysis shows the probability of
(d)
(1) The system must be checked for failure conditions, not extremely improbable, that degrade the structural capability below the level required by 14 CFR part 29 or that significantly reduce the reliability of the remaining operational portion of the system. As far as reasonably practicable, the flight crew must be made aware of these failures before flight. Certain elements of the control system, such as mechanical and hydraulic components, may use special periodic inspections, and electronic components may use daily checks, in lieu of detection and indication systems to achieve the objective of this requirement. These other means of detecting failures before flight will become part of the certification maintenance requirements (CMRs) and must be limited to components that are not readily detectable by normal detection and indication systems, and where service history shows that inspections will provide an adequate level of safety.
(2) The existence of any failure condition, shown to be not extremely improbable, during flight that could significantly affect the structural capability of the rotorcraft and for which the associated reduction in airworthiness can be minimized by suitable flight limitations, must be signaled to the flight crew. For example, failure conditions that result in a factor of safety between the rotorcraft strength and the loads of Subpart C below 1.25, or flutter and divergence margins below 1.11 V
(e)
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are adopting a new airworthiness directive (AD) for certain Bombardier, Inc. Model DHC–8–102, –103, and –106 airplanes, Model DHC–8–200 series airplanes, and Model DHC–8–300 series airplanes. This AD was prompted by several occurrences of loss of airspeed data on both pilot and co-pilot air speed indicators due to the accumulation of ice on the pitot probes caused by inoperative pitot probe heaters. This AD requires replacing the existing circuit breakers in the pitot heater system. We are issuing this AD to address the unsafe condition on these products.
This AD is effective January 12, 2017.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of January 12, 2017.
For service information identified in this final rule, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone: 416–375–4000; fax: 416–375–4539; email:
You may examine the AD docket on the Internet at
Assata Dessaline, Aerospace Engineer, Avionics and Services Branch, ANE–172, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone: 516–228–7301; fax: 516–794–5531.
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc. Model DHC–8–102, –103, and –106 airplanes, Model DHC–8–200 series airplanes, and Model DHC–8–300 series airplanes. The NPRM published in the
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian AD CF–2016–04, dated February 1, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model DHC–8–102, –103, and –106 airplanes, Model DHC–8–200 series airplanes, and Model DHC–8–300 series airplanes. The MCAI states:
There have been several occurrences of loss of airspeed data on both pilot and co-pilot Airspeed Indicators (ASI) due to the accumulation of ice on the pitot probes. Subsequent investigation revealed that the build up of ice on the pitot probes was due to inoperative pitot probe heaters. When flying in heavy precipitations, the increased heat required by the pitot probe to clear ice build up may result in a current demand in excess of the trip point of the associated circuit breakers (CB). Under this condition, the CB may trip and cut power supply to the heater. If not corrected, the loss of airspeed data may result in the crew not being able to control the aeroplane's airspeed.
This [Canadian] AD is issued to mandate the replacement of the existing CBs with CBs that have higher trip points.
We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response to each comment. The Airline Pilots Association, International, stated that it supported the NPRM.
Bombardier, Inc. requested that we correct the cost of the pitot heaters. Bombardier, Inc. stated that we provided the cost of left-hand pitot heater ($1,194), but not the right-hand pitot heater. Bombardier Inc. stated that the cost of the right-hand pitot heater is $1,155.
We agree with the commenter's request for the reasons provided. We have revised this AD accordingly.
Bombardier, Inc. requested that we omit the phrase “in production” in the first sentence of paragraph (h) of the proposed AD. Bombardier, Inc. stated that ModSum IS8Q3000004 was incorporated in service.
We agree with the commenter for the reason stated above. We have revised this AD accordingly.
We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM.
We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.
We reviewed Bombardier Service Bulletin 8–30–39, dated November 11, 2015, and Bombardier Service Bulletin 8–30–40, dated November 11, 2015. The service information describes procedures for replacing the existing circuit breakers in both the left and right sides of the pitot heater system with circuit breakers that have higher trip points. These documents are distinct since they apply to different sides of the airplane. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We estimate that this AD affects 83 airplanes of U.S. registry.
We estimate the following costs to comply with this AD:
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 that 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);
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.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective January 12, 2017.
None.
This AD applies to Bombardier, Inc. Model DHC–8–102, –103, –106, –201, –202, –301, –311, and –315 airplanes, certificated in any category, serial numbers 003 through 672 inclusive.
Air Transport Association (ATA) of America Code 30, Ice and rain protection.
This AD was prompted by several occurrences of loss of airspeed data on both pilot and co-pilot air speed indicators due to the accumulation of ice on the pitot probes. An investigation revealed that the accumulation of ice was due to inoperative pitot probe heaters. We are issuing this AD to prevent circuit breakers from tripping and cutting power supply to the pitot probe heater, which could cause loss of airspeed data and result in the flight crew not being able to control the airspeed of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Except as provided by paragraph (h) of this AD, within 5,000 flight hours or 60 months after the effective date of this AD, whichever occurs first: Replace the existing circuit breakers in both the left and right side of the pitot heater system with circuit breakers that have higher trip points, in accordance with the Accomplishment Instructions of Bombardier Service Bulletin 8–30–39, dated November 11, 2015 (for the right side), and Bombardier Service Bulletin 8–30–40, dated November 11, 2015 (for the left side).
For airplanes on which Bombardier ModSum IS8Q3000004 has been incorporated, no action is required by paragraph (g) of this AD.
The following provisions also apply to this AD:
(1)
(2)
Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian AD CF–2016–04, dated February 1, 2016, for related information. This MCAI may be found in the AD docket on the Internet at
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Bombardier Service Bulletin 8–30–39, dated November 11, 2015.
(ii) Bombardier Service Bulletin 8–30–40, dated November 11, 2015.
(3) For service information identified in this AD, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone: 416–375–4000; fax: 416–375–4539; email:
(4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425–227–1221.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration (FAA), DOT.
Final rule.
We are adopting a new airworthiness directive (AD) for all M7 Aerospace LLC Models SA226–AT, SA226–T, SA226–T(B), SA226–TC, SA227–AC (C–26A), SA227–AT, SA227–BC (C–26A), SA227–CC, SA227–DC (C–26B), and SA227–TT airplanes. This AD was prompted by corrosion and stress corrosion cracking of the pitch trim actuator upper attach fittings of the horizontal stabilizer front spar. This AD requires repetitive inspections with replacement of fittings as necessary. We are issuing this AD to correct the unsafe condition on these products.
This AD is effective January 12, 2017.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of January 12, 2017.
For service information identified in this final rule, contact M7 Aerospace LLC, 10823 NE Entrance Road, San Antonio, Texas 78216; phone: (210) 824–9421; fax: (210) 804–7766; Internet:
You may examine the AD docket on the Internet at
Andrew McAnaul, Aerospace Engineer, FAA, ASW–143 (c/o San Antonio MIDO), 10100 Reunion Place, Suite 650, San Antonio, Texas 78216; phone: (210) 308–3365; fax: (210) 308–3370; email:
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all M7 Aerospace LLC Models SA226–AT, SA226–T, SA226–T(B), SA226–TC, SA227–AC (C–26A), SA227–AT, SA227–BC (C–26A), SA227–CC, SA227–DC (C–26B), and SA227–TT airplanes. The NPRM published in the
We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.
We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM.
We reviewed M7 Aerospace LLC Service Bulletin (SB) 226–27–081 R1, M7 Aerospace LLC SB 227–27–061 R1, and M7 Aerospace LLC SB CC7–27–033 R1, all revised June 27, 2016. In combination for the different applicable models, the service information describes procedures for detailed visual, liquid penetrant, ultrasound, and high frequency eddy current inspections of the pitch trim actuator upper attach fittings for corrosion and cracking in the bolt holes and the web/flange radius, and replacement if necessary for applicable airplane models. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We estimate that this AD affects 300 airplanes of U.S. registry.
We estimate the following costs to comply with this AD:
We estimate the following costs to do any necessary replacements that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need these replacements:
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.
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
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective January 12, 2017.
None.
This AD applies to M7 Aerospace LLC Models SA226–AT, SA226–T, SA226–T(B), SA226–TC, SA227–AC (C–26A), SA227–AT, SA227–BC (C–26A), SA227–CC, SA227–DC (C–26B), and SA227–TT airplanes, all serial numbers, certificated in any category.
Joint Aircraft System Component (JASC)/Air Transport Association (ATA) of America Code 5510, Horizontal Stabilizer Structure.
This AD was prompted by corrosion and stress corrosion cracking of the pitch trim actuator upper attach fittings of the horizontal stabilizer front spar. We are issuing this AD to prevent jamming and/or loss of control of the horizontal stabilizer, which could result in partial or complete loss of airplane pitch control.
Comply with paragraphs (g)(1) and (2) of this AD using the following service bulletins and within the compliance times specified, unless already done:
(1)
(2)
(3)
(1) Within the next 600 hours time-in-service (TIS) after January 12, 2017 (the effective date of this AD) or within the next 12 months after January 12, 2017 (the effective date of this AD), whichever occurs first, and repetitively thereafter at intervals not to exceed every 5,000 hours TIS or 5 years, whichever occurs first, perform the inspection of the pitch trim actuator upper attach fittings following section 2.A. and return to service following section 2.C. of the Accomplishment Instructions of the service bulletins identified in paragraph (f)(1), (2), or (3) of this AD, as applicable.
(2) If any corrosion or cracks are found as a result of any inspection in paragraph (g)(1) of this AD, before further flight, replace the fitting following section 2.B. and return to service following section 2.C. of the Accomplishment Instructions of the service bulletins identified in paragraph (f)(1), (2), or (3) of this AD, as applicable.
This AD allows credit for inspection or replacement of the pitch trim actuator upper attach fittings required in paragraph (g)(1) and (2) of the AD, if done before January 12, 2017 (the effective date of this AD), following the procedures in the Accomplishment Instructions of the applicable service information listed in paragraphs (h)(1) through (3) of this AD:
(1)
(2)
(3)
(1) The Manager, Fort Worth Airplane Certification Office, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (i) of this AD.
(2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.
For more information about this AD, contact Andrew McAnaul, Aerospace Engineer, FAA, ASW–143 (c/o San Antonio MIDO), 10100 Reunion Place, Suite 650, San Antonio, Texas 78216; phone: (210) 308–3365; fax: (210) 308–3370; email:
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless the AD specifies otherwise.
(i) M7 Aerospace LLC Service Bulletin (SB) 226–27–081 R1, revised June 27, 2016.
(ii) M7 Aerospace LLC SB 227–27–061 R1, revised June 27, 2016.
(iii) M7 Aerospace LLC SB CC7–27–033 R1, revised June 27, 2016.
(3) For M7 Aerospace LLC service information identified in this AD, contact M7 Aerospace LLC, 10823 NE Entrance Road, San Antonio, Texas 78216; phone: (210) 824–9421; fax: (210) 804–7766; Internet:
(4) You may view this referenced service information at the FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call 816–329–4148.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to:
Federal Aviation Administration (FAA), Department of Transportation (DOT).
Final rule.
We are adopting a new airworthiness directive (AD) for certain Bombardier, Inc. Model DHC–8–400 series airplanes. This AD was prompted by reports of cracked and corroded barrel nuts found at the mid-spar location of the horizontal-stabilizer-to-vertical-stabilizer attachment joint. This AD requires repetitive detailed
This AD is effective January 12, 2017.
The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of January 12, 2017.
For service information identified in this final rule, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416–375–4000; fax 416–375–4539; email
You may examine the AD docket on the Internet at
Aziz Ahmed, Aerospace Engineer, Airframe and Mechanical Systems Branch, ANE–171, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516–228–7329; fax 516–794–5531.
We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc. Model DHC–8–400 airplanes. The NPRM published in the
Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, issued Canadian Airworthiness Directive CF–2015–13, dated June 25, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model DHC–8–400 series airplanes. The MCAI states:
There has been one in-service report of a cracked and corroded barrel nut, part number (P/N) DSC228–12, found at the mid-spar location of the horizontal stabilizer to vertical stabilizer attachment joint. There have also been two other reports of corroded barrel nuts found at mid-spar locations.
Preliminary investigation determined that the cracking is initiated by corrosion. The corrosion may have been caused by inadequate cadmium plating on the barrel nut. Failure of the barrel nuts could compromise the structural integrity of the joint and could lead to loss of control of the aeroplane.
This [Canadian] AD mandates initial and repetitive inspections of the barrel nuts [and cradles for cracks and corrosion] at each horizontal stabilizer to vertical stabilizer attachment joints.
Required actions include a bolt preload check of the PLI washers and applicable corrective actions (retorque of the bolts and replacement of the barrel nut), a detailed inspection of cracked or broken barrel nuts for damaged bores of the fittings, replacement of barrel nuts, and repair of damage and corrosion.
You may examine the MCAI in the AD docket on the Internet at
We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response to each comment.
The Air Line Pilots Association, International, and a commenter, Lara Gabrys, supported the intent of the NPRM.
The source of service information in the NPRM—Bombardier Alert Service Bulletin A84–55–04, Revision A, dated June 2, 2015—has been revised. Horizon Air requested that we revise the NPRM to refer to the latest version of the service information.
We agree and have revised this final rule to identify Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016, as the appropriate source of service information. The revised service information clarifies certain conditional actions; the major actions remain essentially unchanged. We have also revised paragraph (m) of this AD to include all earlier revisions as credit for prior accomplishment of the corresponding actions specified in this AD.
Commenter Lara Gabrys expressed concern about the unsafe condition and the lack of a permanent solution to address it.
We acknowledge the commenter's concern, and point out that this final rule (as also specified in the NPRM) requires that operators submit their inspection findings to Bombardier. Then, based on those findings, Bombardier plans to develop a permanent solution to address the unsafe condition. If terminating action is developed, approved, and available, we might consider additional rulemaking. At this time, however, we are issuing this final rule as proposed.
Paragraphs (g)(1), (g)(2), (h)(1)(i), (h)(1)(ii), (i), and (k) of the proposed AD specified that certain actions be done in accordance with “the Accomplishment Instructions” of the referenced service information. Noting that “the Accomplishment Instructions” include paragraphs 3.A., “Job Set-Up,” and 3.C., “Close Out,” Horizon Air requested that the compliance method instead be limited to paragraph 3.B., “Procedures”—the only section that corrects the unsafe condition. Horizon Air objected to the inclusion of the specified set-up and close-out procedures, which would restrict the operators' ability to perform other maintenance in conjunction with the incorporation of the service information.
We agree with the request, for the reasons provided by the commenter. We have revised paragraphs (g)(1), (g)(2), (h)(1)(i), (h)(1)(ii), (i), and (k) of this AD, as well as paragraph (h)(1) of this AD, to refer to paragraph 3.B., “Procedures.”
This AD affects Model DHC–8–400, –401, and –402 airplanes. The
We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these minor changes:
• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and
• Do not add any additional burden upon the public than was already proposed in the NPRM.
We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.
Bombardier, Inc. has issued Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016. The service information describes procedures for a detailed inspection and repair for cracks and corrosion of the barrel nuts and cradles, a bolt preload check of the PLI washers, applicable corrective actions, a detailed inspection and repair for corrosion and damage of the bores of the fittings, and replacement of the barrel nuts.
Bombardier, Inc. has also issued Bombardier Repair Drawing (RD) 8/4–55–1143, Issue 1, dated May 21, 2015. The service information describes procedures for repairing corrosion and damage of the fitting bore.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
We estimate that this AD affects 76 airplanes of U.S. registry.
We also estimate that it will take about 6 work-hours per product to comply with the basic requirements of this AD and 1 work-hour per product for reporting. The average labor rate is $85 per work-hour. Required parts will cost about $0 per product. Based on these figures, we estimate the cost of this AD on U.S. operators to be $45,220, or $595 per product.
In addition, we estimate that any necessary follow-on actions would take about 4 work-hours, and require parts costing $8,881, for a cost of $9,221 per product. We have no way of determining the number of aircraft that might need this action.
A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a 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 current valid OMB control number. The control number for the collection of information required by this AD is 2120–0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES–200.
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 that 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);
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.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD is effective January 12, 2017.
None.
This AD applies to Bombardier, Inc. Model DHC–8–400, –401, and –402 airplanes, certificated in any category, serial numbers 4001 and subsequent.
Air Transport Association (ATA) of America Code 55, Stablizers.
This AD was prompted by reports of cracked and corroded barrel nuts found at the mid-spar location of the horizontal-stabilizer-to-vertical-stabilizer attachment joint. We are issuing this AD to detect and correct cracked and corroded barrel nuts, which could compromise the structural integrity of the vertical-stabilizer attachment joints and lead to loss of control of the airplane.
Comply with this AD within the compliance times specified, unless already done.
(1) For airplanes that have accumulated 5,400 flight hours or more, or have been in service 32 months or more since the date of issuance of the original certificate of airworthiness or the date of issuance of the original export certificate of airworthiness, as of the effective date of this AD: Within 600 flight hours or 4 months, whichever occurs first after the effective date of this AD, do a detailed visual inspection for signs of cracks and corrosion of the barrel nut and cradle, in accordance with paragraph 3.B., “Procedures,” of the Accomplishment Instructions of Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016.
(2) For airplanes that have less than 5,400 flight hours, and have been in-service for less than 32 months since the date of issuance of the original certificate of airworthiness or the date of issuance of the original export certificate of airworthiness, as of the effective date of this AD: Before the accumulation of 6,000 total flight hours or 36 months since the date of issuance of the original certificate of airworthiness or the date of issuance of the original export certificate of airworthiness, whichever occurs first, do a detailed visual inspection of the barrel nut for signs of cracks and corrosion of the barrel nut and cradle, in accordance with paragraph 3.B., “Procedures,” of the Accomplishment Instructions of Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016.
Depending on the findings of any inspection required by paragraphs (g) and (j) of this AD, do the applicable actions in paragraphs (h)(1), (h)(2), and (h)(3) of this AD.
(1) If any barrel nut or cradle is found cracked or broken, before further flight, replace the barrel nut and associated hardware, in accordance with paragraph 3.B., “Procedures,” of the Accomplishment Instructions of Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016.
(i) Concurrently with the replacement of any barrel nut, do a detailed inspection for corrosion and damage of the bore of the fitting, in accordance with paragraph 3.B., “Procedures,” of the Accomplishment Instructions of Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016, and, before further flight, repair all corrosion and damage, in accordance with Bombardier Repair Drawing (RD) 8/4–55–1143, Issue 1, dated May 21, 2015. If the bore of the fitting cannot be repaired in accordance with Bombardier RD 8/4–55–1143, Issue 1, dated May 21, 2015, accomplish corrective actions in accordance with the procedures specified in paragraph (n)(2) of this AD.
(ii) Within 600 flight hours or 4 months, whichever occurs first, after the replacement of a cracked barrel nut, replace the remaining barrel nuts and their associated hardware at the horizontal-stabilizer-to-vertical-stabilizer attachment joints, in accordance with paragraph 3.B., “Procedures,” of the Accomplishment Instructions of Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016.
(2) If any corrosion is found on any barrel nut on the front or rear-spar joints, before further flight, replace the barrel nut accomplish corrective actions in accordance with the procedures specified in paragraph (n)(2) of this AD.
(3) If any corrosion above level 1, as defined in Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016, is found on a barrel nut at the mid-spar joint, before further flight, replace the barrel nut and accomplish corrective actions in accordance with the procedures specified in paragraph (n)(2) of this AD.
(4) If all corrosion found is at level 1 or below, as defined in Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016, on a barrel nut at the mid-spar joint, repeat the inspection specified in paragraph (g) of this AD at intervals not to exceed 600 flight hours or 4 months, whichever occurs first, until completion of the actions required by paragraph (k) of this AD.
For airplanes with PLI washers installed at the front and rear-spar joints, before further flight after accomplishing any inspection required by (g) of this AD and all applicable corrective actions required by paragraph (h) of this AD, check the bolt preload, and do all applicable corrective actions, in accordance with paragraph 3.B., “Procedures,” of the Accomplishment Instructions of Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016. Do all applicable corrective actions before further flight.
Repeat the inspection and preload check required by paragraphs (g) and (i) of this AD at intervals not to exceed 3,600 flight hours or 18 months, whichever occurs first, except as provided by paragraph (k) of this AD.
Inspection and replacement of all barrel nuts at the horizontal-stabilizer-to vertical-stabilizer attachment joints, in accordance with paragraph 3.B., “Procedures,” of the Accomplishment Instructions of Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016, extends the next inspection required by paragraph (j) of this AD to within 6,000 flight hours or 36 months, whichever occurs first, after accomplishing the replacement.
At the applicable time specified in paragraph (l)(1) or (l)(2) of this AD, submit a report of the findings (both positive and negative) of each inspection required by this AD to Technical Help Desk—Q-series, telephone: 416–375–4000, fax: 416–375–4539, email:
(1) If the inspection was done on or after the effective date of this AD: Submit the report within 30 days after the inspection.
(2) If the inspection was done before the effective date of this AD: Submit the report within 30 days after the effective date of this AD.
This paragraph provides credit for the corresponding actions specified in paragraphs (g)(1), (g)(2), (h)(1), (h)(1)(i), (h)(1)(ii), (h)(3), (h)(4), (i), (k), and (l) of this AD, if those actions were performed before the effective date of this AD using the service information identified in paragraphs (m)(1), (m)(2), and (m)(3) of this AD.
(1) Bombardier Alert Service Bulletin A84–55–04, dated May 21, 2015.
(2) Bombardier Alert Service Bulletin A84–55–04, Revision A, dated June 2, 2015.
(3) Bombardier Alert Service Bulletin A84–55–04, Revision B, dated July 30, 2015.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF–2015–13, dated June 25, 2015, for related information. This MCAI may be found in the AD docket on the Internet at
(2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (p)(4) and (p)(5) of this AD.
(1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.
(2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.
(i) Bombardier Alert Service Bulletin A84–55–04, Revision C, dated May 3, 2016.
(ii) Bombardier Repair Drawing (RD) 8/4–55–1143, Issue 1, dated May 21, 2015.
(3) For service information identified in this AD, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416–375–4000; fax 416–375–4539; email
(4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425–227–1221.
(5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202–741–6030, or go to
Office of the Assistant Secretary for Fair Housing and Equal Opportunity, HUD.
Classification of published document; correction.
On October 5, 2016, HUD published a document in response to a court remand, which was miscategorized and placed in the “proposed rules” section of the
December 8, 2016.
With respect to this supplementary document, contact Ariel Pereira, Associate General Counsel for Legislation and Regulations, Department of Housing and Urban Development, 451 7th Street SW., Room 10238, Washington, DC 20410; telephone number 202–708–1793 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800–877–8339.
Pursuant to 1 CFR 5.9, the
On October 5, 2016, HUD published a document entitled “Application of the Fair Housing Act's Discriminatory Effects Standard to Insurance,” see 81 FR 69012 (Oct. 5, 2016), which supplements responses previously published with the
Environmental Protection Agency (EPA).
Final rule.
This regulation establishes tolerances for residues of dicamba in or on cotton, gin byproducts; cotton, undelinted seed; soybean, forage; and soybean, hay. Monsanto Company requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).
This regulation is effective December 8, 2016. Objections and requests for hearings must be received on or before February 6, 2017, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the
The dockets for this action, identified by docket identification (ID) number EPA–HQ–OPP–2010–0496 for soybeans and EPA–HQ–OPP–2012–0841 for cotton respectively are available at
Michael Goodis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460–0001; main telephone number: (703) 305–7090; email address:
You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:
• Crop production (NAICS code 111).
• Animal production (NAICS code 112).
• Food manufacturing (NAICS code 311).
• Pesticide manufacturing (NAICS code 32532).
You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at
Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA–HQ–OPP–2010–0496 and EPA–HQ–OPP–2012–0841 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 6, 2017. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).
In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA–HQ–OPP–2010–0496 and EPA–HQ–OPP–2012–0841, by one of the following methods:
•
•
•
In the
Based upon review of the data supporting the petition, EPA is establishing tolerances for soybean, forage and soybean, hay that are higher than requested. The reason for these changes are explained in Unit IV.D.
Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”
Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for dicamba, including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with dicamba follows.
EPA has evaluated the available toxicity data and considered its validity,
For dicamba, toxicology studies for dicamba acid; its salts (isopropylamine (IPA), diglycolamine (DGA), and N, N-Bis-(3-aminopropyl) methylamine (BAPMA)); and its plant metabolites (DCSA (3, 6-dichlorosalicylic acid) and DCGA (3, 6-dichlorogentisic acid)) were all considered for risk assessment. The dicamba BAPMA salt is the BAPMA base added to the dicamba acid form. The DCSA exposure is primarily from dietary exposures (food + water) from uses on transgenic crops, and the dicamba acid exposure is relevant for the incidental oral exposure. In scenarios where co-exposure to the various forms could occur, the most protective point of departure (POD) was utilized for regulation.
Neurotoxic signs (
The rat reproduction study and the developmental studies in rats and rabbits showed no evidence (qualitative or quantitative) for increased susceptibility following
Dicamba is classified as “not likely to be carcinogenic to humans”. Mutagenicity studies did not demonstrate mutagenic concern for dicamba. There was no evidence of dermal or systemic toxicity following repeated dermal application of dicamba acid or the salts at the limit dose (1,000 mg/kg/day). There is no concern for immunotoxicity following exposure to dicamba. Following oral administration, dicamba is rapidly absorbed and rapidly excreted in urine and feces without significant metabolism. Dicamba has a low acute toxicity via the oral, dermal or inhalation route (Acute Toxicity Categories III or IV). It is an eye and dermal irritant but it is not a skin sensitizer.
Specific information on the studies received and the nature of the adverse effects caused by dicamba as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at
Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see
A summary of the toxicological endpoints for dicamba used for human risk assessment is shown in Table 1 of this unit.
1.
i.
Such effects were identified for dicamba. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) 2003–2008 National Health and Nutrition Examination Survey, What We Eat in America (NHANES/WWEIA). As to residue levels in food, EPA used tolerance levels and 100 percent crop treated (PCT) for the acute dietary exposure assessment.
ii.
iii.
iv.
Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if:
•
•
•
In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of PCT as required by FFDCA section 408(b)(2)(F), EPA may require registrants to submit data on PCT.
The Agency estimated the average PCT for existing uses as follows: Asparagus: 5%; barley: 5%; corn: 10%; oats: 2.5%; sorghum: 15%; sugarcane: 20%; sweet corn: 1%; and wheat: 10%.
In most cases, EPA uses available data from United States Department of Agriculture/National Agricultural Statistics Service (USDA/NASS), proprietary market surveys, and the National Pesticide Use Database for the chemical/crop combination for the most recent 6 to 7 years. EPA uses an average PCT for chronic dietary risk analysis. The average PCT figure for each existing use is derived by combining available public and private market survey data for that use, averaging across all observations, and rounding to the nearest 5%, except for those situations in which the average PCT is less than one. In those cases, 1% is used as the average PCT and 2.5% is used as the maximum PCT. EPA uses a maximum PCT for acute dietary risk analysis. The
The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition a, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions b and c, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant sub-populations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which dicamba may be applied in a particular area.
2.
Based on the Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) and Pesticide Root Zone Model Ground Water (PRZM GW), the estimated drinking water concentrations (EDWCs) of dicamba for acute exposures are calculated to be 53.37 parts per billion (ppb) for surface water and 329 ppb parent plus 0.041 ppb DCSA for ground water. For chronic exposures for non-cancer assessments are estimated to be 44.5 ppb for surface water and 187 ppb parent plus 0.041 ppb DCSA for ground water.
Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. The combined estimated drinking water residues (parent + DCSA) for peak concentration used in the acute assessment and chronic were 329 and 187 ug/L (ppb), respectively.
3.
There are no residential uses being proposed in connection with this action for either dicamba or the dicamba BAPMA salt; however, there are existing residential turf uses of dicamba that have been reassessed to reflect updates to the Agency's 2012 Residential Standard Operating Procedures (SOPs).
There is no potential hazard
The quantitative exposure/risk assessment developed for residential handlers to adults is based on the following lawn/turf application scenarios:
The quantitative exposure/risk assessment for residential post-application exposures to children is based on the following scenarios:
• Children (1 to <2 years old) incidental oral exposure to treated turf.
• Children (1 to <2 years old) episodic granular ingestion exposure.
Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at
4.
EPA has not found dicamba to share a common mechanism of toxicity with any other substances, and dicamba does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that dicamba does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at
1.
2.
3.
i. The toxicity database for dicamba is complete for purposes of assessing the safety of existing and petitioned-for tolerances under the FFDCA.
ii. Although consistent neurotoxic signs (
iii. As indicated in Unit III.D.2., the degree of concern for potential susceptibility is low; therefore, there is no need to retain the 10X FQPA safety factor to address any concern for prenatal or postnatal exposure.
iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on tolerance-level residues for the acute dietary, and average field trial data and percent crop treated information for the chronic dietary. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to dicamba in drinking water. EPA used similarly conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by dicamba.
EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.
1.
2.
3.
Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential post-application exposures to children (1 to 2 years old) on turf result in an aggregate MOE of 3,600. Because EPA's level of concern for dicamba is a MOE of 100 or below, this MOE is not of concern.
EPA has determined that it is not appropriate to aggregate short-term exposures for adults, since there was no dermal hazard identified in the route-specific dermal studies and the inhalation effects were not systemic.
4.
An intermediate-term adverse effect was identified; however, dicamba is not registered for any use patterns that would result in intermediate-term residential exposure. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for dicamba.
5.
6.
Adequate enforcement methodology liquid chromatography/mass spectrometer/mass spectrometer (LC/MS/MS) method, BASF Method D0902 is available to enforce the tolerance expression.
The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755–5350; telephone number: (410) 305–2905; email address:
In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.
The Codex has not established a MRL for dicamba in or on soybean, forage; soybean, hay; and cotton, gin byproducts.
The Codex has established a MRL for dicamba in or on cotton seed at 0.04 ppm. This MRL is different than the tolerance being established for dicamba in or on cotton, undelinted seed at 3.0 ppm in the United States. Since the use pattern of dicamba on dicamba-tolerant cotton has been changed to late season, the currently established international tolerances are not adequate to cover residues likely from the new use in the United States. In addition, the dicamba residues of concern for dicamba-tolerant cotton also include the DCSA metabolite, which is not found nor regulated in the other common varieties of cotton. Therefore, harmonization with respect to the tolerance expression
Several comments were received in both dockets EPA–HQ–OPP–2010–0496 and EPA–HQ–OPP–2012–0841, objecting to any approval of new dicamba uses on cotton and soybeans under the Federal Insecticide, Fungicide, and Rodenticide Act. Several comments raised concerns about a sharp increase of dicamba use due to a longer application season, the possible spread of weed resistance, off-site drift to non-targets, volatility, negative environmental effects, possible threat to endangered species, and the negative impact the new uses may have on the U.S. agricultural business as a whole. These comments do not appear to be concerned with the issuance of the tolerances under the FFDCA, but rather the approval of the uses under FIFRA. In any event, the existing legal framework provided by section 408 of the FFDCA states that tolerances may be set when persons seeking such tolerances or exemptions have demonstrated that the pesticide meets the safety standard imposed by the statute, taking into consideration human health impacts from aggregate exposure (including dietary and other non-occupational exposure) from the pesticide and other related chemicals. The scope of review under the FFDCA does not extend to other environmental considerations. Therefore, the Agency is not addressing these comments here. Where appropriate, the Agency may address them in connection with the associated pending pesticide registration action.
Comments were submitted in both docket EPA–HQ–OPP–2010–0496 and EPA–HQ–OPP–2012–0841 raising issues about the establishment of tolerances for dicamba on cotton and soybeans. Commenters raised concerns about the potential toxicity of dicamba, questioned the Agency's endpoint selection, and alleged that increased use of the pesticide would increase exposure to farmers and workers and dietary exposure. The Agency considered all the available toxicity and exposure data for dicamba and its sales and metabolites and determined that these tolerances are safe for the reasons spelled out in detail within the risk assessment Dicamba and Dicamba Salt: Human-Health Risk Assessment for Proposed Section 3 New Uses on Dicamba-tolerant Cotton and Soybean located in Docket ID number EPA–HQ–OPP–2016–0187 on
Finally, the commenters expressed concern that approval of new uses would increase exposure to workers and urged the Agency to take into account the likely increased dietary exposure, including any residues of dicamba that are in cattle diets and livestock commodities from treated cotton plants, from increased use of dicamba from approval of these tolerances. Because the FFDCA directs EPA to aggregate non-occupational exposure with dietary exposure, the Agency's assessment under the FFDCA does not assess the levels of occupational exposure to farmers and other workers. As to the dietary exposure, as noted in Unit III.C.1., the Agency considers exposure under the petitioned-for tolerances (including residues ingested by livestock diets that may result in residues livestock commodities) as well as all existing dicamba tolerances. Upon assessing those levels of exposure, the Agency has determined that these tolerances will be safe.
Tolerances for soybean forage and hay requested by the petitioner were estimated using the North American Free Trade Agreement (NAFTA) MRL calculator. EPA is establishing tolerances, which differ from the proposed tolerances, based on the Organization for Economic Co-operation Development (OECD) MRL calculation procedures, which is the Agency's current standard for determination of tolerances.
Therefore, tolerances are established for residues of dicamba, 3,6-dichloro-2-methoxybenzoic acid, in or on cotton, gin byproducts at 70 ppm; cotton, undelinted seed at 3.0 ppm; soybean, forage at 60 ppm; and soybean, hay at 100 ppm.
This action establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501
Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerances in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601
This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does
This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).
Pursuant to the Congressional Review Act (5 U.S.C. 801
Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.
Therefore, 40 CFR chapter I is amended as follows:
21 U.S.C. 321(q), 346a and 371.
The additions read as follows:
(a) * * *
(3) * * *
Bureau of Land Management, Interior.
Final rule; correction.
The Bureau of Land Management (BLM) is correcting a final rule that appeared in the
Effective January 17, 2017.
Timothy Spisak at the BLM Washington Office, 20 M Street SE., Room 2134LM, Washington, DC 20003, or by telephone at 202–912–7311. For questions relating to regulatory process issues, contact Faith Bremner at 202–912–7441.
In FR Doc. 2016–27637 published in the
Privacy Office, DHS.
Notice of proposed rulemaking.
The Department of Homeland Security is giving concurrent notice of a newly established system of records pursuant to the Privacy Act of 1974 for the “Department of Homeland Security/United States Coast Guard-031 USCG Law Enforcement (ULE) System of Records” and this proposed rulemaking. In this proposed rulemaking, the Department proposes to exempt portions of the system of records from one or more provisions of the Privacy Act because of criminal, civil, and administrative enforcement requirements.
Comments must be received on or before January 9, 2017.
You may submit comments, identified by docket number DHS–2016–0075, by one of the following methods:
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For general questions please contact: Marilyn Scott-Perez (202–475–3515), Privacy Officer, Commandant (CG–61), United States Coast Guard, Mail Stop 7710, Washington, DC 20593. For privacy issues please contact: Jonathan R. Cantor, (202–343–1717), Acting Chief Privacy Officer, Privacy Office, Department of Homeland Security, Washington, DC 20528.
In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, the Department of Homeland Security (DHS) United States Coast Guard (USCG) proposes to establish a new DHS system of records titled, “DHS/United States Coast Guard-031 USCG Law Enforcement (ULE) System of Records.” Concurrent with this newly issued system of records, DHS/USCG is proposing to exempt the ULE System of Records from certain provisions of the Privacy Act.
The Privacy Act embodies fair information practice principles in a statutory framework governing the means by which Federal Government agencies collect, maintain, use, and disseminate personally identifiable information. The Privacy Act applies to information that is maintained in a “system of records.” A “system of records” is a group of any records under the control of an agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual. In the Privacy Act, an individual is defined to encompass U.S. citizens and lawful permanent residents. As a matter of policy, DHS extends administrative Privacy Act protections to all individuals when systems of records maintain information on U.S. citizens, lawful permanent residents, and visitors.
The Privacy Act allows Government agencies to exempt certain records from the access and amendment provisions. If an agency claims an exemption, however, it must issue a Notice of Proposed Rulemaking to make clear to the public the reasons why a particular exemption is claimed.
DHS is claiming exemptions from certain requirements of the Privacy Act for DHS/USCG–031 USCG Law Enforcement (ULE) System of Records. Some information in DHS/USCG–031 USCG Law Enforcement (ULE) System of Records relates to official DHS national security, law enforcement, immigration, and intelligence activities. These exemptions are needed to protect information relating to DHS activities from disclosure to subjects or others related to these activities. Specifically, the exemptions are required to preclude subjects of these activities from frustrating these processes; to avoid disclosure of activity techniques; to protect the identities and physical safety of confidential informants and law enforcement personnel; and to ensure DHS's ability to obtain information from third parties and other sources; to protect the privacy of third parties; and to safeguard classified information. Disclosure of information to the subject of the inquiry could also permit the subject to avoid detection or apprehension.
In appropriate circumstances, when compliance would not appear to interfere with or adversely affect the law enforcement purposes of this system and the overall law enforcement process, the applicable exemptions may be waived on a case by case basis.
A notice of system of records for DHS/USCG–031 USCG Law Enforcement (ULE) System of Records is also published in this issue of the
Freedom of information; Privacy.
For the reasons stated in the preamble, DHS proposes to amend chapter I of title 6, Code of Federal Regulations, as follows:
6 U.S.C. 101
76. The DHS/USCG–031 USCG Law Enforcement (ULE) System of Records consists of electronic and paper records and will be used by DHS and its components. The DHS/USCG–031 USCG Law Enforcement (ULE) System of Records is a repository of information held by DHS in connection with its several and varied missions and functions, including, but not limited to the enforcement of civil and criminal laws; investigations, inquiries, and proceedings there under; and national security and intelligence activities. The DHS/USCG–031 USCG Law Enforcement (ULE) System of Records contains information that is collected by, on behalf of, in support of, or in cooperation with DHS and its components and may contain personally identifiable information collected by other federal, state, local, tribal, foreign, or international government agencies.
The Secretary of Homeland Security, pursuant to 5 U.S.C. 552a(j)(2), has exempted this system from the following provisions of the Privacy Act: 5 U.S.C. 552a (c)(3–4); (d); (e)(1–3), (e)(5), (e)(8); and (g). Additionally, the Secretary of Homeland Security, pursuant to 5 U.S.C. 552a(k)(2) has exempted this system from the following provisions of the Privacy Act: 5 U.S.C. 552a (c)(3); (d); (e)(1), (e)(4)(G), (e)(4)(H), (e)(4)(I); and (f).
When a record received from another system has been exempted in that source system under 5 U.S.C. 552a(j)(2), DHS will claim the same exemptions for those records that are claimed for the original primary systems of records from which they originated and claims any additional exemptions set forth here.
Exemptions from these particular subsections are justified, on a case-by-case basis to be determined at the time a request is made, for the following reasons:
(a) From subsection (c)(3) and (4) (Accounting for Disclosures) because release of the accounting of disclosures could alert the subject of an investigation of an actual or potential criminal, civil, or regulatory violation to the existence of that investigation and reveal investigative interest on the part of DHS as well as the recipient agency. Disclosure of the accounting would therefore present a serious impediment to law enforcement efforts and/or efforts to preserve national security. Disclosure of the accounting would also permit the individual who is the subject of a record to impede the investigation, to tamper with witnesses or evidence, and to avoid detection or apprehension, which would undermine the entire investigative process.
(b) From subsection (d) (Access to Records) because access to the records contained in this system of records could inform the subject of an investigation of an actual or potential criminal, civil, or regulatory violation to the existence of that investigation and reveal investigative interest on the part of DHS or another agency. Access to the records could permit the individual who is the subject of a record to impede the investigation, to tamper with witnesses or evidence, and to avoid detection or apprehension. Amendment of the records could interfere with ongoing investigations and law enforcement activities and would impose an unreasonable administrative burden by requiring investigations to be continually reinvestigated. In addition, permitting access and amendment to such information could disclose security-sensitive information that could be detrimental to homeland security.
(c) From subsection (e)(1) (Relevancy and Necessity of Information) because in the course of investigations into potential violations of federal law, the accuracy of information obtained or introduced occasionally may be unclear, or the information may not be strictly relevant or necessary to a specific investigation. In the interests of effective law enforcement, it is appropriate to retain all information that may aid in establishing patterns of unlawful activity.
(d) From subsection (e)(2) (Collection of Information from Individuals) because requiring that information be collected from the subject of an investigation would alert the subject to the nature or existence of the investigation, thereby interfering with that investigation and related law enforcement activities.
(e) From subsection (e)(3) (Notice to Subjects) because providing such detailed information could impede law enforcement by compromising the existence of a confidential investigation or reveal the identity of witnesses or confidential informants.
(f) From subsection (e)(5) (Collection of Information) because with the collection of information for law enforcement purposes, it is impossible to determine in advance what information is accurate, relevant, timely, and complete. Compliance with subsection (e)(5) would preclude DHS agents from using their investigative training and exercise of good judgment to both conduct and report on investigations.
(h) From subsection (e)(8) (Notice on Individuals) because compliance would interfere with DHS's ability to obtain, serve, and issue subpoenas, warrants, and other law enforcement mechanisms that may be filed under seal and could result in disclosure of investigative techniques, procedures, and evidence.
(j) From subsection (g) (Civil Remedies) to the extent that the system is exempt from other specific subsections of the Privacy Act.
Environmental Protection Agency (EPA).
Proposed rule; extension of comment period.
The Environmental Protection Agency (EPA) is extending the public comment period for the proposed rule titled “Interstate Transport of Fine Particulate Matter: Revision of Federal Implementation Plan Requirements for Texas” published in the
Comments must be received on or before January 9, 2017.
The EPA has established docket number EPA–HQ–OAR–2016–0598 for this action. Follow the instructions for submitting comments provided under
For additional information on this action, contact Robert L. Miller, Clean Air Markets Division, Office of Atmospheric Programs (Mail Code 6204M), Environmental Protection Agency, 1200 Pennsylvania Avenue NW., Washington, DC 20460; telephone number: (202) 343–9077; email address:
In the proposed rule titled “Interstate Transport of Fine Particulate Matter: Revision of Federal Implementation Plan Requirements for Texas” (81 FR 78954, November 10, 2016), the EPA established a public comment period ending on December 12, 2016. The EPA received multiple requests for an extension of this period. In order to ensure that the public has sufficient time to review and comment on the proposal, the EPA is extending the public comment period to end on January 9, 2017.
Environmental protection, Administrative practice and procedure, Air pollution control, Electric power plants, Incorporation by reference, Intergovernmental relations, Nitrogen
Department of Health and Human Services.
Notice of proposed rulemaking.
The Department of Health and Human Services (HHS or Department), through the National Institutes of Health (NIH), proposes to exempt, from certain requirements of the Privacy Act, a subset of records in a new system of records, System No. 09–25–0225, NIH Electronic Research Administration (eRA) Records (NIH eRA Records), which covers records used in managing NIH research and development applications and awards throughout the award lifecycle. Elsewhere in today's
The subset of records proposed to be exempted is material that would inappropriately reveal the identities of referees who provide letters of recommendation and peer reviewers who provide written evaluative input and recommendations to NIH about particular funding applications under an express promise by the government that their identities in association with the written work products they authored and provided to the government will be kept confidential. Only material that would inappropriately reveal a particular referee or peer reviewer as the author of a specific work product (
The Privacy Act provisions from which the material is proposed to be exempted are those that require the agency to provide an accounting of disclosures, access and amendment, and notification, which are contained in subsections (c)(3) and (d) of the Privacy Act.
Submit either electronic or written comments regarding this notice by February 6, 2017.
You may submit comments, identified by Docket Number NIH–2016–0001 via any of the following methods:
Submit electronic comments in the following way:
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Submit written submissions in the following ways:
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Jerry Moore, NIH Regulations Officer, Office of Management Assessment, National Institutes of Health, 6011 Executive Boulevard, Suite 601, MSC 7669, Rockville, MD 20852–7669, telephone 301–496–4607, fax 301–402–0169, email
NIH research and development award programs provide funds through contracts, cooperative agreements, and grants to support biomedical and behavioral research and development projects and centers, training, career development, small business, and loan repayment and other research programs. The NIH is responsible to Congress and the U.S. taxpayers for carrying out its research and development award programs in a manner that facilitates research cost-effectively and in compliance with applicable statutes, rules and regulations, including 42 U.S.C. 217a, 281, 282, 41 U.S.C. 423 and 45 CFR part 75. The NIH uses an award process that relies on checks and balances, separation of responsibilities, and a two-level peer review system to ensure that funding applications submitted to NIH are evaluated in a manner that is fair, equitable, timely, and free of bias. The two-level peer review system is authorized by 42 U.S.C. 216; 42 U.S.C. 282(b)(6); 42 U.S.C. 284(c)(3); and 42 U.S.C. 289a and governed by regulations at 42 CFR part 52h, “Scientific Peer Review of Research Grant Applications and Research and Development Contract Projects.” The two-level system separates the scientific assessment of proposed projects from policy decisions about scientific areas to be supported and the level of resources to be allocated, which permits a more objective and complete evaluation than would result from a single level of review. The two-level review system is designed to provide NIH officials with the best available advice about scientific and technical merit as well as program priorities and policy considerations. The initial or first level review involves panels of experts established according to scientific disciplines, generally referred to as Scientific Review Groups (SRGs), whose primary function is to evaluate the scientific merit of grant applications. The second level of review of grant applications is performed by National Advisory Boards or Councils composed of both scientific and lay representatives. The recommendations made by these Boards or Councils are based not only on considerations of scientific merit as judged by the SRG but also on the relevance of a proposed project to the programs and priorities of NIH. Referees are those individuals who supply reference or other letters of recommendations for a grant or cooperative agreement applicant. Confidential referee and peer reviewer identifying material is contained in records such as reference or
Under the Privacy Act (5 U.S.C. 552a), individuals have a right of access to records about them in federal agency systems of records, and other rights with respect to those records (such as notification, amendment, and an accounting of disclosures), but the Act permits certain types of systems of records (identified in § 552a (j) and (k)) to be exempted from certain requirements of the Act. Subsection (k)(5) permits the head of an agency to promulgate rules to exempt from the requirements in subsections (c)(3) and (d) of the Act investigatory material compiled solely for the purpose of determining suitability, eligibility, or qualifications for Federal contracts, to the extent that the disclosure of such material would reveal the identity of a source who furnished information to the Government under an express promise that the identity of the source would be held in confidence.
Confidential referee and peer reviewer-identifying material in NIH award program records covered by System No. 09–25–0225 qualifies for exemption under subsection (k)(5) because it is investigatory material that NIH/OER compiles solely for the purpose of determining applicants' suitability, eligibility, or qualifications for federal research and development contracts, grants, and cooperative agreements.
The exemptions are necessary to maintain the integrity of the NIH extramural peer review and award processes, which depend on receiving accurate, objective, and unbiased recommendations and evaluations from referees and peer reviewers about funding applications. Protecting their identities as the sources of the information they provide protects them from harassment, intimidation, and other attempts to improperly influence award outcomes, and ensures that they are not reluctant to provide sensitive information or frank assessments. Case law has held that exemptions promulgated under subsection (k)(5) may protect source-identifying material even where the identity of the source is known.
The specific rationales that support the exemptions, as to each affected Privacy Act provision, are as follows:
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Accordingly, pursuant to 5 U.S.C. 552a(k)(5), the agency proposes to exempt the following source-identifying material in system of records-–25–0225 NIH eRA Records from the accounting, access, amendment and notification provisions of the Privacy Act (paragraphs (c)(3), and (d)), based on the specific rationales indicated above: Material that would inappropriately reveal the identities of referees who provide letters of recommendation and peer reviewers who provide written evaluative input and recommendations to NIH about particular funding applications under an express promise by the government that their identities in association with the written work products they authored and provided to the government will be kept confidential; this includes only material that would reveal a particular referee or peer reviewer as the author of a specific work product (
Notwithstanding the exemptions, consideration will be given to any requests for notification, access, and amendment that are addressed to the System Manager, as provided in the
The HHS/NIH has examined the impacts of this rule under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601–612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104–4). Executive Order 12866 directs agencies to assess all 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, and other advantages; distributive impacts; and equity). The agency believes that this rule is not a significant regulatory action under the Executive Order.
The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the rule imposes no duties or obligations on small entities, the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $144 million, using the most current (2015) Implicit Price Deflator for the Gross Domestic Product. The NIH does not expect that a final rule consistent with this NPRM would result in any 1-year expenditure that would meet or exceed this amount.
Privacy.
For the reasons set out in the preamble, the Department proposes to amend its part 5b of title 45 of the Code of Federal Regulations, as follows:
5 U.S.C. 301, 5 U.S.C. 552a.
(b) * * *
(2) * * *
(vii) * * *
(E) NIH Electronic Research Administration (eRA) Records, HHS/NIH/OD/OER, 09–25–0225 (
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule, request for comments.
We, NMFS, announce a 12-month finding and listing determination on a petition to list the Gulf of Mexico Bryde's whale (
Information and comments on the subject action must be received by January 30, 2017. For the specific date of the public hearing, see Public Hearing section.
You may submit comments, information, or data on this document, identified by the code NOAA–NMFS–2014–0101 by any of the following methods:
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The Status Review of Bryde's Whales in the Gulf of Mexico (Rosel
Laura Engleby or Calusa Horn, NMFS, Southeast Regional Office (727) 824–5312 or Marta Nammack, NMFS, Office of Protected Resources (301) 427–8469.
On September 18, 2014, we received a petition from the Natural Resources Defense Council to list the Gulf of
On April 6, 2015, we published a 90-day finding that the petition presented substantial scientific and commercial information indicating that the petitioned action may be warranted (80 FR 18343). At that time, we announced the initiation of a formal status review and requested scientific and commercial information from the public, government agencies, scientific community, industry, and any other interested parties on the delineation of, threats to, and the status of the Bryde's whale in the Gulf of Mexico including: (1) Historical and current distribution, abundance, and population trends; (2) life history and biological information including adaptations to ecological settings, genetic analyses to assess paternal contribution and population connectivity, and movement patterns to determine population mixing; (3) management measures and regulatory mechanisms designed to protect the species; (4) any current or planned activities that may adversely impact the species; and (5) ongoing or planned efforts to protect and restore the species and habitat. We received eight public comments in response to the 90-day finding, with the majority of comments in support of the petition. The public provided relevant scientific literature to be considered in the Status Review report as well as a recently developed density model and abundance estimate. Relevant information was incorporated in the Status Review report and in this proposed rule.
We are responsible for determining whether the Bryde's whale in the Gulf of Mexico is threatened or endangered under the ESA (16 U.S.C. 1531
To determine whether the Bryde's whale population in the Gulf of Mexico warrants listing under the ESA, we first formed a Status Review Team (SRT) of seven biologists, including six NOAA Fisheries Science Center (Southeast, Southwest, and Northeast) and Southeast Regional Office personnel and one member from the Bureau of Safety and Environmental Enforcement—Gulf of Mexico Region, to compile and review the best available scientific information on Bryde's whales in the Gulf of Mexico and assess their extinction risk. The Status Review report prepared by the SRT summarizes the taxonomy, distribution, abundance, life history, and biology of the species, identifies threats or stressors affecting the status of the species, and provides a description of existing regulatory mechanisms and conservation efforts (Rosel
Section 3 of the ESA defines an endangered species as “any species which is in danger of extinction throughout all or a significant portion of its range” and a threatened species as one “which is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.” Thus, we interpret an “endangered species” to be one that is presently in danger of extinction. A “threatened species,” on the other hand, is not currently at risk of extinction but is likely to become so in the foreseeable future. In other words, a key statutory difference between a threatened and endangered species is the timing of when a species may be in danger of extinction, either presently (endangered) or in the foreseeable future (threatened).
In determining whether the Gulf of Mexico population of Bryde's whale meets the standard of endangered or threatened, we first determined that, based on the best scientific and commercial data available, the Gulf of Mexico Bryde's whale is a genetically distinct subspecies of the globally distributed Bryde's whale. We next considered the specific life history and ecology of the species, the nature of threats, the species' response to those threats, and population numbers and trends. We considered both the data and information summarized in the Status Review report, as well as the results of the ERA. We considered impacts of each identified threat both individually and cumulatively. For purposes of our analysis, the mere identification of factors that could impact a species negatively is not sufficient to compel a finding that ESA listing is appropriate. In considering those factors that might constitute threats, we look beyond mere exposure of the species to the factor to determine whether the species responds, either to a single threat or multiple threats, in a way that causes actual impacts at the species level. In making this finding, we have considered and evaluated the best available scientific and commercial information, including information received in response to our 90-day finding.
This section provides a summary of key biological information presented in the Status Review report (Rosel
Bryde's whale (
In a recent genetic analysis of mitochondrial DNA (mtDNA) samples taken from Bryde's whales in the Gulf of Mexico, Rosel and Wilcox (2014) found that the Gulf of Mexico population was genetically distinct from all other Bryde's whales worldwide. Maternally inherited mtDNA is an indicator of population-level differentiation, as it evolves relatively rapidly. Rosel and Wilcox (2014) identified 25–26 fixed nucleotide differences in the mtDNA control region between the Bryde's whale in the Gulf of Mexico and the two currently recognized subspecies (
The SRT considered this level of genetic divergence to be significant, indicating that the Bryde's whale in the Gulf of Mexico is a separate subspecies. To confirm its determination, the SRT asked the Society for Marine Mammalogy Committee on Taxonomy (Committee) for its expert scientific opinion on the level of taxonomic distinctiveness of the Bryde's whale in the Gulf of Mexico. The Committee maintains the official list of marine mammal species and subspecies for the Society for Marine Mammalogy. It updates the list as new descriptions of species, subspecies, or taxonomic actions appear in the technical literature, adhering to principle and procedures, opinions, and directions set forth by the International Commission on Zoological Nomenclature. The Committee also reviews, as requested, formal descriptions of new taxa and other taxonomic actions, and provides expert advice on taxonomic descriptions and other aspects of marine mammal taxonomy. In response to the request made by the SRT, all of the Committee members who responded (nine out of nine) voted it was “highly likely” that Bryde's whales in the Gulf of Mexico comprise at least an undescribed subspecies of what is currently recognized as
Our regulations state that, “In determining whether a particular taxon or population is a species for the purpose of the Act, the Secretary shall rely on standard taxonomic distinctions and biological expertise of the Department and scientific community concerning the relevant taxonomic group” (50 CFR 424.11(a)). Under this provision, we must consider the biological expertise of the SRT and the scientific community, and apply the best available science when it indicates that a taxonomic classification is outdated or incorrect. The GOMx Bryde's whale has a high level of genetic divergence from the two recognized Bryde's whale subspecies (Eden's whale and Bryde's whale) elsewhere in the world. Given this information, we relied on the biological expertise of the SRT and the Committee concerning the taxonomic status of the Bryde's whale in the Gulf of Mexico. We agree with the SRT and the Committee's determination that the Bryde's whale in the Gulf of Mexico is taxonomically at least a subspecies of
The Status Review report (Rosel
Stranding records from the Southeast U.S. stranding network, the Smithsonian Institution, and the literature (Mead 1977, Schmidly 1981, Jefferson 1995) include 22 Bryde's whales strandings in the Gulf of Mexico from 1954–2012, although three have uncertain species identification. Most strandings were recorded east of the Mississippi River through west central Florida, but two were recorded west of Louisiana. There are no documented Bryde's whale strandings in Texas, although strandings of fin (
We began conducting oceanic (ship) and continental shelf (ship and aerial) surveys for cetaceans in 1991 that continue today. The location of shipboard and aerial survey effort in the Gulf of Mexico and Atlantic Ocean was plotted by Roberts
Despite the lack of sightings of Bryde's whales in the Gulf of Mexico outside the BIA, questions remain about their current distribution in U.S. waters. NMFS surveys recorded three baleen whales sighted outside the BIA (
Few systematic surveys have been conducted in the southern Gulf of Mexico (
We agree with the SRT's findings that what is now recognized as the GOMx Bryde's whale has been consistently located over the past 25 years along a very narrow depth corridor in the northeastern Gulf of Mexico, recognized as the GOMx Bryde's whale BIA. Sightings outside this particular area are few, despite a large amount of dedicated marine mammal survey effort that included both continental shelf and oceanic waters of the Atlantic Ocean off the southeastern United States and the northern Gulf of Mexico. Historical whaling records indicate that the historical distribution of the GOMx Bryde's whale in the Gulf of Mexico was much broader than it is currently and included the north-central and southern Gulf of Mexico. We agree with the SRT that the BIA, located in the De Soto Canyon area of the northeastern Gulf of Mexico, encompasses the current areal distribution of GOMx Bryde's whale.
All of the abundance estimates for Bryde's whale in the northern Gulf of Mexico are based on aerial- or ship-based line-transect surveys (Buckland
Little information exists on the behavior of GOMx Bryde's whale. Maze-Foley and Mullin (2006) found GOMx Bryde's whales to have a mean group size of 2 (range 1 −5, n = 14), similar to group sizes of the Eden's and Bryde's whales (Wade and Gerrodette 1993). The GOMx Bryde's whale is known to be periodically “curious” around ships and has been documented approaching them in the Gulf of Mexico (Rosel
Little information is available on foraging ecology available for GOMx Bryde's whales. Based on behavior observed during assessment surveys, these whales do not appear to forage at or near the surface (NMFS, unpublished). In general, Bryde's whales are thought to feed primarily in the water column on schooling fish such as anchovy, sardine, mackerel and herring, and small crustaceans (Kato 2002). These prey occur throughout the Gulf of Mexico and the BIA (Grace
Little information exists on reproduction and growth of GOMx Bryde's whale; however, similar to Eden's whales and Bryde's whales elsewhere in the world, the GOMx Bryde's whale is considered to have k-selected life history parameters (large body size, long life expectancy, slow growth rate, late maturity, with few offspring). Taylor
Baleen whale species produce a variety of highly stereotyped, low-frequency tonal and broadband calls for communication purposes (Richardson
The threats evaluation is the second step in making an ESA listing determination for the GOMx Bryde's whale, as described above in “Listing Determinations Under the ESA.” The SRT identified a total of 27 specific threats, organized and described them according to the five ESA factors listed in section 4(a)(1), and then evaluated the severity of each threat with a level of certainty (see Appendix 3 in Rosel
To promote consistency when ranking each threat, the SRT used definitions for `severity of threat' and `level of certainty' similar to other status reviews, including the Hawaiian insular false killer whales (Oleson
The SRT then calculated the numerical mean of the team members' scores for each threat or category of threats. However, we do not believe that relying on the numerical mean of the SRT's scores is appropriate, because the specific rankings for the severity, certainty, and overall threat were categorically defined by the SRT and not numerically defined. Therefore, we assessed the majority vote of the team members' scores (
Each of the 27 threats identified by the SRT is summarized below, by ESA factor, with severity and certainty rankings based on the SRT's categorical scoring, as described above. We also summarize the overall threat ranking for each ESA factor, based on the SRT's scores, and provide NMFS' determination with regard to each factor. A detailed table of the SRT's threats and rankings can be found in Appendix 3 of the Status Review report (Rosel
The SRT considered the following threats to the GOMx Bryde's whale under ESA Factor A: Energy exploration and development, oil spills and spill response, harmful algal blooms, persistent organic pollutants, and heavy metals. Based on the SRT's numerical threat rankings, the overall threat ranking assigned to Factor A was “high.”
The SRT assigned the threat of energy exploration and development (drilling rigs, platforms, cables, pipelines) a score of “high” severity threat with “moderate” certainty, as it relates to destruction, modification, or curtailments of the range of the GOMx Bryde's whale. (Note: Other aspects or elements of energy exploration and development can act directly on the whales (
The Gulf of Mexico is a major oil and gas producing area and has proven a steady and reliable source of crude oil and natural gas for more than 50 years. Approximately 2,300 platforms operate in Federal outer continental shelf (OCS) waters (Rosel
Oil spills are a common occurrence in the Gulf of Mexico. In 2010, the Deepwater Horizon (DWH) oil spill was the largest spill affecting U.S. waters in U.S. history, spilling nearly 134 million gallons (507 million liters) of oil into the Gulf of Mexico. In addition, 46 smaller-scale spills associated with oil and gas related activities (
Exposure to oil spills may cause marine mammals acute or chronic impacts with lethal or sub-lethal effects depending on the size and duration of the spill. For large baleen whales, like the GOMx Bryde's whale, oil can foul the baleen they use to filter-feed, decreasing their ability to eat, and resulting in the ingestion of oil (Geraci
Harmful Algal Blooms (HAB) occur throughout the Gulf of Mexico, with most blooms occurring off the coast of Florida. One of the most common HAB species,
HABs are also known to negatively affect marine mammal populations through acute and chronic detrimental health effects, including reproductive failure (reviewed in Fire
Concentrations of persistent organic pollutants (POP) are typically lower in baleen whales compared to toothed whales due to differences in feeding levels in the trophic system (Waugh
Little is known about the effects of heavy metals on offshore marine mammal populations. Heavy metals can accumulate in whale tissue and cause toxicity (Sanpera
We interpret the overall risk assigned by the SRT for ESA Factor A as “high,” indicating that there are a high number of threats that are moderately or very likely to contribute to the decline of the GOMx Bryde's whale, or some individual threats identified as very likely to contribute to the decline of the population. Specifically, the SRT found that energy exploration and development, and oil spills and spill response, were significant threats currently seriously degrading the GOMx Bryde's whale population. In addition, the SRT found that HABs, POPs, and heavy metals are not currently significantly contributing to the risk of extinction for the Gulf of Mexico Bryde's whale.
Based on the comprehensive status review and after considering the SRT's threats assessment, we conclude that energy exploration and development, and oil spills and spill response, are currently increasing the GOMx Bryde's whales risk of extinction.
The SRT considered two threats under ESA Factor B; historical whaling and scientific biopsy sampling. The overall rank assigned for Factor B, based on the SRT's scoring, is “low.”
The SRT scored the impacts from historical whaling as a “low” severity threat with a “moderate-high” degree of certainty. Whaling that occurred in the 18th and 19th centuries in the Gulf of Mexico may have removed Bryde's whales. The primary target species were sperm whales, but other species were taken. Reeves
Scientific research that may have the potential to disturb and/or injure marine mammals such as the Bryde's whale requires a letter of authorization under the Marine Mammal Protection Act (MMPA). As of March 7, 2016 (the reference date used by the SRT), there was one active scientific permit authorizing non-lethal take of GOMx Bryde's whale and four scientific research permits authorizing non-lethal take of Bryde's whales worldwide, including the Gulf of Mexico. The permits authorize activities such as vessel or aerial surveys, photo-identification, behavioral observation, collection of sloughed skin, and passive acoustics. Four of the permits also authorize activities such as dart biopsies and/or tagging. Biopsy sampling, where a small piece of tissue is removed for analysis, is a common research activity used to support stock differentiation, evaluate genetic variation, and investigate health, reproduction and pollutant loads (Brown
The overall threat rank assigned for Factor B by the SRT was “low,” indicating there are a low number of threats that are likely to contribute to the decline of the GOMx Bryde's whale. We conclude, based on our review of the information presented in the Status Review report and SRTs threats assessment, that the threats posed by whaling and scientific biopsy sampling are not increasing the risk of extinction for the Gulf of Mexico Bryde's whale. Upon reviewing the information in the Status Review report and the SRT's threats assessment, we concluded that whaling and scientific biopsy sampling are low potential threats to the GOMx Bryde's whale and are not currently contributing to the risk of extinction.
The SRT considered the following threats under ESA Factor C: Disease and
There is little information on disease or parasitism of any Bryde's whale in the literature. Reviews of conservation issues for baleen whales have tended to see disease as a relatively inconsequential threat (Claphan
The SRT identified only two cases of other diseases and parasites known to occur in Bryde's whale detected in Australia (Patterson 1984) and Brazil (Pinto
Killer whales (
The overall threat rank assigned for Factor C, based on the SRT's scoring was “low,” indicating that this category includes a low number of threats that are likely to contribute to the decline of the GOMx Bryde's whale. Based on the limited observance of disease, parasites, or predation, we concur that these are low potential threats to the GOMx Bryde's whale and are not currently contributing to their extinction risk.
The relevance of existing regulatory mechanisms to extinction risk for an individual species depends on the vulnerability of that species to each of the threats identified under the other factors of ESA section 4, and the extent to which regulatory mechanisms could or do control the threats that are contributing to the species' extinction risk. If a species is not vulnerable to a particular threat, it is not necessary to evaluate the adequacy of existing regulatory mechanisms for addressing that threat. Conversely, if a species is vulnerable to a particular threat, we do evaluate the adequacy of existing measures, if any, in controlling or mitigating that threat. In the following paragraphs, we summarize existing regulatory mechanisms relevant to threats to GOMx Bryde's whale generally, and assess their adequacy for controlling those threats.
In U.S. waters, Bryde's whales are protected by the MMPA (16 U.S.C. 1361
The MMPA currently identifies the Northern Gulf of Mexico stock of Bryde's whales as a “strategic” stock, because the level of direct human-caused mortality and serious injury exceeds the potential biological removal (PBR) level determined for the species, which could have management implications. The MMPA also provides additional protections to stocks designated as “depleted” and requires that conservation plans be developed to conserve and restore the stock to its optimum sustainable population (OSP). In order for a stock to be considered “depleted” the Secretary, after consultation with the Marine Mammal
The SRT also identified existing regulatory mechanisms relating to oil and gas development and oil spills and spill response (see Factors A and E for a discussion of those threats). The Outer Continental Shelf Lands Act (OCSLA) establishes Federal jurisdiction over submerged lands on the OCS seaward of coastal state boundaries in order to explore and develop oil and gas resources. Implementation, regulation, and granting of leases for exploration and development on the OCS are delegated to the BOEM, and BOEM is responsible for managing development of the nation's offshore resources. The functions of BOEM include leasing, exploration and development, plan administration, environmental studies, National Environmental Policy Act (NEPA) analysis, resource evaluation, economic analysis, and the renewable energy program BSEE is responsible for enforcing safety and environmental regulations. OCSLA mandates that orderly development of OCS energy resources be balanced with protection of human, marine and coastal environments. It is the stated objective of the OCSLA “to prevent or minimize the likelihood of blowouts, loss of well control, fires, spillages . . . or other occurrences which may cause damage to the environment or to property, or endanger life or health” (43 U.S.C. 1332(6)). OCSLA further requires the study of the environmental impacts of oil and gas leases on the continental shelf, including an assessment of effects on marine biota (43 U.S.C. 1346). OCSLA, as amended, requires the Secretary of the Interior, through BOEM and BSEE, to manage the exploration and development of OCS oil, gas, and marine minerals (
The Oil Pollution Act (OPA) of 1990 (33 U.S.C. 2701–2761) is the principal statute governing oil spills in the nation's waterways. OPA was passed following the March 1989 Exxon Valdez oil spill to address a lack of adequate resources, particularly Federal funds, to respond to oil spills (National Pollution Funds Center 2016). The OPA created requirements for preventing, responding to, and funding restoration for oil pollution incidents in navigable waters, adjoining shorelines, and Federal waters. The OPA authorizes Trustees (representatives of Federal, state, and local government entities, and Tribes with jurisdiction over the natural resources in question) to determine the type and amount of restoration needed to compensate the public for the environmental impacts of the spill. These assessments are typically described in damage assessment and restoration plans. The Final Programmatic Damage Assessment and Restoration Plan (PDARP) developed for the 2010 DWH oil spill found the GOMx Bryde's whale to be the most impacted oceanic and shelf marine mammal; 48 percent of the population was affected, resulting in an estimated 22 percent maximum decline in population size (DWH Trustees 2016). The DWH PDARP allocates fifty-five million dollars over the next 15 years for restoration of oceanic and shelf marine mammals, including Bryde's whales. The PDARP does not identify specific projects, but lays out a framework for planning future restoration projects, that may contribute to the restoration of GOMx Bryde's whale.
The ongoing impacts to the GOMx Bryde's whale from oil and gas development and oil spills in the Gulf of Mexico identified by the SRT indicate that existing regulatory mechanisms are not adequate to control these threats. While the current moratorium on leasing for new oil and gas development in the EPA appears to provide some protection to the GOMx Bryde's whale, the SRT found that development in the Gulf of Mexico continues to have broad impacts, through curtailment of range and anthropogenic noise from seismic surveys and vessels associated with oil and gas development. Additionally, the existing moratorium on new leases in the EPA expires in 2022 and, if not renewed, energy exploration would be allowed in the GOMx Bryde's whale BIA, resulting in potentially severe impacts to this small population. We acknowledge that activities under the DWH PDARP may be beneficial to GOMx Bryde's whales, but we also conclude that oil spills and spill response remain a serious current threat to the GOMx Bryde's whale population, as discussed above in Factor A.
The International Whaling Commission (IWC) was set up under the International Convention for the Regulation of Whaling (ICRW), signed in 1946. The IWC established an international moratorium on commercial whaling for all large whale species in 1982, effective in 1986; this affected all member (signatory) nations (paragraph 10e, IWC 2009a). Since 1985, IWC catch limits for commercial whaling have been set at zero. However, under the IWC's regulations, commercial whaling has been permitted in both Norway and Iceland based on their objection to specific provisions. In addition, harvest of whales by Japan for scientific purposes has been permitted by the ICRW, including the Bryde's whale in the North Pacific. However, distribution of the GOMx Bryde's whale does not overlap with any permitted commercial whaling. The SRT concluded the current commercial whaling moratorium provides significant protection for the GOMx Bryde's whale, and we concur.
The Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) is aimed at protecting species at risk from unregulated international trade and regulates international trade in animals and plants by listing species in one of its three appendices. The level of monitoring and control to which an animal or plant species is subject depends on the appendix in which the
The International Maritime Organization (IMO), a branch of the United Nations, is the international authority on shipping, pollution, and safety at sea and has adopted guidelines to reduce shipping noise and pollution from maritime vessels. Additionally, the IMO's Marine Environment Protection Committee occasionally identifies special areas and routing schemes for various ecological, economic, or scientific reasons. Some of these actions help benefit endangered right whales and humpback whales. However the SRT found no protected areas or routing schemes that would protect the GOMx Bryde's whale.
The SRT expressed concern regarding potential oil and gas development in the southern Gulf of Mexico. Mexico recently instituted reforms related to its oil and gas sector that officially opened Mexico's oil, natural gas, and energy sectors to private investment. As a result, Mexico's state-owned petroleum company, Petroleos Mexicanos (Pemex) may now partner with international companies for the purposes of exploring the southern Gulf of Mexico's deep water and shale resources. The SRT found that more than 9 companies have shallow water lease permits either pending or approved, and 2D and 3D seismic data collection has begun. In 2013, the U.S. Congress approved the U.S.-Mexico Transboundary Hydrocarbons Agreement, which aims to facilitate joint development of oil and natural gas in part of the Gulf of Mexico. This agreement, coupled with recent reforms in Mexico, could lead to development within the Gulf of Mexico offshore Mexico oil and gas, including infrastructure for cross-border pipelines. The SRT found that recent developments indicate a high potential for oil and gas development in these waters. However, we believe that anticipating any future threats to the GOMx Bryde's whale at this point in time is overly speculative, because the best available science indicates that the GOMx Bryde's whale distribution does not currently include the southern Gulf of Mexico.
The SRT unanimously agreed that the inadequacy of existing regulatory mechanisms factor is a “high” threat to the GOMx Bryde's whale (Rosel
The SRT categorized threats under ESA Factor E by three groups: A general category for “other natural or human factors;” anthropogenic noise; and small population concerns. Within the general sub-category for other natural or human factors, the SRT included: Vessel collision; military activities; fishing gear entanglements; trophic impacts due to commercial harvest of prey; climate change; plastics and marine debris; and aquaculture. Within the anthropogenic noise sub-category of Factor E, the SRT included: Aircraft and vessel noise associated with oil and gas activities; drilling and production noise associated with oil and gas activities; seismic survey noise associated with oil and gas activities; noise associated with military training and exercises; noise associated with commercial fisheries and scientific acoustics; and noise associated with vessels and shipping traffic. Within the small population concerns sub-category of Factor E, the SRT included: Allee effects; demographic stochasticity; genetics; k-selected life-history parameters; and stochastic and catastrophic events. An explanation of these threats and the SRT's ranking for each of these sub-categories follows.
Bryde's whales are the third most commonly reported species struck by ships in the southern hemisphere (Van Waerebeek
Pelagic longlines are a known entanglement threat to baleen whales, as the majority of mainline gear is in the water column and animals swimming in the area may interact with the gear (Andersen
Gulf reef fish and shark bottom longline gear consists of a monofilament mainline up to a mile in length anchored on the seafloor, with up to 1,000 baited hooks along the mainline and marked with buoys. Generally bottom longline gear poses less of a threat of entanglement threat to cetaceans compared to pelagic longline gear, except when cetaceans forage along the seafloor. Such foraging appears to be the case with the GOMx Bryde's whale, exposing them to risk of entanglement in mainlines. These fisheries overlap spatially with the GOMx Bryde's whale BIA. While bottom longlining typically occurs in waters less than 100m, fishing for yellowedge grouper, golden tilefish, blueline tilefish, and sharks occurs in deeper waters between 100 and 300m within the BIA. The available information indicates the GOMx Bryde's whale forages on or near the seafloor bottom, such that, potential for interactions exists, although no interactions have been recorded (Rosel
Both the Gulf of Mexico shrimp trawl fishery and the butterfish trawl fishery occur within the GOMx Bryde's whale BIA (Rosel
Oil drilling and production activities produce low-frequency underwater sounds that are in the frequency range detectable by the GOMx Bryde's whale and, given the amount of drilling activity and platforms in the central and western Gulf of Mexico, noise levels are already high. While there are currently no wells being drilled in the eastern Gulf of Mexico, and no production platforms in place, the potential opening of the EPA that overlaps the GOMx Bryde's whale BIA for oil and gas exploration is of considerable concern (Rosel
Shipping noise in the northeast United States was predicted to reduce the communication space of humpback whales, right whales, and fin whales by 8 percent, 77 percent, and 20 percent, respectively, by masking their calls (Clark et al. 2009). Because Bryde's whale call source levels are most similar to those of right whales, the SRT found they may be similarly impacted (Rosel
The SRT found that there is a high level of low frequency noise caused by shipping activity in the Gulf of Mexico, and that it is likely the GOMx Bryde's whale is experiencing significant biological impacts as a result. The impacts to the GOMx Bryde's whale are assumed to be similar to those observed in other low frequency hearing baleen whale species, and include increased stress hormone levels, changes in dive and foraging behavior and communication, and habitat displacement. The SRT assigned the threat of noise associated with shipping traffic and vessels a score of “moderate” severity threat with “moderate” certainty.
The final sub-category considered by the SRT under ESA Factor E was small population concerns. The SRT considered Allee effects, demographic stochasticity, genetics, k-selected life-history parameters, and stochastic and catastrophic events under this sub-category.
The overall threat rank for ESA Factor E by the SRT was influenced by the suite of threats assessed by the SRT. Based on the SRT's scoring, vessel collision, followed by fishing gear entanglements, presents the most serious individual threats of those considered in the generic “other natural and human factors,” category. The threat of vessel collision is a significant source of mortality for a variety of coastal whale species and several important commercial shipping lanes travel through the GOMx Bryde's whale BIA (Rosel
In summary, the SRT found the level of anthropogenic noise in the Gulf of Mexico, the cumulative threat posed by energy exploration, development and production, and the risk of vessel collisions, in combination with the small population size, are threats that are likely to eliminate or seriously degrade the population. The overall rank the SRT assigned for Factor E was “high” (
The most serious threats to the GOMx Bryde's whale are: Energy exploration and development, oil spills and oil spill response, vessel collision, anthropogenic noise, and the effects of small population size. We consider these threats, under ESA section 4(a)(1) factors A and E, as overall “high” threats. We agree with the SRT's assessment that these threats are currently affecting the status of the GOMx Bryde's whale, and find that they are putting it at a heightened risk of extinction. We also agree with the SRT's characterization of factors B and C, overutilization for commercial, recreational, scientific, or educational purposes and disease, parasites, or predation, and their low overall ranking. We find that these are not factors that are likely contributing to the extinction risk for the GOMx Bryde's whale. Finally, we agree with the SRT's overall conclusion for Factor D, that existing regulatory measures have not adequately prevented the GOMx Bryde's whale from reaching its current status, given the presence of current threats to the GOMx Bryde's whale identified under Factors A and E.
The SRT also evaluated four demographic factors to assess the degree of extinction risk: Abundance, spatial distribution, growth/productivity, and genetic diversity. These demographic criteria have been used in previous NMFS status reviews to summarize and assess a population's extinction risk due to demographic processes. The SRT used the following definitions to rank these factors: 1 = “No or low risk: it is unlikely that this factor contributes significantly to risk of extinction, either by itself or in combination with other factors;” 2 = “Low risk: it is unlikely that this factor contributes significantly to risk of extinction by itself, but some concern that it may contribute, in combination with other factors;” 3 = “Moderate risk: it is likely that this factor in combination with others contributes significantly to risk of extinction;” 4 = “High risk: it is likely that this factor, by itself, contributes significantly to risk of extinction”; and 5 = “Very high risk: it is highly likely that this factor, by itself, contributes significantly to risk of extinction.” As described in detail below, the SRT concluded that each of these four demographic factors are likely to contribute significantly to the risk of extinction for the GOMx Bryde's whale.
The SRT determined that both abundance and spatial distribution were “very high risk” factors, meaning that it is highly likely that each factor, by itself, contributes significantly to the risk of extinction. The SRT concluded the best available science indicated: (1) The number of GOMx Bryde's whales is likely less than 100 mature individuals, and (2) their current distribution restricted to a small region along the continental shelf break (100–300 m) in the De Soto Canyon makes them
The SRT ranked both growth/productivity and genetic diversity as “high” risk factors, meaning that it is likely that each factor, by itself, contributes significantly to the risk of extinction. The SRT noted that the life-history characteristics of the GOMx Bryde's whale (
The SRT considered the information provided in the Status Review report and demographic risk factors to conduct an Extinction Risk Analysis (ERA). The SRT summarized its ERA for the GOMx Bryde's whale, placing it in the context of our agency guidelines on how to synthesize extinction risk (NMFS 2015). Those agency guidelines define the high extinction risk category as:
A species or DPS with a high risk of extinction is at or near a level of abundance, productivity, spatial structure, and/or diversity that places its continued persistence in question. The demographics of a species or DPS at such a high level of risk may be highly uncertain and strongly influenced by stochastic or depensatory processes. Similarly, a species or DPS may be at high risk of extinction if it faces clear and present threats (
The SRT provided the following summary of the concerns leading to its overall extinction risk assessment:
The GOMx Bryde's whale population is very small and is restricted to a small habitat area in the De Soto Canyon region of the northeastern [Gulf of Mexico]. Their level of genetic divergence from other Bryde's whales worldwide indicates they are reproductively isolated and on a unique evolutionary trajectory. The Society for Marine Mammalogy's Committee on Taxonomy concluded they represent at least an unnamed subspecies of Bryde's whales. Although the historic population size is unknown, whaling data indicate their distribution in the [Gulf of Mexico] was once much broader. The Team concluded, therefore, based on the best available scientific data, that there has been a range contraction such that their primary range is restricted to the northeastern [Gulf of Mexico] although there are limited data from outside U.S. waters. The north-central and western [Gulf of Mexico] contains some of the most industrialized marine waters in the U.S. due to expansive energy exploration and production, and also experiences significant commercial shipping traffic and commercial fishing activity. The area in the northeastern [Gulf of Mexico], where all verified sightings of Bryde's whales have been recorded during cetacean surveys, has experienced the least amount of energy exploration, due in part to a moratorium put in place in 2006. However, this moratorium expires in 2022 and the eastern [Gulf of Mexico] could be exposed to increased energy activities. Commercial fishing and vessel traffic also could affect the whales in the eastern [Gulf of Mexico].
The Team concluded that the small population size alone put the GOMx Bryde's whale at high risk of extinction. The small size of this population makes it vulnerable to inbreeding depression, demographic stochasticity, and stochastic and catastrophic events. The combination of small size plus risk factors that may have affected the population in the past and may affect it in the future, further increase the extinction risk. These factors include, in particular, impacts due to energy exploration (
We consider the SRT's approach to assessing the extinction risk for GOMx Bryde's whale appropriate, consistent with our agency guidance, and based on the best scientific and commercial information available. Based on the key conclusions from the Status Review report, including the ERA (Rosel
Section 4(b)(1)(A) of the ESA requires the Secretary, when making a listing determination for a species, to take into consideration those efforts, if any, being made by any State or foreign nation to protect the species. To evaluate the efficacy of domestic efforts that have not yet been implemented or that have been implemented, but have not yet demonstrated to be effective, the Services developed a joint “Policy for Evaluation of Conservation Efforts When Making Listing Decisions” (PECE) (68 FR 15100; March 28, 2003). The PECE is designed to ensure consistent and adequate evaluation on whether domestic conservation efforts that have been recently adopted or implemented, but not yet proven to be successful, will result in recovering the species to the point at which listing is not warranted or contribute to forming the basis for listing a species as threatened rather than endangered. The PECE is expected to facilitate the development of conservation efforts by states and other entities that sufficiently improve a species' status so as to make listing the species as threatened or endangered unnecessary.
The PECE establishes two overarching criteria to use in evaluating efforts identified in conservations plans, conservation agreements, management plans or similar documents: (1) The certainty that the conservation efforts will be implemented; and (2) the certainty that the efforts will be effective. We have considered the actions identified by the SRT (
The Status Review report (Rosel
We also considered the proposed results from GoMMAPPS and its potential to protect and restore the population of GOMx Bryde's whale. The purpose of this program is to improve information about abundance, distribution, habitat use, and behavior of living marine resources (
Section 4(b)(1) of the ESA requires that we make listing determinations based solely on the best scientific and commercial data available after conducting a review of the status of the species and taking into account those efforts, if any, being made by any state or foreign nation, or political subdivisions thereof, to protect and conserve the species. We have reviewed the best available scientific and commercial information contained in the Status Review report, the Threats Evaluation, Demographic Evaluation, and the ERA (Rosel
Conservation measures provided for species listed as endangered or threatened under the ESA include recovery plans (16 U.S.C. 1533(f)), critical habitat designations (16 U.S.C. 1533(a)(3)(A)), Federal agency consultation requirements (16 U.S.C. 1536), and protective regulations (16 U.S.C. 1533(d)). Recognition of the species' status through listing promotes conservation actions by Federal and state agencies, private groups, and individuals, as well as the international community. Both a recovery program and designation of critical habitat could result from this final listing. Given its narrow range in the De Soto Canyon region of the northeastern Gulf of Mexico, and existing threats, a regional cooperative effort to protect and restore the population is necessary. Federal, state, and the private sectors will need to cooperate to conserve listed GOMx Bryde's whales and the ecosystem upon which they depend.
The MMPA provides protections to all marine mammals, such as Bryde's whales, whether they are listed under the ESA or not. In addition, the MMPA provides heightened protections to marine mammals designated as “depleted.” Section 3(1) of the MMPA defines “depleted” as “any case in which”: (1) The Secretary “determines that a species or population stock is below its optimum sustainable population”; (2) a state to which authority has been delegated makes the same determination; or (3) a species or stock “is listed as an endangered species or a threatened species under the [ESA]” (16 U.S.C. 1362(1)). Section 115(a)(1) of the MMPA establishes that “[i]n any action by the Secretary to determine if a species or stock should be designated as depleted, or should no longer be designated as depleted,” such determination must be made by rule, after public notice and an opportunity for comment (16 U.S.C. 1383b(a)(1)). It is our position that a marine mammal species or stock automatically gains “depleted” status under the MMPA when it is listed under the ESA.
Section 7(a)(2) of the ESA and joint NMFS/U.S. Fish and Wildlife Service regulations require Federal agencies to consult with us on any actions they authorize, fund, or carry out if those actions may affect the listed species or designated critical habitat. Based on currently available information, we can conclude that examples of Federal actions that may affect GOMx Bryde's whale include, but are not limited to: Authorizations for energy exploration (
Because we are proposing to list this species as endangered, all of the take prohibitions of section 9(a)(1) of the ESA would apply. These include prohibitions against the import, export, use in foreign commerce, or “take” of the species. “Take” is defined under the ESA as “to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or attempt to engage in any such conduct.” These prohibitions apply to all persons subject to the jurisdiction of the United States, including in the United States or on the high seas.
Critical habitat is defined in section 3 of the ESA (16 U.S.C. 1532(5)) as: (1) The specific areas within the geographical area occupied by a species, at the time it is listed in accordance with the ESA, on which are found those physical or biological features (a) essential to the conservation of the
Section 4(a)(3)(A) of the ESA (16 U.S.C. 1533(a)(3)(A)) requires that, to the maximum extent prudent and determinable, critical habitat be designated concurrently with the listing of a species. Pursuant to 50 CFR 424.12(a), designation of critical habitat is not determinable when one or both of the following situations exist: (i) Data sufficient to perform required analyses are lacking; or (ii) The biological needs of the species are not sufficiently well known to identify any area that meets the definition of “critical habitat.” Although we have gathered information through the Status Review report and public comment periods on the habitat occupied by this species, we currently do not have enough information to determine what physical and biological feature(s) within that habitat facilitate the species' life history strategy and are thus essential to the conservation of GOMx Bryde's whale, and may require special management considerations or protection. To the maximum extent prudent and determinable, we will publish a proposed designation of critical habitat for GOMx Bryde's whale in a separate rule. Designations of critical habitat must be based on the best scientific data available and must take into consideration the economic, national security, and other relevant impacts of specifying any particular area as critical habitat. Once critical habitat is designated, section 7 of the ESA requires Federal agencies to ensure that they do not fund, authorize, or carry out any actions that are likely to destroy or adversely modify that habitat. This requirement is in addition to the section 7 requirement that Federal agencies ensure that their actions do not jeopardize the continued existence of listed species.
In December 2004, the Office of Management and Budget (OMB) issued a Final Information Quality Bulletin for Peer Review establishing minimum peer review standards, a transparent process for public disclosure of peer review planning, and opportunities for public participation. The OMB Bulletin, implemented under the Information Quality Act (Pub. L. 106–554) is intended to enhance the quality and credibility of the Federal government's scientific information, and applies to influential or highly influential scientific information disseminated on or after June 16, 2005. To satisfy our requirements under the OMB Bulletin, we received peer reviews from three independent peer reviewers on the Status Review report (Rosel
We intend that any final action resulting from this proposal will be as accurate as possible and informed by the best available scientific and commercial information. Therefore, we request comments or information from the public, other concerned governmental agencies, the scientific community, industry, or any other interested party concerning this proposed rule. In particular we seeks comments containing: (1) Information, including genetic analyses, regarding the classification of the GOMx Bryde's whale as a subspecies; (2) life history information including abundance, distribution, diving, and foraging patterns; (3) information concerning threats to the species; (4) efforts being made to protect the species throughout its current range; and (5) other pertinent information regarding the species.
We are also soliciting information on physical or biological features and areas that may support designation of critical habitat for the GOMx Bryde's whale. Information provided should identify the physical and biological features essential to the conservation of the species and areas that contain these features. Areas outside the occupied geographical area should also be identified if such areas themselves are essential to the conservation of the species. Essential features may include, but are not limited to, features specific to the species' range, habitat, and life history characteristics within the following general categories of habitat features: (1) Space for individual growth and normal behaviour; (2) food, or other nutritional or physiological requirements; (3) protection from predation; (4) sites for reproduction and development of offspring; and (5) habitats that are protected from natural or human disturbance or are representative of the historical, geographical, and ecological distributions of the species (50 CFR 424.12(b)). ESA implementing regulations at 50 CFR 424.12(h) specify that critical habitat shall not be designated within foreign countries or in other areas outside of U.S. jurisdiction. Therefore, we request information only on potential areas of critical habitat within U.S. jurisdiction. For features and areas potentially qualifying as critical habitat, we also request information describing: (1) Activities or other threats to the essential features or activities that could be affected by designating them as critical habitat, and (2) the positive and negative economic, national security and other relevant impacts, including benefits to the recovery of the species, likely to result if these areas are designated as critical habitat.
During the public hearing, a brief opening presentation on the proposed rule will be provided before accepting public testimony. Written comments may be submitted at the hearing or via the Federal e-Rulemaking Portal (see
The date and location for the public hearing is as follows: St. Petersburg, Florida: January 19, 2017, from 6:00 p.m. to 8:00 p.m. at NOAA Fisheries, Southeast Regional Office, Dolphin Conference Room, 236 13th Avenue, South, St. Petersburg, Florida 33701.
This hearing is physically accessible to people with disabilities. Requests for sign language interpretation or other accommodations should be directed to Calusa Horn (see
A complete list of the references used in this proposed rule is available upon request, and also available at:
The 1982 amendments to the ESA, in section 4(b)(1)(A), restrict the information that may be considered when assessing species for listing. Based on this limitation of criteria for a listing decision and the opinion in
As noted in the Conference Report on the 1982 amendments to the ESA, economic impacts cannot be considered when assessing the status of a species. Therefore, the economic analysis requirements of the Regulatory Flexibility Act are not applicable to the listing process. In addition, this final rule is exempt from review under Executive Order 12866. This final rule does not contain a collection-of-information requirement for the purposes of the Paperwork Reduction Act.
In keeping with the intent of the Administration and Congress to provide continuing and meaningful dialogue on issues of mutual state and Federal interest, the proposed rule will be provided to the relevant agencies in each state in which the subject species occurs, and these agencies are invited to comment.
Administrative practice and procedure, Endangered and threatened species, Exports, Imports, Reporting and record keeping requirements, Transportation.
For the reasons set out in the preamble, we propose to amend 50 CFR part 224 as follows:
16 U.S.C. 1531–1543 and 16 U.S.C. 1361
(h) * * *
Office of Advocacy and Outreach, USDA
Notice of Public Meeting.
Pursuant to the Federal Advisory Committee Act (FACA), the Office of Advocacy and Outreach (OAO) is announcing a meeting of the Beginning Farmers and Ranchers Advisory Committee (BFRAC). The committee is being convened to consider issues involving barriers for beginning farmers and ranchers, including lending and access to U.S. Department of Agriculture (USDA) programs, resources, and land. The members will continue deliberations on recommendations to be prepared for USDA Secretarial consideration as discussed during the recent in-person meeting held in Cleveland, Ohio, September 29–30, 2016.
The committee meeting is scheduled for Monday, December 19, 2016, 2:30–4:30 p.m., EST, via teleconference. The meeting will be open to the public. All persons wishing to make comments during this meeting will be allowed a maximum of three minutes. If the number of registrants requesting to speak is greater than what can be reasonably accommodated during the scheduled open public teleconference meeting timeframe, speakers will be scheduled on a first-come basis. Public written comments for the committee's consideration may be submitted by close of business on December 16, 2016, to Mrs. Kenya Nicholas, Designated Federal Official, USDA OAO, 1400 Independence Avenue SW., Room 520–A, Washington, DC 20250–0170, Phone (202) 720–6350, Fax (202) 720–7704, Email:
A listen-only line will be available during the entire meeting for all who wish to listen in on the meeting or make public comments through the following telephone number: 1 (888) 455–1685 and enter passcode 1047915#. Members of the public may also submit written comments for consideration to the committee via email at:
Questions should be directed to Phyllis Morgan, Executive Assistant, OAO, 1400 Independence Avenue SW., Whitten Building, Room 520–A, Washington, DC 20250, Phone: (202) 720–6350; Fax: (202) 720–7704; email:
The BFRAC last met in Cleveland, Ohio, on September 29–30, 2016. The Secretary tasked the BFRAC with providing recommendations on access to land, farm business transition, and land tenure. They also considered issues around lending and credit in parsing statistics generated by USDA. Please visit our Web site at:
Members of the public who wish to make comments during the committee meeting are asked to pre-register for the meeting by midnight on December 16, 2016. You may pre-register for the public meeting by submitting an email to
Forest Service, USDA.
Notice of Forest Plan Amendment approval.
M. Earl Stewart, the Forest Supervisor for the Tongass National Forest, Alaska Region, signed the final Record of Decision (ROD) for the Tongass National Forest Land and Resource Management Plan Amendment (Forest Plan Amendment). The Final ROD documents the rationale for approving the Forest Plan Amendment and is consistent with the Reviewing Officer's response to objections and instructions.
The effective date of the Forest Plan Amendment is 30 days after publication of notice of Forest Plan Amendment approval in the newspaper of record, the
Further information about the Tongass National Forest Plan can be obtained from Earl Stewart during normal office hours (weekdays, 8:00 a.m. to 4:30 p.m. Alaska Time) at the Tongass National Forest Supervisor's Office (Address: Tongass National Forest, 648 Mission Street, Ketchikan, AK 99901–6591); Phone/voicemail: (907) 228–6200.
Individuals who use telecommunication devices for the deaf
The Forest Plan Amendment lays the foundation to address and balance the need for more stable contributions to the economic and social sustainability of Southeast Alaska. It supports both transitioning to a more economically, socially and ecologically sustainable timber program on the Tongass and promoting more sustainable and diverse local economies by encouraging renewable energy production.
The Forest Plan Amendment amends the 2008 Tongass Land and Resource Management Plan (2008 Forest Plan) and describes resource management practices, levels of resource production and management, and the availability and suitability of lands for different kinds of resource management. The Forest Plan Amendment guides all natural resource management projects and activities and establishes management direction for the Tongass National Forest. The Forest Plan Amendment was developed using the current Planning Rule, issued in 2012 and embodies the provisions of the National Forest Management Act, the implementing regulations, and other guiding documents.
The Forest Plan Amendment was shaped by best available science, current laws, and public participation including participation of a cooperating agency (U.S. Fish and Wildlife Service); consultation with Alaska Native tribes and Alaska Native Corporations; advice and recommendations from the Tongass Advisory Committee, a Federal Advisory Committee established by the U.S. Department of Agriculture; and significant public contributions from nine open house meetings, nine subsistence hearings, and the receipt of over 165,000 public comments.
National Institute of Food and Agriculture, USDA.
Notice and solicitation for nominations.
The National Institute of Food and Agriculture (NIFA) is soliciting nominations of veterinary service shortage situations for the Veterinary Medicine Loan Repayment Program (VMLRP) for fiscal year (FY) 2017, as authorized under the National Veterinary Medical Services Act (NVMSA), 7 U.S.C. 3151a. This notice initiates the nomination period and prescribes the procedures and criteria to be used by States, Insular Areas, DC and Federal Lands to nominate veterinary shortage situations. Each year all eligible nominating entities may submit nominations, up to the maximum indicated for each entity in this notice. NIFA is conducting this solicitation of veterinary shortage situation nominations under a previously approved information collection (OMB Control Number 0524–0046).
Shortage situation nominations must be submitted on or before February 8, 2017.
Submissions must be made by clicking the submit button on the Veterinarian Shortage Situation nomination form provided in the VMLRP Shortage Situations section at
This form is sent as a data file directly to the Veterinary Medicine Loan Repayment Program; National Institute of Food and Agriculture; U.S. Department of Agriculture.
Danielle Tack; Program Coordinator, Veterinary Science; National Institute of Food and Agriculture; U.S. Department of Agriculture; STOP 2220; 1400 Independence Avenue SW.,Washington, DC 20250–2220; Voice: 202–401–6802; Fax: 202–401–6156; Email:
Food supply veterinary medicine embraces a broad array of veterinary professional activities, specialties and responsibilities, and is defined as the full range of veterinary medical practices contributing to the production of a safe and wholesome food supply and to animal, human, and environmental health. A series of studies and reports
Two programs, born out of this concern, aim to mitigate the maldistribution of the veterinary workforce: The Veterinary Medicine Loan Repayment Program (VMLRP) and Veterinary Services Grant Program (VSGP), both administered by USDA—NIFA. VMLRP addresses increasing veterinary school debt by offering veterinary school debt payments in exchange for service in shortage situations, while VSGP addresses other factors contributing to the maldistribution of veterinarians serving the agricultural sector. Specifically, the VSGP promotes availability and access to (1) specialized education and training which will enable veterinarians and veterinary technicians to provide services in designated veterinarian shortage situations, and (2) practice-enhancing equipment and personnel resources to enable veterinary practices to expand or improve access to veterinary services.
In accordance with the Office of Management and Budget (OMB) regulations (5 CFR part 1320) that implement the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and recordkeeping requirements imposed by the implementation of these guidelines have been approved by OMB Control Number 0524–0046.
In January 2003, the National Veterinary Medical Service Act (NVMSA) was passed into law adding section 1415A to the National Agricultural Research, Extension, and Teaching Policy Act of 1997 (NARETPA). This law established a new Veterinary Medicine Loan Repayment Program (7 U.S.C. 3151a) authorizing the Secretary of Agriculture to carry out a program of entering into agreements with veterinarians under which they agree to provide veterinary services in veterinarian shortage situations. In FY 2010, NIFA announced the first funding opportunity for the VMLRP.
Section 7104 of the 2014 Farm Bill (Pub. L. 113–79) added section 1415B to NARETPA, as amended, (7 U.S.C. 3151b) to establish the Veterinary Services Grant Program (VSGP). This amendment authorizes the Secretary of Agriculture to make competitive grants to qualified entities and individual veterinarians that carry out programs in veterinarian shortage situations and for the purpose of developing, implementing, and sustaining veterinary services. Funding for the VSGP was first appropriated in 2016 through the Consolidated Appropriations Act, 2016 (Pub. L. 114–113).
Pursuant to the requirements enacted in the NVMSA of 2004 (as revised), and the implementing regulation for this Act, part 3431 subpart A of the VMLRP Final Rule [75 FR 20239–20248], NIFA hereby implements guidelines for authorized State Animal Health Officials (SAHO) to nominate veterinary shortage situations for the FY 2017 program cycle.
Section 1415A of NARETPA, as amended and revised by Section 7105 of the Food, Conservation and Energy Act, directs determination of veterinarian shortage situations for the VMLRP to consider (1) geographical areas that the Secretary determines have a shortage of veterinarians; and (2) areas of veterinary practice that the Secretary determines have a shortage of veterinarians, such as food animal medicine, public health, epidemiology, and food safety. This section also added that priority should be given to agreements with veterinarians for the practice of food animal medicine in veterinarian shortage situations.
While the NVMSA (as amended) specifies priority be given to food animal medicine shortage situations, and that consideration also be given to specialty areas such as public health, epidemiology and food safety, the Act does not identify any areas of veterinary practice as ineligible. Accordingly, all nominated veterinary shortage situations will be considered eligible for submission. However, assessment of submitted nominations by the external review panel convened by NIFA will reflect that priority be given to certain types of veterinary service shortage situations. NIFA therefore anticipates that the more competitive nominations will be those directly addressing food supply veterinary medicine shortage situations.
A subset of the shortages designated for VMLRP applicants are also available to satisfy requirements, as applicable, for VSGP applicants. In addition, a shortage situation under the VSGP Rural Practice Enhancement program area must also be designated rural as defined in section 343(a) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1991(a)).
NIFA adopted definitions for the practice of veterinary medicine and the practice of food supply medicine that are broadly inclusive of the critical roles veterinarians serve in both public practice and private practice situations. Nominations describing either public or private practice veterinary shortage situations are eligible for submission.
The only authorized respondent on behalf of each State is the chief SAHO, as duly authorized by the Governor or the Governor's designee in each State. The chief SAHO must submit nominations using the Veterinarian Shortage Situation Nomination Form (OMB Control Number 0524–0046), which is available in the VMLRP Shortage Situations section on the VMLRP Web site at
NIFA will accept the number of nominations equivalent to the maximum number of designated shortage areas for each state. For historical background and more information on the rationale for capping nominations and state allocation method, please visit
The maximum number of nominations (and potential designations) is based on data from the 2012 Agricultural Census conducted by the USDA National Agricultural Statistics Service (NASS). Awards from previous years have no bearing on a state's maximum number of allowable shortage nomination submissions or designations in any given year, or number of nominations or designations allowed for subsequent years. NIFA reserves the right in the future to proportionally adjust the maximum number of designated shortage situations per state to ensure a balance between available funds and the requirement to ensure that priority is given to mitigating veterinary shortages corresponding to situations of greatest need. Nomination Allocation tables for FY 2017 are available under the VMLRP Shortage Situations section of the VMLRP Web site at
Table I lists the maximum nomination allocations by state. Table II lists “Special Consideration Areas” which include any State or Insular Area not reporting data to NASS, reporting less than $1,000,000 in annual Livestock and Livestock Products Total Sales ($), and/or possessing less than 500,000 acres. One nomination is allocated to any State or Insular Area classified as a Special Consideration Area.
Table III shows the values and quartile ranks of States for two variables broadly correlated with demand for food supply veterinary services: “Livestock and Livestock Products Total Sales ($)” (LPTS) and “Land Area (acres)” (LA).
While Federal Lands are widely dispersed within States and Insular Areas across the country, they constitute a composite total land area over twice the size of Alaska. If the 200-mile limit U.S. coastal waters and associated fishery areas are included, Federal Land total acreage would exceed 1 billion. Both State and Federal Animal Health officials have responsibilities for matters relating to terrestrial and aquatic food animal health on Federal Lands. Interaction between wildlife and domestic livestock, such as sheep and cattle, is particularly common in the plains states where significant portions of Federal lands are leased for grazing. Therefore, both SAHOs and the Chief Federal Animal Health Officer (Deputy Administrator of the Animal and Plant Health Inspection Service or designee) may submit nominations to address shortage situations on or related to Federal Lands.
NIFA emphasizes that the shortage nomination allocation is set to broadly balance the number of designated shortage situations across states prior to the nomination and award phases of the VMLRP and VSGP. Awards will be made based strictly on the peer review panels' assessment according to each program's review criteria; thus no state will be given a preference for placement of awardees. Additionally, each designated shortage situation will be limited to one award per program.
For the FY 2017 program cycle, all eligible submitting entities may: (1) Request to retain designated status for any shortage situation successfully designated in 2016 and/or (2) submit new nominations. Any shortage from FY 2016 not retained or submitted as a new nomination will not be considered a shortage situation in 2017. The total number of new nominations plus designated nominations retained (carried over) may not exceed the maximum number of nominations each entity is permitted.
The following process is the mechanism for retaining a designated nomination: Each SAHO should review the map of VMLRP designated shortage situations for FY 2016 (
Both new and retained nominations must be submitted on the Veterinary Shortage Situation Nomination form provided in the VMLRP Shortage Situations section at
Submissions must be made by clicking the submit button on the Veterinarian Shortage Situation nomination form provided in the VMLRP Shortage Situations section at
This form is sent as a data file directly to the Veterinary Medicine Loan Repayment Program; National Institute of Food and Agriculture; U.S. Department of Agriculture; Shortage situation nominations. Both new and retained (carry-over) nominations must be submitted on or before February 8, 2017.
Each shortage situation is approved for one program year cycle only. However, any previously approved shortage situation not filled in a given program year may be resubmitted as a retained (carry-over) nomination. Retained (carry-over) shortage nominations will be required to undergo panel merit review for 2017. Starting in 2018 retained shortages (without any revisions) will be automatically approved for up to three years before requiring another merit review. By resubmitting a carry-over nomination, the SAHO is affirming that in his or her professional judgment the original case made for shortage status, and the original description of needs, remain current and accurate.
For the purpose of implementing the solicitation for veterinary shortage situations, the definitions provided in 7 CFR part 3431 are applicable.
The VMLRP Shortage Nomination Form must be used to nominate Veterinarian Shortage Situations. Once designated as a shortage situation, VMLRP applicants will use the information to select shortage situations they are willing and qualified to fill, and to guide the preparation of their applications. NIFA will use the information to assess contractual compliance of awardees. The form is available in the VMLRP Shortage Situations section at
Detailed directions for each field can be found at
NIFA will convene a panel of food supply veterinary medicine experts from Federal and State agencies, as well as institutions receiving Animal Health and Disease Research Program funds under section 1433 of NARETPA, to review the nominations and make recommendations to the NIFA Program Manager. NIFA will review the panel's recommendations and designate the VMLRP shortage situations. The list of approved shortage situations will be made available on the VMLRP Web site at
Criteria used by the shortage situation nomination review panel and NIFA for certifying a veterinary shortage situation will be consistent with the information requested in the shortage situations nomination form. NIFA understands the process for defining the risk landscape associated veterinary service shortages within a state may require consideration of many qualitative and quantitative factors. In addition, each shortage situation will be characterized by a different array of subjective and objective supportive information that must be developed into a cogent case identifying, characterizing, and justifying a given geographic or disciplinary area as deficient in certain types of veterinary capacity or service. To accommodate the uniqueness of each shortage situation, the nomination form provides opportunities to present a case using both supportive metrics and narrative explanations to define and explain the proposed need.
While NIFA anticipates some arguments made in support of a given shortage situation will be qualitative, respondents are encouraged to present verifiable quantitative and qualitative evidentiary information wherever possible. Absence of quantitative data such as animal and veterinarian census data for the proposed shortage area(s) may lead the panel to recommend disapproval of the shortage nomination.
The maximum point value that panelists may award for each element is as follows:
An additional 20 points will be used to evaluate overall merit/quality of the case made for each nomination.
The Department of Commerce will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act (44 U.S.C. chapter 35).
In 2004, the National Academy of Sciences' Committee on National Statistics (CNSTAT) reviewed the National Center for Science and Engineering Statistics' (NCSES) portfolio of R&D surveys and recommended that NCSES explore ways to measure firm innovation and investigate the incidence of R&D activities in growing sectors, such as small business enterprises not currently covered by BRDIS. As a result, Census plans to expand BRDIS to include very small businesses or microbusinesses through the use of the BRDI–M questionnaire.
The National Science Foundation Act of 1950 as amended authorizes and directs the National Science Foundation (NSF) through the National Center for Science and Engineering Statistics (NCSES) “. . . to provide a central clearinghouse for the collection, interpretation, and analysis of data on scientific and engineering resources and to provide a source of information for policy formulation by other agencies of the Federal government.” One of the methods used by NCSES to fulfill this mandate is the Business R&D and Innovation Survey (BRDIS)—the primary federal source of information on R&D in the business sector.
BRDIS will continue to collect the following types of information:
• R&D expense based on accounting standards.
• Worldwide R&D of domestic companies.
• Business segment detail.
• R&D related capital expenditures.
• Detailed data about the R&D workforce.
• R&D strategy and data on the potential impact of R&D on the market.
• R&D directed to application areas of particular national interest.
• Data measuring innovation and intellectual property protection activities.
In addition to adding the BRDI–M form, the following changes will be made to the 2016–2017 BRDIS compared to the 2015 BRDIS:
• Add item in type-of-cost questions to collect Royalty and licensing payments.
• Add questions collecting Basic-Applied-Development split of Total R&D paid for by the company and Total R&D paid for by others.
• Delete question on intellectual property protection.
• Add two Yes/No questions to help separately identify intellectual property transfer transactions with U.S. persons and foreign persons.
• Discontinue the pre-survey letter. This letter was planned to collect contact and company status information (merger, acquisition, etc.) from approximately 500 of the largest R&D companies.
The forms used in the BRDIS are:
Form BRDI–M. This form will be mailed to approximately 200,000 small businesses with less than 10 employees. In addition to general business information—primary business activity (NAICS code), year business was formed, and number of employees—this form would collect data on R&D, innovation, employment, related activities (such as sales of significantly improved goods and services; operating agreements and licensing activities; technology transfer; patents and intellectual property; and sources of technical knowledge), measures of entrepreneurial strategies, and demographic characteristics of the entrepreneur.
Form BRDI–1. This form will be mailed to approximately 7,000 companies with a history of significant R&D and contains the full complement of BRDIS data items.
Form BRDI–1(S). This form will be mailed to approximately 38,000 companies and contains only the most high-level BRDIS data items.
Information from BRDIS will continue to support the America COMPETES Reauthorization Act of 2010 as well as other R&D-related initiatives introduced during the clearance period. Other initiatives that have used BRDIS statistics include: The Innovation Measurement-Tracking the State of Innovation in the American Economy (U.S. Department of Commerce); Science of Science and Innovation Policy (NSF); and Rising Above the Gathering Storm (National Research Council).
Policy officials from many Federal agencies rely on BRDIS statistics for essential information. For example, the Bureau of Economic Analysis (BEA) now incorporates R&D as fixed investment in the National Income and Product Accounts (NIPAs). Businesses and trade organizations also rely on BRDIS data to benchmark their industries' performance against others. Each BRDIS data item is intended to address specific data user needs identified by NCSES through research, workshops, and regular interaction with data users.
In previous years, BRDIS statistics were limited to companies with five or more U.S. employees. With the addition of BRDI–M, all companies with U.S. employees will be eligible for inclusion in providing statistics on R&D and innovation regardless of company size. Expanding the coverage of the BRDIS
This information collection request may be viewed at
Written comments and recommendations for the proposed information collection should be sent within 30 days of publication of this notice to
U.S. Census Bureau, Commerce.
Notice.
The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.
To ensure consideration, written comments must be submitted on or before February 6, 2017.
Direct all written comments to Jennifer Jessup, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6616, 14th and Constitution Avenue NW., Washington, DC 20230 (or via the Internet at
Requests for additional information or copies of the information collection instrument(s) and instructions should be directed to Robert Sienkiewicz;
A 21st century statistical system must provide information about the dynamic economy quickly, using data assets efficiently while minimizing the burden of collecting and providing data and fully preserving confidentiality. The Census Bureau's Longitudinal Employer-Household Dynamics (LEHD) program has demonstrated the power and usefulness of linking multiple business and employee data sets with state-of-the-art confidentiality protections to build a longitudinal national frame of jobs.
This program supports the Department of Commerce plan to improve American competitiveness and measures of innovation. It provides federal, state, and local policymakers and planners, businesses, private sector decision makers, and Congress with comprehensive and timely national, state, and local information on the dynamic nature of employers and employees.
The LEHD program significantly reduces the overall effort for the generation of its quarterly data product by:
The LEHD program is a member of a partnership between the US Census Bureau and the Labor Market Information (LMI) agencies from 49 states, the District of Columbia, and the territories of Puerto Rico and the Virgin Islands. This partnership supports the development, promotion, and distribution of the following data products:
• QWI Public Use—The flagship data product of the LEHD program is the QWI Public Use which provides 32 statistical indicators on employment, job creation and destruction, accessions (hires and recalls), and separations (
○ County, metropolitan, and workforce investment area
○ Age, sex, race, and ethnicity categories
○ Detailed industry (
• LEHD Origin Destination Employment Statistics (LODES)—LODES data provide detailed spatial distributions of workers' employment and residential locations and the relation between the two at the Census Block level. LODES also provides characteristic detail on age, earnings, industry distributions, and local workforce indicators.
• Job-to-Job Flows (J2J)—Job-to-Job Flows (J2J) is a new set of statistics on worker reallocation in the United States constructed from the LEHD data. The initial release of national data distinguishes hires and separations associated with job change from hires and separations to non-employment. Future releases will be published at more detailed levels of aggregations, and will tabulate the origin and destination job characteristics of workers changing jobs.
These data products highlight state and local labor market dynamics that cannot be learned from other statistical sources and are therefore used in many different arenas. For example, the QWI can be used as local-labor-market controls in regression analysis; to identify long-term trends; to provide local context in performance evaluations, and a host of other applications.
The collection of data occurs in accordance with the rules established by interagency agreements with the participating state partners or data sharing agreements that have been established within the Census Bureau. For state partners, their data is submitted directly to the Census secure servers where Personally Identifiable Information (PII) goes through a process to replace it with Protected Identification Keys (PIK). This “PIKing” process also applies to all other administrative data that are used by the LEHD program. For all other required administration data, they are transferred or referenced by the QWI production system. Data collection and processing also includes activities such as validation of data quality.
The data products created by the LEHD program are not generated by a traditional survey. Rather, all input data required is collected electronically as follows:
• State Unemployment Insurance (UI) and Quarterly Census of Employment and Wages (QCEW) are provided via secure File Transfer Protocol (FTP)
• Federal and Census Administrative data are acquired from other directorates or divisions within the Census Bureau where an internal agreement has been established for the use of the data.
• Public Use data sets are acquired from public source Web sites or public File Transfer Protocol (FTP) servers.
Data that is used by the LEHD program is defined in the following table.
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
On August 5, 2016, Wacker Polysilicon North America LLC submitted a notification of proposed production activity to the Foreign-Trade Zones (FTZ) Board for its facility within FTZ 134, in Charleston, Tennessee.
The notification was processed in accordance with the regulations of the FTZ Board (15 CFR part 400), including notice in the
Enforcement and Compliance, International Trade Administration, Department of Commerce.
As a result of this sunset review, the Department of Commerce (the Department) finds that revocation
Dena Crossland, AD/CVD Operations, Office VI, Enforcement and Compliance, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482–3362.
Effective December 8, 2016.
On March 29, 1995, the Department published the antidumping duty order on glycine from the PRC.
On August 30, 2016, the Department received an adequate substantive response to the notice of initiation from GEO within the 30-day deadline specified in 19 CFR 351.218(d)(3)(i). The Department did not receive any responses from the respondent interested parties,
The product covered by the order is glycine, which is a free-flowing crystalline material, like salt or sugar. Glycine is produced at varying levels of purity and is used as a sweetener/taste enhancer, a buffering agent, reabsorbable amino acid, chemical intermediate, and a metal complexing agent. This order covers glycine of all purity levels. Glycine is currently classified under subheading 2922.49.4020 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheading is provided for convenience and Customs purposes, the written description of the merchandise under the order is dispositive.
The issues discussed in the Decision Memorandum
Pursuant to sections 752(c)(1) and (3) of the Act, we determine that revocation of the
This notice also serves as the only reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely notification of the return of destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
The Department is issuing and publishing these final results and notice in accordance with sections 751(c), 752(c), and 777(i)(1) of the Act and 19 CFR 351.218.
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; receipt of revised application for marine mammal incidental take regulations (ITRs); request for comments and information.
NMFS has received a revised application for ITRs from the Bureau of Ocean Energy Management (BOEM), on behalf of oil and gas industry operators. The specified activity considered in the application is geophysical survey activity conducted in the Gulf of Mexico (GOM), over the course of five years from the date of issuance. Pursuant to regulations implementing the Marine Mammal Protection Act (MMPA), NMFS is announcing receipt of BOEM's request for the development of regulations governing the incidental taking of marine mammals. NMFS invites the public to provide information, suggestions, and comments on BOEM's application.
Comments and information must be received no later than January 9, 2017.
Comments on the application should be addressed to Jolie Harrison, Chief, Permits and
Ben Laws, Office of Protected Resources, NMFS, (301) 427–8401.
Electronic copies of the application and supporting documents may be obtained online at:
Section 101(a)(5)(A) of the MMPA (16 U.S.C. 1361
Incidental taking shall be allowed if NMFS finds that the taking will have a negligible impact on the species or stock(s) affected and will not have an unmitigable adverse impact on the availability of the species or stock(s) for taking for subsistence uses, and if the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such taking are set forth.
NMFS has defined “negligible impact” in 50 CFR 216.103 as “an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.”
Except with respect to certain activities not pertinent here, the MMPA defines “harassment” as: “any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild (Level A harassment); or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering (Level B harassment).”
The use of sound sources such as those described in the application (
BOEM was formerly known as the Minerals Management Service (MMS) and, later, the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE). On December 20, 2002, MMS petitioned NMFS for rulemaking under Section 101(a)(5)(A) of the MMPA to authorize take of sperm whales (
The requested regulations would establish a framework for authorization of incidental take by Level A and Level B harassment through Letters of Authorization (LOAs). Following development of the ITRs, implementation could occur via issuance of LOAs upon request from individual industry applicants planning specific geophysical survey activities.
The application describes geophysical survey activity, conducted by industry operators in OCS waters of the GOM within BOEM's GOM planning areas (
Deep penetration seismic surveys, used largely for oil and gas exploration and development and involving a vessel or vessels towing an airgun or array of airguns that emit acoustic energy pulses through the overlying water and into the seafloor, are one of the most extensive survey types and are expected to carry the greatest potential for effects to marine mammals. Non-airgun high resolution geophysical surveys are used to detect and monitor geohazards, archaeological resources, and certain types of benthic communities.
Interested persons may submit information, suggestions, and comments concerning BOEM's request (see
Defense Security Cooperation Agency, Department of Defense.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104–164 dated July 21, 1996.
Pam Young, DSCA/SA&E/RAN, (703) 697–9107.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittal 16–43 with attached Policy Justification and Sensitivity of Technology.
(i)
(ii)
(iii)
Twenty-six (26) GLTA AN/AAQ–24(V) (12 + 14 spares)
Twelve (12) LSPR AN/AAQ–24(V) (4 + 8 spares)
Fifty-four (54) UVMWS Sensors AN/AAR–54 (24 + 30 spares)
CIURs, SCAs, HHCs, UDM cards, initial spares and repair parts, consumables, support equipment, technical data, engineering change proposals, minor modifications, publications, Field Service Representatives' (FSRs), repair and return, depot maintenance, training and training equipment, contractor technical and logistics personnel services, U.S. Government and contractor representative support, Group A and B installation support, flight test and certification, selective availability anti-spoofing module (SAASM) Global Positioning System, and other related elements of logistics support.
(iv)
(v)
(vi)
(vii)
(viii)
* as defined in Section 47(6) of the Arms Export Control Act.
The Government of the Republic of Korea (ROK) has requested the sale and installation of AN/AAQ- 24(V) Large Aircraft Infrared Countermeasures (LAIRCM) systems for up to four (4) A–330 Multi-Role Tanker and Transport (MRTT) aircraft. Each LAIRCM system consists of the following major defense equipment (MDE): three (3) Guardian Laser Terminal Assemblies (GLTA), six (6) Ultra-Violet Missile Warning System (UVMWS) Sensors AN/AAR–54, one (1) LAIRCM System Processor Replacement (LSPR), one (l) Control Indicator Unit Replacement (CIUR), one (1) Smart Card Assembly (SCA), one (1) High Capacity Card (HCC), and User Data Memory (UDM) card. The sale includes spares bringing the MDE total to twenty-six (26) GLTAs, twelve (12) LSPRs, and fifty-four (54) UVMWS Sensors AN/AAR–54.
The sale also includes the following non-MDE items: CIURs, SCAs, HHCs, UDM Cards, initial spares and repair parts, consumables, support equipment, technical data, engineering change proposals, minor modifications, publications, Field Service Representatives' (FSRs), repair and return, depot maintenance, training and training equipment, contractor technical and logistics personnel services, U.S. Government and contractor representative support, Group A and B installation support, flight test and certification, selective availability anti-spoofing module (SAASM) Global Positioning System, and other related elements of logistics support. The estimated cost is $141 million.
The ROK is procuring the LAIRCM system to defend and protect its future aerial refueling and troop transport capabilities. This helps the ROK Air Force become more capable of sustaining and projecting air power across large distances and transporting its forces and fighter aircraft for both operational and training missions with less reliance on foreign partners, such as the United States. The ROK will have no difficulty absorbing this equipment into its armed forces.
This proposed sale contributes to the foreign policy and national security of the United States. The ROK is one of the major political and economic powers in East Asia and the Western Pacific and a key partner of the United States in ensuring peace and stability in that region. It is vital to U.S. national interests to assist our Korean ally in developing and maintain a strong and ready self-defense capability. This sale increases the ROK's capability to participate in Pacific regional security operations and improves its national security posture as a key U.S. ally.
The proposed sale of this equipment and support does not affect the basic military balance in the region.
This sale includes provisions for one (1) FSR to live in Korea for up to two years. Implementation of this proposed sale requires multiple temporary trips to Korea involving U.S. Government or contractor representatives over a period of up to six (6) years for program execution, delivery, technical support, and training.
The principal contractor is Northrop Grumman Corporation, Rolling Meadows, IL. At this time, there are no known offset agreements proposed in connection with this potential sale.
There is no adverse impact on U.S. defense readiness as a result of this proposed sale.
(vii)
1. The AN/AAQ–24(V) Large Aircraft Infrared Countermeasures (LAIRCM) is a self contained, directed energy countermeasures system designed to protect aircraft from infrared guided surface-to-air missiles. The system features digital technology and micro-miniature solid state electronics. The system operates in all conditions, detecting incoming missiles and jamming infrared-seeker equipped missiles with aimed bursts of laser energy. The LAIRCM system consists of multiple Ultra-Violet Missile Warning System (UVMWS) Sensors AN/AAR–54, Guardian Laser Turret Assembly (GLTA), LAIRCM System Processor Replacement (LSPR), Control Indicator Unit Replacement (CIUR), and a classified High Capacity Card (HCC), and User Data Memory (UDM) card. The HCC is loaded into the CIUR prior to flight. When the classified HCC is not in use, it is removed from the CIUR and placed in onboard secure storage. LAIRCM Line Replaceable Unit (LRU) hardware is classified SECRET when the HCC is inserted into the CIUR. LAIRCM system software, including Operational Flight Program is classified SECRET. Technical data and documentation to be provided are UNCLASSIFIED.
a. The set of UVMWS Sensor units (AN/AAR–54) are mounted on the aircraft exterior to provide omni-
b. The AN/AAR–54 UVMWS Sensor warns of threat missile approach by detecting radiation associated with the rocket motor. The AN/AAR–54 is a small, lightweight, passive, electro-optic, threat warning device used to detect surface-to-air missiles fired at helicopters and low-flying fixed-wing aircraft and automatically provide countermeasures, as well as audio and visual warning messages to the aircrew. The basic system consists of multiple UVMWS Sensor units, three (3) GLTAs, a LSPR, and a CIUR. The set of UVMWS units (each A–330 MRTT has six (6)) are mounted on the aircraft exterior to provide omni-directional protection. Hardware is UNCLASSIFIED. Software is SECRET. Technical data and documentation to be provided are UNCLASSIFIED.
2. If a technologically advanced adversary were to obtain knowledge of the specific hardware and software elements, the information could be used to develop countermeasures or equivalent systems which might reduce system effectiveness or be used in the development of a system with similar or advanced capabilities.
3. This sale is necessary in furtherance of the U.S. foreign policy and national security objectives outlined in the Policy justification. Moreover, the benefits to be derived from this sale, as outlined in the Policy Justification, outweigh the potential damage that could result if the sensitive technology were revealed to unauthorized persons.
4. All defense articles and services listed in this transmittal are authorized for release and export to the Government of the Republic of Korea.
Defense Security Cooperation Agency, Department of Defense.
Notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification. This is published to fulfill the requirements of section 155 of Public Law 104–164 dated July 21, 1996.
Pam Young, DSCA/SE&E–RAN, (703) 697–9107.
The following is a copy of a letter to the Speaker of the House of Representatives, Transmittal 16–53 with attached Policy Justification and Sensitivity of Technology.
(i)
(ii)
(iii)
Twenty-six (26) Certifiable Predator B Remotely Piloted Aircraft (16 with option for additional 10)
Twelve (12) Advanced Ground Control Stations (GCSs) (8 with option for additional 4)
Four (4) New Launch and Recovery Element GCSs
Four (4) Upgrades to existing Blk 15 Launch and Recovery Element GCSs (2 with option for additional 2)
Twenty-five (25) Multi-spectral Targeting Systems (12 + 2 spares, with option for additional 10 + 1 spare)
Twenty-five (25) AN/APY–8 Lynx IIe Block 20A Synthetic Aperture Radar and Ground Moving Target Indicators (SAR/GMTI) (12 + 2 spares, with option for additional 10 + 1 spare)
Eighty-six (86) Embedded Global Positioning System/Inertial Guidance Units (EGIs) (3 per aircraft) (48 + 5 spares, with option for additional 30 + 3 spares)
Non-MDE items include: communications equipment, Identification Friend or Foe (IFF) equipment, weapons installation kits, and TPE331–10YGD engines. In addition, the package provides a unique and common spares package, support equipment, U.S. Air Force technical orders, country specific technical
(iv)
(v)
(vi)
(vii)
* as defined in Section 47(6) of the Arms Export Control Act.
The United Kingdom (UK) requested a possible sale of up to twenty-six (26) Certifiable Predator B Remotely Piloted Aircraft (16 with option for additional 10); twelve (12) Advanced Ground Control Stations (GCSs) (8 with option for additional 4); four (4) New Launch and Recovery Element GCSs; four (4) Upgrades to existing Blk 15 Launch and Recovery Element GCSs (2 with option for additional 2); twenty-five (25) Multi-spectral Targeting Systems (12 + 2 spares, with option for additional 10 + 1 spare); twenty-five (25) AN/APY–8 Lynx IIe Block 20A Synthetic Aperture Radar and Ground Moving Target Indicators (SAR/GMTI) (12+ 2 spares, with option for additional 10 + 1 spare); Eighty-six (86) Embedded Global Positioning System/Inertial Guidance Units (EGIs) (3 per aircraft) (48 + 5 spares, with option for additional 30 + 3 spares). This sale also includes communications equipment, Identification Friend or Foe (IFF) equipment; weapons installation kits; TPE331–10YGD engines; unique and common spares package; support equipment; U.S. Air Force technical orders; country specific technical orders; Contractor Logistics Support for two (optional three) years; contractor provided aircraft components, spares, and accessories; personnel training; and other related elements of logistical and program support. The total estimated program cost is $1.0 billion.
The UK is a close ally and an important partner on critical foreign policy and defense issues. The proposed sale will enhance U.S. foreign policy and national security objectives by enhancing the UK's capabilities to provide national defense and contribute to NATO and coalition operations.
This sale will improve the UK's ability to meet current and future threats by providing improved Intelligence, Surveillance and Reconnaissance (ISR) coverage that enhances homeland security, promotes increased battlefield situational awareness, augments combat search and rescue, and provides ground troop support. The Certifiable Predator B will also be used to support the UK's armed forces and coalition forces engaged in current and future peacekeeping, peace-enforcing, counter-insurgent, and counterterrorism operations. The UK already operates armed remotely piloted aircraft, the MQ–9 Reaper, and will have no difficulty transitioning to the Certifiable Predator B.
The proposed sale of this equipment and support will not alter the basic military balance in the region.
The principal contractors will be General Atomics Aeronautical Systems, Inc. in San Diego, California. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will not require the assignment of any additional U.S. Government or contractor representatives to the UK.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
(vii)
1. The Certifiable Predator B (CPB) Remotely Piloted Aircraft (RPA) is a weapons-capable aircraft designed for medium to high altitude-long endurance Intelligence, Surveillance and Reconnaissance (ISR), Target Acquisition, and Strike missions. Protector (formerly known as Scavenger) represents the CPB as modified to a UK-specific configuration which includes the design, development and integration of a UK-specific weapons installation kit for employment of UK-produced weapons (Paveway IV and Brimstone II). Building upon the legacy of Predator B's proven success, CPB/Protector provides up to 40 hours endurance, speeds up to 220 knots true air speed (KTAS) and a maximum altitude of 45,000 feet. The system is designed to be controlled by two operators within an Advanced Ground Control Station (AGCS). The AGCS is designed to emulate a reconnaissance aircraft cockpit, giving users extensive means to operate both the aircraft and sensors. CPB/Protector is able to operate using a direct Line-of-Sight (LOS) datalink or can be operated Beyond Line-of-Sight (BLOS) using satellite communications (SATCOM). The design enables unmanned aerial vehicle (UAV) control to be handed off between multiple AGCSs thus allowing remote-split operations and centralized mission control with other assets. The CPB/Protector system can be deployed from a single site that supports launch, recovery, mission control, and maintenance. The system also supports remote-split operations where launch, recovery, and maintenance occur at a Forward Operating Base and mission control is conducted from another geographically separated location, or Main Operating Base (MOB).
2. The United Kingdom CPB/Protector system includes the following components.
a. A secure Advanced CGCS with workstations that allow operators to control and monitor the aircraft, as well as record and exploit downlinked payload data.
b. The unclassified General Atomics AN/APY–8 Block 20 Lynx Ile Synthetic Aperture Radar and Ground Moving Target Indicator (SAR/GMTI) system provides an all-weather surveillance, tracking and targeting capability. The AN/APY–8 Block 20 operates in the Ku band, using an offset-fed dish antenna mounted on a three-axis stabilized gimbal. It has a large field of regard, produces a strip map and can image up to a l0km wide swath. Swaths from multiple passes can be combined for wide-area surveillance.
c. The Raytheon Multi-spectral Targeting System with Laser Target Designator (LTD) and multi-use Electro-Optical (EO)/lnfra-Red (IR) sensor provides long-range surveillance, high-altitude target acquisition, tracking, and range-finding with capabilities up to and including high definition color TV, high definition short-wave IR, medium-wave IR, and long wave IR sensors.
d. The weapons installation kit enables the integration of UK-produced munitions (Paveway IV and Brimstone II) onto the Protector platform. The integration of these munitions requires specialized non-recurring engineering work which will be performed by the platform OEM in the United States.
3. If a technologically advanced adversary were to obtain knowledge of the specific hardware or software in this proposed sale, any information gleaned from exploitation of hardware, publications and software could be used to develop countermeasures (electronic, infrared, or other types) as well as offensive and defensive counter-tactics and allow an adversary to exploit those vulnerabilities during combat.
4. A determination has been made that the recipient country can provide substantially the same degree of protection for the sensitive technology being released as the US Government. This sale is necessary in furtherance of the U.S. foreign policy and national security objectives outlined in the Policy Justification.
5. All defense articles and services listed in this transmittal have been authorized for release and export to the United Kingdom.
Joint Service Committee on Military Justice (JSC), Department of Defense.
Publication of Discussion (Supplementary Materials) accompanying the Manual for Courts-Martial, United States (2012 ed.) (MCM).
The JSC hereby publishes Supplementary Materials accompanying the MCM as amended by Executive Orders 13643, 13669, 13696, 13730, and 13740. These changes have not been coordinated within the Department of Defense under DoD Directive 5500.1, “Preparation, Processing and Coordinating Legislation, Executive Orders, Proclamations, Views Letters and Testimony,” June 15, 2007, and do not constitute the official position of the Department of Defense, the Military Departments, or any other Government agency. These Supplementary Materials have been approved by the JSC and the General Counsel of the Department of Defense, and shall be applied in conjunction with the rule with which they are associated. The Discussion is effective insofar as the Rules it supplements are effective, but may not be applied earlier than the date of publication in the
This Discussion is effective as of December 8, 2016.
Major Harlye S.M. Carlton, USMC, (703) 963–9299 or
The Discussion to Part IV of the Manual for Courts-Martial, United States, is amended as follows:
(a) The Discussion immediately after paragraph 60.c.(6)(a) is amended to read as follows:
“Clauses 1 and 2 are theories of liability that must be expressly alleged in a specification so that the accused will be given notice as to which clause or clauses to defend against. The words “to the prejudice of good order and discipline in the armed forces” encompass both paragraph c.(2)(a), prejudice to good order and discipline, and paragraph c.(2)(b), breach of custom of the Service. A generic sample specification is provided below:
If clauses 1 and 2 are alleged together in the terminal element, the word “and” should be used to separate them. Any clause not proven beyond a reasonable doubt should be excepted from the specification at findings.
Lesser included offenses are defined and explained under Article 79; however, in 2010, the Court of Appeals for the Armed Forces examined Article 79 and clarified the legal test for lesser included offenses.
Thursday, December 15, 2016 (10:30 a.m.–1:00 p.m.—EDT).
1335 East West Highway (First Floor Conference Room) Silver Spring, MD 20910.
Commissioners will meet to provide an initial de-brief on the 2016 election and to celebrate the 10th anniversary of the EAC's Testing and Certification Program. Commissioners will discuss the 2016 election with a panel of state and local election administrators, and a panel representing the perspectives of military and overseas voters, voters with disabilities and other election administration interest groups. Commissioners will hear from a panel to discuss the past ten years of EAC Testing and Certification of voting systems. Voting system manufacturers will discuss the evolution of the program from their perspective; a state certification official will provide insight into how EAC certification assists the states in their unique certification roles, and EAC program staff will provide their thoughts on ten years in the certification business.
This meeting will be open to the public.
Bryan Whitener, Telephone: (301) 563–3961.
This is a supplemental notice in the above-referenced proceeding of Rubicon
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is December 20, 2016.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Take notice that the Commission received the following electric rate filings:
Description: § 205(d) Rate Filing: Transmission Svc Agmt for Native Load Customer—APGI (Tapoco) & Arconic to be effective 11/1/2016.
Description: § 205(d) Rate Filing: Notice of Succession to be effective 11/21/2016.
Description: § 205(d) Rate Filing: Notice of Succession to be effective 11/21/2016.
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and § 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
This is a supplemental notice in the above-referenced proceeding of Footprint Power Salem Harbor Development LP`s application for market-based rate authority, with an accompanying rate tariff, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.
Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.
Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability, is December 20, 2016.
The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at
Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.
The filings in the above-referenced proceeding are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for electronic review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on November 21, 2016, Valley Crossing Pipeline, LLC (Valley Crossing), 5400 Westheimer Court, Houston, Texas 77056, filed an application in Docket No. CP17–19–000 under section 3 of the Natural Gas Act (NGA), and Part 153 of the Commission's regulations requesting authorization to site, construct, and operate new natural gas facilities to import/export natural gas between the United States to the Republic of Mexico at a point on the International Boundary in Texas state waters (Border Crossing Project), all as more fully set forth in the application which is on file with the Commission and open to public inspection. The facilities will consist of a segment of 42-in-diameter pipe that extends 1,000 feet in the Gulf of Mexico in Texas state waters to the International Boundary between the United States and Mexico. The filing is available for review at the Commission in the Public Reference Room or may be viewed on the Commission's Web site web at
Any questions concerning this application may be directed to Lisa A. Connolly, General Manager, Rates and Certificates Department, Valley Crossing Pipeline, LLC, 5400 Westheimer Court, Houston, TX 77056; by calling (713) 627–4102; by faxing (304) 357–5947; or by emailing
Pursuant to section 157.9 of the Commission's rules (18 CFR 157.9), within 90 days of this Notice, the Commission staff will either: Complete its environmental assessment (EA) and place it into the Commission's public record (eLibrary) for this proceeding; or issue a Notice of Schedule for Environmental Review. If a Notice of Schedule for Environmental Review is issued, it will indicate, among other milestones, the anticipated date for the Commission staff's issuance of the final environmental impact statement (FEIS) or EA for this proposal. The filing of the EA in the Commission's public record for this proceeding or the issuance of a Notice of Schedule for Environmental Review will serve to notify federal and state agencies of the timing for the completion of all necessary reviews, and the subsequent need to complete all federal authorizations within 90 days of the date of issuance of the Commission staff's FEIS or EA.
There are two ways to become involved in the Commission's review of this project. First, any person wishing to obtain legal status by becoming a party to the proceedings for this project should, on or before the comment date stated below file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, a motion to intervene in accordance with the requirements of the Commission's Rules of Practice and Procedure (18 CFR 385.214 or 385.211) and the Regulations under the NGA (18 CFR 157.10). A person obtaining party status will be placed on the service list maintained by the Secretary of the Commission and will receive copies of all documents filed by the applicant and by all other parties. A party must submit seven copies of filings made in the proceeding with the Commission and must mail a copy to the applicant and to every other party. Only parties to the proceeding can ask for court review of Commission orders in the proceeding.
However, a person does not have to intervene in order to have comments considered. The second way to participate is by filing with the Secretary of the Commission, as soon as possible, an original and two copies of comments in support of or in opposition to this project. The Commission will consider these comments in determining the appropriate action to be taken, but the filing of a comment alone will not serve to make the filer a party to the proceeding. The Commission's rules require that persons filing comments in opposition to the project provide copies of their protests only to the party or parties directly involved in the protest.
Persons who wish to comment only on the environmental review of this project should submit an original and two copies of their comments to the Secretary of the Commission. Environmental commentors will be placed on the Commission's environmental mailing list, will receive copies of the environmental documents, and will be notified of meetings associated with the Commission's environmental review process. Environmental commentors will not be required to serve copies of filed documents on all other parties. However, the non-party commentors will not receive copies of all documents
The Commission strongly encourages electronic filings of comments, protests and interventions in lieu of paper using the “eFiling” link at
Take notice that the Commission received the following electric rate filings:
Description: Compliance filing: Revised MBR Tariff to be effective 1/30/2017.
Description: § 205(d) Rate Filing: Dec 2016 Membership Filing to be effective 11/1/2016.
Take notice that the Commission received the following qualifying facility filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following electric corporate filings:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and § 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that the Commission received the following electric rate filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Environmental Protection Agency (EPA).
Notice of document availability.
As part of its mission to protect human health and the environment, the U.S. Environmental Protection Agency (EPA) publishes protective action guides to help federal, state, local and tribal emergency response officials make radiation protection decisions during emergencies. The EPA, in coordination with a multi-agency working group within the Federal Radiological Preparedness Coordinating Committee (FRPCC), has made final updates to the 1992 Manual of Protective Action Guides and Protective Actions for Nuclear Incidents, referred to as “The 1992 PAG Manual” (EPA 400–R–92–001, May 1992).
The updated guidance in the revised PAG Manual: Protective Action Guides and Planning Guidance for Radiological Incidents (“PAG Manual” hereafter) applies the protective action guides (PAGs) to incidents other than nuclear power plant accidents, updates the radiation dosimetry and dose calculations based on current science and incorporates late phase guidance. The final revisions incorporate input from public comments received in 2013 and include clarifications based on those comments. The Agency plans to finalize drinking water guidance after incorporating public comments on a proposal published in June 2016. The intention is to add it as a section in the Intermediate Phase chapter of the PAG Manual and reissue the PAG Manual once complete. The final revision of the PAG Manual is available at
The PAG Manual is available for use upon publication of this Notice in the
Sara DeCair, Radiation Protection Division, Center for Radiological Emergency Management, Mail Code 6608T, U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW., Washington, DC 20460; telephone number: (202) 343–9108; fax number: (202) 343–2304; Email:
The historical and legal basis of the EPA's role in the PAG Manual begins with Reorganization Plan No. 3 of 1970, in which the Administrator of the EPA assumed functions of the Federal Radiation Council (FRC), including the charge to “. . . advise the President with respect to radiation matters, directly or indirectly affecting health, including guidance for all federal agencies in the formulation of radiation standards and in the establishment and execution of programs of cooperation with states.” (Reorg. Plan No. 3 of 1970, sec. 2(a)(7), 6(a)(2); § 274.h of the Atomic Energy Act of 1954, as amended (AEA), codified at 42 U.S.C. 2021(h)). Recognizing this role, the Federal Emergency Management Agency (FEMA) directed the EPA in their Radiological Emergency Planning and Preparedness Regulations to “establish Protective Action Guides (PAGs) for all aspects of radiological emergency planning in coordination with appropriate federal agencies.” (44 CFR 351.22(a)). FEMA also tasked the EPA with preparing “guidance for state and local governments on implementing PAGs, including recommendations on protective actions which can be taken to mitigate the potential radiation dose to the population.” (44 CFR 351.22(b)). All of this information was to “be presented in the Environmental Protection Agency (EPA) `Manual of Protective Action Guides and Protective Actions for Nuclear Incidents.' ” (44 CFR 351.22(b)).
Additionally, section 2021(h) charged the Administrator with performing “such other functions as the President may assign to him [or her] by Executive order.” Executive Order 12656 states that the Administrator shall “[d]evelop, for national security emergencies, guidance on acceptable emergency levels of nuclear radiation. . . .” (Executive Order No. 12656, sec.1601(2)). The EPA's role in PAGs development was reaffirmed by the
The PAG Manual provides federal, state and local emergency management officials with guidance for responding to radiological emergencies. A protective action guide (PAG) is the projected dose to an individual from a release of radioactive material at which a specific protective action to reduce or avoid that dose is recommended. Emergency management officials use PAGs for making decisions regarding actions to protect the public from exposure to radiation during an emergency. Such actions include, but are not limited to, evacuation, shelter-in-place, temporary relocation, and food restrictions.
Development of the PAGs was based on the following essential principles, which also apply to the selection of any protective action during an incident—
• Prevent acute effects,
• Balance protection with other important factors and ensure that actions result in more benefit than harm,
• Reduce risk of chronic effects.
The PAG Manual is not a legally binding regulation or standard and does not supersede any environmental laws. This guidance does not address or impact site cleanups occurring under other statutory authorities such as the EPA's Superfund program, the Nuclear Regulatory Commission's (NRC) decommissioning program, or other federal or state cleanup programs. As indicated by the use of non-mandatory
The proposed updates to the 1992 PAG Manual, published for public comment and interim use in 2013, were developed by a multi-agency Subcommittee of the Federal Radiological Preparedness Coordinating Committee (FRPCC) and published by the EPA with concurrence from the Department of Energy (DOE); the Department of Defense (DoD); the Department of Homeland Security (DHS), including the Federal Emergency Management Agency (FEMA); the Nuclear Regulatory Commission (NRC); the Department of Health and Human Services (HHS), including both the Centers for Disease Control (CDC) and the Food and Drug Administration (FDA); the U.S. Department of Agriculture (USDA); and the Department of Labor (DOL).
The Agency received about 5,000 comments from members of the public, state and local emergency response and health organizations, industry associations, and from national and international radiation protection organizations. In response to comments received, questions raised in comments and issues identified about implementing the updated PAG Manual, the EPA made a number of changes to the PAG Manual, as described below.
The EPA received comments and questions on the potassium iodide (KI) PAG from state radiation protection agencies and from industry organizations. In response, planning considerations were clarified regarding the lower FDA KI PAG in combination with deleting the thyroid-based evacuation threshold. The EPA added a Table (Table 2.2) with more details on the KI PAG; and also worked with the FDA to include a simplified approach to implementing this PAG and provided reference for the reader to the FDA's published guide. More explanation was included regarding the thyroid-based (organ-based) evacuation thresholds being deleted. This was done for simplicity and because modern dose projection tools now do a much better job of accounting for all-pathway exposures.
The EPA received many comments from PAG technical users suggesting terminology improvements and requesting more information about how the Federal Radiological Monitoring and Assessment Center (FRMAC)—the federal government lead for these calculations during radiological emergencies—provides calculation methods and tables of derived levels. Additional language is provided on the tables of derived values for implementing the PAGs. Specifically, clarifying text on FRMAC methods and dose factor terminology was added. Definitions for incident phases and several concepts around dose projection were also clarified.
The Agency received comments from state emergency management and radiation protection agencies, as well as federal agencies, requesting the inclusion of language from the 1992 PAG Manual Appendices in the revised PAG Manual. This text, focusing on the rationale and basis for setting early and intermediate phase PAGs, has been added to the revised PAG Manual. The 2013 proposal included this information only by reference, but the revised PAG Manual will serve the emergency response community better by providing a summarized description of the basis for setting PAGs directly in the new publication. The 1992 PAG Manual Appendices are still available online in a word-searchable format, for reference.
The EPA received limited, but important, comments on the worker protection section of the proposed Manual, requesting updates to reflect more recent publications on worker safety. These comments were considered by the EPA, the Occupational Safety and Health Administration and the NRC; changes were made to ensure consistency with the latest worker safety guidelines from other agencies.
Some commenters expressed concern over the removal of the 5 rem over 50 years Relocation PAG. Therefore, explanation about the removal of that PAG was expanded, adding language to better explain the deletion. The decision was made in order to eliminate confusion with long-term remediation timeframes and long-term cleanup goals.
The EPA received a number of comments, largely from environmental organizations, expressing concern about whether the PAGs are safe enough, and whether children and sensitive subpopulations are considered adequately. There is an abundant conservatism built into the derivation of the PAGs, and into the assumptions used to generate derived response levels, to ensure that the PAGs are appropriate emergency guides for all members of the public, including sensitive subpopulations. The Agency provided additional explanation in the revised Manual about the basis for the PAGs and how PAG levels are set. A discussion of the conservatism that has been built into the early and intermediate phase PAGs was also added to the Manual.
Some commenters expressed concerns that PAGs would weaken environmental standards and regulations. Environmental regulations or standards are legal limits designed to prevent health effects from everyday exposure to low levels of radiation over long periods. The PAG levels are guidance for emergency situations; they do not supplant any standards or regulations, nor do they affect the stringency or enforcement of any standards or regulations. The PAG levels are intended to be used only in an emergency when radiation levels have already exceeded environmental standards and could be high enough to cause health effects unless protective actions are taken. The PAG levels trigger public safety measures to minimize or avoid radiation exposures during an emergency.
The EPA also received some comments suggesting that the U.S. should rely solely on existing environmental standards and that PAGs are not needed. PAG levels do not replace environmental standards, and environmental standards do not fulfill the role of the PAGs. PAGs are used only during emergency situations when radiation levels are already exceeding environmental standards and could become high enough to cause adverse health effects unless protective action is taken. During a radiological emergency, the PAGs are designed to prevent adverse health effects by triggering public safety measures—protective actions, such as evacuation—and minimizing unnecessary exposures. The PAGs are set at a level where the health risk from radiation exposure that could be avoided with protective action outweighs the risk associated with taking the safety measures,
Finally, the EPA received comments requesting edits to clarify, reword or reorder language in the PAG Manual. Based on those comments, a number of
Emergency management and radiation protection organizations that use the PAGs in their emergency plans are encouraged to incorporate this updated guidance as soon as possible. This may entail training, as well as updating plans and procedures. Outreach and technical training will be conducted by the EPA, the FRMAC and interagency partners on the PAG Subcommittee.
The Federal Emergency Management Agency (FEMA) expects certain organizations associated with nuclear power plant operations to use the PAG Manual in developing their emergency management plans. The FEMA plans to begin using the new PAG Manual during their evaluation of offsite response organizations around nuclear power facilities twelve months after the publication of this Notice in the
For further information and related guidelines, see the PAGs Web page:
Environmental Protection Agency (EPA).
Notice of availability.
This notice announces the availability of the Environmental Protection Agency's (EPA) final report on the National Lakes Assessment 2012. The NLA describes the results of the nationwide probabilistic survey that was conducted in the summer of 2012 by EPA and its state, tribal, and federal partners. The NLA report includes information on how the survey was implemented, what the findings are on a national scale, and future actions and challenges. The NLA Web site also includes findings at the ecoregional scale and allows users to explore additional results using a new interactive dashboard.
Amina Pollard, Office of Wetlands, Oceans and Watersheds, Office of Water, Washington DC. Phone: 202–566–2360; email:
The
The NLA finds that 40% of the nation's lakes have excessive levels of phosphorus. Compared to other measures, nutrient pollution is the most widespread stressor in the NLA and can contribute to algal blooms and affect recreational opportunities in lakes. Using a new biological measure, the NLA finds that 31% of lakes have degraded benthic macroinvertebrate communities. The report has undergone peer, state/tribal and EPA review.
You may view and download the final report from EPA's Web site at
Farm Credit Administration.
Notice is hereby given, pursuant to the Government in the Sunshine Act, of the regular meeting of the Farm Credit Administration Board (Board).
The regular meeting of the Board will be held at the offices of the Farm Credit Administration in McLean, Virginia, on December 8, 2016, from 9:00 a.m. until such time as the Board concludes its business.
Dale L. Aultman, Secretary to the Farm Credit Administration Board, (703) 883–4009, TTY (703) 883–4056.
Farm Credit Administration, 1501 Farm Credit Drive, McLean, Virginia 22102–5090. Submit attendance requests via email to
Parts of this meeting of the Board will be open to the public (limited space available), and parts will be closed to the public. Please send an email to
* Session Closed-Exempt pursuant to 5 U.S.C. Section 552b(c)(8) and (9).
Federal Maritime Commission.
Notice.
Notice is hereby given of the names of the members of the Performance Review Board.
William “Todd” Cole, Director Office of Human Resources, Federal Maritime Commission, 800 North Capitol Street NW., Washington, DC 20573.
Sec. 4314(c) (1) through (5) of title 5, U.S.C., requires each agency to establish, in accordance with regulations prescribed by the Office of Personnel Management, one or more performance review boards. The board shall review and evaluate the initial appraisal of a senior executive's performance by the supervisor, along with any recommendations to the appointing authority relative to the performance of the senior executive.
Agency for Healthcare Research and Quality (AHRQ), HHS.
Request for Scientific Information Submissions.
The Agency for Healthcare Research and Quality (AHRQ) is seeking scientific information submissions to inform our review of
Ryan McKenna, Telephone: 503–220–8262 ext. 51723 or Email:
The Agency for Healthcare Research and Quality has commissioned the Evidence-based Practice Centers (EPC) Programs to complete a review of the evidence for
The EPC Program is dedicated to identifying as many studies as possible that are relevant to the questions for each of its reviews. In order to do so, we are supplementing the usual manual and electronic database searches of the literature by requesting information from the public (
This notice is to notify the public that the EPC Program would find the following information on
A list of completed studies that your organization has sponsored for this indication. In the list, please indicate whether results are available on
For completed studies that do not have results on
Description of whether the above studies constitute all Phase II and above clinical trials sponsored by your organization for this indication and an index outlining the relevant information in each submitted file.
Your contribution will be very beneficial to the EPC Program. The contents of all submissions will be made available to the public upon request. Materials submitted must be publicly available or can be made public. Materials that are considered confidential; marketing materials; study types not included in the review; or information on indications not included in the review cannot be used by the EPC Program. This is a voluntary request for information, and all costs for complying with this request must be borne by the submitter.
The draft of this review will be posted on AHRQ's EPC Program Web site and available for public comment for a period of 4 weeks. If you would like to be notified when the draft is posted, please sign up for the email list at:
I. the characteristics and indications of the patients including descriptives of age, BMI, and comorbid conditions
II. the characteristics of the interventions, including the bariatric procedures themselves as well as pre- and/or post-surgical surgical work-ups (
III. the outcomes that have been measured, including peri-operative (
I. In Medicare-eligible patients, what is the effect of different bariatric therapies (contrasted between them or vs. non-bariatric therapies) on weight outcomes (including failure to achieve at least minimal weight loss)?
II. What patient—(KQ2 I) and intervention-level characteristics (KQ2 II) modify the effect of bariatric therapies on weight outcomes (including failure to achieve at least minimal weight loss)?
III. In Medicare-eligible patients who have undergone bariatric therapy, what is the frequency and the predictors of failing to achieve at least minimal weight loss?
I. In Medicare-eligible patients, what is the comparative effectiveness and safety of different bariatric interventions (contrasted between them or vs. non-bariatric interventions) with respect to the outcomes in KQ2 III?
II. What patient—(KQ2 I) and intervention-level (KQ2 II) characteristics modify the effect of the bariatric therapies on the outcomes in KQ2 III?
I. In Medicare-eligible patients who have undergone bariatric therapy, what is the association between weight outcomes and eligible short- and long-term outcomes (other than weight outcomes)?
II. In Medicare-eligible patients, what proportion of the bariatric intervention effect on eligible short- and long-term outcomes (other than weight outcomes) is accounted for by changes in weight outcomes?
PICOTS (Population, Intervention, Comparator, Outcome, Timing, Setting)
Population: Medicare-eligible population to include those age 65 and older and the disabled.
Interventions: Bariatric treatments including anatomic alteration, FDA-approved device placements, open surgical procedures, as well as laparoscopic and endoscopic procedures
Comparisons: Comparisons of interest include comparisons between different surgical interventions, or between surgical and non-surgical interventions
Outcomes: Outcomes will be classified as peri-operative (
The Centers for Disease Control and Prevention (CDC) has submitted the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995. The notice for the proposed information collection is published to obtain comments from the public and affected agencies.
Written comments and suggestions from the public and affected agencies concerning the proposed collection of information are encouraged. Your comments should address any of the following: (a) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) Evaluate the accuracy of the agencies estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) Enhance the quality, utility, and clarity of the information to be collected; (d) Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
To request additional information on the proposed project or to obtain a copy of the information collection plan and instruments, call (404) 639–7570 or send an email to
National HIV Behavioral Surveillance System ((NHBS), OMB Control No. 0920–0770, exp. 03/31/2017)—Revision—National Center for HIV, Hepatitis, STD, and TB Prevention (NCHHSTP), Centers for Disease Control and Prevention (CDC).
The CDC currently sponsors the National HIV Behavioral Surveillance (NHBS) System. The system is designed to describe and monitor the HIV risk behaviors, HIV seroprevalence and incidence, and HIV prevention experiences of persons at highest risk for HIV infection in the United States. NHBS awardees are state and local health departments that provide HIV-related services, conduct NHBS interviews, and submit non-identifiable information to CDC. To be eligible for NHBS funding, a health department must serve one of the 30 Metropolitan Statistical Areas (MSA) in the U.S. with high HIV prevalence. Twenty-two (22) programs receive NHBS funding and technical assistance from CDC at this time. Burden estimates are based on current availability of funds and recruitment targets for 22 CDC-funded NHBS awardees. If additional funding is received to support the participation of additional sites, CDC will submit a Change Request to make the appropriate adjustments to the total estimated annualized burden.
Information collection is based on rotating annual “cycles” of surveillance with three populations: Men who have sex with men (MSM), injecting drug users (IDUs), and heterosexuals at increased risk of HIV (HET). Screening interviews and specialized behavioral assessment interviews are conducted once every three years with each population: MSM in year 1, IDU in year 2, and HET in year 3. The target number of annual interviews for each NHBS-funded awardee is 500. Due to differences in the risk characteristics of the MSM, IDU and HET groups, the behavioral assessment is customized for each group. In addition, an HIV test and pre-test counseling session are offered to all persons who participate in an NHBS interview.
The surveillance system is focused on behaviors directly related to HIV transmission and those that are amenable to intervention through prevention programs. Information collected through the NHBS System allows CDC to: (a) Describe the prevalence of and trends in risk behaviors; (b) describe the prevalence of and trends in HIV testing and HIV infection; (c) describe the prevalence of and trends in use of HIV prevention services; and (d) identify met and unmet needs for HIV prevention services in order to inform health departments, community-based organizations, community planning groups and other stakeholders. No other federal agency systematically collects this type of information from persons at risk for HIV infection.
Venue-based sampling methods are used to identify respondents for the MSM information collection cycle and respondent-driven sampling methods are used to identify respondents for the IDU cycle and the HET cycle. Consistent with these methods, persons who participate in the IDU and HET interviews may be trained to recruit additional respondents. Each person who serves as a peer recruiter will be asked to participate in a short debriefing interview.
CDC requests OMB approval to continue information collection for three years, with revisions. Selected questions in the eligibility screener and the behavioral assessment interview instruments will be updated to improve usability and data quality, and new questions will be added to provide measures of high priority emerging issues including pre-exposure prophylaxis, treatment as prevention, and opioid use and abuse. Lower priority questions and repetitive content will be deleted in order to manage project cost and respondent burden. There are no changes to the estimated burden per response for any information collection instrument. However, total burden will decrease due to a reduction in the number of health departments funded to participate in the NHBS System (from 25 to 22). Compared to the previous period of OMB approval, this will reduce the total estimated number of interviews for each cycle from 12,500 (4,167 annualized) to 11,000 (3,667 annualized).
Information collected through the NHBS has a substantial impact on the design and delivery of targeted prevention programs aimed at reducing new HIV infections and evaluating
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed revision of the “SEARCH for Diabetes in Youth Study,” a national multi-center study aimed at understanding more about diabetes among children and young adults in the United States.
Written comments must be received on or before February 6, 2017.
You may submit comments, identified by Docket No. CDC–2016–0117 by any of the following methods:
•
•
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact the Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE., MS–D74, Atlanta, Georgia 30329; phone: 404–639–7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501–3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology; and (e) estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; to develop, acquire, install and utilize technology and systems for the purpose of collecting, validating and verifying information, processing and maintaining information, and disclosing and providing information; to train personnel and to be able to respond to a collection of information, to search data sources, to complete and review the collection of information; and to transmit or otherwise disclose the information.
SEARCH for Diabetes in Youth Study (OMB Control No. 0920–0904, Expires 8/31/2017)—Revision—National Center for Chronic Disease Prevention and Health Promotion (NCCDPHP), Centers for Disease Control and Prevention (CDC).
Diabetes is one of the most common chronic diseases among children in the United States. When diabetes strikes during childhood, it is routinely assumed to be type 1, or juvenile-onset, diabetes. Type 1 diabetes (T1D)
The SEARCH for Diabetes in Youth Study began in 2000 as a multi-center, epidemiological study, conducted in six geographically dispersed Study Centers that reflected the racial and ethnic diversity of the U.S. Phases 1 (2000–2005) and 2 (2005–2010) produced estimates of the prevalence and incidence of diabetes among youth age <20 years, according to diabetes type, age, sex, and race/ethnicity, and characterized selected acute and chronic complications of diabetes and their risk factors, as well as the quality of life and quality of health care. Phase 3 (2010–2015) built upon the activities in Phase 1 and 2 and added a cohort component to collect information on estimate the prevalence and incidence of risk factors and complications, including chronic microvascular (retinopathy, nephropathy, and autonomic neuropathy) and selected markers of macrovascular complications (hypertension, arterial stiffness) of diabetes.
SEARCH Phase 4 (2015–2020) continues the activities of the SEARCH Registry Study via cooperative agreements with the clinical sites, data coordinating center and CDC. Respondents will be youth <20 years of age who have been diagnosed with diabetes. Information will be collected from the study participants by five clinical sites and transmitted to the Coordinating Center for the study, each funded through a cooperative agreement. Information collection will support a case registry that can be used to estimate the incidence and prevalence of diabetes in youth in the U.S. The registry study will continue to collect information from participants related to diabetes diagnosis and will ask participants identified with incident diabetes in 2016 to complete an in-person study examination. CDC is no longer funding the cohort component of the SEARCH for Diabetes in Youth Study.
SEARCH Phase 3 identified an average of 1,361 incident cases of diabetes among youth under 20 years each year of the study and completed an average of 1,088 participant surveys each year (80% participation rate among registry study participants).
Respondents will be the Population-based Diabetes in Youth (SEARCH for Diabetes in Youth Phase 4) study participants. The information collection will include:
1.
• Collection of information on newly diagnosed incident diabetes cases in youth age <20 years. CDC estimates that each clinical site will identify and register an average of 302 to 303 cases per year, for a total of 1,511 cases across all sites. There are no changes for the Medication Inventory Form. The Initial Participant Survey form has been revised to eliminate questions that were not useful to the researchers and to improve readability and understanding for the participants. The overall burden for the form has not changed. The total estimated annualized burden for this information collection is 378 hours.
• Physical exam and specimen collection for the 2016 incident cases. CDC estimates that each clinical site will identify and register 1,511 cases during this incident year. Of these cases, CDC anticipants 80% will complete the Initial Participant Survey and be invited for an in-person visit. Of those, we anticipate a 65 to 70% response rate and complete 823 in-person visits. The Physical Exam Form has not changed. There was a change to the Specimen Collection Form since a spot urine will no longer be collected. The total estimated annualized burden for this information collection is 1,371 hours.
• Collection of information on prevalent cases of diagnosed diabetes among youth <20 years. CDC estimates that the clinical sites will identify 776 cases. The items collected for each case include an Initial Participant Survey. The total estimated annualized burden for this information collection is 130 hours. This is a new data collection instrument.
The SEARCH for Diabetes in Youth Study was initially approved with 4,248 annualized burden hours. In this Revision, we request approval for 1,878 annualized burden hours (a net reduction of 2,369 annualized burden hours). The estimated annualized burden per participant respondent is reduced by 3.2 hours since the CDC is no longer funding the cohort component. The total annualized burden for this study is 1,878.
There are no costs to respondents other than their time.
National Institute for Occupational Safety and Health (NIOSH) of the Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice and extension of comment period.
On September 15, 2016 the Director of the National Institute for Occupational Safety and Health (NIOSH) of the Centers for Disease Control and Prevention (CDC), published a notice in the
NIOSH is extending the comment period on the document published September 15, 2016 [81 FR 63482]. Electronic or written comments must be received by June 7, 2017.
Deborah V. Hirst, NIOSH, Alice Hamilton Laboratories, 1090 Tusculum Avenue, MS–R–5, Cincinnati, Ohio 45226, telephone (513) 841–4141 (not a toll free number), Email:
You may submit comments, identified by CDC–2016–0090 and Docket Number NIOSH 288–A, by either of the following two methods:
•
•
The FACES Core study will assess the school readiness skills of Head Start children, survey their parents, and ask their Head Start teachers to rate children's social and emotional skills.
In addition, FACES will include observations in Head Start classrooms, and program director, center director, and teacher surveys. FACES Plus studies include additional survey content of policy or programmatic interest, and may include additional programs or respondents beyond those participating in the Core FACES study.
Previous notices provided the opportunity for public comment on the proposed Head Start program recruitment and center selection process (FR V.78, pg.75569 12/12/2013; FR V.79, pg.8461 02/12/2014), the child-level data collection in fall 2014 and spring 2015 (FR V. 79, pg. 11445 02/28/2014; FR V. 79; pg. 27620 5/14/2014), the program- and classroom-level spring 2015 data collection activities (FR v.79; pg. 73077 12/09/2014), the American Indian and Alaska Native Head Start Family and Child Experiences Survey (AI/AN FACES) child-level data collection activities in fall 2015 and spring 2016 (FR V. 80, pg. 30250 08/07/2015) and AI/AN FACES program- and classroom-level spring 2016 data collection activities (FR V. 80, pg 70231 11/13/2015).
This 30-day notice describes the planned additional data collection activities for FACES program- and classroom-level data collection in spring 2017. Spring 2017 data collection includes site visits to 360 centers in 180 Head Start programs. As in spring 2015, for the Core study teachers, program directors, and center directors will each complete surveys, approximately 25 to 30 minutes in length. Two Plus studies are planned related to program functioning for spring 2017. First, program and center directors in all 180 programs (and 360 centers) will complete a 5-minute survey on how programs are planning for implementing the new Head Start program performance standards. Second, all 720 teachers will complete a survey on program functioning, initially piloted in spring 2015.
The purpose of the Core data collection is to support the 2007 reauthorization of the Head Start program (Pub. L. 110–134), which calls for periodic assessments of Head Start's quality and effectiveness. As additional information collection activities are fully developed, in a manner consistent with the description provided in the 60-day notice (79 FR 11445) and prior to use, we will submit these materials for a 30-day public comment period under the Paperwork Reduction Act.
The RPG Cross-Site Evaluation includes the following components:
1.
In addition to conducting local evaluations and participating in the RPG Cross-Site Evaluation, the RPG grantees are legislatively required to report performance indicators aligned with their proposed program strategies and activities. A key strategy of the RPG Cross-Site Evaluation is to minimize burden on the grantees by ensuring that the cross-site evaluation, which includes all grantees in a study that collects data to report on implementation, the partnerships, and participant characteristics and outcomes, fully meets the need for performance reporting. Thus, rather than collecting separate evaluation and performance indicator data, the grantees need only participate in the cross-site evaluation. In addition, using the standardized instruments that the Children's Bureau has specified will ensure that grantees have valid and reliable data on child and family outcomes for their local evaluations. The inclusion of an impact study conducted on a subset of grantees with rigorous designs will also provide the Children's Bureau, Congress, grantees, providers, and researchers with information about the effectiveness of RPG programs.
A 60-day
In compliance with the requirements of Section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995, the Children's Bureau within the Administration for Children and Families is soliciting public comment on the specific aspects of the information collection described above. Copies of the proposed collection of information can be obtained and comments may be forwarded by writing to Administration for Children and Families, Office of Planning, Research, and Evaluation, 330 C Street SW., Washington, DC 20416, Attn: ACF Reports Clearance Officer. Email address:
OMB is required to make a decision concerning the collection of information between 30 and 60 days after publication of this document in the
National Institutes of Health (NIH), Department of Health and Human Services (HHS).
Notice to establish an exempt system of records.
In accordance with the requirements of the Privacy Act of 1974, as amended, the National Institutes of Health (NIH) proposes to establish a new system of records, to be numbered and titled: SORN 09–25–0225 “NIH Electronic Research Administration (eRA) Records, HHS/NIH/OD/OER,” which will be related to, but separate from, the system of records covered in SORN 09–25–0036 “NIH Extramural Awards and Chartered Advisory Committee (IMPAC II), Contract Information (DCIS), and Cooperative Agreement Information, HHS/NIH.” The new system of records will cover records used by NIH throughout the research and development award lifecycle, from application to scientific peer review, post-award monitoring, and close-out.
Elsewhere in today's
The comment period for this System of Records Notice (SORN) is co-extensive with the 60-day comment period provided in the NPRM;
You may submit comments, identified by the Privacy Act System of Records Number (09–25–0225), by any of the following methods: Email:
NIH Privacy Act Officer, Office of Management Assessment (OMA), Office of the Director (OD), National Institutes of Health (NIH), 6011 Executive Boulevard, Suite 601, MSC 7669, Rockville, Maryland 20852, or telephone (301) 402–6201.
The new system of records established in this Notice, “NIH Electronic Research Administration (eRA) Records, HHS/NIH/OD/OER” (hereinafter referred to as the “NIH eRA Records” system), will cover records used throughout the research and development award lifecycle, including pre-award stages of application submission, scientific peer review, award processing, post-award monitoring, and close-out. Many of the records in the system will contain information about more than one individual or type of individual (
The eRA information technology (IT) system associated with this system of records is an HHS-designated Center of Excellence, and is used as a grants management line of business system by other federal agencies to manage their award records. Records pertaining to awards of other agencies in the eRA IT system are not covered under SORN 09–25–0225, but would be covered under SORN(s) those agencies publish, if their records require a SORN.
The Privacy Act governs the collection, maintenance, use, and
A System of Records (SOR) is a group of any records under the control of a Federal agency from which information about an individual is retrieved by the individual's name or other personal identifier. The Privacy Act requires each agency to publish in the
Electronic Research Administration (eRA) Records, HHS/NIH/OD/OER.
Unclassified.
Records will be located at:
• The Office of Extramural Research (OER), Office of the Director (OD), National Institutes of Health (NIH), Building 1, Room 144, 1 Center Drive, Bethesda, MD 20892; and
• any Federal Records Center where records from this system of records are archived and stored.
The records contained within this system will pertain to the following categories of individuals:
1. Applicants for or Awardees of biomedical and behavioral research and development, training, career development, or loan repayment grant awards; cooperative agreement awards; and research and development contract awards;
2. Individuals who are named in applications, or awards; or individuals named on NIH intramural projects;
3. Peer Reviewers who review and provide evaluative input to the government about particular applications, in records such as reviewer critiques, preliminary or final individual overall impact/priority scores, and/or assignment of peer reviewers to an application;
4. Referees who, in association with a particular trainee application, supply a reference or letter of recommendation for an applicant;
5. Individual awardees and sub-awardees who are required to report inventions, patents, and utilization of subject invention(s) associated with NIH awards; and
6. Academic medical faculty, medical students and resident physicians (
This system will include a variety of pre-award and award management records that contain information needed to process applications and manage grant awards across the award lifecycle. Listed below are the categories of individuals mentioned above, matched with pre-award and award management records collected about them.
1. Applicants for or Awardees of awards—pre-award and award management (awardees) information;
2. Individuals named in applications, or awards—pre-award and award management (awardees) information;
3. Referees—pre-award information;
4. Peer Reviewers—pre-award information;
5. Individuals required to report inventions, etc.—award management information; and,
6. Academic medical faculty, medical students and resident physicians—award management information.
The legal authority to operate and maintain this Privacy Act records system is 42 U.S.C. 217a, 241, 242, 248, 281, 282, 284, 284a, 285, 285b, 285c, 285d, 285e, 285f, 285g, 285h, 285i, 285j, 285k, 285l, 285m, 285n, 285o, 285p, 285q, 285r, 285s, 285t, 286, 287, 287b, 287c–21, 287d, 288, 35 U.S.C. 200–212, 48 CFR Subpart 15.3 and 37 CFR 401.1–16.
Records about individuals will be used within the agency for these purposes:
1. To support NIH award programs and related processes, including (1) application preparation, receipt, referral, and assignment; (2) initial peer and council reviews; (3) award processing, funding, monitoring, and close-out; and (4) data querying,
2. To track individual trainees who receive support from NIH through grants such as fellowship or career awards or who are supported through institutional training grant awards. Included are individuals in training for research and development supported in an investigator's laboratory which has an NIH-funded award (
3. To communicate matters related to agency award programs with (1) applicant organizations, including associated systems or system providers; (2) applicant persons such as the authorized institutional representatives, principal investigator(s), trainees, or foreign collaborators; (3) peer reviewers; or (4) other entities such as Congress; federal departments or agencies, non-federal agencies or entities, or the general public.
4. To monitor the operation of review and award processes to detect and deal appropriately with any instances of real or apparent inequities.
5. To provide mandated and other requested reports to Congress and in compliance with statutory, regulatory, and policy requirements.
6. To maintain communication with former fellows and trainees who have incurred a payback obligation through the National Research Service Award Program and other federal research training programs.
7. To maintain official administrative files of agency-funded research programs.
8. To manage research portfolios.
9. To document inventions, patents, and utilization data and protect the government's right to patents made with NIH support.
Records about an individual may be disclosed from this system of records to the following parties outside HHS, without the individual's prior written consent, for the following purposes:
1. To a congressional office from the record of an individual in response to a written inquiry from the congressional office made at the written request of the individual.
2. To the Department of Justice (DOJ) or to a court or other adjudicative body when:
• HHS or any component thereof or participating agencies; or
• any employee of HHS or participating agencies in the employee's official capacity; or
• any employee of HHS agencies in the employee's individual capacity where the DOJ, HHS, or the participating agency has agreed to represent the employee; or
• the United States,
is a party to litigation or has a direct and substantial interest in the proceeding and the disclosure of such records is deemed by the agency to be relevant and necessary to the proceeding; provided, however, that in each case, it has been determined that the disclosure is compatible with the purpose for which the records were collected.
3. When a record on its face, or in combination with other records, indicates a violation or potential violation of law, whether civil, criminal or regulatory in nature, and whether arising by general statute or particular program statute, or by regulation, rule, or order issued pursuant thereto, disclosure may be made to the appropriate public authority, whether federal, foreign, state, local, tribal, or otherwise responsible for enforcing, investigating, or prosecuting the violation or charged with enforcing or implementing the statute, rule, regulation, or order issued pursuant thereto, if the information disclosed is relevant to the enforcement, regulatory, investigative, or prosecutorial responsibility of the receiving entity.
4. To appropriate federal agencies and HHS contractors, grantees, consultants, or volunteers who have been engaged by HHS to assist in the accomplishment of an HHS function relating to the purposes of this system of records and that need to have access to the records in order to assist HHS in performing the activity. Any contractor will be required to comply with the Privacy Act of 1974, as amended.
5. To appropriate federal agencies and HHS contractors with a need to know the information for the purpose of assisting agency efforts to respond to a suspected or confirmed breach of the security or confidentiality of information maintained in this system of records, if the information disclosed is relevant and necessary for that assistance.
6. To a party for a research purpose when NIH: (A) Has determined that the use or disclosure does not violate legal or policy limitations under which the record was provided, collected, or obtained; (B) has determined that the research purpose (1) cannot be reasonably accomplished unless the record is provided in individually identifiable form, and (2) warrants the risk to the privacy of the individual; (C) has required the recipient to (1) establish reasonable administrative, technical, and physical safeguards to prevent unauthorized use or disclosure of the record, (2) remove or destroy the information that identifies the individual at the earliest time at which removal or destruction can be accomplished consistent with the purpose of the research project, unless the recipient has presented adequate justification of the research, and (3) makes no further use or disclosure of the record except when required by law, and reports results of the research in de-identified or aggregate form; and (D) has secured a written statement attesting to the recipient's understanding of and willingness to abide by these provisions (
7. A record from this system may be disclosed to a federal, foreign, state, local, tribal or other public authority of the fact that this system of records contains information relevant to the hiring or retention of an employee, the issuance or retention of a security clearance, the letting of a contract, or the issuance or retention of a license, grant or other benefit. The other agency or licensing organization may then make a request supported by the written consent of the individual for further information if it so chooses. HHS will not make an initial disclosure unless the information has been determined to be sufficiently reliable to support a referral to another office within the agency or to another federal agency for criminal, civil, administrative, personnel, or regulatory action.
8. To qualified experts not within the definition of agency employees as prescribed in agency regulations or policies to obtain their opinions on applications for grants, CRADAs, inventions, or other awards as a part of the peer review process.
9. To the National Archives and Records Administration (NARA), General Services Administration (GSA), or other federal government agencies pursuant to records management inspections conducted under the authority of 44 U.S.C. 2904 and 2906.
NIH may also disclose information about an individual, without the individual's prior written consent, from
Records are stored in various electronic media and paper form, and maintained under secure conditions in areas with limited and/or controlled access. Only authorized users whose official duties require the use of this information will have regular access to the records in this system. In accordance with established NIH, HHS and other federal security requirements, policies, and controls, records may also be located, maintained and accessed from secure servers wherever feasible or located on approved portable/mobile devices designed to hold any kind of digital data including, but not limited to laptops, tablets, PDAs, USB drives, media cards, portable hard drives, smartphones, optical storage (CDs and DVDs), and/or other mobile storage devices. Records are stored on portable/mobile storage devices only for valid business purposes and with prior approval.
Records are retrieved by the name or other personal identifier (
Access is strictly limited according to the principle of least privilege which means giving a user only those privileges which are essential to that user's work.
Measures to prevent unauthorized disclosures are implemented as appropriate for each location or form of storage and for the types of records maintained. Safeguards conform to the HHS Information Security and Privacy Program,
Controls to ensure proper protection of information and information technology systems include, but are not limited to, the completion of a Security Assessment and Authorization (SA&A) package and a Privacy Impact Assessment (PIA) and mandatory completion of annual NIH Information Security and Privacy Awareness training or comparable specific in-kind training offered by participating agencies that has been reviewed and accepted by the NIH eRA Information Systems Security Officer (ISSO). The SA&A package consists of a Security Categorization, e-Authentication Risk Assessment, System Security Plan, evidence of Security Control Testing, Plan of Action and Milestones, Contingency Plan, and evidence of Contingency Plan Testing. When the design, development, or operation of a system of records on individuals is required to accomplish an agency function, the applicable Privacy Act Federal Acquisition Regulation (FAR) clauses are inserted in solicitations and contracts.
Controls to secure the data and protect paper and electronic records, buildings, and related infrastructure against threats associated with their physical environment include, but are not limited to, the use of the HHS Employee ID and/or badge number and NIH key cards, security guards, cipher locks, biometrics, and closed-circuit TV. Paper records are secured under conditions that require at least two locks to access, such as in locked file cabinets that are contained in locked offices or facilities. Electronic media are kept on secure servers or computer systems.
Controls executed by the computer system are employed to minimize the possibility of unauthorized access, use, or dissemination of the data in the system. They include, but are not limited to user identification, password protection, firewalls, virtual private network, encryption, intrusion detection system, common access cards, smart cards, biometrics and public key infrastructure.
Alleged or Confirmed Security Incidents:
The NIH will report and take action to remediate security incidents involving the unauthorized access or disclosure of personally identifiable and sensitive information according to applicable law, regulations, OMB guidance, HHS and NIH policies.
Records are retained and disposed of in accordance with the NIH Records Control Schedule contained in NIH Manual Chapter 1743, “Keeping and Destroying Records,” which provides these disposition periods:
• Item E–0001 (DAA–0443–2013–0004–0001)—Official case files of construction, renovation, endowment and similar grants.
• Item E–0002 (DAA–0443–2013–0004–0002)—Official case files of funded grants, unfunded grants, and award applications, appeals and litigation records.
• Item E–0003 (DAA–0443–2013–0004–0003)—Animal welfare assurance files.
• Item E–0004 (DAA–0443–2013–0004–0004)—Extramural program and grants management oversight records.
Refer to the NIH Manual Chapter for specific retention and disposition instructions:
OER Privacy Coordinator, Office of Extramural Research (OER), Office of the Director (OD), National Institutes of Health (NIH), 1 Center Drive, Room 144, Bethesda, MD 20814.
Certain material will be exempt from notification; however, consideration will be given to all notification requests addressed to the System Manager. Any individual who wants to know whether this system of records contains a record about him or her must make a written request to the System Manager identified above. The requester should provide either a notarization of the request or a written certification that the requester is who he or she claims to be and understands that the knowing and willful request of a record pertaining to an individual under false pretenses is a criminal offense under the Privacy Act, subject to a five thousand dollar fine. The request should include the requester's full name and address, and should also include the following information, if known: The approximate date(s) the information was collected, the type(s) of information collected, and the office(s) or official(s) responsible for the collection of information.
Certain material will be exempt from access; however, consideration will be given to all access requests addressed to the System Manager. To request access to a record about you, write to the System Manager identified above, and provide the information described under “Notification Procedure”. Individuals may also request an accounting of disclosures that have been made of their records, if any.
Certain material will be exempt from amendment; however, consideration will be given to all amendment requests addressed to the System Manager. To contest information in a record about you, write to the System Manager identified above, reasonably identify the record and specify the information being contested, state the corrective action sought and the reason(s) for requesting the correction, and provide supporting information. The right to contest records is limited to information that is factually inaccurate, incomplete, irrelevant, or untimely (obsolete).
Information in records retrieved by a particular individual's identifier will be obtained directly from that individual or from other individuals and entities named in, contacted about, or involved in processing the records, including applicant institutions; NIH and customer agency acquisition personnel; educational, trainee and awardee institutions; and third parties that provide references or recommendations concerning the subject individual.
Pursuant to 5 U.S.C. 552a(k)(5), the following subset of records in this system of records qualifies as investigatory material compiled solely for the purpose of determining suitability, eligibility, or qualifications for federal contracts, and will be exempted from the Privacy Act requirements pertaining to providing an accounting of disclosures, access and amendment, and notification (5 U.S.C. 552a (c)(3) and (d)):
Material that would inappropriately reveal the identities of referees who provide letters of recommendation and peer reviewers who provide written evaluative input and recommendations to NIH about particular funding applications under an express promise by the government that their identities in association with the written work products they authored and provided to the government will be kept confidential; this includes only material that would reveal a particular referee or peer reviewer as the author of a specific work product (
The exemptions will be effective upon publication of a final rule in the
U.S. Customs and Border Protection, Department of Homeland Security.
Notice of approval of Petrospect, Inc. as a commercial gauger.
Notice is hereby given, pursuant to CBP regulations, that Petrospect, Inc. has been approved to gauge petroleum and certain petroleum products for customs purposes for the next three years as of June 10, 2016.
Approved Gauger and Accredited Laboratories Manager, Laboratories and Scientific Services Directorate, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue NW., Suite 1500N, Washington, DC 20229, tel. 202–344–1060.
Notice is hereby given pursuant to 19 CFR 151.13, that Petrospect, Inc., 499 N. Nimitz Highway, Pier 21, Honolulu, HI 96817, has been approved to gauge petroleum and certain petroleum products for customs purposes, in accordance with the provisions of 19 CFR 151.13. Petrospect, Inc. is approved for the following gauging procedures for petroleum and certain petroleum products from the American Petroleum Institute (API):
Anyone wishing to employ this entity to conduct gauger services should request and receive written assurances from the entity that it is approved by the U.S. Customs and Border Protection to conduct the specific gauger service requested. Alternatively, inquiries regarding the specific gauger service this entity is approved to perform may be directed to the U.S. Customs and Border Protection by calling (202) 344–1060. The inquiry may also be sent to
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the Commonwealth of Virginia is hereby amended to include the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of November 2, 2016.
The independent city of Hampton for Individual Assistance.
The independent cities of Portsmouth and Suffolk for Individual Assistance (already designated for Public Assistance).
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Kansas (FEMA–4287–DR), dated October 20, 2016, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the State of Kansas is hereby amended to include the following area among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of October 20, 2016.
Woodson County for Public Assistance.
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of North Carolina (FEMA–4285–DR), dated October 10, 2016, and related determinations.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the State of North Carolina is hereby amended to include the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of October 10, 2016.
Montgomery County for Public Assistance, including direct federal assistance.
Beaufort, Bertie, Brunswick, Camden, Carteret, Chowan, Columbus, Craven, Currituck, Dare, Duplin, Edgecombe, Gates, Greene, Harnett, Hertford, Hyde, Jones, Lenoir, Martin, Moore, Northampton, Onslow, Pasquotank, Pender, Perquimans, Pitt, Robeson, Sampson, Tyrrell, Washington, Wayne, and Wilson Counties for Public assistance [Categories C–G] (already designated for Individual Assistance and assistance for debris removal and emergency protective measures [Categories A and B], including direct federal assistance, under the Public Assistance program).
New Hanover and Pamlico Counties for Public Assistance [Categories C–G] (already designated for assistance for debris removal and emergency protective measures [Categories A and B], including direct federal assistance, under the Public Assistance program).
Federal Emergency Management Agency, DHS.
Notice.
The Federal Emergency Management Agency, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other Federal agencies to take this opportunity to comment on a revision of a currently approved information collection. In accordance with the Paperwork Reduction Act of 1995, this notice seeks comments concerning the collection of Public Assistance customer satisfaction survey responses and information for assessment and improvement of the delivery of disaster assistance to States, Local and Tribal governments, and eligible non-profit organizations.
Comments must be submitted on or before February 6, 2017.
To avoid duplicate submissions to the docket, please use only one of the following means to submit comments:
(1)
(2)
All submissions received must include the agency name and Docket ID. Regardless of the method used for submitting comments or material, all submissions will be posted, without change, to the Federal eRulemaking Portal at
Kristin Brooks, Statistician, Customer Survey Analysis Section, Reporting and Analytics Division, Recovery Directorate, at (940) 891–8579 or
This collection is in accordance with Executive Orders 12862 and 13571 requiring all Federal agencies to survey customers to determine the kind and quality of services they want and their level of satisfaction with existing services. The Government Performance and Results Act of 1993 (GPRA) requires Federal agencies to set missions and goals and to measure agency performance against them.
Comments may be submitted as indicated in the
Federal Emergency Management Agency, DHS.
Notice.
This notice amends the notice of a major disaster declaration for the State of Minnesota (FEMA–4290–DR), dated November 2, 2016, and related determinations.
November 29, 2016.
Dean Webster, Office of Response and Recovery, Federal Emergency Management Agency, 500 C Street SW., Washington, DC 20472, (202) 646–2833.
The notice of a major disaster declaration for the State of Minnesota is hereby amended to include the Individual Assistance program for the following areas among those areas determined to have been adversely affected by the event declared a major disaster by the President in his declaration of November 2, 2016.
Hennepin County for Individual Assistance.
Blue Earth, Freeborn, Le Sueur, Rice, Steele, and Waseca Counties for Individual Assistance (already designated for Public Assistance.)
Privacy Office, Department of Homeland Security.
Notice of Privacy Act System of Records.
In accordance with the Privacy Act of 1974, the Department of Homeland Security proposes to establish a new Department of Homeland Security system of records titled, “Department of Homeland Security/United States Coast Guard—031 USCG Law Enforcement (ULE) System of Records.” This system of records allows the Department of Homeland Security/United States Coast Guard to collect and maintain records related to maritime law enforcement, marine environmental protection, and the determinations supporting enforcement action taken by the United States Coast Guard. Additionally, the Department of Homeland Security is issuing a Notice of Proposed Rulemaking to exempt this system of records from certain provisions of the Privacy Act, elsewhere in the
Submit comments on or before January 9, 2017. This new system will be effective January 9, 2017.
You may submit comments, identified by docket number DHS–2016–0074 by one of the following methods:
•
•
•
For general questions, please contact: Marilyn Scott-Perez (202–475–3515), Privacy Officer, Commandant (CG–61), United States Coast Guard, Mail Stop 7710, Washington, DC 20593. For privacy questions, please contact: Jonathan R. Cantor, (202) 343–1717, Acting Chief Privacy Officer, Privacy Office, Department of Homeland Security, Washington, DC 20528–0655.
In accordance with the Privacy Act of 1974, 5 U.S.C. 552a, the Department of Homeland Security (DHS) United States Coast Guard proposes to establish a new DHS system of records titled, “DHS/United States Coast Guard-031 USCG Law Enforcement (ULE) System of Records.”
The collection and maintenance of this information will allow the DHS/USCG to collect and maintain records regarding maritime law enforcement, security, marine safety, and environmental protection activities. USCG Law Enforcement consists of certain records that were formerly covered under the DHS/USCG–013 Marine Information for Safety and Law Enforcement (MISLE) system of records. These records are being moved under ULE to maintain USCG law enforcement and case-related data in one repository. In addition to the transfer of this law enforcement data out from under MISLE to ULE, this notice also serves to inform that USCG Biometrics at Sea System records, which are collected under the purpose and identified authorities cited herein, are maintained in the Automated Biometric Identification System (IDENT)—the DHS biometric repository maintained by the DHS Office of Biometric Identity Management. Separately and elsewhere in the
USCG Law Enforcement may contain information on persons who come into contact with USCG through its law enforcement, safety, and environmental protection activities, including vessel and facility owners, operators, crew, employees, passengers, and other persons associated with a USCG law enforcement or environmental protection activity or having an interest in the subject vessel or facility involved or identified in the respective case file. Consistent with the authority being enforced, ULE collects and maintains in case files both biographic and, as appropriate, references to biometric records obtained from individuals and persons, as well as identifying information relating to ownership, registry, and location of vessels and facilities.
Consistent with DHS's information-sharing mission, information stored in the DHS/USCG–031 USCG Law Enforcement (ULE) System of Records may be shared with other DHS components that have a need to know the information to carry out their national security, law enforcement, immigration, intelligence, or other homeland security functions. In addition, information may be shared with appropriate federal, state, local, tribal, territorial, foreign, or
Additionally, DHS is issuing a Notice of Proposed Rulemaking to exempt this system of records from certain provisions of the Privacy Act elsewhere in the
The Privacy Act embodies fair information practice principles in a statutory framework governing the means by which Federal Government agencies collect, maintain, use, and disseminate individuals' records. The Privacy Act applies to information that is maintained in a “system of records.” A “system of records” is a group of any records under the control of an agency from which information is retrieved by the name of an individual or by some identifying number, symbol, or other identifying particular assigned to the individual. In the Privacy Act, an individual is defined to encompass U.S. citizens and lawful permanent residents. As a matter of policy, DHS extends administrative Privacy Act protections to all individuals when systems of records maintain information on U.S. citizens, lawful permanent residents, and visitors.
Below is the description of the DHS/USCG–031 USCG Law Enforcement (ULE) System of Records.
In accordance with 5 U.S.C. 552a(r), DHS has provided a report of this system of records to the Office of Management and Budget and to Congress.
Department of Homeland Security (DHS)/USCG–31
DHS/USCG–031 USCG Law Enforcement (ULE) System of Records.
Sensitive but Unclassified.
Records are maintained at the United States Coast Guard (USCG) Headquarters in Washington, DC, USCG Operations Systems Center (OSC) in Kearneysville, WV, and other field locations. Records collected from the USCG Biometrics at Sea System (BASS) are maintained at the DHS Office of Biometric Identity Management in Washington, DC. The Marine Information for Safety and Law Enforcement (MISLE) System is the information technology (IT) repository for marine safety, security, environmental protection, and law enforcement records. The Automated Biometric Identification System (IDENT) is the IT repository for USCG BASS records.
Individuals with established relationship(s) or associations to maritime vessels or marine transportation facilities that are the subject of enforcement or compliance activities regulated by the USCG. This may include:
• Vessel owners or operator;
• Charterers;
• Masters;
• Crew members;
• Vessel or boat agents;
• Mortgagees;
• Lien claimants;
• Vessel builders;
• Transportation facility owners, managers, or employees;
• Individuals who own, operate, or represent marine transportation companies; and
• Other individuals come into contact with the USCG as part of an enforcement or compliance activity.
The following information may appear in case files, reports, investigations, and other documents (either physical or electronic) maintained by USCG relating to an enforcement or compliance activity:
• Name of individual, vessel, or facility;
• Home and work address;
• Home, work, and mobile phone numbers;
• Facility number;
• Involved party identification number;
• Social Security number (SSN);
• Driver license number;
• Alien Registration Number (A-Number);
• Military identification number;
• U.S. Coast Guard license number;
• Foreign seaman's booklet number;
• Resident alien number;
• Merchant mariners license or documentation number;
• Taxpayer Identification Number (TIN);
• Casualty case number;
• Pollution incident case number;
• Date of incident;
• Civil penalty case number;
• Biometric information, which may include:
○ Photographs and digital images,
○ Height,
○ Weight,
○ Eye color,
○ Hair color,
○ Fingerprints, and
○ Irises.Videos;
• Vessel or boat registration data;
• Port visits;
• Vessel or boat inspection data;
• Vessel or boat documentation data;
• Port Safety boarding;
• Casualties;
• Pollution incidents, civil violations (as applicable), and associated information (data pertaining to people or organizations associated with the subject vessels);
• Information on marine transportation facilities including:
○ Name,
○ Identification number,
○ Location,
○ Commodities handled,
○ Equipment certificates,
○ Approvals,
○ Inspection reports,
○ Pollution incidents, and
○ Casualties.
○ Violations of U.S. laws and data pertaining to people or organizations associated with those facilities;
• For owners, operators, agents, and crew members;
• Statements submitted by USCG personnel relating to boarding;
• Investigations as a result of a pollution and/or casualty incident, as well as any violations of United States law, along with civil penalty actions taken as a result of such violations. Such reports could contain names of passengers on vessels, as well as witnesses to such violations; and
• Narratives, reports, and documents by USCG personnel describing their activities on vessels and within facilities, including incident reports, violations of laws, and international treaties
14 U.S.C 89a, 93(a) and (c), 632; 16 U.S.C 1431; 33 U.S.C 1223; 33 U.S.C. 1228; 46 U.S.C. 3717; 46 U.S.C. 12119, 12501–502.
The purpose of this system is to collect and maintain USCG case records and other reported information relating to the safety, security, law enforcement, environmental, and compliance activities of vessels, facilities, organizations engaged in marine transportation, and related persons.
In addition to those disclosures generally permitted under 5 U.S.C.
A. To the Department of Justice (DOJ), including Offices of the U.S. Attorneys, or other Federal agency conducting litigation or in proceedings before any court, adjudicative, or administrative body, when it is relevant or necessary to the litigation and one of the following is a party to the litigation or has an interest in such litigation:
1. DHS or any component thereof;
2. Any employee or former employee of DHS in his/her official capacity;
3. Any employee or former employee of DHS in his/her individual capacity when DOJ or DHS has agreed to represent the employee; or
4. The U.S. or any agency thereof.
B. To a congressional office from the record of an individual in response to an inquiry from that congressional office made at the request of the individual to whom the record pertains.
C. To the National Archives and Records Administration (NARA) or General Services Administration pursuant to records management inspections being conducted under the authority of 44 U.S.C. 2904 and 2906.
D. To an agency or organization for the purpose of performing audit or oversight operations as authorized by law, but only such information as is necessary and relevant to such audit or oversight function.
E. To appropriate agencies, entities, and persons when:
1. DHS suspects or has confirmed that the security or confidentiality of information in the system of records has been compromised;
2. DHS has determined that as a result of the suspected or confirmed compromise, there is a risk of identity theft or fraud, harm to economic or property interests, harm to an individual, or harm to the security or integrity of this system or other systems or programs (whether maintained by DHS or another agency or entity) that rely upon the compromised information; and
3. The disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with DHS's efforts to respond to the suspected or confirmed compromise and prevent, minimize, or remedy such harm.
F. To contractors and their agents, grantees, experts, consultants, and others performing or working on a contract, service, grant, cooperative agreement, or other assignment for DHS, when necessary to accomplish an agency function related to this system of records. Individuals provided information under this routine use are subject to the same Privacy Act requirements and limitations on disclosure as are applicable to DHS officers and employees.
G. To an appropriate federal, state, tribal, local, international, or foreign law enforcement agency or other appropriate authority charged with investigating or prosecuting a violation or enforcing or implementing a law, rule, regulation, or order, when a record, either on its face or in conjunction with other information, indicates a violation or potential violation of law, which includes criminal, civil, or regulatory violations and such disclosure is proper and consistent with the official duties of the person making the disclosure.
H. To federal and state safety enforcement agencies, including, but not limited to, the Maritime Administration and National Transportation Safety Board, U.S. Department of Transportation, to access historical data that may assist in safety investigations and improve transportation safety.
I. To federal, state, and local environmental agencies, including, but not limited to, the U.S. Environmental Protection Agency, to access historical data that may improve compliance with U.S. laws relating to environmental protection.
J. To the U.S. Department of Defense and related entities, including, but not limited to, the Military Sealift Command and U.S. Navy, to access data on safety information regarding vessels chartered by those agencies.
K. To the International Maritime Organization or intergovernmental organizations, nongovernmental organizations, or foreign governments in order to conduct joint investigations, operations, and inspections;
L. To federal, state, or local agencies with which the U.S. Coast Guard has a Memorandum of Understanding, Memorandum of Agreement, or Inspection and Certification Agreement pertaining to Marine Safety, Maritime Security, Maritime Law Enforcement, and Marine Environmental Protection activities.
M. To the news media and the public, with the approval of the Chief Privacy Officer in consultation with counsel, when there exists a legitimate public interest in the disclosure of the information, when disclosure is necessary to preserve confidence in the integrity of DHS, or is necessary to demonstrate the accountability of DHS's officers, employees, or individuals covered by the system, except to the extent it is determined that release of the specific information in the context of a particular case would constitute an unwarranted invasion of personal privacy.
None.
DHS/USCG stores records in this system electronically or on paper in secure facilities in a locked drawer behind a locked door. The records may be stored on magnetic disc, tape, and digital media.
Records may be retrieved by name of individual, vessel, or facility, facility number, involved party identification number, SSN, TIN, driver license number, (A-Number), military identification number, U.S. Coast Guard license number, cellular number, foreign seaman's booklet number, resident alien number, merchant mariners license or documentation number, person or organization name, casualty case number, pollution incident case number, date of incident, civil penalty case number, USCG unit entering data, or incident location.
Biometric records associated with case files or reports may be retrieved from IDENT by reference to the applicable Organization/Unit/Subunit designations for the Biometrics-at-Sea-System.
DHS/USCG safeguards records in this system according to applicable rules and policies, including all applicable DHS automated systems security and access policies. USCG has imposed strict controls to minimize the risk of compromising the information that is being stored. Access to the computer system containing the records in this system is limited to those individuals who have a need to know the information for the performance of their official duties and who have appropriate clearances or permissions.
Records are retained in accordance with National Archives and Records Administration (NARA) schedule N1–026–05–15 approved July 7, 2005. Most of the records in this system are retained indefinitely by NARA; however law enforcement boarding activities are retained for three years. A copy of this
Commandant (CG–633), United States Coast Guard, Mail Stop 7710, Washington, DC 20593; Commandant (BSX), United States Coast Guard, Mail Stop 7501, Washington, DC 20593; Director, United States Coast Guard, National Vessel Documentation Center, 792 T J Jackson Drive, Falling Waters, WV 25419; IDENT Program Management Office, U.S. Department of Homeland Security, Washington, DC 20528.
The Secretary of Homeland Security has exempted this system from the notification, access, and amendment procedures of the Privacy Act because it is a law enforcement system. However, DHS/USCG will consider individual requests to determine whether or not information may be released. Thus, individuals seeking notification of and access to any record contained in this system of records, or seeking to contest its content, may submit a request in writing to the Chief Privacy Officer and Commandant (CG–611), United States Coast Guard, whose contact information can be found at
When seeking records about yourself from this system of records or any other Departmental system of records, your request must conform with the Privacy Act regulations set forth in 6 CFR part 5. You must first verify your identity, meaning that you must provide your full name, current address, and date and place of birth. You must sign your request, and your signature must either be notarized or submitted under 28 U.S.C. 1746, a law that permits statements to be made under penalty of perjury as a substitute for notarization. While no specific form is required, you may obtain forms for this purpose from the Chief Privacy Officer and Chief Freedom of Information Act Officer,
• Explain why you believe the Department would have information on you;
• Identify which component(s) of the Department you believe may have the information about you;
• Specify when you believe the records would have been created; and
• Provide any other information that will help the FOIA staff determine which DHS component agency may have responsive records;
If your request is seeking records pertaining to another living individual, you must include a statement from that individual certifying his/her agreement for you to access his/her records.
Without the above information, the component(s) may not be able to conduct an effective search, and your request may be denied due to lack of specificity or lack of compliance with applicable regulations.
See “Notification procedure” above.
See “Notification procedure” above.
Records are obtained from USCG boardings, USCG inspections, USCG investigations, USCG documentation offices, and vessel notice of arrival reports in the course of normal routine business. This information is gathered from the owners, operators, crew members, agents, passengers, witnesses, other government agencies, and USCG personnel. In addition records or record identifiers are ingested from other DHS and Federal systems, including IDENT, Vessel Identification System (VIS), Merchant Vessel Documentation System (MVDS), and the National Crime Information Center (NCIC).
The Secretary of Homeland Security, pursuant to 5 U.S.C. 552a(j)(2), has exempted this system from the following provisions of the Privacy Act: 5 U.S.C. 552a(c)(3–4), (d), (e)(1–3), (e)(5), (e)(8), and (g). Additionally, the Secretary of Homeland Security, pursuant to 5 U.S.C. 552a(k)(2) has exempted this system from the following provisions of the Privacy Act, 5 U.S.C. 552a(c)(3), (d), (e)(1), (e)(4)(G), (e)(4)(H), (e)(4)(I), and (f).
When this system receives a record from another system exempted in that source system under 5 U.S.C. 552a(j)(2), DHS will claim the same exemptions for those records that are claimed for the original primary systems of records from which they originated and claims any additional exemptions set forth here.
Office of Lead Hazard Control and Healthy Homes, HUD.
Notice.
The proposed information collection requirement concerning an American Healthy Homes Survey II in homes across the country will be submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act. The Department is soliciting public comments on the subject proposal.
Interested persons are invited to submit comments regarding this proposal. Comments should refer to the proposal by name and/or OMB Control Number and should be sent to: Ms. Ashley Mack, Reports Liaison Officer, Department of Housing and Urban Development, 451 7th Street SW., Room 8236, Washington, DC 20410.
Peter Ashley, (202) 402–7595 (this is not a toll-free number), or
The Department is submitting the proposed information collection to OMB for review, as required by the Paperwork Reduction Act of 1995, (44 U.S.C. chapter 35, as amended).
This Notice is soliciting comments from members of the public and affected agencies concerning the proposed collection of information to: (1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; (3) Enhance
With the more recent of these surveys being over a decade old, new information is needed to identify the extent of progress toward achieving the goal of the President's Task Force on Environmental Health Risks and Safety Risks to Children of eliminating lead paint hazards in housing where children under six live, and help target control strategies toward achieving the goal.
Asthma is a chronic respiratory disease characterized by episodes of airway inflammation and narrowing. It is generally accepted that asthma results from the interaction between genetic susceptibility and environmental exposures. Exposure to indoor allergy-producing substances (allergens) is believed to play an important role in the development and exacerbation of asthma. NSLAH (1998–2000) found that most U.S. homes had detectable levels of dust mite allergen associated with allergic sensitization and asthma. AHHS I (2005–2006) found allergens, pesticides and mold in homes nationwide. Dust mite, dog and cat allergen levels at and above the allergen concentration threshold level that can result in the development of allergic sensitivity or asthma symptoms in susceptible individuals were widespread in housing. Mouse and cockroach allergens were also found. This AHHS II will collect allergy-related samples only for pesticide and mold analyses.
Such airborne chemicals as carbon monoxide, airborne particulate matter, and formaldehyde, such chemicals on surfaces as pesticides, and such unintentional injury factors as housing conditions associated with falls, fires and poisons, are known to have adverse health or safety effects. National residential prevalence estimates for these factors are generally unavailable, limiting the ability of HUD and other agencies to develop data-driven control strategies.
Results from this survey will provide current information needed for regulatory and policy decisions and enable an assessment of progress in making the U.S. housing stock safe.
This information will be used to revise policy and guidance targeting the housing with the greatest needs for evaluation and control of lead and additional housing-related safety and health hazards.
Bureau of Land Management, Interior.
Notice.
The Bureau of Land Management (BLM) will file the plat of survey of the lands described below in the BLM-Eastern States office in Washington, District of Columbia, 30 calendar days from the date of publication in the
Bureau of Land Management—Eastern States, 20 M Street SE., Washington, District of Columbia 20003, Attn: Dominica Van Koten. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Information Relay Service (FIRS) at 1–800–877–8339 to contact the above individual during normal business hours. The FIRS is available 24 hours a day, 7 days a week, to leave a message or question with the above individual. You will receive a reply during normal business hours.
The survey was requested by the Bureau of Indian Affairs.
The lands surveyed are:
The dependent resurvey and subdivision of Section 8, 9, and 17 in Township 7 North, Range 10 East, of the Choctaw Meridian, in the State of Mississippi, and was accepted August 31, 2016.
Copies of the described plat will be placed in the open file. It will be available to the public as a matter of information.
If a protest is received against the survey, as shown on the plat, prior to the date of the official filing, the filing will be postponed pending our consideration of the protest.
The plat will not be officially filed until the day after the protest is accepted or dismissed and has become final, including decisions on appeals.
National Park Service, Interior.
Notice of Availability.
The National Park Service (NPS) announces the availability of the Final Environmental Impact Statement (EIS) for the Off-Road Vehicle (ORV) Management Plan (Plan), Cape Lookout National Seashore (Seashore), North Carolina.
The NPS will execute the Record of Decision (ROD) no sooner than 30 days following publication by the Environmental Protection Agency of its Notice of Availability of the Final EIS in the
An electronic copy of the Plan/Final EIS will be available for public review at
Patrick Kenney, Superintendent, Cape Lookout National Seashore,131 Charles St., Harkers Island, North Carolina 28531; phone 252–728–2250 extension 3014.
Pursuant to the National Environmental Policy Act of 1969, 42 U.S.C 4332(2)(C), the Plan/Final EIS evaluates the impacts of four alternatives for designation of ORV routes and resource management, as well as one alternative that would prohibit ORV use, described as follows:
Executive Order 11644, issued in 1972 and amended by Executive Order 11989 in 1977, states that Federal agencies allowing ORV use must designate the specific areas and trails on public lands on which the use of ORVs may be permitted, and areas in which the use of ORVs may not be permitted. NPS policy requires that areas and trails that are designated for ORV use must be established based upon the protection of the resources of the public lands, promotion of the safety of all users of those lands, and minimization of conflicts among the various uses of those lands. 36 CFR 4.10 requires that “Routes and areas designated for off-road motor vehicle use shall be promulgated as special regulations.” In addition, such routes and areas may only be designated in national recreation areas, national seashores, national lakeshores and national preserves.
The Final EIS responds to, and incorporates, agency and public comments received on the Draft EIS, including comments on night driving restrictions, vehicle permit durations and numerical limits, pedestrian-only areas, species management and closures, infrastructure improvements to the back route, and consistency of closure dates. The Draft EIS was available for public review and comment for 60 days from May 23, 2014, through July 21, 2014, then extended another 60 days to September 19, 2014. During the comment period, 1,146 pieces of correspondence were received; 268 of these were form letters. In total, 2,423 comments were received. Alternative E is the environmentally preferable alternative and alternative C is the NPS preferred alternative.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has received a complaint entitled
Lisa R. Barton, Secretary to the Commission, U.S. International Trade Commission, 500 E Street SW., Washington, DC 20436, telephone (202) 205–2000. The
General information concerning the Commission may also be obtained by accessing its Internet server at United States International Trade Commission (USITC) at
The Commission has received a complaint and a submission pursuant to § 210.8(b) of the Commission's Rules of Practice and Procedure filed on behalf of Flying Arrow Archery, LLC, Inc. on December 2, 2016. The complaint alleges violations of section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain arrowheads with arcuate blades and components thereof. The complaint names as respondents Alice of China; Dongguan hong Song hardware alma iao of China; Huntingsky of China; mengbao of China; Jianfeng Mao of China; In-Sail Sandum Precision Industry (China) Co. Ltd. of China; Arthur Sifuentes of Spring, TX; Taotao (IT60) of China; Wanyuxue of China; Wei Ran of China; YanDong of China; and Zhou Yang of China. The complainant requests that the Commission issue a general exclusion order, cease and desist orders and impose a bond upon respondents' alleged infringing articles during the 60-day Presidential review period pursuant to 19 U.S.C. 1337(j).
Proposed respondents, other interested parties, and members of the public are invited to file comments, not to exceed five (5) pages in length, inclusive of attachments, on any public interest issues raised by the complaint or § 210.8(b) filing. Comments should address whether issuance of the relief specifically requested by the complainant in this investigation would affect the public health and welfare in the United States, competitive conditions in the United States economy, the production of like or directly competitive articles in the United States, or United States consumers.
In particular, the Commission is interested in comments that:
(i) Explain how the articles potentially subject to the requested remedial orders are used in the United States;
(ii) identify any public health, safety, or welfare concerns in the United States relating to the requested remedial orders;
(iii) identify like or directly competitive articles that complainant, its licensees, or third parties make in the United States which could replace the subject articles if they were to be excluded;
(iv) indicate whether complainant, complainant's licensees, and/or third party suppliers have the capacity to replace the volume of articles potentially subject to the requested exclusion order and/or a cease and desist order within a commercially reasonable time; and
(v) explain how the requested remedial orders would impact United States consumers.
Written submissions must be filed no later than by close of business, eight calendar days after the date of publication of this notice in the
Persons filing written submissions must file the original document electronically on or before the deadlines stated above and submit 8 true paper copies to the Office of the Secretary by noon the next day pursuant to § 210.4(f) of the Commission's Rules of Practice and Procedure (19 CFR 210.4(f)). Submissions should refer to the docket number (“Docket No. 3185”) in a prominent place on the cover page and/or the first page. (
Any person desiring to submit a document to the Commission in confidence must request confidential treatment. All such requests should be directed to the Secretary to the Commission and must include a full statement of the reasons why the Commission should grant such treatment.
This action is taken under the authority of section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and of §§ 201.10 and 210.8(c) of the Commission's Rules of Practice and Procedure (19 CFR 201.10, 210.8(c)).
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that a complaint was filed with the U.S. International Trade Commission on November 2, 2016, under section 337 of the Tariff Act of 1930, as amended, on
The complainant requests that the Commission institute an investigation and, after the investigation, issue a limited exclusion order and cease and desist orders.
The complaint, except for any confidential information contained therein, is available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW., Room 112, Washington, DC 20436, telephone (202) 205–2000. Hearing impaired individuals are advised that information on this matter can be obtained by contacting the Commission's TDD terminal on (202) 205–1810. Persons with mobility impairments who will need special assistance in gaining access to the Commission should contact the Office of the Secretary at (202) 205–2000. General information concerning the Commission may also be obtained by accessing its internet server at
The Office of Unfair Import Investigations, U.S. International Trade Commission, telephone (202) 205–2560.
(1) Pursuant to subsection (b) of section 337 of the Tariff Act of 1930, as amended, an investigation be instituted to determine whether there is a violation of subsection (a)(1)(B) of section 337 in the importation into the United States, the sale for importation, or the sale within the United States after importation of certain single-molecule nucleic acid sequencing systems and reagents, consumables, and software for use with same by reason of infringement of one or more of claims 1, 5–7, 10, 14, 16–21, and 23–25 of the '146 patent, and whether an industry in the United States exists as required by subsection (a)(2) of section 337;
(2) Pursuant to Commission Rule 210.50(b)(1), 19 CFR 210.50(b)(1), the presiding administrative law judge shall take evidence or other information and hear arguments from the parties and other interested persons with respect to the public interest in this investigation, as appropriate, and provide the Commission with findings of fact and a recommended determination on this issue, which shall be limited to the statutory public interest factors set forth in 19 U.S.C. 1337(d)(1), (f)(1), (g)(1);
(3) For the purpose of the investigation so instituted, the following are hereby named as parties upon which this notice of investigation shall be served:
(a) The complainant is:
(b) The respondents are the following entities alleged to be in violation of section 337, and are the parties upon which the complaint is to be served:
(c) The Office of Unfair Import Investigations, U.S. International Trade Commission, 500 E Street SW., Suite 401, Washington, DC 20436; and
(4) For the investigation so instituted, the Chief Administrative Law Judge, U.S. International Trade Commission, shall designate the presiding Administrative Law Judge.
Responses to the complaint and the notice of investigation must be submitted by the named respondents in accordance with section 210.13 of the Commission's Rules of Practice and Procedure, 19 CFR 210.13. Pursuant to 19 CFR 201.16(e) and 210.13(a), such responses will be considered by the Commission if received not later than 20 days after the date of service by the Commission of the complaint and the notice of investigation. Extensions of time for submitting responses to the complaint and the notice of investigation will not be granted unless good cause therefor is shown.
Failure of a respondent to file a timely response to each allegation in the complaint and in this notice may be deemed to constitute a waiver of the right to appear and contest the allegations of the complaint and this notice, and to authorize the administrative law judge and the Commission, without further notice to the respondent, to find the facts to be as alleged in the complaint and this notice and to enter an initial determination and a final determination containing such findings, and may result in the issuance of an exclusion order or a cease and desist order or both directed against the respondent.
By order of the Commission.
On the basis of the record
The Commission, pursuant to section 751(c) of the Act (19 U.S.C. 1675(c)), instituted these reviews on October 1, 2015 (80 FR 59186) and determined on January 4, 2016 that it would conduct full reviews (81 FR 1967, January 14, 2016). Notice of the scheduling of the Commission's reviews and of a public hearing to be held in connection
The Commission made these determinations pursuant to section 751(c) of the Act (19 U.S.C. 1675(c)). It completed and filed its determinations in these reviews on December 2, 2016. The views of the Commission are contained in USITC Publication 4650 (November 2016), entitled
By order of the Commission.
On December 2, 2016, the Department of Justice lodged a proposed Consent Decree with the United States District Court for the District of Wyoming in the lawsuit entitled
The United States filed this action under the Resource Conservation and Recovery Act. The complaint seeks injunctive relief, mitigation, and a civil penalty for failure to comply with an Administrative Order (“AO) issued to the Defendant by the Environmental Protection Agency in 2008. The AO was aimed at redressing conditions endangering wildlife at the Defendant's commercial oilfield waste disposal facility known as the Werner Facility in Converse County, Wyoming. In return for a covenant not to sue, the Defendant is obligated under the Consent Decree to take measures to prevent future endangering conditions at the Werner Facility; to implement a mitigation project at Burlington Lake in Gillette, Wyoming consisting of construction of an artificial island to enhance nesting and bird habitat; and to pay a civil penalty of $90,000.
The publication of this notice opens a period for public comment on the Consent Decree. Comments should be addressed to the Assistant Attorney General, Environment and Natural Resources Division, and should refer to
Under section 7003(d) of RCRA, a commenter may request an opportunity for a public meeting in the affected area.
During the public comment period, the Consent Decree may be examined and downloaded at this Justice Department Web site:
Please enclose a check or money order for $10.25 (25 cents per page reproduction cost) payable to the United States Treasury.
Occupational Safety and Health Administration (OSHA), Labor.
Notice.
In this notice, OSHA announces its final decision to expand the scope of recognition for Underwriters Laboratories, Inc., as a Nationally Recognized Testing Laboratory (NRTL).
The expansion of the scope of recognition becomes effective on December 8, 2016.
Information regarding this notice is available from the following sources:
OSHA hereby gives notice of the expansion of the scope of recognition of Underwriters Laboratories, Inc. (UL), as an NRTL. UL's expansion covers the addition of twenty-five test standards to its scope of recognition.
OSHA recognition of an NRTL signifies that the organization meets the requirements specified by 29 CFR 1910.7. Recognition is an acknowledgment that the organization can perform independent safety testing and certification of the specific products covered within its scope of recognition and is not a delegation or grant of government authority. As a result of recognition, employers may use products properly approved by the NRTL to meet OSHA standards that require testing and certification of the products.
The Agency processes applications by an NRTL for initial recognition, or for expansion or renewal of this recognition, following requirements in Appendix A to 29 CFR 1910.7. This appendix requires that the Agency publish two notices in the
UL submitted an application, dated June 30, 2015, (OSHA–2009–0025–0017) to expand its recognition to include twenty-five additional test standards. OSHA staff performed a detailed analysis of the application packet and reviewed other pertinent information. OSHA performed an on-site review in relation to this application on April 4–5, 2016.
OSHA published the preliminary notice announcing UL's expansion application in the
To obtain or review copies of all public documents pertaining to the UL's application, go to
OSHA staff examined UL's expansion application, its capability to meet the requirements of the test standards, and other pertinent information. Based on its review of this evidence, OSHA finds that UL meets the requirements of 29 CFR 1910.7 for expansion of its recognition, subject to the conditions listed below. OSHA, therefore, is proceeding with this final notice to grant UL's scope of recognition. OSHA limits the expansion of UL's recognition to testing and certification of products for demonstration of conformance to the test standards listed in Table 1 below.
OSHA's recognition of any NRTL for a particular test standard is limited to equipment or materials for which OSHA standards require third-party testing and certification before using them in the workplace. Consequently, if a test standard also covers any products for which OSHA does not require such testing and certification, an NRTL's scope of recognition does not include these products.
The American National Standards Institute (ANSI) may approve the test standards listed above as American National Standards. However, for convenience, we may use the designation of the standards-developing organization for the standard as opposed to the ANSI designation. Under the NRTL Program's policy (see OSHA Instruction CPL 1–0.3, Appendix C, paragraph XIV), any NRTL recognized for a particular test standard may use either the proprietary version of the test standard or the ANSI version of that standard. Contact ANSI to determine whether a test standard is currently ANSI-approved.
In addition to those conditions already required by 29 CFR 1910.7, UL must abide by the following conditions of the recognition:
1. UL must inform OSHA as soon as possible, in writing, of any change of ownership, facilities, or key personnel, and of any major change in its operations as an NRTL, and provide details of the change(s);
2. UL must meet all the terms of its recognition and comply with all OSHA policies pertaining to this recognition; and
3. UL must continue to meet the requirements for recognition, including all previously published conditions on UL's scope of recognition, in all areas for which it has recognition.
Pursuant to the authority in 29 CFR 1910.7, OSHA hereby expands the scope of recognition of UL, subject to the limitation and conditions specified above.
David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, 200 Constitution Avenue NW., Washington, DC 20210, authorized the preparation of this notice. Accordingly, the Agency is issuing this notice pursuant to 29 U.S.C. 657(g)(2), Secretary of Labor's Order No. 1–2012 (77 FR 3912, Jan. 25, 2012), and 29 CFR 1910.7.
Office of Federal Procurement Policy, Office of Management and Budget.
Notice; request for comments.
The Office of Federal Procurement Policy (OFPP) in the Office of Management and Budget (OMB) is seeking comment on a draft memorandum that it has developed in coordination with the Office to Monitor and Combat Trafficking in Persons in the Department of State (DOS) and the Department of Labor (DOL), as Co-Chairs of the Procurement and Supply Chains Committee of the Senior Policy Operating Group of the President's Interagency Task Force to Monitor and Combat Trafficking in Persons (the “SPOG Committee”), to address anti-trafficking risk management best practices and mitigation considerations. This guidance is designed to help an agency determine if a contractor is taking adequate steps to meet its anti-trafficking responsibilities under the Federal Acquisition Regulation (FAR).
Interested parties should submit comments in writing to the address below on or before January 9, 2017.
Comments may be submitted by any of the following methods:
Porter Glock, Office of Federal Procurement Policy at 202–395–3145 or
Executive Order 13627,
The co-chairs of the SPOG Committee, OMB, DOS, and DOL (“Co-Chairs”), expect contractors to be proactive and forthcoming in their efforts to address and reduce the risk of human trafficking in their operations and supply chains. At the same time, OMB, State, and DOL recognize that not all contractors are similarly situated and some, such as those with large supply chains, may face more challenges than others in meeting their responsibilities. In addition, not all risks are equal in their impact. To this end, the Co-Chairs developed a set of best practices and mitigation considerations to help contracting officers determine if a contractor is taking adequate steps to meet its anti-trafficking responsibilities under the FAR. In addition, to promote clarity and consistency in the implementation of anti-trafficking requirements, the Co-Chairs also developed responses to a number of frequently asked questions posed by stakeholders following the publication of the final FAR rule.
The Co-Chairs encourage feedback on the draft guidance. Comments are especially welcome on identified best practices and mitigating steps as well as any additional information that may be relevant to helping a contracting officer determine if an existing Federal contractor who reports a trafficking incident has taken reasonable actions or if a prospective contractor is able to address trafficking challenges where the agency is planning an acquisition in an environment that is at high risk of trafficking.
This draft memorandum is another step in an ongoing effort to provide tools to the federal acquisition community—both contracting officers and contractors—to ensure the effective implementation of E.O. 13627 and the NDAA. These tools include (i) an interactive online platform,
Office of Management and Budget, Executive Office of the President.
Notice of public availability of agency inventories of activities that are not inherently governmental and of activities that are inherently governmental.
The Federal Activities Inventory Reform (FAIR) Act, Public Law 105–270, requires agencies to develop inventories each year of activities performed by their employees that are not inherently governmental functions. The FAIR Act further requires OMB to review the inventories in consultation with the agencies. Once that review is complete, agencies are required to make the list available to the public and OMB must publish a notice of public availability in the
As provided in the FAIR Act, interested parties who disagree with the agency's initial judgment may challenge the inclusion or the omission of an activity on the list of activities that are not inherently governmental within 30 working days of this Notice and, if not satisfied with this review, may appeal to a higher level within the agency.
National Archives and Records Administration (NARA).
Notice of advisory committee meeting.
In accordance with the Federal Advisory Committee Act (5 U.S.C. app 2) and implementing regulation 41 CFR 101–6, NARA announces the following committee meeting.
The meeting will be held January 25, 2017, from 10:00 a.m. to 12:00 p.m. EDT.
National Archives and Records Administration, 700 Pennsylvania Avenue NW., Jefferson Room, Washington, DC 20408.
Robert J. Skwirot, Senior Program Analyst, by mail at Information Security Oversight Office (ISOO); National Archives and Records Administration; 700 Pennsylvania Avenue NW., Washington, DC 20408, by telephone at 202.357.5398, or by email at
The purpose of this meeting is to discuss matters relating to the Classified National Security Information Program for State, Local, Tribal, and Private Sector Entities. The meeting will be open to the public. However, due to space limitations and access procedures, you must submit the name and telephone number of individuals planning to attend to ISOO no later than Friday, January 18, 2017. ISOO will provide additional instructions for accessing the meeting's location.
Nuclear Regulatory Commission.
Regulatory Guides 1.3, 1.4, and 1.5; withdrawal.
The U.S. Nuclear Regulatory Commission (NRC) is withdrawing three regulatory guides (RGs): RG 1.3, Revision 2, “Assumptions Used for Evaluating the Potential Radiological Consequences of a Loss of Coolant Accident for Boiling Water Reactors,” dated June 1974; RG 1.4, Revision 2, “Assumptions Used for Evaluating the Potential Radiological Consequences of a Loss of Coolant Accident for Pressurized Water Reactors,” dated June 1974; and RG 1.5 (Safety Guide 5), “Assumptions Used for Evaluating the Potential Radiological Consequences of a Steam Line Break Accident for Boiling Water Reactors,” dated March 1971. These three RGs are being withdrawn because the guidance contained in them has been superseded and is now incorporated into RG 1.183, “Alternative Radiological Source Terms for Evaluating Design Basis Accidents at Nuclear Power Reactors,” and RG 1.195, “Methods and Assumptions for Evaluating Radiological Consequences of Design Basis Accidents at Light-Water Nuclear Power Reactors.”
The effective date of the withdrawal of RGs 1.3, 1.4, and 1.5 is December 8, 2016.
Please refer to Docket ID NRC–2016–0246 when contacting the NRC about the availability of information regarding this document. You may obtain publicly-available information related to this document using any of the following methods:
•
•
•
John Parillo, Office of Nuclear Reactor Regulation, telephone: 301–415–1344; email
Regulatory guides may be withdrawn by the NRC when their guidance no longer provides useful information, or is superseded by technological innovations, congressional actions, or other events. The withdrawal of an RG should be thought of as the final revision of the guide.
The NRC is withdrawing RG 1.3, Revision 2, “Assumptions Used for Evaluating the Potential Radiological Consequences of a Loss of Coolant Accident for Boiling Water Reactors,” dated June 1974 (ADAMS Accession No. ML16215A353); RG 1.4, Revision 2, “Assumptions Used for Evaluating the Potential Radiological Consequences of a Loss of Coolant Accident for Pressurized Water Reactors,” dated June 1974 (ADAMS Accession No. ML16215A351); and RG 1.5 (Safety Guide 5), “Assumptions Used for Evaluating the Potential Radiological Consequences of a Steam Line Break Accident for Boiling Water Reactors,” dated March 1971 (ADAMS Accession No. ML16215A352).
The NRC is withdrawing these three RGs because the guidance contained in them has been superseded by more current guidance which has been incorporated into RG 1.183, “Alternative Radiological Source Terms for Evaluating Design Basis Accidents at Nuclear Power Reactors,” (ADAMS Accession No. ML003716792), and RG 1.195, “Methods and Assumptions for Evaluating Radiological Consequences of Design Basis Accidents at Light-Water Nuclear Power Reactors,” (ADAMS Accession No. ML031490640). The information in RG 1.183 provides guidance for new and existing light-water reactor (LWR) plants that have adopted the alternative source term (AST), and RG 1.195 provides guidance for those LWR plants that have not adopted the AST.
The withdrawal of RGs 1.3, 1.4, and 1.5 does not alter any prior or existing NRC licensing approval or the acceptability of licensee commitments to these RGs. Although RGs 1.3, 1.4, and 1.5 are withdrawn, current licensees may continue to use them, and withdrawal does not affect any existing licenses or agreements. However, by withdrawing RGs 1.3, 1.4, and 1.5, the NRC no longer approves for use the guidance in these RGs in future requests or applications for NRC licensing actions.
For the Nuclear Regulatory Commission.
Nuclear Regulatory Commission.
Regulatory guide; issuance.
The U.S. Nuclear Regulatory Commission (NRC) is issuing Revision 3 to Regulatory Guide (RG) 8.7, “Instructions for Recording and Reporting Occupational Radiation Dose Data.” Regulatory Guide 8.7 describes methods that the staff of NRC considers acceptable for licensees to use for the preparation, retention, and reporting of records of occupational radiation doses. Revision 3 addresses changes to applicable NRC regulations and related staff practices since Revision 2 was issued in November 2005. Revision 3 includes changes in the process a licensee needs to follow in order to monitor occupational exposure, determine prior doses, record monitoring results, and report the results, when required. In addition, Revision 3 references revised versions of NRC Form 4, “Cumulative Occupational
Revision 3 to RG 8.7 is available on December 8, 2016.
Please refer to Docket ID NRC–2015–0203 when contacting the NRC about the availability of information regarding this document. You may obtain publically-available information related to this document using any of the following methods:
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Regulatory guides are not copyrighted, and NRC approval is not required to reproduce them.
Terry Brock, telephone: 301–415–1793; email:
The NRC is issuing a revision to an existing guide in the NRC's “Regulatory Guide” series. This series was developed to describe and make available to the public information regarding methods that are acceptable to the NRC staff for implementing specific parts of the agency's regulations, techniques that the NRC staff uses in evaluating specific issues or postulated events, and data that the NRC staff needs in its review of applications for permits and licenses.
Proposed Revision 3 of RG 8.7 was issued with a temporary identification of Draft Regulatory Guide DG–8030 and is available under ADAMS Accession No. ML15169A218. The NRC published DG–8030 for public comment on August 28, 2015 (80 FR 52345). The public comment period closed on October 27, 2015. The NRC received one set of comments from an industry association and those comments and the NRC staff's responses are available under ADAMS Accession No. ML16060A392. In a related action, the NRC requested public comments on its proposed revisions to Form 5, “Occupational Dose Record for a Monitoring Period” on June 19, 2012 (77 FR 36583). The public comment period closed on July 20, 2012. The NRC received four sets of comments from industry and those comments and the NRC staff's responses are available under ADAMS Accession No. ML16308A071.
Revision 3 of RG 8.7 addresses changes identified since Revision 2 was issued in November 2005. In particular, the regulations in 10 CFR 20.1201(c) concerning the measurement of external exposure by either deep-dose equivalent or effective dose equivalent (for external exposures) (EDEX), and the regulations in 10 CFR 20.1003 and 10 CFR 50.2 regarding the definition of the “total effective dose equivalent” (TEDE), were amended and became effective on January 3, 2008 (72 FR 68043; December 4, 2007). As a result of the revised definition of TEDE, the NRC staff developed the additional acronym EDEX and this term was included in the revised NRC Forms 4 and 5 that were updated in April 2015. Revision 3 of RG 8.7 references the revised versions of NRC Forms 4 and 5, as well as detailed instructions for completing these forms. The acronym EDEX and the term “total organ dose equivalent” are included in the revised forms to be consistent with current NRC practice.
The new NRC Form 4, “Cumulative Occupational Dose History (04–2015),” or its electronic equivalent, is available for use by NRC licensees to record an individual's cumulative occupational dose history. NRC licensees may also continue to use the old NRC Form 4, “Cumulative Occupational Dose History (10/2001),” until December 31, 2016. All NRC licensees should use the new NRC Form 4 or its equivalent beginning January 1, 2017.
The new NRC Form 5, “Occupational Dose Record for a Monitoring Period (04–2015),” or its electronic equivalent, is available for use by NRC licensees to record the occupational dose for any monitoring period beginning on or after January 1, 2016. NRC licensees may also continue to use the old NRC Form 5, “Occupational Dose Record for a Monitoring Period (10/2001),” for any monitoring period beginning on or before December 31, 2016. All NRC licensees should use the new NRC Form 5 or its equivalent, for any monitoring period beginning on or after January 1, 2017. Both forms are available online through the NRC Library on the NRC's public Web site at
This RG is a rule as defined in the Congressional Review Act (5 U.S.C. 801–808). However, the Office of Management and Budget has not found it to be a major rule as defined in the Congressional Review Act.
This RG addresses compliance with the NRC's requirements in 10 CFR part 20 to record and report an individual's cumulative occupational dose history and the occupational dose received by an individual for a specific monitoring period. The NRC regards these requirements as constituting information collection and reporting requirements. The NRC has long taken the position that information collection and reporting requirements are not subject to the NRC's backfitting and issue finality regulations in 10 CFR 50.109, 10 CFR 70.76, 10 CFR 72.62, 10 CFR 76.76, and 10 CFR part 52 (
For the Nuclear Regulatory Commission.
Postal Regulatory Commission.
Notice.
The Commission is noticing recent Postal Service filings for the Commission's consideration concerning negotiated service agreements. This notice informs the public of the filing, invites public comment, and takes other administrative steps.
Submit comments electronically via the Commission's Filing Online system at
David A. Trissell, General Counsel, at 202–789–6820.
The Commission gives notice that the Postal Service filed request(s) for the Commission to consider matters related to negotiated service agreement(s). The request(s) may propose the addition or removal of a negotiated service agreement from the market dominant or the competitive product list, or the modification of an existing product currently appearing on the market dominant or the competitive product list.
Section II identifies the docket number(s) associated with each Postal Service request, the title of each Postal Service request, the request's acceptance date, and the authority cited by the Postal Service for each request. For each request, the Commission appoints an officer of the Commission to represent the interests of the general public in the proceeding, pursuant to 39 U.S.C. 505 (Public Representative). Section II also establishes comment deadline(s) pertaining to each request.
The public portions of the Postal Service's request(s) can be accessed via the Commission's Web site (
The Commission invites comments on whether the Postal Service's request(s) in the captioned docket(s) are consistent with the policies of title 39. For request(s) that the Postal Service states concern market dominant product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3622, 39 U.S.C. 3642, 39 CFR part 3010, and 39 CFR part 3020, subpart B. For request(s) that the Postal Service states concern competitive product(s), applicable statutory and regulatory requirements include 39 U.S.C. 3632, 39 U.S.C. 3633, 39 U.S.C. 3642, 39 CFR part 3015, and 39 CFR part 3020, subpart B. Comment deadline(s) for each request appear in section II.
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This notice will be published in the
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the “Act”),
The Exchange filed a proposal to make certain non-substantive and clarifying changes to the fee schedule applicable to Members
The text of the proposed rule change is available at the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to modify its fee schedule applicable to the Exchange's equity options platform (“BZX Options”) to make certain clarifying and non-substantive changes to its fee schedule in order to improve formatting, eliminate certain redundancies, increase overall readability, and provide users with straightforward descriptions to augment overall comprehensibility and usability of the existing fee schedule. The Exchange notes that these changes are purely clerical and do not substantively amend any fee or rebate, nor do they alter the manner in which the Exchange assesses fees or calculates rebates. The proposed changes are simply intended to provide greater transparency to market participants regarding how the Exchange assesses fees and calculates rebates. Specifically, the Exchange proposes to:
• Alphabetize defined terms under the “Definitions” section;
• amend criteria for Tier 3 under footnote 5 to add a zero after 2.5% to ensure that it is represented to the hundredths decimal point, like all other percentages included in the fee schedule;
• ensure each tier requiring multiple criteria is conjoined using “; and” to clarify that all of a tier's criteria must be satisfied to receive the applicable rate;
• amend the title of the column setting forth each tier's rate to simply state “Fee Per Contract to Remove”, “Fee Per Contract to Add” or “Rebate Per Contract to Add” as applicable. Renaming these column is intended to clearly indicate whether the footnote provides a fee and/or a rebate, and whether that enhanced pricing applies to orders which add or remove liquidity. In renaming these columns, the Exchange also proposes to remove certain other descriptive language as such language is redundant and set forth in the tier's title and list of its applicable fee codes;
• amend the name under first column of the tiers listed under footnotes 1, 3, 4, 5, 12, and 13 to simply state “Tier 1”, Tier 2” etc. as the deleted language is redundant with the respective tier's title or with the description of the tier's criteria;
• replace the phrase “equal to or greater than” and “greater than or equal to” with “≥” in all required criteria cells under footnotes 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, and 13; and
• amend the NBBO Setter Tier under footnote 4 to specify at the top of the footnote that the additional rebates provided by the tier are only applicable to orders that establish a new National Best Bid or Offer (“NBBO”) and to delete such language from each tier's criteria.
The Exchange believes that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities exchange, and, in particular, with the requirements of Section 6 of the Act.
The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. To the contrary, the Exchange believes that the proposed rule change will not impose any burden on competition as the changes are purely clerical and do not amend any fee or rebate.
The Exchange has not solicited, and does not intend to solicit, comments on this proposed rule change. The Exchange has not received any written comments from members or other interested parties.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A) of the Act
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes to amend Chapter Nine of the NYSE Listed Company Manual (the “Manual”) to amend certain of its listing fee provisions. The proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements.
The Exchange proposes to amend Chapter Nine of the Manual to amend certain of its listing fee provisions. The amended fees will take effect in the 2017 calendar year. The following are the proposed fee increases:
• The fee per share charged in connection with the initial listing of a new class of equity securities will be increased from $0.0032 per share to $0.004 per share.
• The minimum initial listing fee in connection with a new class of equity securities will be increased from $125,000 to $150,000 and the maximum fee will be increased from $250,000 to $295,000.
• A number of categories of securities are currently billed an annual fee of $0.001025 per share. This rate will be increased to $0.00105 per share.
• The minimum annual fee applicable to the primary class of common shares (including Equity Investment Tracking Stock) or the primary class of preferred stock (if no class of common shares is listed) will be increased from $52,500 to $59,500.
• The minimum annual fee applicable to structured products listed under Section 902.05 and short-term securities listed under Section 902.06 (except for warrants to purchase equity securities) will be increased from $15,000 to $20,000.
• The initial and annual listing fees for debt listed under Section 102.03 and 103.05 of NYSE equity issuers and affiliated companies will each be increased from $15,000 to $20,000.
• The initial and annual listing fees for debt listed under Section 102.03 and 103.05 of companies other than NYSE equity issuers and affiliated companies will each be increased from $15,000 to $40,000.
• The initial and annual listing fees for securities (including short-term securities) that list under the debt standard in Section 703.19 and trade on NYSE Bonds will each be increased from $15,000 to $20,000.
As described below, the Exchange proposes to make the aforementioned fee increases to better reflect the Exchange's costs related to listing equity securities and the corresponding value of such listing to issuers.
The Exchange also proposes to remove a number of references throughout Chapter Nine to fees that are no longer applicable as they were superseded by new few [sic] rates specified in the rule text and to delete other obsolete rule text
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange believes that it is reasonable to amend Chapter Nine of the Manual to increase the various listing fees as set forth above because the resulting fees would better reflect the Exchange's costs related to such listing and the resulting value that that such listings provide to the issuers. In that regard, the Exchange notes that it has incurred increased expenses as it continues to improve and increase the services it provides to listed companies. These improvements include the development and roll-out of a new interactive web-based platform designed to improve communication between the Exchange and listed companies and significant capital improvements to the Exchange's facility at 11 Wall Street to create state-of-the-art conference facilities to be used by listed companies. The Exchange believes that the proposed fee increases are equitably allocated because the per share fee increase will be the same for all issuers on the Exchange. Therefore, the proposed fee increases will not be unfairly discriminatory towards any individual issuer. The Exchange believes it is consistent with Section 6(b)(5) of the Act to apply different fees to bonds of companies that do not have their equity securities listed on the NYSE than to companies with NYSE-listed equity securities and their affiliates, as there is a greater regulatory and administrative burden associated with listing bonds of companies with which the Exchange does not otherwise have a regulatory or listing relationship.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change is designed to ensure that the fees charged by the Exchange accurately reflect the services provided and benefits realized by listed companies. The market for listing services is extremely competitive. Each listing exchange has a different fee schedule that applies to issuers seeking
No written comments were solicited or received with respect to the proposed rule change.
The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A)
At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B)
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend the Exchange's data fees at Rule 7047 to: (i) Reduce the enterprise license fee for Nasdaq Basic from $350,000 to $100,000 per month for broker-dealers distributing Nasdaq Basic to Non-Professional and Professional Subscribers with whom the broker-dealer has a brokerage relationship; and (ii) eliminate a requirement that broker-dealers purchase other products—specifically, Nasdaq Last Sale and Nasdaq TotalView/OpenView—to qualify for the license. The Exchange also proposes a number of conforming changes: (1) To clarify which Subscribers may receive the data; (2) to limit the use of the data by Professional Subscribers; and (3) to specify that each electronic system used to distribute data under the enterprise license must be separately approved. The proposal is described in further detail below.
These amendments are effective upon filing.
The text of the proposed rule change is available on the Exchange's Web site at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The purpose of the proposed rule change is to: (i) Reduce the enterprise license fee for Nasdaq Basic from $350,000 to $100,000 per month for broker-dealers distributing Nasdaq Basic to Professional and Non-Professional Subscribers with whom the broker-dealer has a brokerage relationship; and (ii) eliminate the requirement that broker-dealers purchase other products—specifically, Nasdaq Last Sale and Nasdaq TotalView/OpenView—to qualify for the license. To clarify how to apply the proposed fee reduction, the Exchange is also proposing language specifying that Subscribers must be natural persons; limiting use of the data by Professional Subscribers to their brokerage relationships with the broker-dealer; and requiring that each electronic system used to distribute data from the enterprise license be separately approved by the Exchange.
Nasdaq Basic provides best bid and offer and last sale information from the Nasdaq Market Center and from the FINRA/Nasdaq Trade Reporting Facility (“FINRA/NASDAQ TRF”). Data is taken from three sources, which may be purchased individually or in combination: (i) Nasdaq Basic for Nasdaq, which contains the best bid and offer on the Nasdaq Market Center and last sale trade reports for Nasdaq and the FINRA/Nasdaq TRF for Nasdaq-listed stocks; (ii) Nasdaq Basic for NYSE, which contains the best bid and offer on the Nasdaq Market Center and last sale trade reports for Nasdaq and the FINRA/Nasdaq TRF for NYSE-listed stocks; and (iii) Nasdaq Basic for NYSE MKT, which contains the best bid and offer on the Nasdaq Market Center and last sale trade reports for Nasdaq and the FINRA/Nasdaq TRF for stocks listed on NYSE MKT and other listing venues whose quotes and trade reports are disseminated on Tape B.
Nasdaq Basic may be purchased through per-subscriber monthly charges, per-query fees, or, for broker-dealers, monthly enterprise licenses. These monthly enterprise licenses are available in two types: An internal license for Professional Subscribers, and a license for Non-Professional and Professional Subscribers with whom the broker-dealer has a brokerage relationship.
The second type of license, for Professional and Non-Professional Subscribers in a brokerage relationship with the broker-dealer, is currently available for $350,000 per month. To qualify for this license, the broker-dealer must also: (i) Distribute Nasdaq Last Sale for Nasdaq or Nasdaq Last Sale for NYSE/NYSE MKT via an internet-based electronic system approved by Nasdaq pursuant to Rule 7039(b)(2)(B), at a level that allows it to qualify for the fee cap provided for in Rule 7039(b); (ii) distribute Nasdaq TotalView or Nasdaq OpenView data under an enterprise license pursuant to Rule 7023(c)(1); and (iii) pay the Distributor Fee for Nasdaq Basic under paragraph [sic] (c)(1) or for Nasdaq Last Sale under Rule 7039(c). The electronic system used to distribute Nasdaq Basic must be approved by Nasdaq, and the broker-dealer must report the number of Subscribers at least once per calendar year.
The Exchange proposes: (i) Reducing the enterprise license fee for Nasdaq Basic from $350,000 to $100,000 per month for broker-dealers distributing Nasdaq Basic to Non-Professional and Professional Subscribers with whom the broker-dealer has a brokerage relationship; and (ii) eliminating the two requirements that the purchaser distribute Nasdaq Last Sale for Nasdaq or Nasdaq Last Sale for NYSE/NYSE MKT at a level that allows it to qualify for the fee cap provided for in Rule 7039(b), and distribute Nasdaq TotalView or Nasdaq OpenView data under an enterprise license pursuant to Rule 7023(c)(1). The proposed changes will promote the use of Nasdaq Basic by lowering its cost to investors and broadening the scope of its distribution to the investing public.
The Exchange also proposes three conforming changes to clarify how to apply the proposed fee reduction.
First, although the term “Professional Subscribers” is defined elsewhere in the rule to include legal entities that are not natural persons, the enterprise license set forth under Rule 7047(b)(5) may not be used to provide information to any business or other entity that is not a natural person. This is a clarification of current practice.
Second, Professional Subscribers may use the data obtained through this license only in the context of the brokerage relationship between the Professional Subscriber and the broker-dealer, and may not use such data within the scope of any professional engagement or registration identified in Rule 7047(d)(3)(A). Specifically, a Professional Subscriber may not use that data in his or her capacity as a person who is: (i) Registered or qualified in any capacity with the Commission, the Commodity Futures Trading Commission, any state securities agency, or any securities exchange or association; (ii) engaged as an `investment adviser' as that term is defined in Section 201(11) of the Investment Advisers Act of 1940 (whether or not registered or qualified under that Act); or (iii) employed by a bank or other organization exempt from registration under federal or state securities laws to perform functions that would require registration or qualification if such functions were performed for an organization not so exempt.
Third, if more than one electronic system is used to distribute information under this license, each such system must be separately approved by the Exchange. In addition, the approved electronic systems may be used to distribute information to any customer eligible to receive such information under this rule. Prior language limiting distribution to employees of the broker-dealer is deleted. Language is also added to clarify that the broker-dealer must pay for any Nasdaq Last Sale data distributed under Rule 7039(c), if the broker-dealer elects to distribute such data. None of these proposed modifications represent a change from current practice.
The enterprise license fee is entirely optional, in that it applies only to broker-dealers that opt to distribute Nasdaq Basic to Professional and Non-Professional Subscribers as described herein.
The Exchange believes that its proposal is consistent with Section 6(b)
The Commission and the courts have repeatedly expressed their preference for competition over regulatory intervention in determining prices, products, and services in the securities markets. In Regulation NMS, while adopting a series of steps to improve the current market model, the Commission highlighted the importance of market forces in determining prices and SRO revenues, and also recognized that current regulation of the market system “has been remarkably successful in promoting market competition in its broader forms that are most important to investors and listed companies.”
Likewise, in
Further, “[n]o one disputes that competition for order flow is `fierce.' . . . As the SEC explained, `[i]n the U.S. national market system, buyers and sellers of securities, and the broker-dealers that act as their order-routing agents, have a wide range of choices of where to route orders for execution'; [and] `no exchange can afford to take its market share percentages for granted' because `no exchange possesses a monopoly, regulatory or otherwise, in the execution of order flow from broker dealers' . . . .”
The Exchange believes that the proposed fee reduction and the elimination of conditions to qualify for the Nasdaq Basic enterprise license under Rule 7047(b)(5) is reasonable. The proposed changes will benefit the investing public by lowering the cost and increasing the availability of information in the marketplace. Moreover, the fees for Nasdaq Basic, like all proprietary data fees, are constrained by the Exchange's need to compete for order flow, and are subject to competition from other products and among broker-dealers for customers.
The Exchange believes that the proposed fee reduction is an equitable allocation and is not unfairly discriminatory because the Exchange will apply the same fee to all similarly situated broker-dealers. Moreover, by allocating the fee reduction to broker-dealers that distribute the product widely among customers, the change will assist in promoting a wider distribution of information to the investing public.
The Exchange does not believe that the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In terms of inter-market competition, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive, or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited.
The proposed change will: (i) Reduce the enterprise license fee for Nasdaq Basic from $350,000 to $100,000 per month for broker-dealers distributing Nasdaq Basic to Non-Professional and Professional Subscribers with whom the broker-dealer has a brokerage relationship; and (ii) eliminate the requirement that broker-dealers purchase other products—specifically, Last Sale for Nasdaq or Last Sale for NYSE/NYSE MKT, and TotalView or OpenView—to qualify for the license. This will reduce the cost of Nasdaq Basic to investors, resulting in information becoming more widely available to the investing public.
As illustrated by the proposed fee reduction, market forces constrain fees for Nasdaq Basic. This occurs in three distinct respects. First, all fees related to Nasdaq Basic are constrained by competition among exchanges and other entities attracting order flow. Firms make decisions regarding Nasdaq Basic and other proprietary data based on the total cost of interacting with the Exchange, and order flow would be harmed by the supracompetitive pricing of any proprietary data product. Second, the price of Nasdaq Basic is constrained by the existence of multiple substitutes that are offered, or may be offered, by entities that offer proprietary or non-proprietary data. The proposed price reduction itself provides evidence of the need to maintain low prices in a competitive marketplace. Third, competition among broker-dealers for customers will further constrain the cost of a Nasdaq Basic enterprise license.
Fees related to Nasdaq Basic are constrained by competition among exchanges and other entities seeking to attract order flow. Order flow is the “life blood” of the exchanges. Broker-dealers currently have numerous alternative venues for their order flow, including thirteen self-regulatory organization (“SRO”) markets, as well as internalizing broker-dealers (“BDs”) and various forms of alternative trading systems (“ATSs”), including dark pools and electronic communication networks (“ECNs”). Each SRO market competes to produce transaction reports via trade executions, and two FINRA-regulated Trade Reporting Facilities (“TRFs”) compete to attract internalized transaction reports. The existence of fierce competition for order flow implies a high degree of price sensitivity on the part of BDs, which may readily reduce costs by directing orders toward the lowest-cost trading venues.
The level of competition and contestability in the market for order flow is demonstrated by the numerous examples of entrants that swiftly grew into some of the largest electronic trading platforms and proprietary data producers: Archipelago, Bloomberg Tradebook, Island, RediBook, Attain, TracECN, BATS Trading and BATS/Direct Edge. A proliferation of dark pools and other ATSs operate profitably with fragmentary shares of consolidated market volume. For a variety of reasons, competition from new entrants, especially for order execution, has
Each SRO, TRF, ATS, and BD that competes for order flow is permitted to produce proprietary data products. Many currently do or have announced plans to do so, including NYSE, NYSE Amex, NYSE Arca, BATS, and IEX. This is because Regulation NMS deregulated the market for proprietary data. While BDs had previously published their proprietary data individually, Regulation NMS encourages market data vendors and BDs to produce proprietary products cooperatively in a manner never before possible. Order routers and market data vendors can facilitate production of proprietary data products for single or multiple BDs. The potential sources of proprietary products are virtually limitless.
The markets for order flow and proprietary data are inextricably linked: a trading platform cannot generate market information unless it receives trade orders. As a result, the competition for order flow constrains the prices that platforms can charge for proprietary data products. Firms make decisions on how much and what types of data to consume based on the total cost of interacting with Nasdaq and other exchanges. Data fees are but one factor in a total platform analysis. If the cost of the product exceeds its expected value, the broker-dealer will choose not to buy it. A supracompetitive increase in the fees charged for either transactions or proprietary data has the potential to impair revenues from both products. In this manner, the competition for order flow will constrain prices for proprietary data products, including charges relating to Nasdaq Basic.
The price of data derived from Nasdaq Basic is constrained by the existence of multiple substitutes offered by numerous entities, including both proprietary data offered by other SROs or other entities, and non-proprietary data disseminated by Securities Information Processors (“SIPs”).
The information provided through Nasdaq Basic is a subset of the best bid and offer and last sale data provided by the SIPs. The “core” data disseminated by the SIP consists of best-price quotations and last sale information from all markets in U.S.-listed equities; Nasdaq Basic provides best bid and offer and last sale information for all U.S. exchange-listed stocks based on trade reports from the Nasdaq Market Center and the FINRA/Nasdaq Trade Reporting Facility. Many customers that purchase SIP data do not also purchase Nasdaq Basic because they are closely related products. In cases where customers buy both products, they may shift the extent to which they purchase one or the other based on price changes. The SIP constrains the price of Nasdaq Basic because no purchaser would pay an excessive price for Nasdaq Basic when similar data is also available from the SIP.
Proprietary data sold by other exchanges also constrain the price of Nasdaq Basic. NYSE and BATS, like Nasdaq, sell proprietary non-core data that include best bid and offer and last sale data. Customers do not typically purchase proprietary best bid and offer and last sale data from multiple exchanges. Other proprietary data products constrain the price of Nasdaq Basic because no customer would pay an excessive price for Nasdaq Basic when substitute data is available from other proprietary sources.
The enterprise license at issue is sold for use by the customers of a broker-dealer. There is no legal or regulatory requirement that such customers have direct access to data feeds containing best bid and offer or last sale information through Nasdaq Basic. If the price of the enterprise license were to be set above competitive levels, the broker-dealer purchasing that license would be at a competitive disadvantage relative to broker-dealers purchasing an alternative product as well as broker-dealers not purchasing any comparable product at all. As such, the broker-dealer at a competitive disadvantage would either purchase a substitute or forego the product altogether. The competition among broker-dealers for customers thereby provides yet another check on the price for Nasdaq Basic.
In summary, the proposed rule change lowers the cost of Nasdaq Basic and broadens its availability to the investing public. Market forces constrain the Nasdaq Basic enterprise license through competition for order flow, competition from substitute products, and in the competition among broker-dealers for customers. For these reasons, the Exchange has provided a substantial basis demonstrating that the fee is equitable, fair, reasonable, and not unreasonably discriminatory, and therefore consistent with and in furtherance of the purposes of the Exchange Act.
No written comments were either solicited or received.
The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) of the Act.
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is: (i) Necessary or appropriate in the public interest; (ii) for the protection of investors; or (iii) otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's Internet comment form (
• Send an email to
• Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
On August 18, 2016, Financial Industry Regulatory Authority, Inc. (“FINRA”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
The proposed rule change was published for comment in the
FINRA arbitrators possess the broad authority to “interpret and determine the applicability of all provisions under the Code[s]. Such interpretations are final and binding upon the parties.”
FINRA maintains a roster of non-public arbitrators,
The Codes provide that arbitrators are eligible for the chairperson roster if they have completed chairperson training provided by FINRA and:
• Have a law degree and are a member of a bar of at least one jurisdiction, and have served as an arbitrator through award on at least two arbitrations administered by a self-regulatory organization in which hearings were held; or
• Have served as an arbitrator through award on at least three arbitrations administered by a self-regulatory organization in which hearings were held.
Additionally, in customer disputes, chairpersons must be public arbitrators.
In February 2015, the Commission approved a proposal by FINRA to amend its definition of “public arbitrator,”
FINRA contends that forum users have complained about the diminished availability of public chairpersons after the amendment to the public arbitrator definition. FINRA also states that forum users have complained of scheduling difficulties and additional costs associated with traveling chairpersons (
FINRA is proposing to amend the eligibility requirements under the Codes for arbitrators who seek to qualify as chairpersons. The amendment would allow an attorney arbitrator to qualify for the chairperson roster if he or she completes chairperson training and serves as an arbitrator through award on at least one arbitration administered by a self-regulatory organization where hearings are held, instead of two arbitrations (as is currently required). FINRA is also proposing to replace the bullets in Rules 12400 and 13400 with numbers for ease of citation.
FINRA states that reducing the case experience requirement for would-be arbitrators from two arbitrations to one arbitration could add more than 270 attorney arbitrators across 59 of its 71 hearing locations, potentially resulting in a nearly 30 percent increase in the number of arbitrators who might be eligible to serve as public chairpersons once they take chairperson training.
The Commission received five (5) comment letters on the proposed rule change,
As noted above, three commenters supported FINRA's proposed amendments to the Codes. One commenter stated that the proposal would “be a fair, equitable and reasonable approach that would facilitate the increased appointment of local chairpersons to arbitration panels and, at the same time, would reduce the necessity for the appointment of out-of-state chairpersons.”
Two comment letters recommended modifications to the proposal, while generally expressing support for the proposal. One commenter stated that investors would “benefit from a larger pool of qualified public chairpersons” and generally supported the proposed rule as “a positive step in regards to increasing the number of arbitrators in proposed chair pools[.]”
One commenter advocated for greater transparency regarding arbitrators' backgrounds and qualifications, as well as greater transparency in the arbitrator selection process generally in order to improve investor confidence in FINRA arbitrators.
In response, FINRA stated that it produces a disclosure report reflecting the prior employment, educational history, and previous arbitration awards for every potential arbitrator during the appointment process.
One commenter stated that the overall reduction in the number of eligible chairpersons has reduced the pool of local chairpersons, and caused FINRA to ask non-local chairpersons to travel to
In its response, FINRA stated that it uses arbitrators in neighboring hearing locations “to ensure an effective ratio of available arbitrators to open cases in each location[.]”
One commenter expressed the concern that the proposed rule change might sacrifice chairperson quality at the expense of chairperson quantity, as “quality pools are paramount to a fair and equitable arbitration proceeding, as well as the public investors' confidence in the overall arbitration process.”
Another commenter similarly asserted that, by expanding chairperson eligibility, the proposed rule change would reduce arbitrators' exposure to live proceedings prior to serving as a chair.
In response, FINRA stated that, earlier this year, it implemented a chairperson mentorship program to facilitate interaction between new chairpersons and experienced chairpersons.
One commenter expressed concern that the arbitrator application process is “burdensome and intimidating and surely drives away many potential arbitrators which further weakens the number and quality of arbitrators available in the FINRA system.”
FINRA responded that, in 2017, it plans to replace the “time-consuming” “Securities Disputes Experience” section of the arbitrator application with a section that allows applicants to explain their securities disputes expertise and skills in narrative form.
One commenter cited the 2015 amendments to the definition of “Public Arbitrator” as a significant contributor to the reduction in the chairperson roster overall and disproportionately for claimants with smaller claims.
In response, FINRA stated that it had revisited the 2015 amendments to the arbitrator definitions and determined not to change the public arbitrator definition, as FINRA deemed it important for public arbitrators to have no significant affiliation with the financial industry.
The Commission has carefully considered the proposal, the comments received, and FINRA's response to the comments. Based on its review of the record, the Commission finds that the proposed rule change is consistent with the requirements of the Exchange Act and the rules and regulations thereunder applicable to a national securities association.
As discussed above, the proposal would amend Rules 12400 and 13400 of the Codes to allow an attorney arbitrator to qualify for the chairperson roster if he or she completes chairperson training and serves as an arbitrator through award on at least one arbitration administered by a self-regulatory
The Commission has considered the five (5) comment letters received on the proposed rule change,
The Commission acknowledges the commenter's concern that FINRA's current disclosure system does not always eliminate the appearance of impropriety and bias in the FINRA arbitration forum, and agrees that transparency in the arbitrator selection process improves investor confidence in FINRA arbitrators.
The Commission acknowledges the commenter's concerns regarding the inconvenience, delay, and additional costs caused by the use of non-local arbitrators.
With regard to commenters' concerns that the proposed amendment might decrease the quality and experience of arbitrator chairpersons at the expense of increasing the quantity of chairpersons, the Commission acknowledges their recommendation that a mentor program or additional trainings should be provided to chairpersons.
The Commission acknowledges the concern expressed regarding FINRA's purportedly burdensome and intimidating arbitrator application process, and the potential deterrent effect the process might have on would-be arbitrator applicants.
The Commission acknowledges the commenter's suggestion that FINRA reconsider the 2015 amendments to the public arbitrator definition in an effort to combat the resulting reduction in the chairperson roster.
Taking into consideration the comments and FINRA's responses, the Commission finds that the proposal is consistent with the Exchange Act. Specifically, the Commission believes that the proposal will help protect investors and the public interest by, among other things, broadening the roster of available arbitrator chairpersons, while preserving the quality of arbitrators who would serve as chairpersons. Furthermore, the Commission believes that FINRA's responses, as discussed in more detail above, appropriately addressed commenters' concerns and adequately explained FINRA's reasons for declining to modify its proposal. Accordingly, the Commission believes that the approach proposed by FINRA is appropriate and designed to protect investors and the public interest, consistent with Section 15A(b)(6) of the Exchange Act and the rules and regulations thereunder.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
U.S. Small Business Administration.
Notice.
This is a Notice of the Presidential declaration of a major disaster for the State of Minnesota (FEMA–4290–DR), dated 11/29/2016.
Submit completed loan applications to: U.S. Small Business Administration, Processing and Disbursement Center, 14925 Kingsport Road, Fort Worth, TX 76155.
A. Escobar, Office of Disaster Assistance, U.S. Small Business Administration, 409 3rd Street SW., Suite 6050, Washington, DC 20416.
Notice is hereby given that as a result of the President's major disaster declaration on 11/29/2016, applications for disaster loans may be filed at the address listed above or other locally announced locations.
The following areas have been determined to be adversely affected by the disaster:
The Interest Rates are:
The number assigned to this disaster for physical damage is 14997B and for economic injury is 149980.
Pursuant to the authority granted to the United States Small Business Administration under the Small Business Investment Act of 1958, as amended, under Section 309 of the Act and Section 107.1900 of the Small Business Administration Rules and Regulations (13 CFR 107.1900) to function as a small business investment company under the Small Business Investment Company License No. 04/04–0304 issued to White Oak SBIC Fund, L.P., said license is hereby declared null and void.
United States Small Business Administration.
Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), E.O. 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
For further information, including a list of the imported objects, contact the Office of Public Diplomacy and Public Affairs in the Office of the Legal Adviser, U.S. Department of State (telephone: 202–632–6471; email:
Federal Aviation Administration (FAA), DOT.
Request for information on holder of Type Certificates (TCs) prior to FAA declaring TCs abandoned.
This notice requests that the current holder(s) (or their heirs) of TCs 3A2 and A–772 come forward and identify themselves; otherwise, the FAA will declare the TCs as abandoned. This notice is issued in accordance with § 302 of the FAA Modernization and Reform Act of 2012,
We must receive all correspondence by June 6, 2017.
Send all correspondence on this issue via certified mail to: Federal Aviation Administration, Anchorage Aircraft Certification Office, 222 W 7th Avenue, MS 14, Anchorage, AK 99513. ATTN: Della Swartz, ACE–115N. All letters must be signed. You may also contact Ms. Swartz by phone at (907) 271–2672 or electronically at:
The FAA has received a third party request for the release of data for TCs 3A2 and A–772 under the provisions of Freedom of Information Act (FOIA) 5 U.S.C. 552. The FAA cannot release the requested data under FOIA without the permission of the TC holders. The TC holders last listed on the certificate records are Airlift International, Inc., in Miami, FL for TC 3A2 and Flying Tiger Line, Inc., in Burbank, CA for TC A–772. The FAA has been unsuccessful in contacting the holders of record by telephone, email, and/or certified mail. There has been no activity with the TC holders for more than three years.
If you are the owners, or heirs, or a transferee of these TCs or have any knowledge regarding who may now hold TCs 3A2 or A–772, please contact Della Swartz using a method described in the
If we do not receive any response by June 6, 2017, we will consider TCs 3A2 and A–772 abandoned and we will proceed with the release of the requested data.
Federal Highway Administration (FHWA), DOT.
Revised notice of intent.
The FHWA is issuing this revised notice to advise the public that a Supplemental Draft Environmental Impact Statement (SDEIS) will be prepared for a proposed highway project in the Towns of Derry and Londonderry, in Rockingham County, New Hampshire.
Mr. Jamie Sikora, New Hampshire Division, Federal Highway Administration, 53 Pleasant Street, Suite 2200, Concord, New Hampshire 03301, Telephone: (603) 410–4870. Mr. Keith Cota, Chief Project Manager, New Hampshire Department of Transportation, 7 Hazen Drive, Concord, New Hampshire 03302–0483, Telephone: (603) 271–1615. Mr. David Caron, Town Administrator, Town of Derry, 14 Manning Street, Derry, New Hampshire 03038, Telephone: (603) 432–6100. Mr. Kevin Smith, Town Manager, Town of Londonderry, 268B Mammoth Road, Londonderry, New Hampshire 03053, Telephone: (603) 432–1100 x111.
FHWA, in cooperation with the Towns of Derry and Londonderry (the Towns) and the New Hampshire Department of Transportation (NHDOT), is advancing an updated environmental study for the I–93 Exit 4A Project. The purpose of the proposed project is to reduce congestion and improve safety along NH Route 102, from I–93 easterly through downtown Derry and to promote economic vitality in the Derry/Londonderry area.
Planning for the Project began in 1985 and a Notice of Intent was published in the
The Preferred Alternative identified in the 2007 DEIS consisted of a new diamond interchange on I–93 in the Town of Londonderry, approximately one mile north of Exit 4. The new diamond interchange would provide access to the east side of I–93. A 1-mile connector roadway would be built on new alignment from the interchange to Folsom Road, near the intersection of North High Street and Madden Road, in the Town of Derry. Folsom Road, and subsequently Tsienneto Road, would be upgraded, and the intersections would be improved. In addition to the Preferred Alternative, the SDEIS will evaluate the same range of alternatives assessed in the 2007 DEIS, which included alternative interchange locations, connector road alignments, upgrades to NH 102 and the No Build Alternative.
To provide an update on the status of the proposed project and environmental review process, a public information meeting was held in Derry, New Hampshire on September 26, 2016. Additionally, once the SDEIS is complete in 2017, the document will be distributed to government agencies, posted on the project Web site, and made available at multiple locations throughout the project area for public viewing. During the 45 day SDEIS public comment period, a public hearing will be held providing the public with an opportunity to review and comment on the SDEIS.
Comments and suggestions are invited from all interested parties to ensure that the full range of issues related to this proposed action are addressed and all significant issues are identified. Comments or questions concerning this proposed action should be directed to the FHWA or NHDOT at the addresses provided above or submitted via the
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of final disposition.
FMCSA announces its decision to renew exemptions of 99 individuals from its prohibition in the Federal Motor Carrier Safety Regulations (FMCSRs) against persons with insulin-treated diabetes mellitus (ITDM) from operating commercial motor vehicles (CMVs) in interstate commerce. The exemptions enable these individuals with ITDM to continue to operate CMVs in interstate commerce.
Each group of renewed exemptions was effective on the dates stated in the discussions below and will expire on the dates stated in the discussions below.
Ms. Christine A. Hydock, Chief, Medical Programs Division, 202–366–4001,
You may see all the comments online through the Federal Document Management System (FDMS) at:
On March 16, 2016, FMCSA published a notice announcing its decision to renew exemptions for 99 individuals from the insulin-treated diabetes mellitus prohibition in 49 CFR 391.41(b)(3) to operate a CMV in interstate commerce and requested comments from the public (80 FR 14210). The public comment period ended on April 15, 2016, and no comments were received. As stated in the previous notice, FMCSA has evaluated the eligibility of these applicants and determined that renewing these exemptions would achieve a level of safety equivalent to or greater than the level that would be achieved by complying with the current regulation 49 CFR 391.41(b)(3). The physical qualification standard for drivers regarding diabetes found in 49 CFR 391.41(b)(3) states that a person is physically qualified to drive a CMV if that person has no established medical history or clinical diagnosis of diabetes mellitus currently requiring insulin for control.
FMCSA received no comments in this preceding.
Based upon its evaluation of the 99 renewal exemption applications and that no comments were received, FMCSA confirms its decision to exempt the following drivers from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce in 49 CFR 391.64(3):
As of March 5, 2016, and in accordance with 49 U.S.C. 31136(e) and 31315, the following 41 individuals have satisfied the renewal conditions for obtaining an exemption from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce. (78 FR 79062; 79 FR 12567):
The drivers were included in Docket No. FMCSA–2013–0193. Their exemptions are effective as of March 5, 2016 and will expire on March 5, 2018.
As of March 7, 2016, and in accordance with 49 U.S.C. 31136(e) and 31315, the following 45 individuals, have satisfied the renewal conditions for obtaining an exemption from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce (77 FR 3549; 77 FR 13685; 78 FR 78479; 79 FR 13086):
The drivers were included in Docket Nos. FMCSA–2011–0368; FMCSA–2013–0192. Their exemptions are effective as of March 7, 2016 and will expire on March 7, 2018.
As of March 23, 2016, and in accordance with 49 U.S.C. 31136(e) and 31315, the following 13 individuals have satisfied the renewal conditions for obtaining an exemption from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce. (77 FR 5870; 77 FR 17116):
The drivers were included in Docket No. FMCSA–2011–0381. Their exemptions are effective as of March 23, 2016 and will expire on March 23, 2018.
In accordance with 49 U.S.C. 31315, each exemption will be valid for two years from the effective date unless revoked earlier by FMCSA. The exemption will be revoked if the following occurs: (1) The person fails to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than was maintained prior to being granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136 and 31315.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice of final disposition.
FMCSA announces its decision to renew exemptions of 107 individuals from its prohibition in the Federal Motor Carrier Safety Regulations (FMCSRs) against persons with insulin-treated diabetes mellitus (ITDM) from operating commercial motor vehicles (CMVs) in interstate commerce. The exemptions enable these individuals with ITDM to continue to operate CMVs in interstate commerce.
Each group of renewed exemptions was effective on the dates stated in the discussions below and will expire on the dates stated in the discussions below.
Ms. Christine A. Hydock, Chief, Medical Programs Division, 202–366–4001,
You may see all the comments online through the Federal Document Management System (FDMS) at:
On December 30, 2015, FMCSA published a notice announcing its decision to renew exemptions for 107 individuals from the insulin-treated diabetes mellitus prohibition in 49 CFR 391.41(b)(3) to operate a CMV in interstate commerce and requested comments from the public (80 FR 81667). The public comment period ended on January 29, 2016 and no comments were received.
As stated in the previous notice, FMCSA has evaluated the eligibility of these applicants and determined that renewing these exemptions would achieve a level of safety equivalent to or greater than the level that would be achieved by complying with the current regulation 49 CFR 391.41(b)(3).
The physical qualification standard for drivers regarding diabetes found in 49 CFR 391.41(b)(3) states that a person is physically qualified to drive a CMV if that person has no established medical history or clinical diagnosis of diabetes mellitus currently requiring insulin for control.
FMCSA received no comments in this preceding.
Based upon its evaluation of the 107 renewal exemption applications and that no comments were received, FMCSA announces its decision to exempt the following drivers from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce in 49 CFR 391.64(3):
As of January 5, 2016, the following 20 individuals have satisfied the renewal conditions for obtaining an exemption from the rule prohibiting drivers with ITDM from driving CMVs
The drivers were included in Docket No. FMCSA–2011–0300. Their exemptions are effective as of January 5, 2016 and will expire on January 5, 2018.
As of January 11, 2016, the following 24 individuals have satisfied the renewal conditions for obtaining an exemption from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce (74 FR 55890; 75 FR 1449; 80 FR 81667):
The drivers were included in Docket No. FMCSA–2009–0289. Their exemptions are effective as of January 11, 2016 and will expire on January 11, 2018.
As of January 23, 2016, the following 13 individuals have satisfied the renewal conditions for obtaining an exemption from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce (78 FR 65034; 79 FR 3917; 80 FR 81667):
The drivers were included in Docket No. FMCSA–2013–0190. Their exemptions are effective as of January 23, 2016 and will expire on January 23, 2018.
As of January 28, 2016, the following 25 individuals have satisfied the renewal conditions for obtaining an exemption from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce (74 FR 65836; 75 FR 4622; 80 FR 81667):
The drivers were included in Docket No. FMCSA–2009–0290. Their exemptions are effective as of January 28, 2016 and will expire on January 28, 2018.
As of January 29, 2016, the following 25 individuals have satisfied the renewal conditions for obtaining an exemption from the rule prohibiting drivers with ITDM from driving CMVs in interstate commerce (78 FR 68139; 79 FR 4807; 80 FR 81667):
The drivers were included in Docket No. FMCSA–2013–0191. Their exemptions are effective as of January 29, 2016 and will expire on January 29, 2018.
In accordance with 49 U.S.C. 31315, each exemption will be valid for two years from the effective date unless revoked earlier by FMCSA. The exemption will be revoked if the following occurs: (1) The person fails to comply with the terms and conditions of the exemption; (2) the exemption has resulted in a lower level of safety than was maintained prior to being granted; or (3) continuation of the exemption would not be consistent with the goals and objectives of 49 U.S.C. 31136 and 31315.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Grant of petition.
Volkswagen Group of America, Inc. (Volkswagen), has determined that certain model year (MY) 2016 Volkswagen Beetle Convertible passenger cars do not fully comply with Federal Motor Vehicle Safety Standard (FMVSS) No. 110,
For further information on this decision please contact Kerrin Bressant, Office of Vehicle Safety Compliance, the National Highway Traffic Safety Administration (NHTSA), telephone (202) 366–1110.
Volkswagen Group of America, Inc. (Volkswagen), has determined that certain model year (MY) 2016 Volkswagen Beetle Convertible passenger cars do not fully comply with paragraph S4.3(d) of Federal Motor Vehicle Safety Standard (FMVSS) No. 110,
Pursuant to 49 U.S.C. 30118(d) and 30120(h) and the rule implementing those provisions at 49 CFR part 556, Volkswagen has petitioned for an exemption from the notification and remedy requirements of 49 U.S.C. Chapter 301 on the basis that this noncompliance is inconsequential to motor vehicle safety.
The notice of receipt of Volkswagen's petition was published, with a 30-day public comment period, on June 14, 2016 in the
Affected are approximately 325 MY 2016 Volkswagen Beetle Convertible passenger vehicles that were manufactured between June 18, 2015, and November 9, 2015.
Volkswagen stated that the subject vehicles have a Tire Placard Label that is misprinted with an incorrect tire size as compared to the tires the vehicle was equipped with and therefore does not fully conform to paragraph S4.3(d) of FMVSS No. 110.
Paragraph S4.3(d) of FMVSS No. 110 requires, in pertinent part:
S4.3 Placard. Each vehicle, except for a trailer or incomplete vehicle, shall show the information specified in S4.3 (a) through (g), and may show, at the manufacturer's option, the information specified in S4.3 (h) through (i), on a placard permanently affixed to the driver's side B-pillar . . .
(d) Tire size designation, indicated by the headings “size” or “original tire size” or “original size,” and “spare tire” or “spare,” for the tires installed at the time of the first purchase for purposes other than resale. For full size spare tires, the statement “see above” may, at the manufacturer's option replace the tire size designation. If no spare tire is provided, the word “none” must replace the tire size designation.
Volkswagen described the subject noncompliance and stated its belief that the noncompliance is inconsequential to motor vehicle safety for the following reasons:
(1) Volkswagen stated that the condition described (tire placard with an incorrect label size on it) would not adversely affect the tire and loading capability of the vehicle.
(2) Volkswagen stated that the loading and combined weight information was printed correctly on both versions of the Tire Placard Label.
NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and 30120(h)) that permit manufacturers to file petitions for a determination of inconsequentiality allow NHTSA to exempt manufacturers only from the duties found in sections 30118 and 30120, respectively, to notify owners, purchasers, and dealers of a defect or noncompliance and to remedy the defect or noncompliance. Therefore, this decision only applies to the subject vehicles that Volkswagen no longer controlled at the time it determined that the noncompliance existed. However, the granting of this petition does not relieve vehicle distributors and dealers of the prohibitions on the sale, offer for sale, or introduction or delivery for introduction into interstate commerce of the noncompliant vehicles under their control after Volkswagen notified them that the subject noncompliance existed.
49 U.S.C. 30118, 30120: Delegations of authority at 49 CFR 1.95 and 501.8.
(b) ‘Eradication’ means the removal or destruction of an entire population of invasive species.
(c) ‘Federal agency’ means an executive department or agency, but does not include independent establishments as defined by 5 U.S.C. 104.
(d) ‘Introduction’ means, as a result of human activity, the intentional or unintentional escape, release, dissemination, or placement of an organism into an ecosystem to which it is not native.
(e) ‘Invasive species’ means, with regard to a particular ecosystem, a non-native organism whose introduction causes or is likely to cause economic or environmental harm, or harm to human, animal, or plant health.
(f) ‘Non-native species’ or ‘alien species’ means, with respect to a particular ecosystem, an organism, including its seeds, eggs, spores, or other biological material capable of propagating that species, that occurs outside of its natural range.
(g) ‘Pathway’ means the mechanisms and processes by which non-native species are moved, intentionally or unintentionally, into a new ecosystem.
(h) ‘Prevention’ means the action of stopping invasive species from being introduced or spreading into a new ecosystem.
(i) ‘United States’ means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, Guam, American Samoa, the U.S. Virgin Islands, the Commonwealth of the Northern Mariana Islands, all possessions, and the territorial sea of the United States as defined by Presidential Proclamation 5928 of December 27, 1988.”
(c) Federal agencies shall pursue the duties set forth in this section in coordination, to the extent practicable, with other member agencies of the Council and staff, consistent with the National Invasive Species Council Management Plan, and in cooperation with State, local, tribal, and territorial governments, and stakeholders, as appropriate, and in consultation with the Department of State when Federal agencies are working with international organizations and foreign nations.
(d) Federal agencies that are members of the Council, and Federal interagency bodies working on issues relevant to the prevention, eradication, and control of invasive species, shall provide the Council with annual information on actions taken that implement these duties and identify barriers to advancing priority actions.
(e) To the extent practicable, Federal agencies shall also expand the use of new and existing technologies and practices; develop, share, and utilize similar metrics and standards, methodologies, and databases and, where relevant, platforms for monitoring invasive species; and, facilitate the interoperability of information systems, open data, data analytics, predictive modeling, and data reporting necessary to inform timely, science-based decision making.
(a) Federal agencies shall consider the potential public health and safety impacts of invasive species, especially those species that are vectors, reservoirs, and causative agents of disease. The Department of Health and Human Services, in coordination and consultation with relevant agencies as appropriate, shall within 1 year of this order, and as requested by the Council thereafter, provide the Office of Science and Technology Policy and the Council a report on public health impacts associated with invasive species. That report shall describe the disease, injury, immunologic, and safety impacts associated with invasive species, including any direct and indirect impacts on low-income, minority, and tribal communities.
(b) Federal agencies shall consider the impacts of climate change when working on issues relevant to the prevention, eradication, and control of invasive species, including in research and monitoring efforts, and integrate invasive species into Federal climate change coordinating frameworks and initiatives.
(c) Federal agencies shall consider opportunities to apply innovative science and technology when addressing the duties identified in section 2 of Executive Order 13112, as amended, including, but not limited to, promoting open data and data analytics; harnessing technological advances in remote sensing technologies, molecular tools, cloud computing, and predictive analytics; and using tools such as challenge prizes, citizen science, and crowdsourcing.
(b) The Council's membership shall be composed of the following officials, who may designate a senior-level representative to perform the functions of the member:
(c) The Council shall be co-chaired by the Secretary of the Interior (Secretary), the Secretary of Agriculture, and the Secretary of Commerce, who shall meet quarterly or more frequently if needed, and who may designate a senior-level representative to perform the functions of the Co-Chair. The Council shall meet no less than once each year. The Secretary of the Interior shall, after consultation with the Co-Chairs, appoint an Executive Director of the Council to oversee a staff that supports the duties of the Council. Within 1 year of the date of this order, the Co-Chairs of the Council shall, with consensus of its members, complete a charter, which shall include any administrative policies and processes necessary to ensure the Council can satisfy the functions and responsibilities described in this order.
(d) The Secretary of the Interior shall maintain the current Invasive Species Advisory Committee established under the Federal Advisory Committee Act, 5 U.S.C. App., to provide information and advice for consideration by the Council. The Secretary shall, after consultation with other members of the Council, appoint members of the advisory committee who represent diverse stakeholders and who have expertise to advise the Council.
(e) Administration of the Council. The Department of the Interior shall provide funding and administrative support for the Council and the advisory committee consistent with existing authorities. To the extent permitted by law, including the Economy Act, and within existing appropriations, participating agencies may detail staff to the Department of the Interior to support the Council's efforts.”
(a) with regard to the implementation of this order, work to ensure that the Federal agency and interagency activities concerning invasive species are coordinated, complementary, cost-efficient, and effective;
(b) undertake a National Invasive Species Assessment in coordination with the U.S. Global Change Research Program's periodic national assessment, that evaluates the impact of invasive species on major U.S. assets, including food security, water resources, infrastructure, the environment, human, animal, and plant health, natural resources, cultural identity and resources, and military readiness, from ecological, social, and economic perspectives;
(c) advance national incident response, data collection, and rapid reporting capacities that build on existing frameworks and programs and strengthen early detection of and rapid response to invasive species, including those that are vectors, reservoirs, or causative agents of disease;
(d) publish an assessment by 2020 that identifies the most pressing scientific, technical, and programmatic coordination challenges to the Federal Government's capacity to prevent the introduction of invasive species, and that incorporate recommendations and priority actions to overcome these challenges into the National Invasive Species Council Management Plan, as appropriate;
(e) support and encourage the development of new technologies and practices, and promote the use of existing technologies and practices, to prevent, eradicate, and control invasive species, including those that are vectors, reservoirs, and causative agents of disease;
(f) convene annually to discuss and coordinate interagency priorities and report annually on activities and budget requirements for programs that contribute directly to the implementation of this order; and
(g) publish a National Invasive Species Council Management Plan as set forth in section 5 of this order.”
(b) The Management Plan shall recommend strategies to:
(c) The Council shall evaluate the effectiveness of the Management Plan implementation and update the Plan every 3 years. The Council shall provide an annual report of its achievements to the public.
(d) Council members may complement the Management Plan with invasive species policies and plans specific to their respective agency's roles, responsibilities, and authorities.”
“(d) The duties of section 3(a)(2) and section 3(a)(3) of this order shall not apply to any action of the Department of State if the Secretary of State finds that exemption from such requirements is necessary for foreign policy, readiness, or national security reasons. The duties of section 3(a)(2) and section 3(a)(3) of this order shall not apply to any action of the Department of Defense if the Secretary of Defense finds that exemption from such requirements is necessary for foreign policy, readiness, or national security reasons.”
“(e) The requirements of this order do not affect the obligations of the Department of Health and Human Services under the Public Health Service Act or the Federal Food, Drug, and Cosmetic Act.”
(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Final rule.
FMCSA establishes new minimum training standards for certain individuals applying for their commercial driver's license (CDL) for the first time; an upgrade of their CDL (
This final rule is effective February 6, 2017. The compliance date for this rule is February 7, 2020. Comments sent to the Office of Management and Budget (OMB) on the collection of information must be received by OMB on or before January 9, 2017.
Petitions for Reconsideration of this final rule must be submitted to the FMCSA Administrator no later than January 9, 2017.
Mr. Richard Clemente, Driver and Carrier Operations (MC–PSD) Division, FMCSA, 1200 New Jersey Ave. SE., Washington, DC 20590–0001, by telephone at 202–366–4325, or by email at
For comments on the Privacy Analysis in this Rulemaking, contact FMCSA's Privacy Officer: Shannon DiMartino, Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590–0001 or by telephone at 202–366–1577.
This final rule responds to a Congressional mandate imposed under the Moving Ahead for Progress in the 21st Century Act (MAP–21). The rule is based in part on consensus recommendations from the Agency's Entry-Level Driver Training Advisory Committee (ELDTAC), a negotiated rulemaking committee that held a series of meetings between February and May 2015.
This Final Rule is organized as follows:
For access to docket FMCSA–2007–27748 to read background documents and comments received, go to
In accordance with 5 U.S.C. 553(c), DOT solicits comments on the Privacy Impact Assessment (PIA) from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to
FMCSA believes this final rule enhances the safety of commercial motor vehicle (CMV) operations on our Nation's highways by establishing a minimum standard for ELDT and increasing the number of drivers who receive ELDT. It replaces existing mandatory training requirements for entry-level operators of CMVs in interstate and intrastate operations required to possess a CDL. The minimum training standards established in today's rule are for certain individuals applying for a CDL for the first time, an upgrade of their CDL
FMCSA's legal authority for this rulemaking is derived from the Motor Carrier Act of 1935, the Motor Carrier Safety Act of 1984, the Commercial Motor Vehicle Safety Act of 1986 (CMVSA), and MAP–21.
The rule primarily revises 49 CFR part 380, Special Training Requirements. It requires an individual who must complete certain CDL skills test requirements, defined as an “Entry-Level Driver,” to receive mandatory training. The rule applies to persons who drive, or intend to drive, CMVs in either interstate or intrastate commerce. Military drivers, farmers, and firefighters who are generally excepted from the CDL requirements in part 383 are also excepted from this rule.
The rule establishes Class A and Class B CDL core curricula and training curricula including passenger (P); school bus (S); and hazardous materials (H) endorsements. The core and endorsement curricula generally are subdivided into theory (knowledge) and behind-the-wheel (BTW) (range and public road) segments. There is no minimum number of hours that driver-trainees must spend on the theory portions of any of the individual curricula. However, training providers must provide instruction in all elements of the applicable theory curriculum and driver-trainees must receive an overall score of at least 80 percent on the theory assessment.
The BTW curricula for the Class A and Class B CDL, comprised of range and public road segments, include discrete maneuvers which each driver-trainee must proficiently demonstrate to the satisfaction of the training instructor. There is no minimum number of hours that driver-trainees must spend on the BTW elements of the core or endorsement curricula. The training provider must not issue the training certificate unless the driver-trainee demonstrates proficiency in performing all required BTW skills. Providers must submit electronic notification to FMCSA that an individual completed the required training; the Agency will provide that information to the SDLAs through the Commercial Driver's License Information System (CDLIS).
This rule applies to entities that train entry-level drivers, also referred to herein as driver-trainees. Training providers must, at a minimum, provide instruction in a training curriculum that meets all the standards established in today's rule and must also meet other eligibility requirements in order to be listed on FMCSA's TPR. Training providers must also attest that they meet the specified requirements, and in the event of an FMCSA audit or investigation of the provider, must supply documentation to verify their compliance. The final rule also makes conforming changes to parts 383 and 384 of the FMCSRs.
The compliance date for this rule is three years after the effective date of the final rule. This three-year period provides the States with sufficient time to pass necessary implementing legislation and to modify their information systems to begin recording the CDL applicant's compliance with ELDT requirements. This phase-in period also allows time for CMV driver training entities to develop and begin offering training programs that meet the eligibility requirements for listing on the TPR.
Entry-level drivers, motor carriers, training providers, SDLAs, and the Federal Government will incur costs for compliance and implementation. The costs of the final rule include tuition expenses, the opportunity cost of time while in training, compliance audit costs, and costs associated with the implementation and monitoring of the TPR. As shown in Table 1, FMCSA estimates that the 10-year cost of the final rule will total $3.66 billion on an undiscounted basis, $3.23 billion discounted at 3 percent, and $2.76 billion discounted at 7 percent (all in 2014 dollars). Values in Table 1 are rounded to the nearest million.
The costs of this final rule specifically attributable to the S (school bus) endorsement training requirement were evaluated separately in the RIA, because, while Section 32304 of MAP–21 mandates training for entry-level drivers who wish to obtain a CDL or a P or H endorsement, the statute is silent with respect to the S endorsement. Inclusion of the S endorsement training requirement increases the total cost of the rule by only approximately 0.82 percent. On an annualized basis at a 7 percent discount rate, this equates to an increase in the total cost of the rule from $365 million to $368 million. Details of these comparative analyses of the costs of the rule and the reasons for this relatively small change in costs resulting from the inclusion of the S endorsement training requirement are presented in Section 3 of the RIA.
This final rule will result in benefits to CMV operators, the transportation industry, the traveling public, and the environment. FMCSA estimated benefits in two broad categories: Safety benefits and non-safety benefits. Training related to the performance of complex tasks may improve performance; in the context of the training required by this final rule, improvement in task performance constitutes adoption of safer driving practices that the Agency believes will reduce the frequency and severity of crashes, thereby resulting in safer roadways for all. The training related to fuel efficient driving practices that will be taught under the `speed management' and `space management' sections of the curriculum reduce fuel consumption and consequently lower environmental impacts associated with carbon dioxide emissions. As discussed in Section 4.1.1 of the RIA for today's rule, FMCSA does not believe that the training in fuel efficient driving practices addressed by this rule will contribute to measurably longer trip times, as the curricula focus on factors such as maintaining safe distances between vehicles and avoiding hard acceleration and braking, rather than reducing vehicle speed. The Agency therefore assumes in its analysis that these fuel efficient driving practices will not contribute to measurably longer trip times.
Safer driving and better-informed drivers will reduce maintenance and repair costs. Table 2 below presents the directly quantifiable benefits that FMCSA projects will result from this final rule (all in 2014 dollars, values rounded to the nearest million). Due to wide ranges of estimates in studies relevant to the quantified benefits of the rule and the lack of studies that specifically focus on the curricula prescribed by this rule,
While FMCSA believes that this final rule will at minimum achieve cost-neutrality, the net of quantified costs and benefits (presented in Table 5 below) results in an annualized net cost of $131 million at a 7 percent discount rate. This estimate is based only on
The lack of data directly linking training to improvements in safety outcomes, such as reduced crash frequency or severity, posed a challenge to the Agency. Discussion regarding the efforts undertaken by FMCSA and its partners in the negotiated rulemaking process to estimate such a quantitative link is presented in Section 4.2 of the RIA. In the NPRM, the Agency again requested any additional data on the safety benefits of requiring ELDT, but did not receive any information that could be used to reliably quantify safety benefits associated with pre-CDL driver training.
In the absence of a clear link between training and safety, FMCSA followed the guidance of the Office of Management and Budget (OMB) in its Circular A–4 to perform a threshold analysis to determine the degree of safety benefits that will need to occur as a consequence of this final rule in order for the rule to achieve cost-neutrality.
Table 6 below presents the projected number of crash reductions involving entry-level drivers that must occur under the central case in each of the 10 years following this final rule's implementation and in the aggregate, in order to offset the net cost ($131 million annualized at 7 percent). It is the sum of the monetized value of
This rule is based on the authority of the Motor Carrier Act of 1935, the Motor Carrier Safety Act of 1984, and the Commercial Motor Vehicle Safety Act of 1986 (CMVSA), as described below. It also implements section 32304 of MAP–21, requiring the establishment of minimum driver training standards for certain individuals required to hold a CDL. The NPRM preceding this final rule reflected the recommendations of FMCSA's ELDTAC, comprised of 25 industry stakeholders and FMCSA, convened through a negotiated rulemaking in 2015, as discussed below. Today's rule retains a number of those recommendations.
The Motor Carrier Act of 1935, codified at 49 U.S.C. 31502(b), provides that “The Secretary of Transportation may prescribe requirements for—(1) qualifications and maximum hours of service of employees of, and safety of operation and equipment of, a motor carrier; and (2) qualifications and maximum hours of service of employees of, and standards of equipment of, a motor private carrier, when needed to promote safety of operation.” This rule improves the “safety of operation” of entry-level “employees” who operate CMVs, as defined in 49 CFR 383.5, by enhancing the training they receive before obtaining or upgrading a CDL.
The Motor Carrier Safety Act of 1984 (MCSA), codified at 49 U.S.C. 31136(a), provides concurrent authority to regulate drivers, motor carriers, and vehicle equipment. It requires the Secretary of Transportation to prescribe regulations for CMV safety to ensure that (1) CMVs are maintained, equipped, loaded, and operated safely; (2) responsibilities imposed on CMV drivers do not impair their ability to operate the vehicles safely; (3) drivers' physical condition is adequate to operate the vehicles safely; (4) the operation of CMVs does not have a deleterious effect on drivers' physical
This rule does not directly address medical standards for drivers (section 31136(a)(3)) or possible physical effects caused by driving CMVs (section 31136(a)(4)). However, to the extent that the various curricula in today's rule address FMCSA's medical requirements for CMV drivers, section 31136(a)(3), has been considered and addressed. FMCSA does not anticipate that drivers will be coerced (section 31136(a)(5)) as a result of this rulemaking. However, we note that the theory training curricula for Class A and B CDLs include a unit addressing the right of an employee to question the safety practices of an employer without incurring the risk of losing a job or being subject to reprisal simply for stating a safety concern. Driver-trainees will also be instructed in procedures for reporting to FMCSA incidents of coercion from motor carriers, shippers, receivers, or transportation intermediaries.
CMVSA provides, among other things, that the Secretary of Transportation shall prescribe regulations on minimum standards for testing and ensuring the fitness of an individual operating a commercial motor vehicle (CMV) (49 U.S.C. 31305(a)). The requirement of today's rule that States test only those entry-level CDL applicants who have completed the requisite training falls within the “minimum standards for testing” authorized by the CMVSA. The training requirement itself, as described below, was created by section 32304 of MAP–21.
MAP–21 requires DOT to regulate ELDT (Pub. L. 112–141, section 32304, 126 Stat. 405, 791 (July 6, 2012)). MAP–21 modified 49 U.S.C. 31305 by adding paragraph (c), which requires FMCSA to issue ELDT regulations. The regulations must address the knowledge and skills necessary for safe operation of a CMV that must be acquired before obtaining a CDL for the first time or upgrading from one class of CDL to another. MAP–21 also requires that training apply to CMV operators seeking passenger or hazardous materials endorsements (49 U.S.C. 31305(c)(1) and (2)). Although the statute specifically requires that the regulations address both classroom and behind the wheel (BTW) instruction, MAP–21 otherwise allows FMCSA broad discretion to define the training methodology, standards, and curriculum necessary to satisfy the ELDT mandate.
MAP–21 clearly establishes the scope of operations to be covered by this rule by requiring that ELDT regulations apply to individuals operating CMVs in both interstate and intrastate commerce. The ELDT requirements are codified in section 31305 of Title 49 of the U.S. Code, and the definition of a CMV in section 31301(4) therefore applies to ELDT. The definition of “commerce” in section 31301(2) covers both interstate commerce (paragraph A) and intrastate commerce (paragraph B). ELDT, as a CDL-related mandate, therefore applies to both interstate and intrastate commerce.
The final rule includes a school bus (S) endorsement curriculum, as proposed in the NPRM. Although MAP–21 did not specifically mandate training for this endorsement, the current FMCSRs require that an applicant for the S endorsement must pass the knowledge and skills test for a passenger vehicle (P) endorsement (49 CFR 383.123(a)(1)). FMCSA believes that because Congress recognized the importance of entry-level training in the operation of passenger vehicles by including the P endorsement within the scope of the MAP–21 mandate, the inclusion of the S endorsement training curriculum in the final rule is consistent with that mandate.
Before prescribing any regulations, FMCSA must consider their “costs and benefits” (49 U.S.C. 31136(c)(2)(A) and 31502(d)). Those factors are addressed in the Regulatory Impact Analysis (RIA) associated with this rulemaking and are summarized above.
On March 7, 2016, FMCSA published a notice of proposed rulemaking (NPRM), Minimum Training Requirements for Entry-Level Commercial Motor Vehicle Operators, in the
MAP–21 mandated that the FMCSA issue regulations to establish minimum entry-level training requirements for interstate and intrastate applicants obtaining a CDL for the first time, CDL holders seeking license upgrades, and those seeking passenger (P) or hazardous materials (H) endorsements. In response to that statutory mandate, the Agency published an NPRM, “Minimum Training Requirements for Entry-Level Commercial Motor Vehicle Operators,” on March 7, 2016. In the NPRM, FMCSA proposed the ELDTAC's consensus recommendations “to the maximum extent possible consistent with its legal obligations” as required under the Negotiated Rulemaking Act(5 U.S.C. 563(a)(7)).
The proposed regulations addressed the knowledge and/or skills training required for entry-level CMV drivers. Additionally, the NPRM outlined new eligibility standards that training providers must meet to deliver ELDT. Finally, while not specifically required by MAP–21, the NPRM reflected the ELDTAC's consensus that training should also be required for applicants seeking a school bus (S) endorsement and for CDL holders disqualified for safety-related CMV driving violations (refresher training).
The proposed rule generally applied to those individuals who obtain a CDL (or a CDL upgrade or endorsement) on or after the compliance date of the final rule and did not otherwise amend substantive CDL requirements in 49 CFR parts 383 and 384. The NPRM identified specific categories of drivers excluded from the rule, based on current exceptions in part 383.
The proposed rule also applied to entities that train CDL applicants. Such providers would, at a minimum, provide instruction in accordance with a training curriculum that meets all FMCSA standards as set forth in the NPRM. Under the NPRM, training providers would attest to their compliance with the eligibility requirements set forth in proposed subpart G of part 380. These proposed requirements addressed the following areas: Course administration; instructional personnel qualifications; training vehicles; training facilities (
The NPRM described factors that would justify FMCSA's removal of a training entity from the TPR, setting forth procedures the Agency would follow before removing an entity from the TPR. The NPRM also proposed procedures that training providers would follow in order to challenge a proposed removal and to apply for reinstatement to the TPR following involuntary removal.
The NPRM proposed that training providers would electronically notify the TPR by the close of the next business day after driver-trainees completed training. The submission of this documentation would ensure that each individual received the required training from a provider listed on the TPR prior to taking the State-administered CDL skills test for the Class A or B CDL and/or the passenger or school bus endorsement, or the knowledge test for the hazardous materials endorsement.
The NPRM proposed core curricula for Class A CDL and Class B CDL applicants; curricula for the P, S, and H endorsements; and a “refresher” training curriculum. The proposed core curricula for Class A and Class B CDL training programs, as well as the P and S curricula, were subdivided into theory and BTW (range and public road) components. The H endorsement training curriculum was proposed as theory-only training because there is no CDL skills test currently required for those seeking an H endorsement. The NPRM did not propose that any minimum number of hours be spent by driver-trainees in completing the theory portions of any of the individual curricula, though training providers must cover all elements of the applicable curriculum and trainees must achieve an overall score of at least 80 percent on the written theory assessment.
The NPRM proposed that a minimum number of BTW hours be required for the Class A and Class B curricula. Class A applicants would be required to complete at least 30 hours of BTW training, while Class B applicants would need to complete a minimum of 15 hours BTW. The NPRM did not propose that driver-trainees spend any minimum number of hours to complete the BTW portion of the P or S curriculum. The preamble to the proposed rule stated that, for BTW training, “[a]ll required driving maneuvers must be performed to the satisfaction of the instructor . . .” As proposed, a CDL holder disqualified from operating a CMV due to safety-related violations would need to complete refresher training requirements before applying for reinstatement of his/her CDL. Similar to the other proposed curricula, the refresher curriculum included both theory and BTW components; however, the NPRM did not propose that a minimum number of hours be required to complete any portion of the refresher curriculum. The Agency proposed that SDLAs issue limited CDL privileges for persons seeking to become reinstated, solely for the purpose of allowing the driver to complete the BTW portion of the refresher curriculum.
The proposed compliance date for this rule was three years after the effective date of the final rule. The Agency believed the three-year phase-in period would give the States enough time to (1) pass implementing legislation and/or regulations as necessary; (2) modify their information systems to begin recording the training provider's certification information into CDLIS and onto the driver's CDL record; and (3) begin making that information available to other States through CDLIS. The three-year phase-in period would also allow ample time for the CMV driver training industry to develop and begin offering training programs that meet the requirements for listing on the TPR.
There were 338 submissions on the proposed rule, 190 of which provided substantive comments. In addition to private citizens, the following types of entities commented on the proposed rule: Academic institutions, agriculture industry, motor carriers, CMV driver trainers, electric utilities, professional associations, owner/operators, safety advocacy groups, State DMVs and other governmental entities, school bus operations, and trade associations.
Commenters generally supporting the proposed rule endorsed setting minimum standards, which they said would improve road safety and reduce crashes involving CMVs. While a number of commenters asserted that over the long term, entry-level driver training would result in greater highway safety and efficiencies and savings for the industry, none of those comments included quantitative data to support that assertion.
Commenters generally opposing the NPRM made several arguments. The most frequent assertions were that an entry-level driver training program would exacerbate a commercial driver shortage (especially for school bus drivers), that an ELDT rule was unnecessary because carrier-based or other existing training regimens already work, that FMCSA had no data to support the proposed requirements, and that FMCSA exaggerated savings or underestimated costs of the ELDT proposal.
The ELDT requirements proposed in the NPRM pertain to drivers who meet the definition of “entry-level driver” in § 380.605 and who intend to drive CMVs in interstate and/or intrastate commerce. As proposed, drivers holding a valid Class A or Class B CDL or a P, S, or H endorsement issued before the compliance date of the final rule would not be subject to ELDT requirements. Under the NPRM, the following categories of drivers, who are currently excepted or may, at the State's discretion, be excepted from CDL requirements, would also be excepted from the ELDT requirements: (1) Drivers excepted from the CDL requirements under § 383.3(c), (d), and (h), which includes individuals who operate CMVs for military purposes, farmers, firefighters, emergency response vehicle drivers and drivers removing snow and ice, and drivers of “covered farm vehicles”; (2) drivers applying for a restricted CDL under § 383.3 (e) through (g); and (3) veterans with military experience who meet the requirements and conditions of § 383.77.
The Association of American Railroads (AAR) commented that several of the proposed training standards should not apply to railroad employees required to hold a CDL. For example, AAR stated that FMCSA
FMCSA received a large number of comments from the custom harvester industry requesting an exception from the ELDT rule. The commenters generally cited the following arguments in support of their request. First, custom harvesters hire and train seasonal CDL drivers, most of whom do not already have a CDL. Consequently, the custom harvester typically provides training to enable the driver to obtain a CDL. Because many entry-level drivers in the custom harvester industry cannot afford training costs and other CDL-related expenses, the employer must directly pay for, or absorb the cost of, providing CDL-related training. Custom harvester employers therefore believed that the ELDT training requirements would impose additional costs on them.
Second, the custom harvester industry argued that because the CMV testing and licensing standards in certain foreign jurisdictions do not meet the CDL testing standards established in part 383, a temporary worker who holds an H2–A visa must obtain a non-domiciled CDL. Non-domiciled CDLs are valid only for the length of the holder's work visa, which is normally six to eleven months. Commenters felt it was unfair for them to incur the cost of training drivers who obtain a CDL that is valid only for the length of their employment in the United States, and for whom they usually have to pay transportation expenses to and from the United States.
Third, custom harvester industry commenters asserted that they have a strong driver safety record in the United States. The National Council of Farmer Cooperatives (NCFC) noted that agricultural services “present a lower risk relative to other types of commercial vehicle operations due to the nature of agricultural production and the way trucks and application equipment are used.” NCFC specifically cited less traffic congestion in rural areas and fewer total miles driven than the “general commercial trucking industry.” NCFC requested that FMCSA therefore grant recognition for “existing training programs, previous driving experience, and current industry practices for non-accredited entry-level driver classroom and behind-the-wheel training requirements for farm-related industries.”
The Oregon Department of Transportation (ODOT) supported the proposed exception for holders of valid CDLs issued before the compliance date of the final rule, as provided in § 380.603(b), but noted that the language “except as otherwise specifically provided” is very unclear.
FMCSA acknowledges the concerns raised by the custom harvest industry and others who believe that the specialized nature of their industries makes mandated ELDT unnecessary or unduly burdensome. In response, FMCSA emphasizes that any entity or employer currently providing training would be eligible for listing on the TPR, as long as the applicable minimum curricula and instructor requirements set forth in today's rule are met. Additional costs for such providers would include online registration for the TPR, which the Agency estimates will be minimal (see RIA for discussion of these costs). In addition, as noted in the NPRM and elsewhere in this preamble, today's rule does not impose any new Federal accreditation requirements on either classroom or BTW training providers.
Further, the fact that CDL applicants in a specific industry expect to perform job functions that are more limited than the scope of the required curricula, or who may be expected to travel relatively short distances in the course of their employment, is not a valid basis for exception from ELDT requirements. Entry-level drivers obtaining a Class A or B CDL or a P, S, or H endorsement for the first time are presumed competent to safely operate the type of CMV for which they have received a license. Accordingly, CDL holders should be capable of operating the vehicle in appropriate settings and circumstances, which may go beyond the specific purpose or employment for which they initially obtained the CDL or endorsement. Regardless of an applicant's intentions at the time he or she obtains a CDL or endorsement, the individual is in fact credentialed to operate a range of CMVs falling within the CDL class of license or endorsement received. Therefore, based on the current CDL program, it is reasonable for FMCSA to require these individuals to receive training commensurate with the CMV driving credentials they hold.
Additionally, FMCSA notes that it would be virtually impossible to implement and enforce exemptions from the ELDT requirements in today's rule based either on the driver's industry or anticipated use of a CMV for which a CDL or endorsement is required.
The Agency also notes that the training requirements established in today's rule are generally imposed on a one-time-only basis. This also holds true for non-domiciled CDL holders; once they complete training for the non-domiciled CDL class or endorsement, they would not be required to repeat that same training upon their return to the United States in subsequent years. Therefore, H2–A workers in the custom harvest industry would need to complete the applicable ELDT requirements only once. In addition, because the final rule permits driver-trainees to obtain theory and BTW training from separate providers, absent a conflicting State requirement, foreign workers can complete the theory portion of the training online in order to reduce ELDT related costs.
Finally, as proposed, the ELDT requirements do not apply to individuals holding a valid CDL or a P, S, or H endorsement issued before the compliance date of the final rule. Due to other changes in the final rule discussed below, FMCSA deletes the language “except as otherwise specifically provided” from § 380.603(b).
As proposed, § 380.603(c)(1) required that individuals who obtain a CLP before the compliance date of the final rule would not be subject to ELDT requirements if they obtain a CDL within 360 days of obtaining a CLP. Therefore, under the NPRM, CLP holders who fail to obtain a CDL within the 360-day time frame would be required to complete ELDT before taking the required State-administered skills test.
In addition, under revised § 380.603(c)(1), CLPs with endorsements are included within the scope of this exception. Accordingly, any applicant who obtains a P or S endorsement on his or her CLP before the compliance date of the final rule is not required to complete the P or S endorsement training curriculum if the applicant receives the endorsement before the initial or renewed CLP expires.
This requirement would not apply to individuals seeking the H endorsement, who are not required to take a skills test, and therefore do not need to obtain a CLP. Unlike the P and S endorsements, the H endorsement is not linked to any specific class or type of vehicle. Accordingly, applicants for the H endorsement will already hold a Class A or B CDL, or will be concurrently obtaining a Class A or B CDL at the time they apply for the H endorsement, or intend to transport hazardous materials in a vehicle for which a Class A or B CDL is not required (
The NPRM proposed that individuals obtaining a CLP on or after the compliance date of the final rule must comply with applicable ELDT requirements. The Agency received no comments on this requirement and it is retained, as proposed, in § 380.603(c)(2).
The NPRM proposed that, except for driver-trainees seeking the H endorsement, driver-trainees must complete the theory and skills portion of the training within 360 days (§ 383.71(a)(4)).
The NPRM proposed minimum training standards for entry-level CMV drivers, minimum qualification requirements for individuals providing theory and/or BTW instruction, and minimum eligibility requirements for training providers.
The State of Michigan, Bureau of Driver and Vehicle Licensing Programs, Department of State (Michigan), recommended that the final rule require that theory/classroom training be coordinated with BTW training, adding that “[i]f not required by the rule, States should be allowed to require such coordination.” Michigan also noted that, because “some States do not presently allow the use of online training courses for driver education,” the final rule should not require that States accept online training.
A commenter representing the Driver and Vehicle Services Division of the Minnesota Department of Public Safety (Minnesota) noted that “Minnesota's licensed CDL behind-the-wheel instructor qualifications refer to hours of experience, by a showing of 3,000 hours within the last five years operating the class of vehicle for which instruction will be provided.” Also discussing the NPRM's requirements for BTW instructors, Virginia requested that “the proposed language be revised to indicate these are minimum requirements so that States have flexibility in requiring additional criteria.”
In order to comply with the requirements of today's rule, entry-level drivers must obtain BTW and/or theory training from a provider listed on the TPR. Under the final rule, the BTW portion of the required training must be completed before the applicant can take the State-administered skills test, except for H endorsement applicants, who must complete the H endorsement theory curriculum before taking the State-administered knowledge test.
The question of which, if any, additional State-based ELDT-related requirements apply to the applicant will be determined by where he or she obtains their BTW and/or theory training for the Class A or Class B CDL and/or the P, S, or H endorsements.
The Agency anticipates that most driver-trainees will obtain ELDT in their State of domicile. Under the final rule, driver-trainees who obtain BTW and/or theory training in their State of domicile are subject to any additional ELDT requirements that State imposes on CDL applicants.
For example, if a State requires that entry-level drivers complete a CDL training program with a prescribed minimum number of BTW hours, a driver-trainee who is domiciled there and obtains BTW training there, must comply with that requirement in order to take the State-administered the skills test. Similarly, driver-trainees who take theory training in their State of domicile would be required to comply with any State-based requirements applicable to theory training. Therefore, if a driver-trainee's State of domicile prohibits online CDL-related theory training, the individual would be required to obtain theory training in a classroom or other “live” setting permitted by the State. In these examples, the applicant's State of domicile is both the training State and the licensing State.
However, the final rule does not prohibit driver-trainees from obtaining training outside their State of domicile, if they so choose. Under § 383.79, which currently permits a non-domicile State to administer CDL skills testing to an applicant who has taken training in that State, but is to be licensed in his or her State of domicile, requires the applicant's licensing State to accept the results of that skills testing. This could occur, for example, if the applicant's prospective employer provided the training in a State other than the applicant's State of domicile. Under today's rule, any ELDT requirements that may exist in the licensing State (
Driver-trainees who elect to obtain theory training outside their State of domicile would also be subject to any additional theory training requirements imposed on CDL applicants by the training State. Accordingly, driver-trainees, when selecting a training provider, will need to understand the specific State-based ELDT requirements (if any) where they intend to obtain either type of training. FMCSA notes that the final rule does not require that driver-trainees obtain theory training prior to taking the State-administered knowledge test (except for H endorsement applicants), nor does it require that driver-trainees obtain theory training in the same State where they intend to take the State-administered knowledge test for any CDL license class or endorsement covered by the rule.
The minimum standards in today's rule also apply to ELDT providers and instructors. Training providers must meet and continue to comply with eligibility requirements, set forth in §§ 380.703 and 719 of the final rule, including utilizing qualified theory and BTW instructors. In order to be eligible for listing on the TPR, training providers must also comply with applicable State requirements in each State where in-person training is conducted, and must utilize theory and/or BTW instructors who comply with applicable qualification requirements in each State where in-person training is conducted. The Agency notes that, just as States may impose additional requirements on entry-level drivers who obtain training in their State, the final rule also permits States to impose requirements beyond the training or instructor/provider qualification standards adopted today.
For example, States are free to require that ELDT instructors in their State have more years of experience operating the class of vehicle for which instruction will be provided than the two-year minimum established in the final rule. States would also be free to add ELDT instructor qualifications, such as a required level of vocational or academic education (neither of which is required by today's final rule); or to impose additional bases for disqualification of training instructors. In these situations, training providers must comply with the additional requirements imposed in their respective States in order to meet the TPR eligibility requirement set forth in § 380.703(a)(5)(i).
In today's rule, the only exception to this requirement is for training providers who provide theory training exclusively online. While online content must be prepared and delivered by instructors meeting the qualification requirements of the final rule, the provider is not required to utilize instructors complying with State-based theory instructor qualifications. As explained below in the discussion of the definition of “theory instructor,” online providers cannot reasonably be expected to require that their theory instructors comply with multiple, and potentially conflicting, qualification requirements in any State where the online training might be taken.
As our discussion of these hypothetical examples illustrates, the purpose of this final rule is to establish a floor, not a ceiling, by requiring, at a minimum, that entry-level CMV drivers demonstrate proficiency in the applicable theory and BTW curricula established today. The Agency believes that, to the extent practicable, and consistent with Congressional intent, the final rule allows States the flexibility to impose additional ELDT requirements on driver-trainees who obtain training in their State and on training providers and instructors who deliver training in their State. That said, we are aware that questions concerning the relationship between Federal and State ELDT requirements will inevitably arise, and the Agency will provide additional post-rule guidance to address those issues, as necessary.
As proposed, ELDT requirements apply to all entry-level drivers operating CMVs in intrastate and interstate commerce, subject to the limited exceptions noted above.
The NPRM defined “training provider” as “an entity that is listed on the FMCSA TPR, as required by subpart G of this part.” In the preamble, the Agency noted that training providers could be training schools, educational institutions, motor carriers providing “in-house” training to current or prospective employees, local governments, or school districts.
In the NPRM, FMCSA said a range was “an area that must be free of obstructions, enables the driver to maneuver safely and free from interference from other vehicles and hazards, and has adequate sight lines.”
As proposed, training in the theory and BTW portions of the curricula may be delivered by different training providers, as long as each provider is listed on the TPR. The NPRM was silent on whether the range and public road portions of the Class A and B curricula could be delivered by different providers.
Further, in the case of BTW training for the S and P endorsements, the range and public road portions are not set out separately as they are for the Class A and B CDL core curricula. Instead, they are combined into a single BTW (range and public road) curriculum, effectively
Finally, as noted above in the discussion of the definition of “range,” training providers are not required to maintain or rent a private range in order to conduct BTW training. Publicly accessible areas can be used for this purpose, as long as the area affords sufficient space in which the required range maneuvers can be performed safely and other basic requirements are met.
The NPRM proposed that training providers who train, or expect to train, three or fewer entry-level drivers per year be exempt from two requirements applicable to all other providers. First, in order to qualify as a theory instructor, small training entities would not be required to have previously audited or instructed that portion of the theory curriculum they intend to instruct. Second, small entities would not be required to provide written training materials for any of the curricula. The purpose of these exemptions was to lessen the administrative burden on small training entities.
IUOE observed that “[s]ince written materials are integral components of high quality training, this exemption from providing written materials to trainees is contrary to the goals of this rulemaking.” IUOE also noted that the use of written training materials “is an obvious prerequisite to taking a test in a written or electronic format to demonstrate mastery of the information.”
The Agency does not anticipate that removal of the two exemptions will result in undue hardship on small training entities. For example, the AAMVA CDL manual or other existing training materials could be used to satisfy the requirement that written training materials be provided. We also note that, because the rule permits driver-trainees to obtain theory and BTW instruction from separate training providers, small entities can opt not to offer theory instruction if they so choose.
Further, as discussed below in the Explanation of Changes from the NPRM, FMCSA deletes from the definition of “theory instructor” in the final rule the proposed alternate theory instructor qualification requiring that instructors must have previously audited or instructed that portion of the theory curriculum they intend to instruct. Accordingly, the proposed small entity exemption to that requirement is also deleted.
Finally, FMCSA notes that the NPRM requested comments regarding any specific changes to the proposal that would lessen its regulatory impact on small business entities. The Agency did not receive any comments in response to that request.
FMCSA proposed a minimum number of required BTW hours for the range and public road portions of the Class A and Class B CDL curricula: Class A CDL driver-trainees would be required to receive a minimum of 30 hours of BTW training, with a minimum of 10 hours spent on a range, and either 10 hours spent driving on a public road or 10 public road trips (each no less than 50 minutes in duration). The remaining 10 hours of required BTW training could occur on either the range, public road, or some combination of the two, depending on the instructor's assessment of the individual driver-trainee's needs. Additionally, the NPRM proposed that all required driving maneuvers must be performed to the satisfaction of the instructor. In the NPRM, the definitions of “BTW range training” and “BTW public road training” each included a requirement that the training occur when a “driver-trainee has actual control of the power unit during a driving lesson” conducted on a range or public road.
As proposed, Class B CDL trainees would receive a minimum of 15 hours of BTW (range and public road) training, with a minimum of seven hours of public road driving. Again, the instructor would determine how the remaining eight hours are spent, as long as all the BTW elements of the range curriculum are covered.
FMCSA did not propose a minimum number of BTW hours for either the P or the S endorsement curricula.
The Agency requested comment on various aspects of this approach, including whether there should be a required minimum number of BTW hours for the Class A and Class B curricula and, if so, what the minimum number of BTW hours should be. In addition, we requested comment on whether any minimum number of BTW hours should be required for the P and S endorsements. The Agency also asked what alternatives to a required minimum number of BTW hours, such as a requirement expressed in terms of outcomes rather than specifying the means to those ends, would be appropriate to ensure an adequate level of BTW training for Classes A and B.
OOIDA commented that it “would like to see significantly more robust training requirements than currently proposed; however the required 30 hours BTW training is a necessary first step.” Similarly, although Delaware Technical Community College (DTCC) is “satisfied with the consensus reached by the ELDTAC for 30 hours of BTW time for Class A,” it supports a “stronger BTW requirement.” Specifically, DTCC proposed increasing the BTW hours for Class B from 15, as proposed, to 20, with a minimum of 10 hours of public road driving. The Delaware Motor Transport Association (DMTA) also supported increasing the minimum number of BTW hours for the Class B CDL from 15 to 20.
Other commenters, including the American Bus Association (ABA), United Motorcoach Association (UMA), Advocates for Auto and Highway Safety (Advocates), San Juan College, the National Association of State Directors of Pupil Transportation Services (NASDPTS), VU, VA DMV, and the Commercial Vehicle Training Association (CVTA), supported the minimum number of required BTW hours for Class A and/or Class B as proposed. NASDPTS commented that “[t]he [Class B] proposal is consistent with best practices and the high regard for safety exhibited within the nation's student transportation community.” Advocates, a member of the ELDTAC, characterized the required minimum number of BTW hours as “a common sense and essential component of the performance-based standard adopted by the ELDTAC.” Advocates also noted that this approach “reflects the consensus determination of the ELDTAC about the lowest level of BTW training that is necessary under the training curriculum.” The ABA, also a member of the ELDTAC, commented that the BTW hours issue was discussed extensively during the Committee's deliberations and that “[t]he minimum was based on the experience of current training providers' ability to deliver a basic program and ensure that all of the material was covered.”
The State of Michigan supported a required minimum number of BTW hours from which driver-trainees should not be permitted to “opt out,” but had no position on what the number of hours should be. The Iowa DOT also supported the “concept of minimum hours of BTW training,” but said that driver-trainees demonstrating proficiency should be able to “opt out” of the requirement. Minnesota commented that “[r]equired minimum hours is needed,” but questioned how compliance with an hours requirement would be documented. Schneider National (Schneider) agreed with FMCSA's proposal of 30 BTW hours for a Class A license, but recommended that hours spent on a public road specifically include practicing entry and exit of the interstate.
Several commenters supported adding a required number of minimum BTW hours to the P and S curricula. AAMVA recommended that FMCSA analyze the minimum number of hours required to complete the curricula “and use that number to set the baseline for the BTW requirement for the S and P endorsements . . .” The Iowa DOT supported a “limited amount of BTW training” for the S and P endorsements. San Juan College stated that “[e]ntry-level Class C bus drivers should not be able to obtain a CDL without BTW hours that are required of other initial CDL applicants.”
ATA, a member of the ELDTAC, viewed the proposed BTW hours requirement as unnecessary and not supported by any research indicating “a relationship between the number of hours spent in training and a reduction in crashes.” Noting that “what little data is available does not support a minimum hours-based approach,” ATA cited the American Transportation Research Institute's (ATRI) 2008 analysis of the effect of CDL driver training on safety performance. According to ATA, the ATRI study concluded that “no relationship is evident between total training program contact hours and driver safety events when other factors such as age and length of employment are held constant.”
In its comments, C.R. England summarized a study it conducted among 2,929 of its drivers “to test whether an hours-based program that requires 30 BTW hours or more, results in better performance than a performance-based program that requires fewer than 30 BTW hours.” In analyzing this data, C.R. England found, among other things, that “drivers from the shorter programs have fewer crashes and less severe crashes,” thus showing “a negative correlation between increased required hours and negative safety outcomes.” C.R. England therefore recommended that, “[g]iven the gaping lack of evidence to support the BTW requirement and the arbitrary selection of the number of required hours,” FMCSA drop the requirement from the final rule.
ATA and other commenters also stated that the BTW hours requirement contravenes Executive Orders 12866 and 13563, both of which express a preference for establishing performance
Two commenters opposed a minimum BTW hours requirement for the P and S endorsements. NASDPTS commented that “[g]iven the unparalleled high level of safety already provided by school bus transportation, we do not see any safety need or justification for further extending the specific BTW hours requirement to include the passenger and school bus curricula . . .” San Juan College stated that for P and S endorsement applicants taking their State-administered skills test in a bus, “no additional BTW should be required.”
Several commenters, including ATA, Werner and C.R. England, favored the use of a “Master Trip Sheet” to document the repeated successful demonstration of required skills as an alternative to the BTW hours requirement. Commenters identified a Master Trip Sheet as a document used to record a driver-trainee's successful, repetitive demonstration of required maneuvers. ATA commented that the Master Trip Sheet “represents a clear performance objective—the demonstration of competence—. . . preferable to an arbitrarily assigned number of hours.”
Additionally, ATA stated that FMCSA, by failing to quantify or qualify the Master Trip Sheet alternative to the minimum BTW hours requirement adopted by the ELDTAC, did not comply with the requirements of OMB Circular A–4. According to ATA, had the Agency followed the directives of Circular A–4 and conducted a detailed analysis on the Master Trip Sheet solution offered by ELDTAC members, “a performance-based BTW requirement would have prevailed because, as demonstrated by ELDTAC, it is feasible, and produces a more favorable cost benefit analysis.”
IUOE also supported the mandatory use of a Master Trip Sheet, but stressed that it should be combined with a minimum BTW hours requirement, which would be “the most effective means to ensure that training providers furnish high quality training and that they thoroughly assess the skills of the trainees.”
On the other hand, NASDPTS stated it is “unaware of any practical, measurable and universally acceptable means of employing an outcomes-based approach in lieu of a required number of BTW hours.” Minnesota stated that if “performance standards” are adopted in lieu of a minimum BTW hours requirement, “[t]his would defeat the purpose of requiring comprehensive entry-level driver training and will add another skewing variable to the purposed baseline of measuring the effectiveness of training in reducing crashes by tracking it through CDLIS.” CVTA thought FMCSA's question regarding possible alternatives to a minimum BTW hours requirement was misleading, “as the FMCSA seems to suggest that a performance or outcomes approach has not been selected. Clearly it has.”
FMCSA carefully considered all comments submitted in response to the questions noted above. Clearly, as evidenced by the volume and breadth of comments received on the proposed BTW hours requirement, this issue is significant for a variety of stakeholders affected by today's rule. And, as we noted in the NPRM, “the issue of a `performance-based' approach to BTW training versus an approach requiring that a minimum number of hours be spent in BTW training was the most thoroughly debated issue within the ELDTAC” (81 FR 11944, 11956 (March 7, 2016)). The Agency's conclusion that the final rule should not, at this time, impose a mandatory minimum number of BTW hours for the Class A and Class B training, is primarily due to the fact that, despite the best efforts of FMCSA and the ELDTAC, we were not able to obtain sufficient quantitative data linking mandatory minimum BTW training hours with positive safety outcomes, such as crash reduction, following publication of the NPRM.
Consistent with the Agency's objective to produce data-driven regulations that balance motor carrier safety with efficiency, FMCSA has long recognized the value of quantitative correlative evidence supporting ELDT. For example, in withdrawing the 2007 NPRM to establish minimum training requirements for entry-level CMV operators, which proposed a required minimum number of BTW hours, FMCSA noted the need “to gather supporting information on the effectiveness of ELDT” (78 FR 57585, 57587 (September 19, 2013)). Indeed, at the ELDTAC's initial meeting on February 26, 2015, the Agency presented on the topic of data gathering and economic analysis as a rule development priority, and a Cost-Benefit Analysis/Data Needs Work Group was established within the ELDTAC.
As several commenters who opposed the minimum hours requirement noted, Executive Order 12866, as supplemented by Executive Order 13563, requires that Federal agencies propose or adopt regulations that “to the extent feasible, specify performance objectives, rather than specifying the behavior or manner of compliance that regulated entities must adopt”.
In order to fulfill the statutory mandate set forth in MAP–21, the Agency established the ELDTAC and, as required under the Negotiated Rulemaking Act, relied on the Committee's consensus findings to the maximum extent possible as the basis for the NPRM. In the hope that the final rule development process would yield reliable data to support mandatory minimum BTW hours, FMCSA, as a member of the ELDTAC, supported the requirement in combination with an outcomes-based approach, as reflected in the Committee's Consensus Agreement.
FMCSA believes it was appropriate to propose minimum BTW hours for the Class A and B curricula, based on the ELDTAC's estimation of the time an average driver-trainee would need to demonstrate BTW proficiency. However, as some commenters noted, that approach could potentially result in the unintended consequence of effectively penalizing high-performing trainees who may be capable of achieving BTW proficiency in less time than the proposed required minimum. Based on the ELDTAC discussions, the Agency does not believe the proportion of high-performing trainees capable of completing the BTW curricula in significantly less time than the proposed minimums represents a substantial percentage of entry-level drivers. However, it is important to avoid, if possible, imposing unnecessary training costs on that population.
FMCSA acknowledges the numerous comments supporting minimum BTW hours as a “common sense” and intuitively effective means of ensuring that entry-level drivers receive adequate training to safely operate CMVs. As noted below, the Agency will continue to evaluate the impact of minimum BTW hours on CMV safety. Because the final rule does not include a minimum hours requirement as proposed, many of the comments that raised concerns regarding that approach are now moot. Accordingly, FMCSA does not specifically respond to comments suggesting that the requirement would discourage prospective applicants from obtaining a CDL, dissuade motor carrier employers from providing ELDT, or require training providers to obtain additional equipment.
The Agency's adoption of a proficiency-based BTW training standard in lieu of minimum hours notwithstanding, FMCSA believes that the ELDTAC process was highly constructive, and we greatly appreciate the time, effort and expertise put forth by ELDTAC members. The Committee's collective expertise allowed us to propose detailed minimum ELDT curricula and training instructor qualifications, which are largely retained in the final rule.
Our decision not to include the minimum BTW hours as part of the Class A and B curricula should not necessarily be construed as the Agency's last word on this subject. In order to gather data which will allow FMCSA to perform a thorough post-rule evaluation, we require in today's rule that all individual training certifications submitted to the TPR by training providers include the total number of BTW hours spent by each driver-trainee in achieving proficiency, as determined by the training instructor. Collecting this information will allow the Agency to compare the CMV driving records of drivers who received varying amounts of BTW training, and to draw conclusions regarding the extent to which hours of BTW training correlate to safer driving outcomes. This data will also assist in the Agency's oversight of training providers.
The Agency will thus continue to assess whether minimum BTW hours requirements are necessary to improve CMV safety, and, if so, at what levels. Should FMCSA ultimately decide, on the basis of post-rule quantitative data, to revisit the issue of mandatory minimum BTW hours for entry-level driver training, we will do so through notice-and-comment rulemaking. We note, however, that today's rule does not prohibit States or training providers from requiring a minimum number of BTW hours, as many CMV driver training programs currently do.
While the final rule does not impose mandatory minimum BTW hours, FMCSA nevertheless expects that, based on the extensive experience of CMV driver training organizations represented on the ELDTAC,
In the Agency's judgment, the extensive CMV driver training expertise represented on the ELDTAC is a credible basis for FMCSA's assessment of the cost of compliance with the BTW portions of the Class A and Class B curricula. FMCSA expects, however, that some trainees will demonstrate BTW proficiency in less than 30 or 15 hours and that others will require more time to achieve a proficient level of performance of the required BTW elements of those curricula. Accordingly, actual costs of compliance for these trainees will be lower or higher than the costs estimated in the RIA, but the Agency currently has no data on which to determine variations in cost for trainees who achieve BTW proficiency in either less time or more time than the average student.
Under today's rule, BTW proficiency is determined solely by the instructor's evaluation of how well the driver-trainee performs the fundamental vehicle control skills and driving procedures set forth in the curricula. In the final rule, FMCSA clarifies this point in the introduction to the Class A and B curricula. As a number of commenters observed, a proficiency-based standard based entirely on individual skill levels and learning abilities, rather than a mandatory minimum number of hours spent on either a range or public road, will permit skilled trainees to demonstrate proficiency more efficiently than adherence to a minimum training time. Accordingly, since the final rule does not require minimum BTW hours, there is no need to permit highly proficient trainees to “opt out” of that requirement, as several commenters requested.
Instructors will also determine how much or how little training is required for individual skills, as proposed in the NPRM. The final rule, therefore, emphasizes the individual trainee's attainment of performance goals as set forth in the curricula and evaluated by the instructor. As IOUE noted in its comments, since there is no requirement that training providers devote a specified amount of time to individual curriculum topics in the core BTW curricula, training programs will have “the latitude to emphasize topics that present the greatest safety challenges” in the operation of CMVs in various segments of the motor carrier industry.
Although today's rule adopts a minimum set of driving skills in which proficiency must be demonstrated, the Agency does not define “proficiency”. The instructor, based on his/her professional judgment, must decide at what point the driver-trainee demonstrates the proficient performance of required skills and the instructor will determine the amount of time each driver-trainee needs to spend on the range and public road portions of the curricula. However, FMCSA believes that demonstrated proficiency requires some level of successful repetition of the required BTW curricula elements, as determined by the instructor. In other words, performing each required maneuver correctly one time does not mean that the trainee has demonstrated proficiency. In the Agency's view, a “one and done” approach is essentially the equivalent of the CDL skills tests. MAP–21 requires that FMCSA establish ELDT requirements addressing the knowledge and skills necessary for the safe operation of a CMV (49 U.S.C. 31305(c)(1)(A)). Since the CDL skills testing protocols in part 383 were in place years before Congress enacted the ELDT requirements in MAP–21, we conclude that Congress intended that the BTW training requirements be more extensive than a simple one-time demonstration of skills. In addition, as noted above, the ELDTAC's estimation of the 30 and 15 hours to successfully complete the BTW elements of the Class A and B curricula assumed some level of repetition of required skills.
Further, the Agency notes that a number of commenters opposed to the BTW minimum hours requirement proposed a “Master Trip Sheet” as a preferable alternative. Trip sheets are a means to document the repeated successful demonstration of required skills. The Master Trip Sheet specifically considered by the ELDTAC, and endorsed by ATA
Additionally, individual commenters also endorsed the value of the repeated demonstration of required skills. For example, Werner Enterprises noted that “[a] requirement expressed in terms of consistent demonstration of applicable skills is more appropriate [than minimum BTW hours] and would serve as a better predictor of increased safety outcomes.” Similarly, TCA stated that “[t]ruck driving is a skill . . . through which repetition and practice will almost certainly increase a driver's awareness and performance when operating equipment on our highways.”
In the Agency's judgment, safe CMV driving, like many other skills, requires some level of repetition and practice. Repetition of required skills also increases the likelihood that driver-trainees will have the opportunity to demonstrate their proficiency under a wider array of road and weather conditions than a “one time” demonstration, particularly with regard to public road training. For example, the proficient entry and exit of an interstate
As proposed in the NPRM, instructors also maintain flexibility to select the specific means or method by which a driver-trainee's proficient performance of required BTW skills is recorded in order to comply with the documentation requirements in § 380.715(b). As noted above, instructors will also need to capture the total number of hours spent by each driver-trainee in completing BTW training, so that this information can be included in the training certifications submitted to the TPR, as required in § 380.717. Nothing in today's rule prohibits the use of Master Trip Sheets to document either the driver-trainee's proficient demonstration of BTW skills or the total number of hours spent in completing the BTW curriculum, as required in § 380.715(b).
The NPRM did not propose a minimum hours requirement for BTW training in either the P or the S endorsement curricula, and, for the reasons discussed above, the final rule does not include such requirements. However, the final rule does require that training providers who certify, through the TPR, the successful completion of the P and/or S BTW (range and public road) curricula, must indicate the total number hours spent by each driver-trainee in completing the BTW curriculum. FMCSA will use this information to assist us in a post-rule evaluation of whether, and to what extent, varying amounts of BTW training impact the safe operation of passenger-carrying CMVs and school busses.
The NPRM set forth minimum theory curricula requirements for the Class A and Class B CDLs and the P, S, and H endorsements. As proposed, the training provider must cover all curriculum topics and assess driver-trainees' understanding of the material in a written or electronic format. Driver-trainees must receive a minimum score of 80 percent on the theory assessment. FMCSA did not propose a minimum number of required hours for any of the theory curricula.
Further, this approach retains flexibility for training providers and driver-trainees to cover the required topics at a pace that is comfortable for them. FMCSA also notes that, as with the other requirements established in the final rule, the individual topics of the theory curricula represent the minimum amount of knowledge necessary for ELDT. Today's rule permits States and individual training providers to require that driver-trainees complete additional theory topics.
In the NPRM, FMCSA proposed allowing training providers flexibility by using either clock-hours or academic hours (
Other commenters, including NAPT, ABA, Schneider, and the VA DMV, supported the NPRM's approach of allowing training providers to decide whether they would use clock or academic hours because the flexibility would accommodate the specific training being delivered. These commenters generally did not perceive a discernible difference between the two concepts.
The DMTA thought there was an obvious difference between the two concepts, but did not object to the use of academic hours “so long as an equivalency is maintained so that the actual time spent at activities is equal to the clock hours required by FMCSA.” Utah commented that if the Agency “is going to allow the usage of credit hours, FMCSA needs to define how many practical hours should be considered a credit hour.”
An individual commenter noted that for every six academic hours, “you have lost one hour of clock hour training time.” Other commenters said that if academic hours are allowed, then the total hours should be increased to match the clock hours. The Delaware Department of Education (DDE) commented that, while trainers understand what an hour on the clock means, many would not know how to interpret an academic hour. Michigan commented that, in its experience, truck schools misuse terms such as “academic hours” and “credit hours” to “grossly” misrepresent actual training time. DTCC and NGWA also recommended that clock hours should be used as the standard training unit.
Based on the commentary, FMCSA is concerned that exclusive use of the term “academic hour,” or permitting either term to be used at the training provider's discretion, would cause confusion and inconsistency in the documentation of BTW delivery, even if FMCSA attempted to convert “academic hours” to “clock hours,” or vice-versa, as some commenters suggested. FMCSA therefore believes that “clock hour” is a term that is easily understood by all training entities and consistent with a uniform minimum standard
FMCSA requested comment on whether there is duplication between ELDT theory training and the CLP exam and, if so, whether such duplication should be minimized or eliminated.
Michigan believes that, while the CLP exam and ELDT theory training cover the same subject matter, each serves a distinct purpose. “The CLP exam measures for minimum competency for the purposes of allowing a driver to begin training. The theory training should build on that minimum competency and improve the entry-level driver's skills . . .” CVTA also noted that, while the CLP exam and theory training address many of the same topics, “. . . the theory portion should not be eliminated or minimized because it teaches many additional subjects, in greater depth than are covered on the Commercial Learner's Permit exam.”
NRECA did not find any duplication between theory training and the CLP exam. On the other hand, Driver Holdings LLC believed there is duplication and requested that it “be eliminated from the ELDT theory training.” Several individual CMV driving trainers also requested that duplication be minimized or eliminated. Farris Brothers, Inc. commented that, if driver-trainees complete ELDT theory training, a CLP should then be issued. Utah, noting that “applicants who are completing the minimum training will have already completed the knowledge exam,” asked whether driver-trainees' knowledge should, in effect, be tested twice, or would it be better to “test the application of that knowledge through various skills tests.” The Iowa DOT commented that “[i]t would be reasonable through training to eliminate the need for knowledge tests at the SDLA . . . while allowing the SDLA to test randomly or when evidence exists to warrant a re-test.”
As several commenters noted, the CLP knowledge test and ELDT theory training serve separate and distinct functions in CMV driver education. Theory training, as set forth in today's rule, is designed to provide driver-trainees with substantive understanding of the operating characteristics of the vehicles they intend to operate, safe driving practices, and the legal and medical requirements related to CMV driving. The CLP knowledge test is designed to assess whether CDL applicants have sufficient knowledge of basic concepts related to the safe operation of CMVs. FMCSA believes that the two approaches each represent important and distinct elements of CMV driver education.
FMCSA proposed a Class A and B CDL core curriculum. The Class A curriculum addressed the knowledge and skills necessary to safely operate combination vehicles (Group A), while the Class B curriculum pertains to heavy straight vehicles (Group B). The proposed curricula set forth training topics specific to the underlying CDL class, all elements of which must be taught and assessed. The Agency requested comment on the scope and content of the proposed curricula.
Schneider recommended that the Class A BTW-public road curriculum include a requirement to practice entry and exit of the interstate, noting that it “often encounters newly licensed drivers who enter its finishing program without any experience operating a CMV on a highway or interstate.” CM Air Brake and Electrical Training Services, LLC, commented that the ELDT rulemaking presents a unique opportunity to “ensure that drivers have a sufficient understanding of air brake systems to actually recognize whether or not the brake systems on their vehicles are functioning properly.”
The AAR supported the NPRM's requirement that driver-trainees be trained in recognizing potential dangers and appropriate safety procedures for use at railroad grade crossings. AAR suggested that, in addition, driver-trainees should be instructed that railroads have personnel available at the posted Emergency Notification System (ENS) telephone numbers to receive notification of any information relating to an unsafe condition at the railroad-highway grade crossing, such as a warning system malfunction at the railroad-highway grade crossing, or a disabled vehicle or other obstruction blocking a railroad track at the railroad-highway grade crossing.
An individual commenter, noting that improperly inflated tires increase braking distances and contribute to punctures and blowouts, suggested that load-to-tire inflation tables be included in the ELDT curricula.
Truckers Against Trafficking (TAT) suggested adding an element to the Class A and B curricula addressing human trafficking in the trucking industry, focusing on “the understanding and recognition of this crime, along with the action steps to be taken.” Other commenters suggested adding the following training topics: (1) As part of trip planning—instruction, practice, and evaluation for map reading utilizing an atlas; (2) overview of the requirements of the ELDT regulation along with information on how to report a non-compliant school; (3) whistleblower protection regulations in 29 CFR part 1978 and the procedures for reporting to FMCSA incidents of coercion from motor carriers, shippers, receivers, or transportation intermediaries; (4) driver wellness and basic health maintenance that affect a driver's ability to safely operate a CMV; and (5) Federal rules pertaining to physical qualifications of CMV drivers, including medical certification and medical examination procedures.
The Agency also received comments suggesting that certain topics be removed from various curricula, primarily because the topic did not directly apply to the commenter's occupation or segment of the industry. For example, AAR said that railroad employees should not be required to demonstrate skills like alley dock backing or other skills similarly unrelated to their job functions. UPS commented that several proposed elements in the theory portion of the Class A curriculum, including photographing the scene and assessing weather and signage conditions post-crash, “do not correspond to specific substantive safety requirements and are inconsistent with prudent operations.”
Minnesota suggested that the rule “address training requirements for non-fifth wheel combinations in addition to the traditional tractor-trailer combinations,” noting that if CDL holders are restricted to operating a non-fifth wheel combination, “training curricula needs to be developed to address the needs of operating this type of class A combination vehicle safely.”
DDE commented that school bus drivers will typically have a Class B CDL with P and S endorsements. DDE noted that many elements of the Class B theory curriculum are not applicable to school buses, including coupling and uncoupling combination vehicles, hazardous materials regulations, stopping at weigh stations, awareness of surroundings including truck stops/rest areas, tire chain procedures, theory of cargo weight distribution, cargo securement, and hours of service.
Finally, several commenters, including Minnesota DPS, DTCC, and Century College, suggested that certain “dangerous driving maneuvers” or “extreme driving conditions” in the Class A and B BTW public road curricula, such as skid control and recovery, should be removed from the BTW portion of the curricula and retained as theory topics only. DTTC commented that “[i]t would be impractical at best and dangerous at worst to mandate [skid control and recovery] as part of BTW training.”
FMCSA adds specific cross references to applicable pre- and post-trip inspection sections of the FMCSRs (
Although brakes were identified as a key vehicle system in the “Identification and diagnosis of malfunctions” portion of the proposed Class A and B theory curricula, in the final rule the Agency expanded the term to include specific types of CMV braking systems, including ABS, hydraulic and air, as applicable. In response to the comment regarding non-fifth wheel combinations for Group A vehicles, we note that techniques for the proper coupling and uncoupling of combination vehicles are included in the Class A theory curriculum and that “coupling devices” are included within the scope of both pre-trip and post-trip inspections in §§ 392.7 and 396.11, respectively. In addition, FMCSA adds the words “as applicable” after “coupling and uncoupling combination vehicle units” in the Class A curriculum to indicate that more than one type of coupling device exists.
The Agency also made various conforming and organizational changes to the curricula for purposes of clarity and consistency, most of which are specifically noted below in the section-by-section explanation of changes from the NPRM.
The Agency notes that many of the suggested additions to the training curricula were proposed in the NPRM and remain in the final rule, including whistleblower protection in 29 CFR part 1978, reporting incidents of coercion to FMCSA, physical qualification of drivers, and driver wellness. While we did not include the reporting of non-compliant training providers as a topic in the curricula, instructions for doing so will be available on the ELDT Web site. FMCSA considers human trafficking, suggested by TAT as an additional topic for the training curricula, to be an extremely important issue. However, it is not directly related to safe CMV driving skills, and therefore was not included in the final rule. FMCSA notes that training providers are free to add any topics they consider relevant to the training experience, as long as the required elements of the ELDT curricula are taught and assessed in compliance with today's rule.
Additionally, FMCSA removed several elements from the “Post-crash procedures” portion of the Class A and B theory curricula that, as UPS noted, do not directly impact the safe operation of CMVs, including photographing the scene, obtaining witness information, assessing skid measurements, and assessing signage, road, and weather conditions. We also note that the NPRM inadvertently included “tire chaining procedures” in the BTW-public road portion of the Class B curriculum; the Agency removed that element in the final rule. Tire chaining procedures remain in the Class A and B theory curricula, as proposed.
Finally, FMCSA disagrees with commenters suggesting that certain training topics be deleted from the proposed curricula, or should not apply to certain CDL holders, because they are not relevant to a particular occupation or vehicle. Regardless of an applicant's intentions at the time he or she obtains a CDL or endorsement, the individual is in fact credentialed to operate a range of CMVs falling within the CDL class or endorsement received. For example, although an individual may intend to make a living as a school bus driver, if he or she holds a Class A or Class B license in addition to the S and P endorsements, that individual is considered qualified to operate any CMV falling within those classifications, including straight trucks. Accordingly, it is reasonable to require that these individuals receive training commensurate with the CMV driving credentials they hold.
In response to comments suggesting that certain driving skills, such as hazard perception and skid control and recovery, be removed from the Class A and Class B BTW public road curricula and retained as theory topics only, FMCSA notes that these skills are not necessarily intended to be performed by the driver-trainee. In the NPRM, the following BTW skills were specifically designated as “appropriate for discussion during public road training or simulated, but
These topics remain in the BTW public road curricula because they are appropriate for commentary instruction, in which the instructor discusses the proper techniques for responding to these conditions while the driver-trainee is behind-the-wheel of a CMV, even when such conditions may not actually be encountered during the training session. For example, an instructor could discuss adjustments to speed and following distance that need to be made during periods of heavy rain, even when actual driving conditions are dry. FMCSA believes that commentary instruction during public road training provides a valuable opportunity for
As proposed, Class A and B CDL trainees would be required to receive both theory and BTW (public road) instruction in night operation of a CMV in order to recognize and respond to the special problems that night driving presents. While training providers were strongly encouraged to offer driver-trainees actual night-driving experience where feasible, they would not be required to do so.
On the other hand, several training providers supported the NPRM's approach of not making nighttime driving a requirement. Century College commented that “[a]dding a night driving component would add instructional costs and insurance costs that would be prohibitive,” noting that drivers could learn night driving operations from specific employers after obtaining a CDL.
As defined in the NPRM, BTW training means training provided by a qualified driver-instructor when driver-trainees have actual control of the power unit during a driving lesson conducted either on a range or public road. Therefore, as proposed, time spent on a driving simulation device would not substitute for actual “hands on the wheel” training on a range or public road. The NPRM did, however, include “driving simulation devices” within the scope of “theory instruction,” thus permitting simulator use to fulfill the proposed theory curricula requirements.
Schneider suggested allowing for 10 percent of the BTW training hours to be completed using driving simulation, noting that simulator use will allow the training provider to expose the driver-trainee to adverse conditions that are (1) not readily accessible in the training provider's region (
FMCSA agrees that simulators can provide valuable learning opportunities to entry-level drivers to improve driving techniques and introduce them to hazards and driving conditions they may expect to encounter in their driving career. The Agency has previously recognized the value of specified simulation technology for entry-level training of CMV drivers.
As proposed in the theory portion of the Class A and B curricula, the topic “shifting/operating transmissions” is described as an introduction to “basic shifting patterns and procedures,” which will enable the trainee to perform basic shifting maneuvers, including executing “up and down shifting techniques on multi-speed dual-range transmissions if appropriate.” The description of the “shifting/transmission” topic in the BTW-public road curricula requires driver-trainees to “demonstrate proficiency in proper techniques for performing safe and fuel-efficient shifting and making any necessary adjustments in the process.”
Noting that some carriers utilize only CMVs equipped with automatic transmissions, FMCSA invited comment on whether there should be an option to forego this element of the training for driver-trainees who intend to operate only automatic transmission-equipped CMVs. The NPRM also noted that, currently, drivers who take their CDL skills test in a CMV equipped with an
C.R. England also stated that the NPRM “lacks flexibility because it does not allow reduced training hours for restricted licenses.” Noting, for example, that “if a driver intends to drive an automatic transmission vehicle and receive a restricted license, less training is required” C.R. England suggested that “required BTW time for a Class A or Class B license with a manual transmission restriction be reduced by
Schneider and the California Department of Motor Vehicles (CA DMV) both noted that, if driver-trainees opt to receive training only in an automatic transmission vehicle, the training provider would need to indicate that on the training certificate uploaded to the TPR and States must be able to accept and store that information on the electronic driving record.
NASDPTS noted that since almost all school buses are now equipped with automatic transmissions, there is no value in qualifying school bus drivers to operate manual transmission-equipped vehicles. DDE and NAPT also supported the option to forego the manual transmission element because school buses have automatic transmissions.
However, several commenters opposed permitting driver-trainees to obtain training only in an automatic transmission-equipped CMV. The Iowa DOT said “the training should be inclusive and not specific to the transmission.” In addition, the Iowa DOT thought the NPRM was unclear regarding the situation in which a driver changes jobs or the type of vehicle, asking whether a driver “would have to take the training over again if they drive a manual transmission because they were trained in the `automatic only' curriculum?”
The description of “shifting/transmission” as a component of the BTW-public road training for Class A, initially presented to the ELDTAC by the Core Curriculum Working Group at its third meeting on April 9–10, 2015, remained largely unchanged throughout the remainder of the ELDTAC's meetings.
FMCSA's conclusion is further supported by the fact that, as several commenters noted, the prevalence of automatic transmission-equipped vehicles in the Group A and B classifications is currently significant and is widely expected to increase over time. In light of this clear trend toward automatic transmission-equipped CMVs, it defies logic to presume that the ELDTAC intended to require that all driver-trainees receive training on a manual transmission, regardless of whether they intend to operate a CMV so equipped, or would be required to do so in the course of their employment. The Agency regrets any confusion caused by posing the question of whether driver-trainees should be permitted to “opt out” of manual transmission training. Further, FMCSA notes that States, in administering the CDL skills test, “must check the vehicle in which the applicant takes his or her test is representative of the vehicle group the applicant has certified that he or she operates or expects to operate” (§ 383.73(b)(2)). Accordingly, the NPRM proposed, and the final rule requires, that training vehicles must be in the same group and type that the driver-trainee intends to operate for the CDL skills test (§ 380.711(b)).The Agency notes that, in addition to the manual transmission restriction discussed above, other restrictions currently apply to air brakes and non-fifth wheel connections (§ 383.95(a), (b) and (d)). In the final rule, the Agency adds “as applicable” to the brake-related topic descriptors in the Class A and B curricula and the coupling descriptor in the Class A curricula, to clarify that driver-trainees are free to select a training curriculum that is appropriate for the type of CMV they intend to operate.
Because the final rule does not require that driver-trainees complete a minimum number of BTW training
Contrary to the assertion of commenters who noted that, if a driver-trainee completes training in an automatic transmission-equipped vehicle, the training provider would need to indicate that on the trainee's ELDT certification the provider electronically submits to the TPR, there is no need to identify the specific transmission type in which the driver completed BTW training. As noted in the NPRM and in today's rule, each BTW curriculum requires only that the training be conducted in a vehicle representative of the applicable class or endorsement. As explained above, there is no “automatic transmission only” training designation. Driver-trainees will take BTW training in the type of CMV they intend to operate and, consequently, in which they expect to take the CDL skills test. The training certificate would simply indicate, for example, that the individual completed training applicable to a Class A or Class B CDL.
In response to the Iowa DOT's question concerning what, if any, ELDT requirements would apply to drivers who obtain “automatic transmission only” training and subsequently have that restriction removed from the CDL by taking a skills test in a manual transmission-equipped vehicle, the answer is that no further ELDT would be required. Again, FMCSA notes there is no “automatic transmission only” training designation. An applicant who takes the CDL skills test in a CMV subject to a restriction (
FMCSA did not propose a curriculum for Class C CDL training because a Group C vehicle must be designed to transport 16 or more passengers (including the driver) or any hazardous materials as defined in 49 CFR 383.5. As such, the driver of a Group C vehicle needs a P, S, or H endorsement. The NPRM proposed training curricula for each of these endorsements. In addition, because Group C vehicles weigh less than 26,001 pounds, the Agency does not believe it is necessary to prescribe BTW training comparable to the other classes of CDL.
We note that, under the final rule, applicants for the H endorsement are not required to obtain BTW training because there is no State-administered skills test for the H endorsement. As noted previously, applicants for the H endorsement will already have a Class A or B CDL, or will be concurrently obtaining a Class A or B CDL at the time they apply for the H endorsement, or intend to transport hazardous materials in a vehicle for which a Class A or Class B CDL is not required. Consequently, H endorsement applicants must complete the theory curriculum set forth in Appendix E of Part 380 before taking the State-administered knowledge test required to obtain that endorsement.
The NPRM included a curriculum to address the specific training needs of a CMV driver seeking a P endorsement. There was no minimum number of hours proposed for either the theory or BTW (range and public road) portions of the P endorsement training, but the training provider must cover all of the topics set forth in the curriculum. Additionally, the training must be conducted in a representative vehicle for the P endorsement.
The DDE commented that the theory curriculum for the P endorsement had additional items not applicable to school bus operations,
The AAR stated that certain elements of the P curriculum, including inspection of restrooms and handling of passenger baggage, should not be required for railroad employees who drive crew vehicles, as those vehicles “are not equipped with restrooms and the drivers do not handle passenger baggage.”
The NYAPT had no objection to the curriculum content prescribed for attainment of the P endorsement, but expressed concern over the potential impact the rigorous training requirements will have on school bus driver recruitment and hiring.
Two commenters believed that limousine drivers should not be required to complete the proposed curriculum for the P endorsement training. Minnesota Chauffeured Limousine Association (MCLA) stated that the limousine industry “already faces difficulty trying to obtain drivers because of the stipulations put on us by the insurance companies,” predicting that “with these new regulations, it will be almost impossible to hire drivers or promote drivers to achieve a passenger endorsement.” The National Limousine Association (NLA) noted the positive safety record of the passenger-carrying motor vehicle industry, suggesting that the P endorsement training should not be required for smaller CMVs such as vans, shuttles, and mini-coaches. NLA is not aware of any “pressing concerns in the pre-arranged passenger ground transportation industry that would necessitate additional new training requirements for those vehicles.”
In addition, NLA noted that the majority of its members own vehicle fleets comprised primarily of sedans. The organization expressed concern that “[i]f the company has one CMV that does interstate work, then the company will be required to train all of its drivers since they may at some point be needed to drive the CMV.” NLA therefore concluded that “there should be some exemption [from P endorsement requirements] for very small operators.”
In response to ABA's suggestion that the Agency adopt the MMC, we note that the MMC is not necessarily intended for entry-level drivers. Rather, the MMC is a comprehensive training curriculum for motorcoaches, more likely to be used in “finishing” training for newly-hired drivers who have already obtained the P endorsement. In contrast, the P endorsement curriculum in today's rule focuses on the basic specific skills that a driver-trainee will need to master in order to safely operate a passenger-carrying CMV.
Part 383 currently requires that anyone seeking the S endorsement also pass the knowledge and skills tests for obtaining the P endorsement (§ 380.123(a)(1)). In response to comments that the proposed P curriculum included topics unrelated to the operation of a school bus, such as cargo management and weigh station obligations, we note that such topics are extremely relevant to common carrier motor coach operations, which are also covered by the P endorsement, and are thus retained in today's rule.
In the Agency's judgment, any CMV driver holding a P endorsement should be capable of safely operating representative passenger vehicles covered by that endorsement, regardless of whether or not the individual also holds the S endorsement and intends to drive only school buses. Similarly, Class B holders who operate railroad crew vehicles may not intend to operate other types of passenger vehicles, such as a motor coach, but holding a Class B CDL with a P endorsement permits them to do so, and they should be trained accordingly.
In addition, there is no justification for excepting drivers of “smaller CMVs such as vans, shuttles, and mini-coaches,” from the P endorsement curriculum requirements, as suggested by NLA. The fact remains that these smaller Group C vehicles are used to transport passengers. Therefore, it is important that drivers of these vehicles receive passenger endorsement-specific training which allows them to acquire the knowledge and skills necessary for their safe operation.
The Agency does not believe that the P curriculum requirements in today's rule will “kill the passenger transportation business” by making it too difficult to hire limousine drivers as MCLA asserted. To the contrary, better trained drivers may make it less difficult to obtain liability insurance. In addition, to the extent that limousine companies currently provide P endorsement training to employees or potential employees or wish to begin providing such training, they may be listed on the TPR if they meet the eligibility requirements set forth in §§ 380.703 and 380.719 of the final rule.
Finally, as noted below in the discussion of the S endorsement curriculum, FMCSA does not anticipate that the training requirements in today's rule will hinder school bus driver recruitment and hiring. The majority of jurisdictions currently impose school bus driver training requirements that meet or exceed the minimum standard established in the final rule. Under both the NPRM and the final rule, such training programs would be eligible for listing on the TPR. In order to make this clearer, we amend the definition of “training provider” in today's rule to specifically include local/State governments and school districts.
The NPRM included a curriculum to address the specific training needs of a CMV driver seeking an S endorsement. The NPRM did not propose a minimum number of required hours for either the theory or BTW (range and public road) portions of the S endorsement training, but the training provider must cover all of the topics in the curriculum. BTW training must also be conducted in a representative vehicle for the S endorsement.
The DMTA supported S endorsement training, but stated that no BTW time should be mandated since the trainee would already have a Class B CDL or would need to meet the Class B training mandate (which includes a BTW requirement). Some commenters believed the proposed S endorsement training is unnecessary because school bus drivers in most States are currently subject to rigorous training requirements from their State Highway Patrols or Departments of Education. Consequently, they claim that school bus drivers are already among the best trained groups of CDL drivers and have the best safety record. The NYAPT expressed concern that “the rigorous training programs and provider network in place will be supplanted by these new requirements and result in lower levels of quality and intensity of training.” Accordingly, NYAPT requested that “FMCSA consider ways to grand-parent existing programs that meet or exceed the proposed high training standards . . .”
NYAPT also commented that the new requirements could likely have an effect on the shortage of school bus drivers, stating that “[t]his training regimen, however well intended, will make it more difficult for drivers to be brought on-line in school bus operations.” A number of SDLAs, including the North Dakota Department of Transportation, the Iowa DOT, and the Delaware DMV, opposed the inclusion of the S endorsement training, also asserting that requiring entry-level training for school bus drivers would negatively impact the school districts in their States, which are currently struggling to hire drivers. Several commenters also noted that MAP–21 did not mandate S endorsement training.
FMCSA does not believe the final rule unduly burdens those jurisdictions that already maintain reasonable S training requirements. As noted above, States or localities currently requiring that school bus drivers obtain S training that meets or exceeds the minimum standard established by today's rule will be minimally impacted because the rule does not impose
FMCSA disagrees with the DMTA's position that the S endorsement training curriculum should not include a BTW component. According to DMTA, S endorsement BTW training would be redundant since the driver-trainee would either already have a Class B CDL or would be required to obtain a Class B CDL and thus complete a curriculum that includes at least 15 hours of BTW training. First, we note that, even in the absence of a 15 hour minimum BTW requirement (which was not retained in the final rule), the school bus-specific BTW training requirements in today's rule do not duplicate the Class B curriculum requirements for BTW on either the range or public road. The range/public road component of the S endorsement curriculum describes six maneuvers, specific to the operation of a school bus, in which the driver-trainee must demonstrate proficiency, as determined by the instructor.
When a driver-trainee who has not previously held a CDL intends to concurrently obtain a Class B CDL, as well as the P and S endorsements, the trainee can elect to take the Class B BTW training in a school bus. In such situations, BTW instructors will ensure that the range and road maneuvers required as part of the S endorsement training will be addressed in addition to the maneuvers required by the Class B curriculum. It would be up to the instructor to determine the point at which the driver-trainee demonstrates the school bus-specific competencies. FMCSA also notes that, for driver-trainees who concurrently obtain training for the Class B CDL and the P and S endorsements from the same training provider, the provider would electronically submit certification to the TPR indicating that the individual completed each of the three curricula.
In addition, not all driver-trainees wishing to obtain the S endorsement will necessarily have or need to obtain a Class B CDL. Those who intend to drive “Type A” school buses below a GVWR of 26,001 pounds would not need to hold or obtain a Class B CDL in order to obtain the S endorsement. Similarly, a driver who previously obtained a Class B CDL by completing BTW training and taking the CDL skills test in a straight truck, and who subsequently wishes to add the S endorsement to his or her CDL in order to drive school buses, must complete the BTW requirements specific to the operation of a school bus.
Commenters who asserted that the S endorsement training would either cause or exacerbate a shortage of school bus drivers did not offer any specific information in support of their claims, other than to note that “additional” training requirements would make it more difficult to find qualified drivers. We do not find this generic argument a persuasive basis for either eliminating or reducing the S endorsement curriculum.
As previously discussed, for those States and localities that already require training in the safe operation of a school bus, today's rule will likely have marginal impact as long as those training programs, at a minimum, follow the S endorsement curriculum as set forth in Appendix D and become listed on the TPR. For those jurisdictions presently without mandated training that meets this minimum standard, today's rule “raises the bar” for safety by requiring that school bus drivers be adequately trained. In the Agency's judgment, that is the paramount consideration for any jurisdiction or entity responsible for transporting children.
FMCSA proposed training for individuals seeking an H endorsement. As noted above, the current requirements to obtain an H endorsement, set forth in § 383.121, do not include a State-administered skills
The Agency sought comment on the scope and content of the proposed curriculum and on whether the Pipeline and Hazardous Materials Administration's (PHMSA) hazardous materials employee training regulations in 49 CFR 172.704 could be used or modified to satisfy the proposed H endorsement training requirements.
Schneider requested that FMCSA remove the requirement for H endorsement training or, in the alternative, demonstrate the benefit from training. Schneider noted that H endorsement applicants are already required to pass a knowledge test as a condition of obtaining the endorsement and that, under the proposed rule, “the driver would also be required to pay to complete this course work.” Accordingly, “Schneider believes the driver would demonstrate the same level of knowledge with or without the ELDT training and, therefore, the benefit of this training is not likely to justify the costs.”
The PMAA supported “provisions in the NPRM designed to establish an improved core curriculum for Hazardous Materials endorsements.”
OOIDA does not support substituting hazardous materials regulations (HMR) training in 49 CFR 172.704 to satisfy the H endorsement training in the proposed rule, noting that “the ELDTAC hazardous materials curriculum recommendations were carefully developed by a clear consensus.” On the other hand, the Iowa DOT commented that substituting PHMSA's HMR training for the H endorsement training proposed in the NPRM “seems reasonable and would establish a more universal standard for HAZMAT training.”
FMCSA proposed refresher training for any CDL holder who is disqualified from operating a CMV under § 383.51(b) through (e). The NPRM proposed that a CDL holder be required to complete refresher training from a provider listed on the TPR prior to retaking the State-administered skills test to reinstate his or her Class A or Class B CDL. Under the NPRM, the State may not restore full CMV driving privileges until the disqualification period is completed and the State receives notification that the driver completed refresher training. FMCSA did not propose a minimum number of required hours for the refresher training, but required that the training provider cover all topics in the curriculum. As proposed, disqualified drivers taking refresher training would obtain a restricted CDL solely for the purpose of completing the BTW portion of the refresher training curriculum. The Agency specifically invited comment on the practical implications of implementing that proposed requirement. FMCSA also invited comment on whether a driver disqualified under § 383.52 (imminent hazard) should also be required to complete refresher training before his or her CDL is reinstated.
Several commenters noted that the term “refresher training” may also pertain to training for CMV drivers whose CDLs have lapsed for some period of time. San Juan College suggested that, in the final rule, the Agency change the term to `Reinstatement Training' “to differentiate the training required for “highway-safety” related issues from the current refresher training programs that are not related to a safety issue.” Another commenter suggested that FMCSA make clear that refresher training is not a short cut to initially getting a license.
A number of comments opposed all or part of the refresher training proposal. The ODOT questioned FMCSA's stated premise for refresher training, noting that “[t]rained, experienced drivers may make mistakes or poor decisions in their driving behavior, but that does not mean they have suddenly lost their ability to safely operate a CMV.” The North Dakota DOT commented that the proposal “will have a direct administrative impact on the State's workload and lend itself to confusion for the public.” The CA DMV stated that its “system would require significant program modification in order to prevent the issuance of a CDL when refresher training was not completed.” The VA DMV commented that the refresher training requirement would burden drivers subject to a 60-day disqualification, “since a driver who is convicted of two speeding tickets in a three year period would be required to obtain an “R” restriction on his CLP/CDL, complete theory and BTW training (with fees) and return to DMV to have the “R” restriction lifted.” AAMVA noted that, while it “appreciates the need for refresher training, the requirement for refresher training for all violations incorporated under § 383.51 would drastically increase the volume and demand for operators requiring
A number of commenters pointed out various logistical and implementation issues associated with the States' limited reinstatement of the CDL to permit driver-trainees to complete the BTW portion of the refresher training curriculum, as proposed in § 383.95(h). The State of Minnesota said that having to provide limited privileges for refresher training would be an undue burden on SDLAs. The commenter noted that, in addition, “Minnesota currently has a conflict with the `R' restriction as that letter code is already used for something else in MN and this most likely is the case in many other states.” The State of Michigan commented that “the proposal for a limited license that allows for a training period when a person is currently under a suspension/revocation violates the Motor Carrier Safety Improvement Act (MCSIA) that was very specific that CDL drivers were not to be issued a limited term (restricted) license.”
The NY DMV commented that “[t]here are too many variables to consider to implement a `limited CDL' and would be putting a heavy burden on the States to program and monitor.” The ODOT said that “requirement for the SDLA to issue a `restricted CDL' for the purpose of the BTW portion of the refresher training is unmanageable and burdensome.” The Nebraska DMV, the State of Montana-DOJ/MVD, the Iowa DOT, the CA DMV, and the Delaware DMV also expressed concerns regarding the practical difficulties associated with a temporary reinstatement of the CDL in order for the holder to complete refresher training. AAMVA asked what evidence would be provided which would allow an individual “to operate a CMV for the sole purpose of satisfying the refresher training.”
Further, the States impose their own reinstatement protocols on CDL holders who have been disqualified, some of which include remedial driver education and/or a requirement that the driver re-take the State-administered skills test as a condition of CDL reinstatement.
In the NPRM, FMCSA proposed a Class A CDL core curriculum; a Class B CDL core curriculum and curricula for the P, S, and H endorsements. The curricula for Class A and B CDLs and the P and S endorsements are comprised of both theory and BTW (range and public road) elements. Individuals seeking the H endorsement would be required to complete theory training only. As explained previously, the H endorsement is not linked to any specific vehicle group or type of vehicle; consequently, there is no skills test required in order to obtain it. The Agency's responses to the comments below address the curriculum requirements applicable to driver-trainees seeking multiple CDL credentials.
NY DMV also noted that the NPRM is not clear regarding the obligations of driver-trainees undertaking multiple curricula when some of those curricula have overlapping elements in theory and/or BTW instruction. They posed the following example: “a trainee undergoes the Class A curriculum, then wants to undergo the Class B curriculum, may the Training Provider offer them reduced theory and/or BTW instruction, if the trainee took the same theory and/or BTW instruction form the Class A curriculum?” Other commenters wanted to know whether a driver upgrading from a Class B CDL to a Class A CDL would have to complete the entire Class A curriculum. The Nebraska DMV asked whether “anything completed for the Class B training count[s] toward the Class A requirement.” San Juan College, noting that the Class A and Class B curricula are virtually identical but for the inclusion of “coupling/uncoupling” in Class A training, stated that “there should be some training required to upgrade from Class B to Class A, but it should only relate to skill required for pulling a trailer.”
The DDE commented that the NPRM does not address the requirements that a driver with a Class A CDL would need to meet in order to drive a school bus,
The DE DMV commented that “[r]equiring additional training on top of Class A and B core `entry-level' training for a specific endorsement is unnecessary” because “the applicant has already obtained the knowledge base necessary to operate a CMV.” DE DMV also noted that it currently requires 12 hours of classroom training and 6 hours of BTW training for the “S application,” which “falls short of the requirements set forth in this rule.” DE DMV asserted that if the NPRM's S endorsement training requirements were adopted in the final rule, “major changes to our current State laws, regulations and procedures will need to be made in order to meet this mandate.”
The different operating characteristics of these two distinct vehicle groups require that many of the elements in the Class A and B curricula, though topically the same, be taught in ways tailored to the specific vehicle class. Space management, extreme driving conditions, pre-trip inspection, and backing are examples of topics that would call for different methods of instruction depending on the underlying vehicle class. The current CDL skills testing process accounts for the difference in handling characteristics between and among vehicle groups by requiring that the driving tests must be given in a representative vehicle for a given vehicle group (§ 383.91(b)). Similarly, today's rule requires that BTW training be conducted in representative vehicles for the class or endorsement for which training is provided. To the extent there is overlap between the Class A and B curricula, FMCSA agrees with the numerous commenters who noted that some level of repetition in training is acceptable as a means of reinforcing core concepts and competencies. Moreover, since the final rule does not require any minimum number of hours for BTW training, Class B CDL holders can reasonably expect to demonstrate proficiency in the Class A BTW elements in less time.
In response to the NY DMV's question regarding whether a Class A CDL holder, having already completed Class A training, who wishes to obtain a Class B CDL would have to complete the Class B training curriculum, the answer is no. Currently, any Class A CDL holder is permitted to drive a CMV in either Group B or Group C without taking the related knowledge/skills tests (§ 383.91(c)(1)). Today's rule does not change existing part 383 licensing requirements; therefore, no additional training would be required under those circumstances.
We note, however, that the ELDT requirements established in today's rule apply to persons who take a skills test either to obtain a Class A or B CDL for the first time, to upgrade to a Class A from a Class B, and to upgrade to a Class A or B from a Class C. Accordingly, after the compliance date of the final rule, a Class B CDL holder wishing to upgrade to a Class A CDL would be required to complete the entire Class A curricula (theory and BTW) before taking the skills test for the Class A CDL. Class C CDL holders seeking to upgrade to a Class A or B CDL would need to complete that curriculum before taking the applicable skills test. In addition, anyone holding a Class A, B, or C CDL who wants to obtain a P and/or S endorsement would need to complete the entire P and/or S endorsement curricula (theory and BTW) before taking the State-administered skills test in a representative passenger vehicle. Similarly, any CDL holder seeking an H endorsement must complete the H endorsement theory curriculum before taking the State-administered knowledge test.
As noted above, the DE DMV asserted that Class A or B holders already “have the knowledge base to operate” a CMV and should therefore not be required to undergo any additional endorsement-related training. To the contrary, the Agency believes it is both necessary and appropriate that CDL holders obtaining either the P or the S endorsement be trained specifically in the safe operation of the passenger vehicle(s) they will be licensed to operate.
Several commenters had questions regarding the ELDT requirements for driver-trainees obtaining more than one CDL credential at the same time. For example, DDE asked whether a Class A CDL holder wishing to obtain the S endorsement would need to complete the Class B, S, and P endorsement curricula. In that situation, the CDL holder would need to complete both portions of the S curriculum since the applicant would be required to take a State-administered skills test in order to obtain the endorsement. Because § 383.123(a)(1) currently requires that S endorsement applicants must also pass the knowledge and skills test for obtaining the P endorsement, the applicant must also complete the theory and BTW portion of the P endorsement training curriculum. The Class A CDL holder in this example would not need to complete the ELDT curriculum for the Class B CDL because, as previously stated, under § 383.91(c)(1), a Class A CDL holder is already licensed to operate a Group B (or Group C) vehicle.
As noted above, the DE DMV expressed concern that the DDE's current training program for the S endorsement, which requires 12 hours of classroom and 6 hours of BTW training, “falls well short of the requirements set forth in this rule.” We believe that concern is unfounded since the NPRM did not require any minimum number of hours for completion of either the theory or BTW portions of the S endorsement curriculum, and today's rule does not include such requirements. In order to comply with the minimum standard established by the final rule, existing programs simply must cover the S endorsement curriculum, and the instructor must determine that the driver-trainee is proficient in the knowledge and skills covered by the training. As stated previously, States are free to impose training requirements that exceed this minimum standard.
As proposed, training providers that train more than three driver-trainees annually must provide written training materials addressing the applicable curricula to each driver-trainee. Providers training three or fewer driver-trainees annually were not subject to this requirement.
IUOE recommended that the Agency “post written training materials on-line and develop an interactive, on-line training program for the theory portion of the Core Curricula”, noting that this approach would “provide a feasible mechanism” through which FMCSA could ensure quality and uniformity of training. IUOE also noted that FMCSA-sponsored training and testing would “reduce by one-third the costs of ELDT borne by individual workers.” Similarly, OOIDA commented that “FMCSA should be able to create the necessary training and assessment for the theory curriculum”, which would prevent disparity among ELDT providers and provide a basis for tracking training performance.
FMCSA anticipates that the final rule will encourage new entrants into the market for ELDT services, which will increase the availability of innovative and cost-effective alternatives from which driver-trainees may choose. In addition, many motor carrier employers seeking qualified driver applicants currently provide ELDT (including training materials) at little or no cost to the driver-trainee, and the Agency has no basis to anticipate that will change as a result of the final rule. Because IUOE offered no substantiation for its claim that FMCSA-provided online training materials would reduce driver-trainees' costs by one-third, the Agency is unable to respond directly to that assertion.
As noted above, the final rule makes no distinction based on the size of the training provider; therefore, smaller training entities are subject to the requirement that written training materials must be provided to driver-trainees.
In the NPRM, FMCSA did not propose that the theory, BTW-range, and BTW-public road training occur in a specific sequence, but requested comment on whether there should be a particular order for any of the required curricula. The Agency also requested comment on whether theory training should be required before a driver-trainee takes the State-administered knowledge test to obtain a CLP.
ATA agreed that training providers should be granted flexibility to determine when to teach various elements of the ELDT curricula, noting that many of CDL training schools currently provide instruction in most, if not all, of the curricula elements proposed in the NPRM. Over the years, the experience of those providers has taught them the best sequence in which to teach various elements. Additionally, ATA stated that maintaining this flexibility will encourage innovative and adaptive training programs that could greatly improve collective understanding of effective CDL training.
The VA DMV suggested that the final rule should require that theory and BTW-range instruction be provided before the BTW-public road portion of the training in order to “ensure that drivers have a basic understanding of the laws governing CMVs and what to expect before beginning operation of a vehicle.” AAMVA commented that it would be “logical” to provide theory training prior to any BTW “where an increased element of danger is introduced into the environment,” also noting that prior theory training would increase the value and efficiency of BTW training. AAMVA recommended that “range hours precede public road training to limit public exposure to drivers that have not had BTW training in a controlled environment.” The State of Michigan favored requiring that “some” theory instruction be completed before beginning BTW training, Michigan also commented that the final rule should require that theory training “be coordinated with” BTW training and, if not, “states should be allowed to require such coordination.”
VU asked whether driver-trainees will be required to complete the full ten hours of range training for a Class A CDL before proceeding to the public road portion of the training.
AAMVA also commented that theory training should not be a mandatory requirement for taking the SDLA knowledge test, but should be made available to students who may want to use theory training to aid in their preparation for obtaining a CLP. San Juan College commented that, although completion of the theory portion of the ELDT does not need to be required before taking the State-administered CLP written tests, applicants would be much better prepared to take the CLP tests after completing their theory training. VU strongly believes that driver-trainees should not be required to take theory training before obtaining a CLP, noting that a student's ability to obtain a CLP, whether prior to or during the theory training, will facilitate the timely completion of the BTW portion of the training.
The NPRM proposed that, among other things, ELDT instructors providing theory and BTW training must be “experienced drivers” having at least one year of experience in either CMV operation or driver training instruction. The Consensus Agreement noted the ELDTAC's preference for two or more years of CMV driving experience. FMCSA requested comment on whether a two-year experience requirement would affect the applicability of State laws relating to instructors or training providers.
The NPRM also proposed that BTW instructors complete training in the public road portion of the curriculum in which they are instructing.
Other commenters, including NAPT and ATD, urged FMCSA to allow a maximum degree of flexibility in setting instructor qualifications. Virginia requested the final rule make clear “that these are minimum requirements so that the states have flexibility in requiring additional criteria.” ATD expressed concern that “overly restrictive instructor qualification requirements would unduly limit the number and availability of qualified instructor/trainers.” DTCC commented that the final rule should specify that the instructor's experience pertain to the classification of CMV in which instruction is being provided.
FMCSA believes this approach, which reflects the ELDTAC's preference for at least two years of CMV driving or BTW instruction experience, as well as the opinion of numerous commenters, establishes a sufficient minimum qualification standard for BTW instructors. We also note that the instructional requirements described above are now incorporated directly into the definition of “BTW instructor” in § 380.603, rather than in the definition of “experienced driver,” as proposed. Consequently, the term “experienced driver” does not appear in the final rule.
Finally, we note the final rule does not include the requirement, proposed in the NPRM, that certain BTW instructors must have completed training in the public road portion of the curriculum in which they are instructing. The Agency believes the higher level of CMV driving experience now required makes that additional requirement unnecessary.
In addition, FMCSA deletes the proposed qualification that theory instructors must have audited or instructed the portion of theory training that they intend to provide. On further consideration, we concluded that this qualification standard is insufficient because it does not require that the theory instructor have actual CMV driving or instructional experience. In the final rule, the Agency adds an exception to the theory instructor qualifications set forth in § 380.605: An instructor is not required to hold a CDL of the same (or higher) class and with all endorsements necessary to operate the CMV for which training is to be provided, as long as the instructor previously held a CDL of that class and meets all other qualification requirements. The Agency makes this change in order to permit retired CMV drivers, who may have many years of experience operating a CMV but who no longer hold a CDL, to provide theory instruction. As noted below, this change responds to a comment regarding the valuable experience that such drivers possess.
The final rule requires that, as proposed, theory instructors must also meet any applicable State requirements for CMV instructors. However, today's rule includes a limited exception to that requirement when online theory training is provided. Because the nature of online training makes it available literally anywhere there is an internet connection, it would be impractical to expect an online provider to meet multiple (and possibly conflicting) State-based requirements pertaining to CMV theory instructors. Therefore, State-based qualification requirements otherwise applicable to theory instructors would not apply to those instructors who provide content for online providers. The Agency adds a requirement pertaining to theory providers who offer online content in any of the theory curricula included in today's rule: They must ensure that the online theory curriculum content is prepared and/or delivered by theory instructors who meet the qualifications described above (
The NPRM proposed that within the past two years, BTW instructors must not have had any CMV-related convictions for the offenses identified in § 383.51(b) through (e). It also required
An individual driver stated that instructors should “have no record of theft or violence of any kind, nor have had any record of drug use or DUI.” The NY DMV noted that, in addition to the offenses identified in § 383.51(b) through (e), “there are many other factors on a driving record that would make an instructor undesirable, including, but not limited to, other sanctions, fraud, non-CMV violations, and accidents,” suggesting that FMCSA strengthen the provision pertaining to an instructor's prior driving record. The ODOT asked what is meant by the proposed requirement that an instructor's driving record meet “applicable Federal and State requirements.”
The Agency believes that the standard for BTW instructor disqualification is more appropriately based on CDL suspension, revocation, or cancellation, rather than on CMV-related convictions, as proposed. This change reflects the fact that under § 383.51, certain offenses require more than one conviction before a driver's CDL is suspended, cancelled, or revoked, while other offenses result in loss of CDL driving privileges after the first conviction. The outcome therefore varies according to the severity of the underlying offense. Therefore, BTW instructor disqualification is based on the loss of CDL driving privileges due to unsafe driving behaviors.
We also note that the NPRM's proposed requirement that a BTW instructor's driving record meet “applicable Federal and State requirements” has been deleted from the final rule. FMCSA concludes the language is unnecessary in light of the reference to “applicable State requirements for CMV instructors” in the definition of “BTW instructor” in § 380.605.
Finally, FMCSA reiterates that States are permitted to impose more stringent BTW instructor requirements.
As proposed, in order to be listed on the TPR, a training provider must meet the applicable eligibility requirements set forth in subpart G and electronically submit a completed Training Provider Registration Form affirming, under penalty of perjury, that the provider will teach the FMCSA-prescribed curriculum that is appropriate for the CDL class or endorsement. FMCSA did not propose that training providers be accredited by a third-party organization in order to be eligible for listing on the TPR.
The NMFTA was also supportive. It stated that while self-certification processes are “commonly viewed as suspect,” in this case FMCSA has proposed adequate safeguards to ensure they are meaningful. NMFTA cited the proposed documentation retention requirements and on-site audits or investigations by FMCSA as additional enhancements to program integrity.
ATD supports the self-certification proposal because a third-party accreditation mandate would be too bureaucratic, inflexible, and costly. They also noted that an accreditation model could result in an insufficient supply of training options to meet industry demands.
The Agency did not receive any comments opposing self-certification.
The proposed Training Provider Identification Report form (TPID form), available in the NPRM docket, was designed to capture the information necessary for registration on the TPR, such as identifying business and training facility information, training provider type (
The VA DMV asked whether there “will be an initial fee for applicants to register” or a fee associated with continued listing on the TPR. Some commenters were concerned that the registration process would be unduly burdensome and expensive. UPS said that “[t]he proposed rule would impose on UPS and other carriers with proven in-house training programs the unnecessary cost and burden of ensuring that all of it facilities meet the specific requirements” for listing on the TPR. The NSTA, citing “administrative fees and burdens” that it expects to be associated with the registration process, urged FMCSA to streamline the required information and registration process as much as possible in order to minimize costs.
Dart Transportation recommended that “motor carriers not be required to register as certified training programs as long as [they] use BTW trainers with at least one year of experience and otherwise meet all DOT qualification requirements.” UPS recommended that “any school operated by a motor carrier that employs more than 1000 CDL-licensed drivers for the purpose of training drivers that the motor carrier intends to employ, shall be conclusively presumed to satisfy the requirements for listing on the TPR.”
The VA DMV requested that FMCSA maintain a “publicly accessible listing of approved training providers that includes when providers have received a notice of proposed removal.” The NYAPT commented that, as proposed, the TPR will “require many school districts to sign up as training providers” which “will inflate the size of the Registry significantly with entities that seek to train their own drivers and who are not intending to make their services available to other employers.”
Minnesota commented that “[t]here will need to be communication between the TPR registry and states that license CDL training schools when a training school fails to follow state requirements.” The NY DMV asked whether the State has an affirmative obligation to inform FMCSA if a training provider “ceases to be certified to provide training in that State.”
IUOE requested that FMCSA clarify that “apprenticeship programs and other joint labor-management programs satisfy the `third-party quality control' section” of the TPID Report form. IUOE also noted that, in the NPRM, FMCSA stated its intention to provide post-rule guidance regarding both suggested and proposed documentation establishing a training provider's compliance with the eligibility requirements for listing on the TPR. IUOE urged the Agency to “resolve issues related to third-party quality control through the rulemaking process, rather than through post-regulatory guidance.” The Montana Logging Association (MLA) asked that FMCSA “eliminate or modify the part where training facilities need to be accredited by an educational source.”
There is no fee associated with either initial or continuing registration on the TPR. Further, FMCSA expects that the registration process itself will be neither burdensome nor costly, as the process is entirely electronic and captures basic identifying and categorical information. The Agency sees no rationale under which motor carrier-operated training schools should be permitted to opt out of the TPR registration requirements on the basis of their size or safety record, as several commenters suggested. Such exceptions would defeat the very purpose of the registration process, which is to provide FMCSA with identifying information and to require all training providers to attest, under penalty of perjury, that they provide ELDT in accordance with the final rule. In addition, registration is necessary to allow for the electronic transmission of training certification information to the TPR.
FMCSA acknowledges that some training providers, including those who provide ELDT only for their own employees or prospective employees, may wish to keep their contact information private and therefore not have it publicly displayed on the TPR Web site. Accordingly, training providers who do not intend to make their services available to all driver-trainee applicants can elect not to include their contact information in the public listing that appears on the TPR Web site. This option will be made available at the time of initial registration and can be changed anytime the provider so chooses. Because these training providers do not wish to be contacted by driver-trainee applicants, they will be listed on the TPR Web site simply by name, city, and State. We note, however, that it is important that
The Agency agrees with the VA DMV's suggestion that training providers who have received a notice of
Several commenters asked whether a State must inform the Agency whenever a CMV driver training provider licensed, certified, or otherwise approved by that State no longer complies with the applicable requirements imposed by the State. The answer is yes, and parts 383 and 384 are revised to make that obligation clear. This notification requirement is necessary because FMCSA has no independent means by which to monitor a training provider's compliance with existing State laws and regulations. A training provider's failure to comply with the licensure, certification, or other requirements of the State in which it conducts training may result in that provider's removal from the TPR.
In response to comments by MLA and IUOE, FMCSA notes that we may have inadvertently caused confusion by labeling a section of the TPID form as “Third-Party Quality Control.” As noted above, no third-party certification or accreditation requirements for training providers were proposed in the NPRM and none are adopted in the final rule. The purpose of this section on the proposed TPID form was merely to identify organizational affiliations that training providers may have. There is no requirement that training providers belong to any third-party group as a condition of listing on the TPR. In order to avoid confusion going forward, FMCSA changes the name of that section of the registration form from “Third-Party Quality Control” to “Third-Party Affiliations.” We also add “joint labor-management programs” to the list of third-party organizations identified in this section of the form.
FMCSA further clarifies that the Agency does not intend to issue post-rule guidance pertaining to “third-party quality control”. The guidance to which we referred in the NPRM concerned the specific documentation requirements set forth in § 380.725. In light of the clarifying changes made in § 380.725 of the final rule discussed below, the Agency believes that post-rule guidance on training provider documentation requirements is unnecessary. In addition, draft instructions accompanying the TPRF, available in the docket for this rulemaking, provide detailed descriptions of the categories of information required for registration on the TPR.
FMCSA proposed that all training providers must upload training certificates to the TPR by close of the next business day after the driver-trainee completes the training.
As proposed, following a driver-trainee's completion of ELDT administered by a training provider listed on the TPR, the provider will electronically transmit to the TPR a certificate of completion which contains specified information, including the driver-trainee's name, CLP/CDL number and the CDL class and/or endorsement training the driver-trainee received. FMCSA would then instantaneously transmit the certificate to the SDLA via CDLIS for entry into the appropriate driver record. In the NPRM, the Agency indicated that it would not retain a copy of the trainee certificate in any Agency system of records. For Class A or B CDLs or P, S, or H endorsements issued after the compliance date of the final rule, FMCSA proposed that, before issuing a CDL, States be required to initiate a check with CDLIS to determine that the applicant completed the required ELDT from a training provider listed on the TPR.
AAMVA noted further that it is unclear how quickly the SDLAs would be notified after the ELDT certificate is uploaded to the TPR and requested that the Agency clarify the time frame in the final rule. AAMVA also asked FMCSA to clarify how long SDLAs have to post the ELDT certificates and for what length of time the States must retain the information. South Dakota DPS commented that if license examiners must record the training certificate when the driver applied for a CDL, there would be longer wait times at examining stations, requiring States to hire additional staff. The ABA asked whether FMCSA intends to make ELDT certificates available to motor carriers seeking to hire qualified drivers.
The NY DMV commented that FMCSA “has not set any regulations or guidelines as to the establishment of [the TPR] or the integration of the transmittal of TPR certification data to
ATA commented that “[i]t is imperative that training providers are able to electronically transmit training certificates to the SDLAs, and that the SDLAs are able to append the certificate, or confirmation thereof, to the driver's [CDLIS] record prior to implementation of this rule.” Similarly, NY DMV recommended that the TPR be “fully established and operational to integrate the training certifications to CDLIS
Contrary to the position that FMCSA expressed in the NPRM, the Agency will retain the training certification information electronically transmitted to the TPR. Upon consideration, FMCSA believes retention of this information is prudent in the event that data transmission to CDLIS is unsuccessful, as several commenters noted. Further, as noted previously, the Agency intends to use the specific training information contained in the certificates to assess the impact of ELDT on motor carrier safety and to monitor the effectiveness of individual training providers. FMCSA will not make individual driver-trainee ELDT certification information available through the TPR to potential employers or any entity other than the SDLAs. The means by which FMCSA will protect the personally identifiable information (PII) contained in the training certification information is discussed in the Privacy Impact Assessment associated with this rulemaking.
The Agency will not issue paper training certificates for use by the SDLAs; FMCSA's transmittal of ELDT certification information to the SDLAs will be entirely electronic through CDLIS. The Agency believes that the use of paper training certificates is susceptible to fraud. Accordingly, in the final rule, FMCSA revises § 383.73(b)(10) to clarify that States must accept only electronic notification of ELDT certification. However, today's rule does not prohibit training providers from issuing paper certificates to individual driver-trainees, who may wish to have their own documentation of ELDT completion.
The comments submitted by SLDAs and training providers have raised important questions and concerns regarding the transmittal of ELDT certification information to the States through CDLIS. Many of the operational details will necessarily be developed during the implementation phase of the TPR, and the Agency will take these comments into account during that process. In addition, FMCSA will work closely with AAMVA and the SDLAs during the implementation phase to address these issues in a way that minimizes the administrative burden on States to the greatest possible extent.
The NPRM permitted theory and BTW training to be delivered by separate providers. The Agency noted that it “would not transmit training certification to the SDLA until it receives notice of successful completion of both theory and BTW (range and public road) training, when applicable.” (81 FR 11960)
As proposed, one of the requirements that training providers must meet in order to remain listed on the TPR is to allow an audit or investigation of their operations conducted by FMCSA or its authorized representative (§ 380.719(a)(6)). Training providers must also ensure that all required documentation is available upon request by FMCSA or its authorized representative.
As proposed, § 380.723 set forth procedures related to the voluntary and involuntary removal of a training provider from the TPR.
The Agency acknowledges the commenter's concern that the proposed language does not appear to afford the training provider an opportunity to correct noted deficiencies “short of suspending its program.” In response, FMCSA deletes the proposed language in § 380.703(b) stating that “no training conducted after issuance of a notice of proposed removal will be considered to comply with this subpart until FMCSA withdraws the notice.” Accordingly, under the final rule, training providers who receive a notice of proposed removal can continue to conduct training during the period in which they are undertaking the necessary corrective actions, which is generally 60 days. However, the final rule requires, as proposed, that providers who receive a notice of proposed removal must inform driver-trainees currently enrolled in training, as well as those scheduled for future training, of the proposed removal. In addition, as noted below, FMCSA will indicate on the TPR Web site that it has issued a notice of proposed removal to the training provider. (The Agency will remove that notation from the TPR Web site if it withdraws the notice.) If FMCSA subsequently removes the provider from the TPR because it did not respond to the notice or proposed removal within 30 days, or because it did not complete the required corrective actions, any training conducted after the date of removal is invalid.
In the Agency's judgment, this approach balances the needs of training providers who wish to correct deficiencies in their program and driver-trainees who are already receiving training from a provider to whom FMCSA issues a notice of proposed removal. Finally, we note that, under the emergency removal procedures in § 380.723(e), FMCSA can immediately remove any training provider engaged in fraud, criminal behavior or when the public interest or safety requires.
The rest of § 380.723(c)(1) remains largely as proposed. The Agency, therefore, believes that the final rule offers training providers significant due process protections which allow them to: (1) Respond to the notice of proposed removal by explaining why the proposed removal is not warranted or by agreeing to take specified corrective actions; (2) conduct training following issuance of the notice of proposed removal (3) avoid removal from the TPR by taking prescribed corrective actions; (4) request administrative review of removal; and (5) apply for reinstatement to the TPR no earlier than 30 days after involuntary removal.
The NPRM did not address when a driver-trainee may schedule his or her State-administered CDL skills test. Under existing regulations, a CLP holder is not eligible to take the CDL skills test in the first 14 days after initial issuance of the CLP (§ 383.25(e)). However, part 383 does not prohibit a CDL applicant from scheduling a skills test before that date.
The NPRM did not address whether, or how, a third-party CDL skills tester would access a driver-trainee's training certification information. Under § 383.75, States may currently authorize a third-party tester to administer the CDL skills tests, as long as specified conditions are met.
As proposed, the compliance date will be three years after the effective date of the final rule.
AAMVA commented that “[t]he registry of entry-level training providers and the process for transmittal and acceptance of all applicable information associated with the entry-level training certification must be in place before the compliance date.” AAMVA requested that the three year compliance date be specifically predicated on the completion of all process and functional requirements associated with the final rule. Similarly, the Connecticut DMV asked the Agency to extend the compliance date “until all process requirements of the rule and [the TPR] are functional.” The NY DMV also commented that the compliance date should be tied directly to the functionality of the TPR, suggesting that the date be no earlier than one year after the “fully established and operational training Registry.”
In addition to SDLAs, several other commenters expressed concern regarding the proposed compliance date. The NYAPT commented that FMCSA could place the State licensing agencies in the difficult position of having to implement requirements before the related systems changes are fully operational. UMA reminded the Agency “of the importance of a fully functional electronic system between schools, FMCSA and states prior to full implementation.”
Finally, unlike FMCSA's phased approach to the Medical Certification and National Medical Registry implementation, the Agency will not provide SDLAs with paper training certificates, nor will SDLAs be permitted to accept paper certificates as evidence of ELDT compliance. Accordingly, FMCSA believes that the underlying information systems can be integrated and operational by the compliance date of today's rule.
The NPRM did not propose any bond requirements for training providers listed on the TPR. However, in the preamble, the Agency noted that the ELDTAC considered the effect of a training provider's involuntary removal from the TPR on driver-trainees who had already paid tuition, but had not yet completed their training. The ELDTAC determined the issue should be resolved between the training provider and the driver-trainee.
The bond requirement for third-party skill examiners, referenced by the ODOT, is not an appropriate precedent for requiring training providers to maintain a bond under today's rule. Section 383.75(a)(8)(v), provides that when the State has an agreement with a third party to administer CDL skills testing, that agreement must include a provision requiring the third-party tester to initiate and maintain a bond, in an amount determined by the State, sufficient to pay for re-testing drivers in the event the third-party is involved in fraudulent activities related to conducting skills testing for CDL applicants. That bond requirement is therefore part of a contractual agreement between the State and third-party, non-government entities who provide testing services for the State.
No contractual relationship exists between a training provider and FMCSA. In order to be eligible for listing on the TPR, training providers need only attest, under penalty of perjury, that they meet the eligibility criteria to provide ELDT and that they agree to comply with other requirements set forth in subpart G. This self-certification approach is very different from the way that third-party CDL skills examiners are regulated under part 383. Section 383.75 requires, for example,
However, the Agency recognizes that driver-trainees should be timely informed about the status of providers from whom they obtain, or plan to obtain, ELDT. The final rule requires, as proposed, that training providers inform driver-trainees currently enrolled in training, as well as those scheduled for future training, of the proposed removal (§ 380.723(b)). Further, as noted above, the Agency adds a provision to § 380.723(b) stating that, if the provider is listed on the TPR Web site, FMCSA will indicate on the Web site that it has issued a notice of proposed removal to the provider. (In the event that FMCSA withdraws the notice, that designation will be removed from the provider's TPR listing.)
As noted above, in today's rule, FMCSA deletes the proposed provision stating that training conducted after the Agency's issuance of a notice of proposed removal is invalid until FMCSA withdraws the notice. Under § 380.723(b) of the final rule, training conducted following issuance of a notice of proposed removal is generally considered compliant until the provider is actually removed from the TPR. Therefore, a driver-trainee in the process of receiving ELDT from a provider to whom FMCSA issues a notice of proposed removal will very likely be able to complete their training before the provider can be removed, which is a minimum of 30 days following issuance of the notice. (Any training provided after the date of removal from the TPR is not valid.)
Further, FMCSA expects that the potential imposition of civil and criminal penalties on training providers failing to comply with the requirements of today's rule will, in most case, deter fraudulent conduct. However, in the event that driver-trainees become aware of fraudulent training operations, they are encouraged to report the activity to the DOT Office of Inspector General (OIG). Instructions for reporting fraud, waste and abuse are available on the OIG's Web site,
E.O. 13045 requires that Federal agencies, consistent with their mission, identify whether “economically significant” rules pose environmental health risks and safety risks that may disproportionately affect children. In the NPRM, FMCSA stated that, while the proposed rule was economically significant, the Agency does not anticipate that this regulatory action could in any way create an environmental or safety risk that could disproportionately affect children.
FMCSA acknowledges that the costs per hour for delivering BTW training may exceed the costs per hour for delivering theory training, given that one includes the costs of more one-on-one instruction and observation of the student operating a CMV on the range and road, while the other involves the costs of theory instruction which may be provided simultaneously in a classroom setting to multiple students or via online training. The Agency does not believe this fact is relevant to the content of the rule or the estimates of the costs for completing all the training necessary to obtain the CDL.
Additional details can be found in Section 4.1.1 (Savings from Reduction in Fuel Consumption) and Section 4.1.2 (Monetized CO
In Section 4.1.1 of the RIA (Savings from Reduction in Fuel Consumption), the Agency demonstrates that the 5 percent fuel economy benefit attributable to this final rule is conservative, because it is predicated on only a few key training concepts, encompassed in the Class A and Class B curricula, that could reasonably be expected to improve fuel economy (
Additionally, due to wide ranges of estimates in studies relevant to the quantified benefits of the rule and the lack of studies that specifically focus on the curricula prescribed by this rule,
In addition, FMCSA accounted more broadly for other external factors related to vehicle technology by adjusting downward the baseline fuel consumption projection to reflect the possible impact of the joint EPA/NHTSA Phase 2 Medium- and Heavy-Duty Vehicle Fuel Efficiency and Greenhouse Gas Standards rule.
Additionally, ATA commented that the RIA does not estimate the cost of additional maintenance that would be required for the non-safety benefits to be achieved.
FMCSA notes that these numbers have been updated in the RIA for today's rule and can be found in Section 4.2 (Safety Benefits).
FMCSA does not believe the final rule imposes a heavy burden or cost on training providers seeking to be listed on the TPR. As discussed above, FMCSA does not “certify” training providers under the final rule, instead relying on a self-certification approach for training providers who want to be eligible for listing on the TPR. Training
As discussed in the response to comments, the final rule makes the following changes to the NPRM:
This section remains as proposed. Compliance is required with this subpart three years after the effective date of the final rule.
As proposed, this subpart established training requirements for entry-level drivers, minimum curricula contents, and standards for training providers. It also stated that ELDT, as defined in this subpart, applies only to individuals who apply for a CDL or CDL upgrade or endorsement and does not otherwise amend substantive requirements in part 383.
In the final rule, FMCSA deletes the reference to “standards for training providers”, which the Agency inadvertently included in this section. (Training provider standards are addressed in subpart G, discussed below.) We also make conforming changes to reflect the revised definition of “entry-level driver,” as discussed below. The provision remains otherwise unchanged.
The Agency makes several clarifying and conforming changes to this section, which explains how ELDT requirements apply to drivers who intend to operate CMVs in intrastate and/or interstate commerce.
First, in § 380.603(a), we add an exception: CMV drivers applying for removal of a restriction in accordance with § 383.135(b)(7) are not subject to the training requirements set forth in today's rule (§ 380.603(a)(4)).
The meaning of § 380.603(b), which stated that drivers holding a valid CDL issued before the compliance date of the final rule are not subject to ELDT requirements, remains essentially as proposed. However, FMCSA deletes the term “valid CDL” and adds clarifying language in order to make this provision explicitly consistent with the scope of today's rule. Accordingly, the subsection now states that anyone holding a Class A or Class B CDL, or the passenger (P), school bus (S), or hazardous materials (H) endorsement, issued before the compliance date is not subject to ELDT requirements pertaining to that CDL or endorsement. We also delete the words “except as otherwise specifically provided”.
Section 380.603(c)(1) proposed that individuals holding a CLP before the compliance date of the final rule are not subject to ELDT requirements if they obtain a CDL within 360 days of obtaining the CLP. In the final rule, the Agency adds clarifying language to specify that individuals who obtain a CLP before the compliance date of the final rule are not subject to ELDT requirements if they obtain the underlying CDL and/or endorsement to which the CLP applies before the CLP or renewed CLP expires. As noted in the response to comments, the deletion of “360 days” accounts for the fact that individual States address the renewal of CLPs differently. Section 380.603(c)(2), which proposed that individuals obtaining a CLP after the compliance date of the final rule are subject to ELDT requirements, remains as proposed.
FMCSA adds new subsection § 380.603(c)(3). Originally proposed as new § 383.71(a)(4), this requirement stated that, except for individuals seeking the H endorsement, individuals successfully completing the theory portion of the training had to complete the BTW portion within 360 days. In the final rule, FMCSA moves this requirement to § 380.603(c) and changes “360 days” to “one year”. We also clarify that theory and BTW portions of
In the final rule, the Agency deletes proposed § 380.603(d), which stated that, except for those persons subject to the proposed refresher training requirements, a person who received ELDT qualifying him or her to take the skills test for a CDL or endorsement would not be required to obtain such training again before reapplying for a CDL or endorsement. FMCSA believes that the revised definition of “entry-level driver” in § 380.605, discussed below, makes this provision unnecessary.
The Agency also deletes proposed § 380.603(e), which required that a CDL holder disqualified from operating a CMV under § 383.51(b)–(e) must complete refresher training as proposed in § 380.625. Because the final rule does not include a refresher training requirement, this provision is no longer necessary.
The Agency makes various clarifying and conforming changes to this section, as discussed below, but does not add any new definitional terms in the final rule.
As proposed, the definition of “behind-the-wheel (BTW) instructor” required that the instructor be an “experienced driver” as defined in this section and must have completed training in the public road portion of the curriculum in which they are instructing, except that BTW instructors utilized by “providers that train, or expect to train, three or few drivers annually” are not required to comply with that requirement.
In the final rule's definition of BTW instructor, we delete the reference to the term “experienced driver” as well as the reference to providers training three or fewer drivers annually because the final rule does not retain the proposed distinction between large and small training entities.
In addition, the Agency incorporates the qualification requirements for BTW instructors, proposed as § 380.713(b) (and cross-referenced to the proposed definition of “experienced driver” in § 380.605), directly into the definition of BTW instructor in the final rule. The qualifications are also revised to reflect comments suggesting that BTW instructors should have a minimum of two years of relevant driving or instructional experience, rather than the one year of experience, as proposed.
Accordingly, in the final rule, the definition of BTW instructor means an individual providing BTW training involving the actual operation of a CMV on a range or public road who meets one of the following qualifications: Holds a CDL of the same (or higher) class, and with all endorsements necessary, to operate the CMV for which training is to be provided; has a minimum of two years of experience driving a CMV requiring a CDL of that class or endorsement; and meets all applicable State requirements for CMV instructors;
In addition, FMCSA adds an exception to the definition of BTW instructor: instructors who provide BTW training solely on a private range are not required to currently hold a CDL of the same or higher class and all endorsements necessary to operate the CMV for which training is provided as long as they previously held that class of CDL. As noted in the response to comments, FMCSA makes this change to permit non-CDL holders, such as retired CMV drivers, or CMV drivers not medically certified, to provide training on a private range.
Finally, FMCSA revises the BTW training instructor qualification requirement pertaining to the instructor's CMV driving record. As proposed in § 380.713(b), during the two years prior to engaging in BTW instruction, instructors must not have had any CMV-related convictions for the offenses identified in § 383.51(b)–(e) and the instructor's driving record must meet applicable Federal and State requirements.
In the final rule, if an instructor's CDL has been cancelled, suspended, or revoked due to any of the disqualifying offenses identified in § 383.51, the instructor is prohibited from engaging in BTW instruction for two years following the date his or her CDL is reinstated following the disqualification. FMCSA adds this provision to the definition of “BTW instructor” in the final rule.
As proposed, “theory instructor” was defined as instructors who provide knowledge instruction on the operation of a CMV and are either an “experienced driver” as defined in this section or have previously audited or instructed that portion of the theory training course they intend to instruct.
FMCSA makes several substantive changes to this definition, as well as conforming changes to account for the fact that, as noted above, the definition of “experienced driver” is not retained in the final rule. The qualifications for theory instructors are now incorporated directly into the definition of the term, just as they are for BTW instructors.
In the final rule, theory instructors must hold a CDL of the same (or higher) class, and with all endorsements necessary, to operate the CMV for which training is to be provided, and have a minimum of two years of experience driving a CMV requiring a CDL of that class or endorsement,
FMCSA also adds the following provision to the definition of” theory instructor” in the final rule: If an instructor's CDL has been cancelled, suspended, or revoked due to any of the disqualifying offenses identified in § 383.51, the instructor is prohibited from engaging in theory instruction for two years following the date his or her CDL is reinstated following the disqualification. As noted above, a similar provision is also included in the definition of “BTW instructor”. FMCSA adds the provision to the definition of “theory instructor” because we believe the instructor's CMV driving record is also a relevant qualification for individuals who provide theory
In addition, as discussed in the response to comments, FMCSA deletes the proposed qualification standard a theory instructor must have previously audited or instructed that portion of the theory training course they intend to instruct.
As proposed, an “experienced driver” was defined as a driver who holds a CDL of the same or higher class and with all endorsements necessary to operate the CMV for which training is to be provided; has at least one year of experience driving a CMV requiring a CDL of the same or higher class and/or the same endorsement or has at least one year of experience as a BTW CMV instructor; and meets all applicable State training requirements for CMV instructors. That proposed definition was cross-referenced in proposed § 380.713, which set forth the theory and BTW instructor qualification requirements. As described above, the proposed definition of “experienced driver” is not retained in the final rule. The Agency revises the instructor qualification requirements proposed in § 380.713 and incorporates them into the definitions of “BTW instructor” and “theory instructor” in the final rule.
The definitions of BTW range training and BTW road training remain as proposed, except that FMCSA changes the term “driver-instructor” to “BTW instructor” in each definition.
As proposed, the definition of “entry-level driver” included a person who must complete the CDL skills test requirements under 49 CFR 383.71 prior to receiving the initial CDL or having a CDL reinstated, upgrading to a Class A or B CDL, or obtaining the P, S, or H, endorsement. Individuals for whom States waive the CDL skills test under 49 CFR 383.77 were excepted from the proposed definition.
As discussed above, the Agency received a number of comments stating that the proposed definition was unclear. Accordingly, in the final rule, FMCSA revises the definition of “entry-level driver” as follows: An individual who must complete the CDL skills test requirements under § 383.77 prior to receiving a Class A or Class B CDL for the first time, upgrading to a Class B or a Class A CDL, or obtaining a P, S, or H, endorsement for the first time. FMCSA believes that the phrase “receiving a Class A or Class B CDL for the first time” is clearer than the term “initial CDL”, as proposed. This phrase is also consistent with the language of MAP–21, which requires that FMCSA establish entry-level training requirements addressing the knowledge and skills that “must be acquired before obtaining a commercial driver's license for the first time,” 49 U.S.C. 31305(c)(1)(B).
The Agency deletes the reference to “having a CDL reinstated” primarily because the proposed refresher training requirement is not retained in the final rule. In addition, as noted above in the explanation of changes to § 380.603(a), FMCSA adds an exception for individual drivers applying to have a restriction removed from their CDL. The exception for individuals for whom the States waive the skills test under § 383.77 remains as proposed.
FMCSA makes conforming changes to the definition of “entry-level driver training” in the final rule in order to reflect the revised definition of “entry-level driver” described above. Accordingly, ELDT means training that an entry-level driver receives from an entity listed on the TPR prior to taking the CDL skills test required to receive a Class A or Class B CDL for the first time or upgrade to a Class B or a Class A CDL; taking the CDL skills test required to obtain a P and/or S endorsement for the first time; or taking the CDL knowledge test required to obtain the H endorsement for the first time.
As proposed, “refresher training” was defined as training that a CDL holder who has been disqualified from operating a CMV must take. For reasons explained in FMCSA's response to comments on the proposed refresher training requirement, we delete this definition (along with the refresher training curriculum) from the final rule.
As proposed, “training provider” was defined as an entity listed on the TPR, as required by subpart G. In the NPRM preamble, FMCSA noted that training providers could be training schools, motor carriers providing “in-house” training to current or prospective employees, local governments, or school districts.
In order to clarify that any entity meeting the eligibility requirements set forth in subpart G can be a “training provider,” FMCSA revises the definition of the term in the final rule by adding specific examples of potentially qualifying entities. Accordingly, “training provider” is defined as an entity listed on the TPR, as required by subpart G; training providers include, but are not limited to, training schools, educational institutions, rural electric cooperatives, motor carriers, State/local governments, school districts, joint labor management programs, owner-operators, and individuals. As noted in our response to comments on this issue, these examples are not intended to be a finite list; the Agency adds them to illustrate the range of entities that could potentially be eligible for listing on the TPR.
As proposed, this section explained that CDL applicants must complete training that meets the CDL class and/or endorsement (
While the essential meaning of § 380.609 remains unchanged in the final rule, the Agency makes various conforming changes to this section. We delete the reference to “refresher training,” as that proposed requirement is not retained in the final rule. FMCSA also clarifies that specified ELDT requirements apply to individuals who wish to obtain a Class A or B CDL for the first time and/or a P, S, or H endorsement for the first time. The Agency makes these changes to conform to the revised language in § 380.603 (Applicability), as discussed above. We make other conforming changes to reflect the fact that all of the training curricula in the final rule are included in Appendices A–E to part 380 of the final rule and are no longer set forth in §§ 380.613, 380.615, 380.619, 380.621 and 380.623, as proposed.
As proposed, this section stated that training providers seeking to be listed on the TPR must meet the requirements of subpart G, attest that they meet the requirements of this part, and supply documentary evidence of their compliance with these requirements to FMCSA or its authorized representative, upon request.
FMCSA deletes this section in the final rule. As proposed, the provision applied directly to training providers; we therefore conclude that it does not belong in subpart F. Additionally, this
In the final rule, the Class A training curriculum is moved to Appendix A of part 380. Although the curriculum elements for the Class A CDL remain largely as proposed, FMCSA makes clarifying and conforming changes, as well as several topic-related additions and deletions, as described below. Additionally, as discussed in the response to comments, FMCSA deletes the requirement that driver-trainees complete a minimum of 30 BTW hours in order to complete that portion of the curriculum. In the introduction to the curriculum, FMCSA adds the requirement that training providers must determine that the driver-trainee has demonstrated proficiency in all elements of the BTW curriculum, unless otherwise noted. This language is consistent with the NPRM's designation of certain elements of the BTW curriculum, such as night driving or skid control, as “discussed during public road training or simulated, but not necessarily performed.” The Agency also clarifies that training instructors must provide commentary instruction in those elements of the BTW curriculum. FMCSA considers these additions to be clarifying rather than substantive.
FMCSA also adds a requirement that instructors document the total number of (clock) hours that each driver-trainee spends in completing all elements of the BTW (range and public road) curriculum. As noted above, the purpose of this requirement is to allow FMCSA to collect data which will assist the Agency in assessing the effectiveness of ELDT and in monitoring the effectiveness of training providers. Finally, the Agency clarifies that BTW training may not be conducted by using a driving simulation device, nor may a driver-trainee use a simulation device to demonstrate BTW proficiency.
Additionally, in response to comments, the Agency adds two safety-related topics to the Class A curriculum. First, “entering and exiting the interstate or controlled access highway” is added to the “Basic control” unit of the theory curriculum and to the “Vehicle controls” unit of and BTW-public road portion of the curriculum. In addition, the Agency adds an element to the “Railroad-highway grade crossings” unit in the “Advanced operating practices” section of the theory curriculum, which requires that training providers instruct driver-trainees that railroads maintain “Emergency Notification Systems” to receive notification of unsafe conditions, such as a disabled vehicle blocking the track.
The Agency deletes several topics because they are not directly related to the safe operation of a CMV, as required by MAP–21 (49 U.S.C. 31305(c)(1)(A)). In the “Fatigue and wellness awareness” unit of the theory curriculum, the Agency deletes the following topics: Diet, exercise, personal hygiene, stress, and lifestyle changes. In the final rule, this unit covers the consequences of chronic and acute driver fatigue, in addition to wellness and basic health maintenance issues that affect a driver's ability to safely operate a CMV. In the “Post-crash procedures” unit of the theory curriculum, FMCSA deletes the following topics: Responsibilities for assisting injured parties; “Good Samaritan” laws; a driver's legal obligations and rights, including rights and responsibilities for engaging with law enforcement personnel; and the importance of learning company policy on post-crash procedures. As previously noted, training providers may address these and other topics as they see fit, but they are not required curriculum elements under today's rule.
FMCSA also cross-references the current FMCSRs (
Finally, the Agency makes various clarifying and conforming changes to the Class A curriculum in the final rule in order to improve organizational efficiency and consistency between curricula and delete redundancies in individual curriculum topics.
In the final rule, the Class B training curriculum is moved to Appendix B of part 380. Although the curriculum elements for the Class B CDL remain largely as proposed, FMCSA makes clarifying and conforming changes, as well as several topic-related additions and deletions, as described below. Additionally, as discussed in the response to comments, FMCSA deletes the requirement that driver-trainees complete a minimum of 15 BTW hours in order to complete that portion of the curriculum. In the introduction to the curriculum, FMCSA adds the requirement that training providers must determine that the driver-trainee has demonstrated proficiency in all elements of the BTW curriculum, unless otherwise noted. This language is consistent with the NPRM's designation of certain elements of the BTW curriculum, such as night driving or skid control, as “discussed during public road training or simulated, but not necessarily performed.” The Agency also clarifies that training instructors must provide commentary instruction in those elements of the BTW curriculum. FMCSA considers these additions to be clarifying rather than substantive.
FMCSA also adds a requirement that instructors document the total number of (clock) hours that each driver-trainee spends in completing all elements of the BTW (range and public road) curriculum. As noted above, the purpose of this requirement is to allow FMCSA to collect data which will assist the Agency in assessing the effectiveness of ELDT and in monitoring the effectiveness of training providers. Finally, the Agency clarifies that BTW training may not be conducted by using a driving simulation device, nor may a driver-trainee use a simulation device to demonstrate BTW proficiency.
Additionally, in response to comments, the Agency adds two safety-related topics to the Class B curriculum. First, “entering and exiting the interstate or controlled access highway” is added to the “Basic control” unit of the theory curriculum and to the “Vehicle controls” unit of and BTW-public road portion of the curriculum. In addition, the Agency adds an element to the “Railroad-highway grade crossings” unit in the Advanced operating practices” section of the theory curriculum, which requires that training providers instruct driver-trainees that railroads maintain “Emergency Notification Systems” to receive notification of unsafe conditions, such as a disabled vehicle blocking the track.
The Agency deletes several topics because they are not directly related to the safe operation of a CMV, as required by MAP–21 (49 U.S.C. 31305(c)(1)(A)). In the “Fatigue and wellness
FMCSA also cross-references the current FMCSRs (
Finally, FMCSA makes various clarifying and conforming changes to the Class B curriculum in the final rule in order to improve organizational efficiency and consistency between curricula and delete redundancies in individual curriculum topics.
In the final rule, the passenger (P) endorsement curriculum is moved to Appendix C of part 380. The P curriculum remains largely as proposed. FMCSA adds language to the introduction to the curriculum clarifying that the training instructor must determine that the driver-trainee has demonstrated proficiency in all elements of the BTW curriculum. FMCSA also adds a requirement that instructors document the total number of (clock) hours that each driver-trainees spends in completing the BTW curriculum, for the reasons previously noted. The Agency adds “drawbridges” to the “Railroad-highway grade crossings” topic in the theory portion of the P curriculum for consistency with § 383.111. FMCSA also cross-references the current FMCSRs (
In the “Post-crash procedures” unit of the P endorsement theory curriculum, FMCSA deletes the following topics: Responsibilities for assisting injured parties; “Good Samaritan” laws; a driver's legal obligations and rights, including rights and responsibilities for engaging with law enforcement personnel; and the importance of learning company policy on post-crash procedures. As noted above, the Agency removes these topics from the curriculum because they are not directly related to the safe operation of a CMV, as required by MAP–21. In addition, FMCSA deletes paragraph (4) from the “Baggage and/or cargo management” units of the theory and BTW-range and public road portions of the curriculum, which identifies various prohibited items and materials; in the final rule, that topic is now covered in revised paragraph (2) of each unit.
FMCSA also makes clarifying and conforming changes to the P curriculum in the final rule in order to improve organizational efficiency and consistency between curricula and delete redundancies in individual curriculum topics.
In the final rule, the school bus (S) endorsement curriculum is moved to Appendix D of part 380. The S curriculum remains largely as proposed. FMCSA adds language to the introduction to the curriculum clarifying that the training instructor must determine that the driver-trainee has demonstrated proficiency in all elements of the BTW curriculum. FMCSA also adds a requirement that instructors document the total number of (clock) hours that each driver-trainee spends in completing the BTW curriculum. The Agency also cross-references the current FMCSRs (
FMCSA adds a “vehicle orientation” unit to the theory portion of the S curriculum, which covers the basic physical and operational characteristics of a school bus. This addition is made to provide consistency with the theory portions of the Class A and B and the P curricula, each of which contains a vehicle orientation unit. FMCSA deletes the proposed theory unit entitled “antilock braking systems”, because “brake systems” are included in the vehicle orientation unit added to the S curriculum in the final rule. The Agency deletes the “Night operation” unit from the theory curriculum, because that topic, which is not unique to the operation of a school bus, is addressed in the Class A and B core curricula.
In the final rule, the hazardous materials (H) endorsement curriculum is moved to appendix E of part 380. The H curriculum remains essentially as proposed.
As proposed, the refresher training curriculum set forth the training requirements that CDL holders who are disqualified from operating a CMV must complete before their CDL can be reinstated. As explained above, the final rule does not include any requirements related to refresher training. Accordingly, FMCSA deletes the refresher training curriculum in the final rule.
As proposed, this section stated that subpart G establishes eligibility requirements for listing on the TPR, and that drivers seeking ELDT may use only providers listed on the TPR to comply with this part. In the final rule, FMCSA clarifies that, in order to provide ELDT in compliance with this part, providers must be listed on the TPR. The Agency deletes the reference to the driver's need to obtain ELDT only from providers listed on the TPR, as that obligation is referenced in § 380.609.
As proposed, this section set forth the requirements a training provider must meet in order to be eligible for initial listing on the TPR. It remains essentially as proposed.
FMCSA makes several conforming changes to reflect that, in the final rule, the ELDT curricula are set forth in Appendices A–E and that refresher training requirements are not included in the final rule. We also change the name of the registration document from “Entry-Level Driver Training Identification Report”, as proposed, to “Training Provider Registration Form”, in the final rule. Further, FMCSA clarifies that training providers must
FMCSA adds new § 380.703(a)(5)(i), requiring that training providers be licensed, certified, registered, or authorized to provide training in accordance with the applicable laws and regulations of any State where in-person training is provided. This provision, proposed as § 380.719(a)(4), is moved to § 380.703 because it is a threshold eligibility requirement; the wording of this provision remains as proposed, except for the clarifying addition of “in-person”. The Agency also adds new § 380.703(a)(5)(ii), which states that State qualification requirements otherwise applicable to theory instruction do not apply to providers who offer instruction only online. As discussed in the response to comments, this exception is necessary to account for the fact that, because online training can be delivered virtually anywhere, online providers cannot reasonably be expected to comply with multiple (and possibly conflicting) State requirements. However, as noted above in the discussion of the revised definition of “theory instructor” in § 380.605, online providers must ensure that the training content is delivered and/or prepared by theory instructors meeting the definition.
Finally, the Agency deletes the reference to the creation and maintenance of driver-trainee records of completion and/or withdrawal, as proposed in § 380.703(a)(7). The Agency will have access to the pertinent information through the providers' transmission of ELDT certification information for each driver-trainee completing their training program.
As proposed, this section set forth the requirements applicable to ELDT providers. It mandated that providers require that all accepted applicants for BTW public road training meet Federal, State and/or local laws pertaining to drug screening, controlled substances testing, age, medical certification, licensing and driving record. This section also required that training providers cover all required elements of the BTW (range and public road) and theory curricula, as applicable. As proposed, providers training more than three driver-trainees annually must provide training materials to each trainee addressing the applicable curricula; providers training three or fewer trainees annually were not subject to this requirement. This section also stated that separate training providers may deliver the theory and BTW portions of the curricula.
FMCSA makes several changes to this section in the final rule. The Agency makes conforming changes to reflect that the final rule does not include a refresher training curriculum and that different requirements are not imposed on providers training three or fewer trainees annually, as proposed. In § 380.707(a), the Agency clarifies that accepted BTW applicants must certify that they will comply with DOT regulations, as well as State and local laws, pertaining to alcohol and controlled substances testing, age, medical certification, licensing and driving record. As proposed, the requirement could be interpreted to mean that training providers are responsible for driver-trainees' compliance with these requirements, which was not FMCSA's intention. FMCSA also adds a requirement that training providers verify that accepted BTW applicants hold valid CLPs/CDLs, as applicable, in order to ensure that driver-trainees operating CMVs on a public road are licensed to do so.
FMCSA clarifies in § 380.707(c) that, while separate providers may provide theory and BTW training, both the range and public road portions of BTW training must be provided by the same training entity, as noted in the response to comments. FMCSA adds a requirement that training providers offering online training must ensure that the content is prepared by a theory instructor as defined in § 380.605. Finally, FMCSA deletes the provisions, proposed as § 380.707(b) and (c), requiring that BTW and theory instruction include all elements set forth in the applicable curricula because those requirements are already imposed on training providers in § 380.703(a)(1).
As proposed, this section required that a training provider's classroom and/or range facilities comply with all applicable Federal, State, and/or local laws. Additionally, training providers offering BTW-range training must have an instructor on site to demonstrate applicable skills and correct deficiencies of individual students; and the range must be free of obstructions, enable the driver to maneuver safely and free from interference from other vehicles and hazards, and have adequate sight lines.
In the final rule, FMCSA retains, as proposed, the requirement that a training provider's classroom and/or range facilities comply with all applicable Federal, State, and/or local laws. The Agency deletes the requirements pertaining to range instruction because they are duplicative. In the final rule, the range-related requirements proposed in § 380.709 are addressed in the introductions to the Class A, Class B, P, and S curricula in Appendices A–D and in the definition of “range” in § 380.605.
As proposed, this section required that all vehicles used in BTW must be in safe mechanical condition and that vehicles used in BTW-public road training comply with applicable Federal and State safety requirements. In addition, training vehicles must be in the same class (A or B) and type (bus or truck) that driver-trainees intend to operate for their CDL skills test.
In the final rule, FMCSA deletes the provision requiring that all vehicles used for BTW-range training be in safe mechanical condition. The Agency believes that the requirement that vehicles used for BTW training comply with applicable Federal and State safety requirements, now in § 380.711(a), adequately addresses the issue of training vehicle safety. In addition, we delete the parenthetical references to “(A or B)” and “(bus or truck)” in response to a comment that Group C vehicles, which may be used in BTW training for the P and/or S endorsement, are not used in Class A or B CDL training and may be neither a bus nor a truck.
As proposed, this section required that training providers utilize theory and BTW instructors meeting the specified definitions in § 380.605. Additionally, this section required training providers to utilize BTW instructors whose driving record meets applicable State and Federal requirements and who, in the two years prior to engaging in BTW instruction, have not had any CMV-related convictions for the offenses identified in § 385.51(b)–(e).
FMCSA significantly revises § 380.713 in the final rule, as noted above in the explanation of changes made to § 380.605. The specific qualification requirements pertaining to theory and BTW instructors are now addressed directly in the definitions of those terms. Accordingly, in the final rule, this section simply requires that training providers utilize “theory instructors” and “BTW instructors” meeting the definition of those terms as set forth in § 380.605.
As proposed, this section required that driver-trainees successfully complete a course of instruction meeting the ELDT curriculum requirements. Training providers must use assessments (in written or electronic format) to demonstrate the trainee's proficiency in the knowledge objectives set forth in the applicable theory curriculum; trainees must achieve an overall score of 80 percent or higher on the theory assessment. Training providers are required to assess a driver-trainee's proficiency on the driving range in accordance with the applicable curriculum, as well as a trainee's proficiency in BTW driving skills on a public road in the class (A or B) and type (bus or truck) of vehicle the trainee will operate for the CDL skills test.
In the final rule, § 380.715 remains largely as proposed. FMCSA makes conforming changes to reflect that the ELDT theory and BTW curricula are now in Appendices A–E of part 380 and are no longer set forth in §§ 380.613, 380.615, 380.619, 380.621 and 380.623, as proposed. FMCSA deletes the requirement that driver-trainees must complete a course of instruction meeting the applicable ELDT requirements, because that provision is set forth in § 380.609.The Agency clarifies that training providers must document their assessment of a driver-trainee's proficiency in the BTW skills, as required in Appendices A–D, as well as the total number of (clock) hours each driver-trainee spends in completing BTW (range and public road) training, but the proficiency documentation requirement in § 380.715(b) of the final rule is now combined for all BTW skills (range and public road). Separate documentation for range and public road skills, as proposed in § 380.715(b) and (c), is therefore no longer required. FMCSA does not require any specific means or method of documentation of BTW proficiency or the number of hours spent in completing the BTW curriculum.
Finally, FMCSA deletes the proposed requirement that BTW skills assessment must occur in “a vehicle class (A or B) and type (bus or truck) that the driver-trainee will operate for the CDL skills test,” for the reason noted above in the explanation of changes to § 380.711. We also note that all of the BTW curricula in today's rule require that the training occur in a representative vehicle for the CDL class or endorsement.
As proposed, this section required that training providers upload ELDT certificates to the TPR by the close of the next business day after the individual's completion of the training. It also set forth the specific information elements to be included in the training certification, such as the driver-trainee's name, CLP/CDL number and State of licensure, the type of training completed the training provider's name and unique TPR identification number, and the date of training completion.
In the final rule, § 380.717 remains largely as proposed. In response to comments, FMCSA extends the time period for electronically transmitting the ELDT certification information to the TPR to midnight of the second business day following the individual's completion of the training. As noted above, FMCSA adds the total number of (clock) hours spent to complete BTW training, as applicable, to the required certification information. We also add the trainee's driver's license number as a potential data element to account for the fact that trainees who are not CDL holders and who complete the theory curricula before obtaining BTW training may not have a CLP number at that point. The Agency also requires that training providers electronically transmit the ELDT data elements to the TPR, rather than uploading a training certificate, as proposed.
As proposed, this section identified the specific obligations imposed on training providers as a condition of continued listing on the TPR. The requirements include: Meeting the applicable requirements of this subpart; providing biennial updates to the Entry-Level Driver Training Provider Identification Report; reporting to FMCSA specified changes in key information within 30 days; being licensed, certified, registered or authorized to provide training in each State where training is provided, as applicable, and maintaining related documentation; allowing FMCSA or its authorized representative to conduct an audit or investigation of the training provider; and ensuring that all required documentation is provided within 48 hours of receiving a request for documentation from FMCSA or its authorized representative.
In the final rule, this section remains largely as proposed. The Agency clarifies that biennial updates to the Training Provider Registration Form, as well as any reports of changes in key information, must be transmitted electronically through the TPR Web site. As noted above, the requirement that training providers meet applicable State laws and regulations in each State where training is provided, proposed as § 380.719(a)(4), is in § 380.703(5)(i) of the final rule. The Agency moves the provision to § 380.703 because it is a threshold eligibility requirement for listing on the TPR.
As proposed, this section established the factors that FMCSA may consider when removing a training provider from the TPR. All training certificates issued after the training provider is removed from the TPR will be considered invalid.
In the final rule, this section remains essentially as proposed. FMCSA makes clarifying changes to § 380.721(a)(5), deleting the reference to “the SDLA CDL exam passage rate.” In the final rule, the regulatory text refers to the CDL skills test passage rate for applicants for the Class A CDL, Class B CDL, P endorsement, and/or S endorsement and the SDLA knowledge test passage rate for applicants for the H endorsement. In response to comments, the Agency also deletes “abnormally low” from this provision in order to clarify that we do not intend to establish a minimum required CDL test passage rate. FMCSA will assess the passage rate information in the context of State norms. Finally, the Agency makes a clarifying change to the proposed language stating that all training certificates issued after the date a provider is removed from the TPR will be considered invalid. In the final rule, the provision states that any training conducted after the removal date is invalid.
As proposed, this section set forth the procedures for voluntary and involuntary removal of a training provider from the TPR. This section addresses FMCSA's initiation of the involuntary removal process, the training provider's right to respond to the notice and undertake corrective action, the provider's right to oppose FMCSA's notice of proposed removal, the provider's right to request administrative review of an involuntary removal, procedures for FMCSA's emergency removal of a provider from the TPR, and the process by which a provider may apply for reinstatement to the TPR following voluntary or involuntary removal.
In the final rule, FMCSA makes several changes to the procedures related to a training provider's involuntary removal from the TPR, as
In § 380.723(c)(1)(iii), the Agency adds a sentence stating that any training conducted after the date a provider is removed from the TPR is invalid. This provision was proposed and is retained as part of § 380.721; it is included here for clarity and consistency. Otherwise, § 380.723 remains as proposed.
Section 380.725 sets forth the documentation and record retention requirements that apply to training providers eligible for listing on the TPR. As proposed, providers must retain their policy containing requirements for driver-trainee applicants related to controlled substances testing, medical certification, licensing, and driving records; specified instructor qualification documentation (
In order to consolidate and clarify the record keeping requirements imposed on training providers, FMCSA makes several changes to § 380.725 in the final rule. The Agency deletes the proposed retention requirements for the amount of time generally allocated to theory and BTW training, proposed as § 380.725(b)(3); the instructor-driver-trainee ratio and number of training vehicles; and the names of driver-trainees who complete or withdraw from the instruction and who passed/failed the theory or BTW assessment, proposed as § 380.725(b)(5). FMCSA will instead capture the relevant information on the Training Provider Registration Form (TPRF), so the provider does not need to retain that information separately. In addition, the Agency makes conforming changes to § 380.725(b)(1) to require the retention of self-certifications by driver-trainee BTW applicants, who must attest that they will comply with U.S. Department of Transportation regulations in parts 40, 382, 383, and 391, as well as State and local laws, related to alcohol and controlled substances testing, age, medical certification, licensing, and driving records, as required in § 380.707(a).
FMCSA adds the following record retention requirements: the TPRF, copies of a driver-trainee's CLP/CDL (as applicable), and records of ELDT assessments as described in § 380.715. FMCSA believes these revised requirements capture the information essential for the Agency to perform a meaningful audit or investigation of a training provider's operations. The three-year record retention requirement in § 380.725(c) remains as proposed.
In the proposed rule, FMCSA revised the authority citation for part 383 and made various conforming changes. The proposed rule did not make any substantive changes to the existing requirements in part 383. FMCSA discusses below only the proposed conforming changes to part 383 which were notably revised in the final rule. All other conforming changes to part 383 remain essentially as proposed.
In the proposed rule, new subsection (a)(8), stated that CDL holders disqualified as a result of convictions of offenses under § 383.51(b) through (e) must not be fully reinstated until completing the refresher training curriculum.
As discussed above, the final rule does not include any refresher training requirements. Accordingly, FMCSA deletes this proposed conforming amendment to § 383.51 from the final rule.
As proposed, new § 383.71(a)(3) required that, as of the compliance date of the final rule, a person must complete the training prescribed in subpart F of part 380 of this chapter prior to taking the skills test for a Class A CDL, Class B CDL, a P or S endorsement, or the knowledge test for the H endorsement. The training must be administered by a training provider listed on the TPR.
In the final rule, this conforming change remains largely as proposed. FMCSA adds language to this provision to clarify that the required training must be completed prior to taking the skills test for the Class A CDL or Class B CDL
As proposed, new § 383.71(a)(4) provided that, except for driver-trainees seeking the H endorsement, driver-trainees completing the theory portion of the training must complete the skills portion within 360 days.
As discussed above, FMCSA deletes this requirement from § 383.71, as proposed, makes clarifying changes to this requirement, and moves it to § 380.603(c) of the final rule. The provision now requires that trainees complete both portions of the required ELDT within one year of completing the first portion of the training.
As proposed, new § 383.71(b)(11) required that, as of the compliance date of the final rule, a person must complete the training prescribed in subpart F of part 380 of this chapter prior to taking the skills test for an initial Class A CDL, Class B CDL, or a P or S endorsement, or the knowledge test for the H endorsement. The training must be administered by a training provider listed on the TPR.
In the final rule, this conforming change remains largely as proposed. As noted above in the discussion of conforming changes to § 383.71(a)(3), FMCSA adds language to this provision to clarify that the required training must be completed prior to taking the skills test for the Class A CDL or Class B CDL for the first time, or the skills test for a P or S endorsement for the first time, or
As proposed, new § 383.71(e)(5) required that a person must complete the training prescribed in subpart F of part 380 of this chapter prior to taking the skills test for upgrading to a CDL from one class to another, or upgrading a CDL with a P or S endorsement, or taking the knowledge test for the H endorsement issued on a CDL. The training must be administered by a training provider listed on the TPR.
In the final rule, this conforming change remains largely as proposed. As noted above in the discussion of conforming changes to §§ 383.71(a)(3) and 383.71(b)(11), FMCSA adds language to this provision to clarify that the required training must be completed prior to taking the skills test for upgrading to a Class A or Class B CDL, adding a P or S endorsement to a CDL the first time, or taking the knowledge test for the H endorsement for the first time.
As proposed, this section would be amended to add, in § 383.73(b)(3)(ii), a requirement that the State check with CDLIS to determine, if the CDL was issued on or after the compliance date of the final rule, whether an applicant for a Class A or Class B CDL or a CDL with a P, S, or H endorsement has completed the training required by subpart F of this subchapter from a training provider listed on the TPR.
In the final rule, FMCSA deletes the requirement that the State determine that the required ELDT was obtained from a training provider on the TPR. As discussed in the response to comments, the Agency will not be transmitting a training certificate to the State through CDLIS, as proposed in the NPRM. Instead, data elements containing the relevant training certification information will be added to the driver's record through CDLIS. Accordingly, the State is not obligated to confirm that the applicant received training from a provider listed on the TPR; FMCSA will verify that before transmitting the data elements to the driver's record. This subsection otherwise remains as proposed.
As proposed, new § 383.73(b)(10) provided that, beginning on the compliance date of the final rule, the State must not conduct a skills test for a Class A or Class B CDL, or a P or S endorsement, until the State verifies that the applicant completed the training prescribed in subpart F of part 380 of this chapter from a training provider listed on the TPR.
In the final rule, FMCSA clarifies that the State must verify
As proposed, new § 383.73(e)(8) provided that, beginning on the compliance date of the final rule, the State must require a person with a CDL upgrading from one class of CDL to another or upgrading a CDL with an H, P, or S endorsement, to complete the training prescribed in subpart F of part 380 of this chapter from a training provider listed on the TPR.
In the final rule, FMCSA makes several clarifying changes to this subsection. First, the Agency specifies that the requirement applies to upgrades to either a Class A or Class B CDL, or the addition of a P, S, or H endorsement. Additionally, for the reasons noted above in the discussion of §§ 383.73(b)(3)(ii) and 383.73(b)(10), FMCSA deletes the requirement that the State determine that the required ELDT was obtained from a training provider on the TPR.
Finally, the Agency adds new (p) to § 383.73 to require that, after the compliance date of the final rule, the State must notify FMCSA in the event that a training provider in the State does not meet applicable State requirements for CMV instruction. As discussed in the response to comments, this change is necessary since FMCSA has no means of independently determining whether a training provider complies with applicable State requirements for CMV instruction. If the training provider is listed on the TPR, failure to meet State requirements could result in that provider's removal from the TPR. This subsection otherwise remains as proposed.
As proposed, new § 383.95(h) provided that the State would reinstate the CDL for a CDL holder disqualified from operating a CMV under § 383.51(b)–(e) solely for the limited purpose of completing the refresher training curriculum. The State may not restore full CMV driving privileges until receiving notification that the driver completed the refresher training curriculum.
As discussed above, the final rule does not include any refresher training requirements as proposed. Accordingly, FMCSA deletes this proposed subsection from the final rule.
As proposed, § 383.153(a)(10) was amended to add (ix), a new restriction (R) for refresher training only.
Because the final rule does not include any refresher training requirements as proposed, FMCSA deletes this proposed addition to § 383.153(a)(10) from the final rule.
In the proposed rule, FMCSA revised the authority citation for part 384 and made various conforming changes. The proposed rule did not make any substantive changes to the existing requirements in part 384. FMCSA discusses below only the proposed conforming changes to part 384 which were revised in the final rule. All other conforming changes to part 384 remain essentially as proposed.
As proposed, new § 384.230(a) required a State, beginning on the compliance date of the final rule, to follow the procedures prescribed in § 383.73 for verifying that a person received training from a provider listed on the TPR before issuing an initial Class A or Class B CDL, a CDL with an H, P, or S endorsement, upgrading a CDL from one class to another, or upgrading a CDL with an H, P, or S endorsement. In addition, under proposed § 384.230(b), States would be permitted to issue a CDL to individuals who obtain an initial CLP before the compliance date of the final rule who have not complied with the ELDT requirements in subpart F of part 380, so long as they obtain the CDL within 360 days after obtaining the initial CLP. Finally, under proposed § 384.230(c), a State may not issue a CDL to individuals who obtain a CLP on or after the compliance date of the final rule unless
In the final rule, FMCSA makes several clarifying changes to § 384.230(a) and (b). In § 384.230(a), we add specific references to § 383.73(b)(3)(ii), (b)(10), and (e)(8) in order to clarify the ELDT completion verification procedures a State is required to follow and make corresponding conforming changes to the regulatory text. In § 384.230(b), the Agency makes a conforming change to clarify that a State may issue a CDL to individuals who obtain a CLP before the compliance date of the final rule who have not complied with the ELDT requirements in subpart F of part 380, so long as they obtain a CDL before the CLP or renewed CLP expires. Section 384.230(c) remains as proposed.
FMCSA adds new § 384.235 to mandate that the State must meet the entry-level driver training notification requirement of § 383.73(p).
Subpart E would be retitled as “Subpart E—Entry-Level Driver Training Requirements Before February 7, 2020.” On the compliance date of the final rule, this subpart would be removed and reserved and replaced by new subparts F and G.
This new subpart establishes the requirements for entry-level drivers, minimum curriculum content, and standards for training providers. The entry-level driver training requirements that would replace those in current subpart E would be titled “Subpart F—Entry-Level Driver Training Requirements On and After February 7, 2020.”
This new subpart establishes the minimum qualifications for an entity to be eligible for listing on the FMCSA TPR. The TPR will be an online portal administered by FMCSA allowing training providers to register. Training providers will also transmit driver-trainee training certifications to FMCSA electronically through the TPR. The TPR allows drivers seeking training to find an eligible provider who meets their needs.
FMCSA adds new paragraphs—(a)(3), (b)(11), and (e)(3) through (5)—regarding the completion of the training prescribed in part 380, subpart F, before a Class A or B CDL, a passenger, school bus, or hazardous materials endorsement for the first time, or an upgrade to a Class A or Class B CDL is issued.
FMCSA adds new paragraphs (b)(10), (e)(8), and (p) and revised paragraph (b)(3)(ii) to prohibit a State from issuing a Class A or B CDL, or a CDL with a hazardous materials, passenger, or school bus endorsement for the first time, or an upgrade to a CDL, unless the SDLA has received electronic ELDT certification information.
FMCSA adds new §§ 384.230 and 384.235. Additionally, the Agency adds a new paragraph (j) to § 384.301.
FMCSA has determined that this rulemaking is an economically significant regulatory action under Executive Order (E.O.) 12866,
• Identifies the problem targeted by this rulemaking, including a statement of the need for the action.
• Defines the scope and parameters of the analysis.
• Defines the baseline.
• Defines and evaluates the costs and benefits of the action.
• Compares the costs and benefits.
• Interprets the cost and benefit results.
The RIA is the synthesis of research conducted specific to current entry-level driver training practices, industry discussions from the ELDTAC, and research conducted on the costs and benefits of the entry-level driver training provisions of this final rule.
Entry-level drivers, motor carriers, training providers, SDLAs, and the Federal Government would incur costs for compliance and implementation. The costs of the final rule include tuition expenses, the opportunity cost of time while in training, compliance audit costs, and costs associated with the implementation and monitoring of the TPR. As shown in Table 1, FMCSA estimates that the 10-year cost of the final rule would total $3.66 billion on an undiscounted basis, $3.23 billion discounted at 3 percent, and $2.76 billion discounted at 7 percent (all in 2014 dollars). Values in Table 1 are rounded to the nearest million.
The costs of this final rule specifically attributable to the S endorsement training requirement were also evaluated separately in the RIA. This was done because MAP–21 mandates training for entry-level drivers who wish to obtain a CDL, or a P endorsement, or an H endorsement, but is silent with respect to the S endorsement. Inclusion of the S endorsement training requirement increases the total cost of the rule by only approximately 0.82 percent. On an annualized basis at a 7 percent discount rate, this equates to an increase in the total cost of the rule from $365 million to $368 million (this can be seen in Section 3 of the RIA). Details of these comparative analyses of the costs of the rule and the reasons for this relatively small change in costs resulting from the inclusion of the S endorsement training requirement are presented in Section 3 of the RIA. The costs presented in Table 1 include this small additional incremental cost associated with the S endorsement training requirement as part of the total costs of the final rule.
This final rule will result in benefits to CMV operators, the transportation industry, the traveling public, and the environment. FMCSA estimated benefits in two broad categories: Safety benefits and non-safety benefits. Training related to the performance of complex tasks may improve performance; in the context of the training required by this final rule, improvement in task performance constitutes adoption of safer driving practices that the Agency believes will reduce the frequency and severity of crashes, thereby resulting in safer roadways for all. The training related to fuel efficient driving practices that will be taught under the `speed management' and `space management' sections of the curriculum reduce fuel consumption and consequently lower environmental impacts associated with carbon dioxide emissions. As discussed in Section 4.1.1 of the RIA for today's rule, FMCSA does not believe that the training in fuel efficient driving practices addressed by this rule will contribute to measurably longer trip times, as the curricula focus on factors such as maintaining safe distances between vehicles and avoiding hard acceleration and braking, rather than reducing vehicle speed. The Agency therefore assumes in its analysis that these fuel efficient driving practices will not contribute to measurably longer trip times.
Safer driving will reduce maintenance and repair costs. Table 2 below presents the directly quantifiable benefits that FMCSA projects will result from this final rule (all in 2014 dollars, values rounded to the nearest million). Due to wide ranges of estimates in studies relevant to the quantified benefits of the rule and the lack of studies that specifically focus on the curricula prescribed by this rule,
While FMCSA believes that this final rule will at a minimum achieve cost-neutrality, the net of quantified costs and benefits (presented in Table 5 below) results in an annualized net cost of $131 million at a 7 percent discount rate. This estimate is based only on
In the absence of a clear link between training and safety, FMCSA followed the guidance of the Office of Management and Budget (OMB) in its Circular A–4 to perform a threshold analysis to determine the degree of safety benefits that will need to occur as a consequence of this final rule in order for the rule to achieve cost-neutrality.
Table 6 below presents the projected number of crash reductions involving entry-level drivers that must occur in each of the 10 years following this final rule's implementation and in the aggregate, in order to offset the net cost ($131 million annualized at 7 percent).
The Regulatory Flexibility Act of 1980, Public Law 96–354, 94 Stat. 1164 (5 U.S.C. 601–612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104–121, 110 Stat. 857, March 29, 1996) and the Small Business Jobs Act of 2010 (Pub. L. 111–240, 124 Stat. 2504, September 27, 2010), requires Federal agencies to consider the effects of the regulatory action on small business and other small entities and to minimize any significant economic impact. The term “small entities” comprises small businesses and not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. Additionally, DOT policy requires an analysis of the impact of all regulations on small entities, and mandates that agencies strive to lessen any adverse effects on these businesses.
Accordingly, FMCSA prepared an Initial Regulatory Flexibility Analysis (IRFA) for the NPRM and a Final Regulatory Flexibility Analysis (FRFA) for the Final Rule. This rule will affect all entities that choose to become training providers. As shown in the FRFA (see Section 5 of the RIA), FMCSA estimated that approximately 4.6 million small entities could employ entry-level drivers, but that only 22,000 entities will register with FMCSA to become training providers. The impact on those entities that choose to become training providers will be less than $500 in the first year of the analysis, which is less than 1% of revenue for entities in any of the potentially affected industries. Therefore, I certify that this rule will not have a significant economic impact on a substantial number of small entities.
In accordance with section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, FMCSA wants to assist small entities in understanding this final rule so that they can better evaluate its effects on themselves and participate in the rulemaking initiative. If the final rule will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance; please consult the FMCSA point of contact, Richard Clemente, listed in the
Small businesses may send comments on the actions of Federal employees who enforce or otherwise determine compliance with Federal regulations to the Small Business Administration's 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 FMCSA, call 1–888–REG–FAIR (1–888–734–3247). DOT has a policy regarding the rights of small entities to regulatory enforcement fairness and an explicit policy against retaliation for exercising these rights.
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 $155 million (which is the value equivalent of $100,000,000 in 1995, adjusted for inflation to 2013 levels) or more in any one year. This rulemaking would result in private sector expenditures in excess of the $155 million threshold. Gross costs, however, are expected to be offset by fuel, carbon dioxide, and maintenance and repair savings, making this final rule cost-neutral based on reduced instances of crashes, as further discussed in the threshold-based analysis described in the RIA.
A written statement under the Unfunded Mandates Reform Act is not required for regulations that incorporate requirements specifically set forth in law (2 U.S.C. 1531). MAP–21 mandated that FMCSA issue regulations to establish minimum entry-level training requirements for all first-time CDL applicants, CDL holders seeking a license upgrade from one class of CDL to another, and applicants for the passenger (P) or hazardous materials (H) endorsements.
These amended regulations require training providers to obtain, collect, maintain, and in some cases transmit, information about their facilities, curricula, and the individuals who complete entry-level driver training. In accordance with the Paperwork Reduction Act of 1995 (the PRA) (44 U.S.C. 3501–3520), FMCSA has analyzed the need for these information-collection (IC) activities and how the information will be managed. On March 7, 2016, the Agency provided a preliminary estimate of the time burden that would be imposed on training providers under the proposed rules and asked for public comment (81 FR 11967). No comments were received.
The compliance date for the amended training rules is three years after the effective date of this final rule. For the next three years, the Agency's current regulations pertaining to the training of entry-level drivers (49 CFR Subpart E) will remain in place. OMB approves information-collection activities for a maximum period of 3 years. Thus, the Agency's estimate of IC burden must be based upon the current regulations. That burden was approved by OMB on December 23, 2015, after public notice and comment (80 FR 53385). The Agency at this time does not amend that approved estimate: 66,250 hours. Formal OMB approval of the IC collection to be conducted under the amended rules must be obtained before the compliance date of those rules. Therefore, in approximately two years, the Agency will submit its estimate of the burden of the amended rules to OMB for approval and provide notice and an opportunity for public comment on the estimate.
FMCSA offers the following preliminary estimate of the IC burden it foresees the amended training rules will impose on the compliance date three years hence.
A rule has implications for Federalism under Section 1(a) of Executive Order 13132 if it has “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. FMCSA has analyzed this rule in accordance with E.O. 13132 and has determined that it does not have federalism implications.
The key concept here is “substantial direct effects on the States.” Sec. 3(b) of the Federalism Order provides that “[n]ational action limiting the policymaking discretion of the States shall be taken only where there is constitutional and statutory authority for the action and the national activity is appropriate in light of the presence of a problem of national significance.” The rule amends the current entry-level driver training requirements in 49 CFR part 380, as required by the MAP–21 amendment to 49 U.S.C. 31305, the training section of the CDL statute. The CDL program does not have preemptive effect. It is voluntary; States may withdraw at any time, although doing so will result in the loss of certain Federal aid highway funds pursuant to 49 U.S.C. 31314. Because this rule makes conforming, and not substantive, changes to the requirements already imposed on participating States, FMCSA has determined that it does not have substantial direct effects on the States, on the relationship between the Federal and State governments, or on the distribution of power and responsibilities among the various levels of government.
Nonetheless, FMCSA recognizes that, as a practical matter, this rule may have some impact on the States. Accordingly, the Agency sought advice from the National Governors Association (NGA), the National Conference of State legislatures (NCSL), the American Association of Motor Vehicle Administrators (AAMVA), and the National Association of Publicly Funded Truck Driving Schools (NAPFTDS) on the topic of entry-level driver training, by letters to each organization, dated July 6, 2015. (Copies of these letters are available in the docket for this rulemaking.) FMCSA offered NGA, NCSL, AAMVA, and NAPFTDS officials the opportunity to meet and discuss issues of concern to the States. It should also be noted that AAMVA and NAPFTDS were members of the ELDTAC, whose consensus recommendations formed the basis of the NPRM. State and local governments were also able to raise Federalism issues during the NPRM comment period.
Furthermore, FMCSA sent follow-up letters to NGA, NCSL, AAMVA, and NAPFTDS on March 18, 2016, notifying them that the NPRM had been published.
This final rule meets applicable standards in sections 3(a) and 3(b)(2) of E.O. 12988, Civil Justice Reform, to minimize litigation, eliminates ambiguity, and reduce burden.
E.O. 13045, Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, Apr. 23, 1997), requires agencies issuing “economically significant” rules, if the regulation also concerns an environmental health or safety risk that an agency has reason to believe may disproportionately affect children, to include an evaluation of the regulation's environmental health and safety effects on children. Although FMCSA has determined that this in an economically significant rule, the Agency concludes, as noted in the response to comments, that this regulatory action does not present “environmental health risks and safety risks,” as that term is defined in E.O. 13045, which could disproportionately affect children.
FMCSA reviewed this final rule in accordance with E.O. 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights, and has determined it will not effect a taking of private property or otherwise have taking implications.
FMCSA conducted a privacy impact assessment (PIA) of this rule as required by section 522(a)(5) of division H of the FY 2005 Omnibus Appropriations Act, Public Law 108–447, 118 Stat. 3268 (Dec. 8, 2004). The assessment considered impacts of the final rule on the privacy of information in an identifiable form and related matters. The final rule will impact the handling of personally identifiable information (PII). FMCSA has evaluated the risks and effects the rulemaking might have on collecting, storing, and sharing PII and has evaluated protections and alternative information handling processes in developing the final rule in order to mitigate potential privacy risks.
For the purposes of both transparency and efficiency, the privacy analysis conforms to the DOT standard Privacy Impact Assessment (PIA) and will be published on the DOT Web site,
As required by the Privacy Act, FMCSA and the Department will publish, with request for comment, a system of records notice (SORN) that will describe FMCSA's maintenance and electronic transmission of information affected by this final rule and covered by the Privacy Act. This SORN will be developed to reflect the new storage and electronic transmission of information and published in the
The regulations implementing E.O. 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this program.
FMCSA has analyzed this final rule under E.O. 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. The Agency has determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, it does not require a Statement of Energy Effects under E.O. 13211.
This rule does not have tribal implications under E.O. 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.
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 OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards (
If you disagree with our analysis of the voluntary consensus standards or are aware of voluntary consensus standards that might apply but are not listed here, please send a comment to the docket using one of the methods under
The National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321
FMCSA also analyzed this final rule under the Clean Air Act, as amended (CAA), section 176(c) (42 U.S.C. 7401
Under E.O. 12898, each Federal agency must identify and address, as appropriate, “disproportionately high and adverse human health or environmental effects of its programs, policies, and activities on minority populations and low-income populations” in the United States, its possessions, and territories. FMCSA evaluated the environmental justice effects of this rule in accordance with the Executive Order, and has determined that no environmental justice issue is associated with this rule, nor is there any collective environmental impact that would result from its promulgation.
Administrative practice and procedure, Highway safety, Motor carriers, Reporting and recordkeeping requirements.
Administrative practice and procedure, Alcohol abuse, Drug abuse, Highway safety, Motor carriers.
Administrative practice and procedure, Alcohol abuse, Drug abuse, Highway safety, Motor carriers.
For the reasons set forth in the preamble, FMCSA amends 49 CFR parts 380, 383, and 384 as follows:
49 U.S.C. 31133, 31136, 31305, 31307, 31308, and 31502; sec. 4007(a) and (b) of Pub. L. 102–240 (105 Stat. 2151–2152); sec. 32304 of Pub. L. 112–141; and 49 CFR 1.87.
Compliance with the provisions of this subpart is required on or after February 7, 2020.
This subpart establishes training requirements for entry-level drivers, as defined in this subpart, and minimum content for theory and Behind-the-Wheel (BTW) training curricula. Entry-level driver training, as defined in this subpart, applies only to those individuals who apply for a commercial driver's license (CDL) or a CDL upgrade or endorsement and does not otherwise amend substantive CDL requirements in part 383 of this chapter.
(a) The rules in this subpart apply to all entry-level drivers, as defined in this subpart, who intend to drive CMVs as defined in § 383.5 of this chapter in interstate and/or intrastate commerce, except:
(1) Drivers excepted from the CDL requirements under § 383.3(c), (d), and (h) of this chapter;
(2) Drivers applying for a restricted CDL under § 383.3(e) through (g) of this chapter;
(3) Veterans with military CMV experience who meet all the requirements and conditions of § 383.77 of this chapter; and
(4) Drivers applying for a removal of a restriction in accordance with § 383.135(b)(7).
(b) Drivers who hold a valid Class A or Class B CDL, or a passenger (P), school bus (S), or hazardous materials (H) endorsement, issued before February 7, 2020, are not required to comply with this subpart pertaining to that CDL or endorsement.
(c)(1) Individuals who obtain a CLP before February 7, 2020, are not required to comply with this subpart if they obtain a CDL before the CLP or renewed CLP expires.
(2) Individuals who obtain a CLP on or after February 7, 2020, are required to comply with this subpart.
(3) Except for individuals seeking the H endorsement, individuals must complete the theory and BTW (range and public road) portions of entry-level driver training within one year of completing the first portion.
(a) The definitions in parts 383 and 384 of this subchapter apply to this subpart, except as stated below.
(b) As used in this subpart:
(i) Holds a CDL of the same (or higher) class and with all endorsements necessary to operate the CMV for which training is to be provided and has at least two years of experience driving a CMV requiring a CDL of the same or higher class and/or the same endorsement and meets all applicable State qualification requirements for CMV instructors; or
(ii) Holds a CDL of the same (or higher) class and with all endorsements necessary to operate the CMV for which training is to be provided and has at least two years of experience as a BTW CMV instructor and meets all applicable State qualification requirements for CMV instructors.
(iii) If an instructor's CDL has been cancelled, suspended, or revoked due to any of the disqualifying offenses identified in § 383.51, the instructor is prohibited from engaging in BTW instruction for two years following the date his or her CDL is reinstated.
(i) Taking the CDL skills test required to receive the Class A or Class B CDL for the first time;
(ii) Taking the CDL skills test required to upgrade to a Class A or Class B CDL; or
(iii) Taking the CDL skills test required to obtain a passenger and/or school bus endorsement for the first time or the CDL knowledge test required to obtain a hazardous materials endorsement for the first time.
(i) Holds a CDL of the same (or higher) class and with all endorsements necessary to operate the CMV for which training is to be provided and has at least two years of experience driving a CMV requiring a CDL of the same (or higher) class and/or the same endorsement and meets all applicable State qualification requirements for CMV instructors; or
(ii) Holds a CDL of the same (or higher) class and with all endorsements necessary to operate the CMV for which training is to be provided and has at least two years of experience as a BTW CMV instructor and meets all applicable State qualification requirements for CMV instructors.
(iii) If an instructor's CDL has been cancelled, suspended, or revoked due to any of the disqualifying offenses identified in § 383.51, the instructor is prohibited from engaging in theory instruction for two years following the date his or her CDL is reinstated.
(iv)
(a) An individual who applies, for the first time, for a Class A or Class B CDL, or who upgrades to a Class A or B CDL, must complete driver training from a provider listed on the Training Provider Registry (TPR), as set forth in subpart G.
(b) An individual seeking to obtain a passenger (P), school bus (S), or hazardous materials (H) endorsement for the first time, must complete the training related to that endorsement from a training provider listed on the TPR, as set forth in subpart G.
The rules in this subpart establish the eligibility requirements for listing on FMCSA's Training Provider Registry (TPR). In order to provide entry-level driver training in compliance with this part, training providers must be listed on the TPR.
(a) To be eligible for listing on the TPR, an entity must:
(1) Follow a curriculum that meets the applicable criteria set forth in appendices A through E of part 380,
(2) Utilize facilities that meet the criteria set forth in § 380.709;
(3) Utilize vehicles that meet the criteria set forth in § 380.711;
(4) Utilize driver training instructors that meet the criteria set forth in § 380.713;
(5)(i) Be licensed, certified, registered, or authorized to provide training in accordance with the applicable laws and regulations of any State where in-person training is conducted.
(ii)
(6) Allow FMCSA or its authorized representative to audit or investigate the
(7) Electronically transmit an Entry-Level Driver Training Provider Registration Form through the TPR Web site maintained by FMCSA, which attests that the training provider meets all the applicable requirements of this section, to obtain a unique TPR number. If a training provider has more than one campus or training location, the training provider must electronically transmit an Entry-Level Driver Training Provider Registration Form for each campus or training location in order to obtain a unique TPR number for each location.
(b) When a provider meets the requirements of §§ 380.703 and 380.707, FMCSA will issue the provider a unique TPR number and, as applicable, add the provider's name and/or contact information to the TPR Web site.
(a) Training providers must require all accepted applicants for behind-the-wheel (BTW) training to certify that they will comply U.S. Department of Transportation regulations in parts 40, 382, 383, and 391, as well as State and/or local laws, related to controlled substances testing, age, medical certification, licensing, and driving record. Training providers must verify that all accepted BTW applicants hold a valid commercial learner's permit or commercial driver's license, as applicable.
(b) Training providers offering online training must ensure that the content is prepared and/or delivered by a theory instructor, as defined in § 380.605.
(c) Separate training providers may deliver the theory and BTW portions of the training, but both portions (range and public road) of the BTW training must be delivered by the same training provider.
The training provider's classroom and range facilities must comply with all applicable Federal, State, and/or local statutes and regulations.
(a) All vehicles used in the behind-the-wheel training must comply with applicable Federal and State safety requirements.
(b) Training vehicles must be in the same group and type that driver-trainees intend to operate for their CDL skills test.
(a) Theory training providers must utilize instructors who are a theory instructor as defined in § 380.605.
(b) BTW training providers must utilize instructors who are a BTW instructors as defined in § 380.605.
(a) Training providers must use assessments (in written or electronic format) to determine driver-trainees' proficiency in the knowledge objectives in the theory portion of each unit of instruction in appendices A through E of part 380, as applicable. The driver-trainee must receive an overall minimum score of 80 percent on the theory assessment.
(b) Training instructors must evaluate and document a driver-trainee's proficiency in BTW skills in accordance with the curricula in appendices A through D of part 380, as applicable.
After an individual completes training administered by a provider listed on the TPR, that provider must, by midnight of the second business day after the driver-trainee completes the training, electronically transmit training certification information through the TPR Web site including the following:
(a) Driver-trainee name, number of driver's license/commercial learner's permit/commercial driver's license, as applicable, and State of licensure;
(b) Commercial driver's license class and/or endorsement and type of training (theory and/or BTW) the driver-trainee completed;
(c) Total number of clock hours the driver-trainee spent to complete BTW training, as applicable;
(d) Name of the training provider and its unique TPR identification number; and
(e) Date(s) of successful training completion.
(a) To be eligible for continued listing on the TPR, a provider must:
(1) Meet the requirements of this subpart and the applicable requirements of § 380.703.
(2) Biennially update the Entry-Level Driver Training Provider Registration Form.
(3) Report to FMCSA changes to key information, as identified in paragraph (a)(3)(i) of this section, within 30 days of the change.
(i) Key information is defined as training provider name, address, phone number, type(s) of training offered, training provider status, and, if applicable, any change in State licensure, certification, or accreditation status.
(ii) Changes must be reported by electronically transmitting an updated Entry-Level Driver Training Provider Registration Form.
(4) Maintain documentation of State licensure, registration, or certification verifying that the provider is authorized to provide training in that State, if applicable.
(5) Allow an audit or investigation of the training provider to be completed by FMCSA or its authorized representative, if requested.
(6) Ensure that all required documentation, as set forth in § 380.725, is available to FMCSA or its authorized representative, upon request. The provider must submit this documentation within 48 hours of the request.
(b) [Reserved]
FMCSA may remove a provider from the TPR when a provider fails to meet or maintain any of the qualifications established by this subpart or the requirements of other State and Federal regulations applicable to the provider. If FMCSA removes a provider from the TPR, any training conducted after the removal date will be considered invalid.
(a) The factors FMCSA may consider for removing a provider from the TPR include, but are not limited to, the following:
(1) The provider fails to comply with the requirements for continued listing on the TPR, as described in § 380.719.
(2) The provider denies FMCSA or its authorized representatives the opportunity to conduct an audit or investigation of its training operations.
(3) The audit or investigation conducted by FMCSA or its authorized representatives identifies material deficiencies, pertaining to the training provider's program, operations, or eligibility.
(4) The provider falsely claims to be licensed, certified, registered, or authorized to provide training in accordance with the applicable laws and regulations in any State where in-person training is provided.
(5) The State-administered CDL skills examination passage rate for applicants for the Class A CDL, Class B CDL, passenger endorsement, and/or school bus endorsement who complete the provider's training and the CDL knowledge test passage rate for applicants for the hazardous materials endorsement who complete the provider's training.
(b) In instances of fraud or other criminal behavior by a training provider in which driver-trainees have
(a)
(b)
(c)
(1)
(i) If the Director finds that FMCSA has relied on erroneous information to propose removal of a training provider from the TPR, the Director will withdraw the notice of proposed removal and notify the provider of the withdrawal in writing.
(ii) If the Director finds that FMCSA has not relied on erroneous information in proposing removal, the Director will affirm the notice of proposed removal and notify the provider in writing of the determination. No later than 60 days after the date the Director affirms the notice of proposed removal, or as otherwise agreed to by the provider and the Director, the provider must comply with this subpart and correct the deficiencies identified in the notice of proposed removal as described in paragraph (c)(2) of this section.
(iii) If the provider does not respond in writing within 30 days of the date of issuance of a notice of proposed removal, the removal becomes effective immediately and the provider will be removed from the TPR. Any training conducted after the removal date is invalid.
(2)
(ii) If the provider fails to complete the proposed corrective action(s) within the 60-day period, the provider will be removed from the TPR. The Director will notify the provider in writing of the removal.
(d)
(1)
(2)
(e)
(f)
(2) No sooner than 30 days after the date of a provider's involuntary removal from the TPR, the provider may apply to the Director to be reinstated. The provider must submit documentation showing completion of any corrective action(s) identified in the notice of proposed removal or final notice of removal, as applicable.
(a)
(b)
(1) Self-certifications by all accepted applicants for behind-the-wheel (BTW) training attesting that they will comply with U.S. Department of Transportation regulations in parts 40, 382, 383 and 391, as well as State and/or local laws,
(3) Instructor qualification documentation indicating driving and/or training experience, as applicable, for each instructor and copies of commercial driver's licenses and applicable endorsements held by BTW instructors or theory instructors, as applicable.
(4) The Training Provider Registration Form submitted to the TPR.
(5) The lesson plans for theory and BTW (range and public road) training curricula, as applicable.
(6) Records of individual entry-level driver training assessments as described in § 380.715.
(c)
Class A CDL applicants must complete the Class A CDL curriculum outlined in this Appendix. The curriculum for Class A applicants pertains to combination vehicles (Group A) as defined in 49 CFR 383.91(a)(1). There is no required minimum number of instruction hours for theory training, but the training instructor must cover all topics set forth in the curriculum. There is no required minimum number of instruction hours for BTW (range and public road) training, but the training instructor must cover all topics set forth in the BTW curriculum. BTW training must be conducted in a CMV for which a Class A CDL is required. The instructor must determine and document that each driver-trainee has demonstrated proficiency in all elements of the BTW curriculum, unless otherwise noted. Consistent with the definitions of BTW range training and BTW public road training in § 380.605, a simulation device cannot be used to conduct such training or to demonstrate proficiency. Training instructors must document the total number of clock hours each driver-trainee spends to complete the BTW curriculum. The Class A curriculum must, at a minimum, include the following:
This section must cover the interaction between driver-trainees and the CMV. Driver-trainees will receive instruction in the Federal Motor Carrier Safety Regulations (FMCSRs) and will be introduced to the basic CMV instruments and controls. Training providers will teach driver-trainees the basic operating characteristics of a CMV. This section must also teach driver-trainees how to properly perform vehicle inspections, control the motion of CMVs under various road and traffic conditions, employ shifting and backing techniques, and properly couple and uncouple combination vehicles. Driver-trainees must familiarize themselves with the basic operating characteristics of a CMV.
This unit must introduce driver-trainees to the combination vehicle driver training curriculum and the components of a combination vehicle. The training providers must teach the safety fundamentals, essential regulatory requirements (
This unit must introduce driver-trainees to vehicle instruments, controls, and safety components. The training providers must teach driver-trainees to read gauges and instruments correctly and the proper use of vehicle safety components, including safety belts and mirrors. The training providers must teach driver-trainees to identify, locate, and explain the function of each of the primary and secondary controls including those required for steering, accelerating, shifting, braking systems (
This unit must teach the driver-trainees to conduct pre-trip and post-trip inspections as specified in §§ 392.7 and 396.11, including appropriate inspection locations. Instruction must also be provided on enroute vehicle inspections.
This unit must introduce basic vehicular control and handling as it applies to combination vehicles. This unit must include instruction addressing basic combination vehicle controls in areas such as executing sharp left and right turns, centering the vehicle, maneuvering in restricted areas, and entering and exiting the interstate or controlled access highway.
This unit must introduce shifting patterns and procedures to driver-trainees to prepare them to safely and competently perform basic shifting maneuvers. This unit must include training driver-trainees to execute up and down shifting techniques on multi-speed dual range transmissions, if appropriate. The training providers must teach the importance of increased vehicle control and improved fuel economy achieved by utilizing proper shifting techniques.
This unit must teach driver-trainees to back and dock the combination vehicle safely. This unit must cover “Get Out and Look” (GOAL), evaluation of backing/loading facilities, knowledge of backing set ups, as well as instruction in how to back with the use of spotters.
This unit must provide instruction for driver-trainees to develop the skills necessary to conduct the procedures for safe coupling and uncoupling of combination vehicle units, as applicable.
This section must teach the practices required for safe operation of the combination vehicle on the highway under various road, weather, and traffic conditions. The training providers must teach driver-trainees the Federal rules governing the proper use of seat belt assemblies (§ 392.16).
This unit must teach driver-trainees to visually search the road for potential hazards and critical objects, including instruction on recognizing distracted pedestrians or distracted drivers.
This unit must instruct driver-trainees on how to communicate their intentions to other road users. Driver-trainees must be instructed in techniques for different types of communication on the road, including proper use of headlights, turn signals, four-way flashers, and horns. This unit must cover instruction in proper utilization of eye contact techniques with other drivers, bicyclists, and pedestrians.
This unit must instruct driver-trainees in FMCSRs related to distracted driving and other key driver distraction driving issues, including improper cell phone use, texting, and use of in-cab technology (
This unit must teach driver-trainees how to manage speed effectively in response to various road, weather, and traffic conditions. The instruction must include methods for calibrating safe following distances taking into account CMV braking distances under an array of conditions including traffic, weather, and CMV weight and length.
This unit must teach driver-trainees about the importance of managing the space surrounding the vehicle under various traffic and road conditions.
This unit must instruct driver-trainees in the factors affecting the safe operation of CMVs at night and in darkness. Additionally, driver-trainees must be instructed in changes in vision, communications, speed space management, and proper use of lights, as needed, to deal with the special problems night driving presents.
This unit must teach driver-trainees about the specific problems presented by extreme driving conditions. The training provide will emphasize the factors affecting the operation of CMVs in cold, hot, and inclement weather and on steep grades and sharp curves. The training provider must teach proper tire chaining procedures.
This section must introduce higher-level skills that can be acquired only after the more fundamental skills and knowledge taught in the prior two sections have been mastered. The training providers must teach driver-trainees about the advanced skills necessary to recognize potential hazards and must teach the driver-trainees the procedures needed to handle a CMV when faced with a hazard.
The unit must teach driver-trainees to recognize potential hazards in the driving environment in order to reduce the severity of the hazard and neutralize possible emergency situations. The training providers must teach driver-trainees to identify road conditions and other road users that are a potential threat to the safety of the combination vehicle and suggest appropriate adjustments. The instruction must emphasize hazard recognition, visual search, adequate surveillance, and response to possible emergency-producing situations encountered by CMV drivers in various traffic situations. The training providers must teach driver-trainees to recognize potential dangers and the safety procedures that must be utilized while driving in construction/work zones.
This unit must teach the causes of skidding and jackknifing and techniques for avoiding and recovering from them. The training providers must teach the importance of maintaining directional control and bringing the CMV to a stop in the shortest possible distance while operating over a slippery surface. This unit must provide instruction in appropriate responses when faced with CMV emergencies. This instruction must include evasive steering, emergency braking, and off-road recovery, as well as the proper response to brake failures, tire blowouts, hydroplaning, and rollovers. The instruction must include a review of unsafe acts and the role the acts play in producing or worsening hazardous situations.
This unit must teach driver-trainees to recognize potential dangers and the appropriate safety procedures to utilize at railroad (RR)-highway grade crossings. This instruction must include an overview of various Federal/State RR grade crossing regulations, RR grade crossing environments, obstructed view conditions, clearance around the tracks, and rail signs and signals. The training providers must instruct driver-trainees that railroads have personnel available (“Emergency Notification Systems”) to receive notification of any information relating to an unsafe condition at the RR-highway grade crossing or a disabled vehicle or other obstruction blocking a railroad track at the RR-highway grade crossing.
This section must provide entry-level driver-trainees with sufficient knowledge of the combination vehicle and its systems and subsystems to ensure that they understand and respect their role in vehicle inspection, operation, and maintenance and the impact of those factors upon highway safety and operational efficiency.
This unit must teach driver-trainees to identify major combination vehicle systems. The goal is to explain their function and how to check all key vehicle systems, (
This unit must instruct driver-trainees on what to expect during a standard roadside inspection conducted by authorized personnel. The training providers must teach driver-trainees on what vehicle and driver violations are classified as out-of-service (OOS), including the ramifications and penalties for operating a CMV when subject to an OOS order as defined in section 390.5.
This unit must introduce driver-trainees to the basic servicing and checking procedures for various engine and vehicle components and to help develop their ability to perform preventive maintenance and simple emergency repairs.
This section must teach driver-trainees the activities that do not involve actually operating the CMV.
This unit must teach the basic theory of cargo weight distribution, cargo securement on the vehicle, cargo covering, and techniques for safe and efficient loading/unloading. The training providers must teach driver-trainees the basic cargo security/cargo theft prevention procedures. The training provider must teach driver-trainees the basic information regarding the proper handling and documentation of HM cargo.
This unit must teach driver-trainees to recognize environmental hazards and issues related to the CMV and load, and also make the driver-trainee aware that city, county, State, and Federal requirements may apply to such circumstances.
This unit must teach driver-trainees to understand that there are different hours-of-service (HOS) requirements applicable to different industries. The training providers must teach driver-trainees all applicable HOS regulatory requirements. The training providers must teach driver-trainees to complete a Driver's Daily Log (electronic and paper), timesheet, and logbook recap, as appropriate. The training providers must teach driver-trainees the consequences (safety, legal, and personal) of violating the HOS regulations, including the fines and penalties imposed for these types of violations.
This unit must teach driver-trainees about the issues and consequences of chronic and acute driver fatigue and the importance of staying alert. The training providers must teach driver-trainees wellness and basic health maintenance information that affect a driver's ability to safely operate a CMV.
This unit must teach driver-trainees appropriate post-crash procedures, including the requirement that the driver, if possible, assess his or her physical condition immediately after the crash and notify authorities or assign the task to other individuals at the crash scene. The training providers must teach driver-trainees how to protect the area; obtain emergency medical assistance; move on-road vehicles off the road in minor crashes so as to avoid subsequent crashes or injuries; engage flashers; place reflective triangles and other warning devices for stopped vehicles; and properly use a fire extinguisher, if necessary. The training providers must instruct driver-trainees in post-crash testing requirements related to controlled substances and alcohol.
This unit must teach driver-trainees in the value of effective interpersonal communication techniques/skills to interact
This unit must teach the driver-trainees about the right of an employee to question the safety practices of an employer without incurring the risk of losing a job or being subject to reprisals simply for stating a safety concern. The training providers must instruct driver-trainees in the whistleblower protection regulations in 29 CFR part 1978. The training providers must teach the procedures for reporting to FMCSA incidents of coercion from motor carriers, shippers, receivers, or transportation intermediaries.
This unit must address the importance of and requirements for planning routes and trips. This instruction must address planning the safest route, planning for rest stops, heavy traffic areas, railroad-highway grade crossing safe clearance and ground clearance (
This unit must teach driver-trainees the rules applicable to controlled substances (including prescription drugs) and alcohol use and testing related to the operation of a CMV.
This unit must teach driver-trainees the Federal rules on medical certification, medical examination procedures, general qualifications, responsibilities, and disqualifications based on various offenses, orders, and loss of driving privileges (49 CFR part 391, subparts B and E).
BTW range training must teach driving exercises related to basic vehicle control skills and mastery of basic maneuvers, as covered in §§ 383.111 and 383.113 of this chapter, necessary to operate the vehicle safely. The training providers will teach activities in this unit on a driving range as defined in § 380.605. The training provider must teach “Get Out and Look” (GOAL) to the driver-trainee as it applies to units A2.2–2.6.
Driver-trainees must demonstrate proficiency in conducting pre-trip and post-trip inspections as specified in §§ 392.7 and 396.11, including appropriate inspection locations. Instruction must also be provided on enroute vehicle inspections.
Driver-trainees must demonstrate proficiency in proper techniques for performing various straight line backing maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for performing 45/90 degree alley dock maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for performing off-set right and left backing maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for performing parallel parking blind side positions/maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for performing sight side parallel parking maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for coupling, inspecting, and uncoupling combination vehicle units, as applicable.
The instructor must engage in active two-way communication with the driver-trainees during all active BTW public road training sessions. Skills described in paragraphs A3.8 through 3.12 of this section must be discussed during public road training, but not necessarily performed. Driver-trainees are not required to demonstrate proficiency in the skills described in paragraphs A3.8 through 3.12.
Driver-trainees must demonstrate proficiency in proper techniques for initiating vehicle movement, executing left and right turns, changing lanes, navigating curves at speed, entry and exit on the interstate or controlled access highway, and stopping the vehicle in a controlled manner.
Driver-trainees must demonstrate proficiency in proper techniques for performing safe and fuel-efficient shifting.
Driver-trainees must demonstrate proficiency in proper techniques for signaling intentions and effectively communicating with other drivers.
Driver-trainees must demonstrate proficiency in proper techniques for visually searching the road for potential hazards and critical objects.
Driver-trainees must demonstrate proficiency in proper habits and techniques for adjusting and maintaining vehicle speed, taking into consideration various factors such as traffic and road conditions. Driver-trainees must demonstrate proficiency in maintaining proper speed to keep appropriate spacing between the driver-trainee's CMV and other vehicles. Instruction must include methods for calibrating safe following distances under an array of conditions including traffic, weather, and CMV weight and length.
Driver-trainees must demonstrate proficiency in safe driver behavior during their operation of the CMV.
Driver-trainees must demonstrate proficiency in the basic activities required by the HOS regulations, such as completing a Driver's Daily Log (electronic and paper), timesheet, and logbook recap, as appropriate.
Driver-trainees must demonstrate their ability to recognize potential hazards in the driving environment in time to reduce the severity of the hazard and neutralize possible emergency situations. Driver-trainees must demonstrate the ability to identify road conditions and other road users that are a potential threat to the safety of the combination vehicle and suggest appropriate adjustments.
Driver-trainees must demonstrate the ability to recognize potential dangers and to demonstrate appropriate safety procedures when RR-highway grade crossings are reasonably available.
Driver-trainees must be familiar with how to operate a CMV safely at night. Training providers must teach driver-trainees that night driving presents specific circumstances that require heightened attention on the part of the driver. Driver-trainees must be taught special requirements for night vision, communications, speed, space management, and proper use of lights.
Driver-trainees must be familiar with the special risks created by, and the heightened precautions required by, driving CMVs under extreme driving conditions, such as heavy rain, high wind, high heat, fog, snow, ice, steep grades, and sharp curves. Driver-trainees must demonstrate their ability to recognize the changes in basic driving habits needed to deal with the specific challenges
Driver-trainees must know the causes of skidding and jackknifing and techniques for avoiding and recovering from them. Driver-trainees must know how to maintain directional control and bring the CMV to a stop in the shortest possible distance while operating over a slippery surface. Driver-trainees must be familiar with proper techniques for responding to CMV emergencies, such as evasive steering, emergency braking, and off-road recovery. They must also know how to prevent or respond to brake failures, tire blowouts, hydroplaning, and rollovers.
Class B CDL applicants must complete the Class B CDL curriculum outlined in this Appendix. The curriculum for Class B applicants pertains to heavy straight vehicles (Group B) as defined in 49 CFR 383.91(a)(2). There is no required minimum number of instruction hours for theory training, but the training instructor must cover all the topics in curriculum. There is no required minimum number of instruction hours required for BTW (range and public road) training, but the training instructor must cover all topics set forth in the BTW curriculum. BTW training must be conducted in a CMV for which a Class B CDL is required. The instructor must determine and document that each driver-trainee has demonstrated proficiency in all elements of the BTW curriculum unless otherwise noted. Consistent with the definitions of BTW range training and BTW public road training in § 380.605, a simulation device cannot be used to conduct such training or to demonstrate proficiency. Training instructors must document the total number of clock hours each driver-trainee spends to complete the BTW curriculum. The Class B curriculum must, at a minimum, include the following:
This section must cover the interaction between driver-trainees and the CMV. Driver-trainees will receive instruction in the Federal Motor Carrier Safety Regulations (FMCSRs) and will be introduced to the basic CMV instruments and controls. This section must also teach driver-trainees how to perform vehicle inspections, control the CMVs under various road and traffic conditions, employ shifting and backing techniques, and couple and uncouple, as applicable. Driver-trainees must familiarize themselves with the basic operating characteristics of a CMV.
This unit must introduce driver-trainees to the commercial motor vehicle driver training curriculum and the components of a commercial motor vehicle. The training providers must teach driver-trainees the safety fundamentals, essential regulatory requirements (
This unit must introduce driver-trainees to vehicle instruments, controls, and safety components. The training providers must teach driver-trainees to read gauges and instruments correctly and the proper use of vehicle safety components, including safety belts and mirrors. The training providers must teach driver-trainees to identify, locate, and explain the function of each of the primary and secondary controls including those required for steering, accelerating, shifting, braking systems (
The training provider must teach the driver-trainees to conduct pre-trip and post-trip inspections as specified in §§ 392.7 and 396.11, including appropriate inspection locations. Instruction must also be provided on enroute vehicle inspections.
This unit must introduce basic vehicular control and handling as it applies to commercial motor vehicles. This unit must include instruction addressing basic CMV controls in areas such as executing sharp left and right turns, centering the vehicle, maneuvering in restricted areas, and entering and exiting the interstate or controlled access highway.
This unit must introduce shifting patterns and procedures to driver-trainees to prepare them to safely and competently perform basic shifting maneuvers. This unit must teach driver-trainees to execute up and down shifting techniques on multi-speed dual range transmissions, if appropriate. The training providers must teach driver-trainees the importance of increased fuel economy achieved by utilizing proper shifting techniques.
This unit must teach driver-trainees to back and dock the combination vehicle safely. This unit must cover “Get Out and Look” (GOAL), evaluation of backing/loading facilities, knowledge of backing set ups, as well as instruction in how to back with use of spotters.
This section must teach the practices required for safe operation of the CMV on the highway under various road, weather, and traffic conditions. The training providers must teach driver-trainees the Federal rules governing the proper use of seat belt assemblies (§ 392.16).
This unit must teach driver-trainees to visually search the road for potential hazards and critical objects, including instruction on recognizing distracted pedestrians or distracted drivers. This unit must include instruction in how to ensure a driver-trainee's personal security/general awareness in common surroundings such as truck stops and/or rest areas and at shipper/receiver locations.
This unit must teach driver-trainees how to communicate their intentions to other road users. Driver-trainees must be instructed in techniques for different types of communication on the road, including proper use of headlights, turn signals, four-way flashers, and horns. This unit must cover instruction in proper utilization of eye contact techniques with other drivers, bicyclists, and pedestrians.
This unit must instruct driver-trainees in FMCSRs related to distracted driving and other key driver distraction driving issues, including improper cell phone use, texting, and use of in-cab technology (
This unit must teach driver-trainees how to manage speed effectively in response to various road, weather, and traffic conditions. The instruction must include methods for calibrating safe following distances under an array of conditions including traffic, weather and CMV weight and length.
This unit must teach driver-trainees about the importance of managing the space surrounding the vehicle under various traffic and road conditions.
This unit must instruct driver-trainees in the factors affecting the safe operation of CMVs at night and in darkness. Additionally, driver-trainees must be instructed in changes in vision, communications, speed, space management, and proper use of lights, as needed, to deal with the special problems night driving presents.
This unit must teach driver-trainees the specific problems presented by extreme driving conditions. The training will emphasize the factors affecting the operation of CMVs in cold, hot, and inclement weather and on steep grades and sharp curves. The training providers must teach driver-trainees the proper tire chaining procedures in this unit.
This section must introduce higher-level skills that can be acquired only after the more fundamental skills and knowledge taught in the prior two sections have been mastered.
The unit must provide instruction for recognizing potential hazards in the driving environment in order to reduce the severity of the hazard and neutralize possible emergency situations. The training providers must teach driver-trainees to identify road conditions and other road users that are a potential threat to the safety of the CMV and suggest appropriate adjustments. The instruction must emphasize hazard recognition, visual search, adequate surveillance, and response to possible emergency-producing situations encountered by CMV drivers in various traffic situations. The training providers must also teach driver-trainees to recognize potential dangers and the safety procedures that must be utilized while driving in construction/work zones.
This unit must teach the causes of skidding and jackknifing and techniques for avoiding and recovering from them. The training providers must teach the importance of maintaining directional control and bringing the CMV to a stop in the shortest possible distance while operating over a slippery surface. This unit must provide instruction in appropriate responses when faced with CMV emergencies. This instruction must include evasive steering, emergency braking, and off-road recovery, as well as the proper response to brake failures, tire blowouts, hydroplaning, and rollovers. The instruction must include a review of unsafe acts and the role the acts play in producing or worsening hazardous situations.
This unit must teach driver-trainees to recognize potential dangers and appropriate safety procedures to utilize at railroad (RR)-highway grade crossings. This instruction must include an overview of various Federal/State RR grade crossing regulations, RR grade crossing environments, obstructed view conditions, clearance around the tracks, and rail signs and signals. The training providers must instruct driver-trainees that railroads have personnel available (“Emergency Notification Systems”) to receive notification of any information relating to an unsafe condition at the RR-highway grade crossing or a disabled vehicle or other obstruction blocking a railroad track at the RR-highway grade crossing.
This unit must provide entry-level driver-trainees with sufficient knowledge of the CMV and its systems and subsystems to ensure that they understand and respect their role in vehicle inspection, operation, and maintenance and the impact of those factors upon highway safety and operational efficiency.
This unit must teach driver-trainees to identify major vehicle systems. The goal is to explain their function and how to check all key vehicle systems, as appropriate (
This unit must instruct driver-trainees on what to expect during a standard roadside inspection conducted by authorized personnel. The training providers must teach driver-trainees on what vehicle and driver violations are classified as out-of-service (OOS), including the ramifications and penalties for operating a CMV when subject to an OOS order as defined in section 390.5.
This unit must introduce driver-trainees to the basic servicing and checking procedures for various engine and vehicle components and to help develop their ability to perform preventive maintenance and simple emergency repairs.
This section must teach driver-trainees activities that do not involve actually operating the CMV,
This unit must teach driver-trainees the basic theory of cargo weight distribution, cargo securement on the vehicle, cargo covering, and techniques for safe and efficient loading/unloading. The training providers must also teach driver-trainees the basic cargo security/cargo theft prevention procedures. The training providers must teach driver-trainees the basic information regarding the proper handling and documentation of HM cargo.
This unit must teach driver-trainees to recognize environmental hazards and issues related to the CMV and load, and also make aware that city, county, State, and Federal requirements may apply to such circumstances.
This unit must teach driver-trainees to understand that there are different hours-of-service (HOS) requirements applicable to different industries. The training providers must teach driver-trainees all applicable HOS regulatory requirements. The training providers must teach driver-trainees to complete a Driver's Daily Log (electronic and paper), timesheet, and logbook recap, as appropriate. The training providers must teach driver-trainees the consequences (safety, legal, and personal) of violating the HOS regulations, including the fines and penalties imposed for these types of violations.
The issues and consequences of chronic and acute driver fatigue and the importance of staying alert will be covered in this unit. The training providers must teach driver-trainees about wellness and basic health maintenance information that affect a driver's ability to safely operate a CMV.
This unit must teach driver-trainees the appropriate post-crash procedures, including the requirement that the driver, if possible, assess his or her physical condition immediately after the crash and notify authorities, or assign the task to other individuals at the crash scene. The training providers must teach driver-trainees how to protect the area; obtain emergency medical assistance; move on-road vehicles off the road in minor crashes so as to avoid subsequent crashes or injuries; engage flashers; place reflective triangles and other warning devices for stopped vehicles; and properly use a fire extinguisher, if necessary. The training providers must instruct driver-trainees in post-crash testing requirements related to controlled substances and alcohol.
This unit must instruct driver-trainees in the value of effective interpersonal communication techniques/skills to interact with enforcement officials. The training providers must teach driver-trainees the specifics of the roadside vehicle inspection process, and what to expect during this activity. Driver-trainees who are not native English speakers must be instructed in FMCSA English language proficiency requirements and the consequences for violations. The training providers must teach driver-trainees the implications of violating Federal and state regulations will have on their driving records and their employing motor carrier's records.
This unit must teach the driver-trainees about the right of an employee to question the safety practices of an employer without incurring the risk of losing a job or being subject to reprisals simply for stating a safety concern. The training providers must instruct driver-trainees in the whistleblower protection regulations in 29 CFR part 1978. The training providers must teach driver-trainees the procedures for reporting to FMCSA incidents of coercion from motor carriers, shippers, receivers, or transportation intermediaries.
This unit must address the importance of and requirements for planning routes and trips. This instruction must address planning the safest route, planning for rest stops, heavy traffic areas, railroad-highway grade crossing safe clearance and ground clearance (
This unit must teach driver-trainees the rules applicable to controlled substances (including prescription drugs) and alcohol use and testing related to the operation of a CMV.
This unit must teach driver-trainees the Federal rules on medical certification, medical examination procedures, general qualifications, responsibilities, and disqualifications based on various offenses, orders, and loss of driving privileges (49 CFR part 391, subparts B and E).
This unit must teach driving exercises related to basic vehicle control skills and mastery of basic maneuvers, as covered in §§ 383.111 and 383.113 of this chapter necessary to operate the vehicle safely. The training providers must teach driver-trainees activities in this unit on a driving range as defined in § 380.605. The training provider must teach “Get Out and Look” (GOAL) to the driver-trainee as it applies to units B2.2–2.6.
Driver-trainees must demonstrate proficiency in conducting pre-trip and post-trip inspections as specified in §§ 392.7 and 396.11, including appropriate inspection locations. Instruction must also be provided on enroute vehicle inspections.
Driver-trainees must demonstrate proficiency in proper techniques for performing various straight line backing maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for performing 45/90 degree alley dock maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for performing off-set backing maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for performing parallel parking blind side positions/maneuvers to appropriate criteria/acceptable tolerances.
Driver-trainees must demonstrate proficiency in proper techniques for performing sight side parallel parking maneuvers to appropriate criteria/acceptable tolerances.
The instructor must engage in active two-way communication with the driver-trainees during all active BTW public road training sessions. Skills described in paragraphs B3.8 through 3.12 of this section must be discussed during public road training, but not necessarily performed. Driver-trainees are not required to demonstrate proficiency in the skills described in paragraphs B3.8 through 3.12.
Driver-trainees must demonstrate proficiency in proper techniques for initiating vehicle movement, executing left and right turns, changing lanes, navigating curves at speed, exiting and entering the interstate, and stopping the vehicle in a controlled manner.
Driver-trainees must demonstrate proficiency in proper techniques for performing safe and fuel-efficient shifting.
Driver-trainees must demonstrate proficiency in proper techniques for signaling intentions and effectively communicating with other drivers.
Driver-trainees must demonstrate proficiency in proper techniques for visually searching the road for potential hazards and critical objects.
Driver-trainees must demonstrate proficiency in proper habits and techniques for adjusting and maintaining vehicle speed, taking into consideration various factors such as traffic and road conditions. Driver-trainees must demonstrate proficiency in maintaining proper speed to keep appropriate spacing between the driver-trainee's CMV and other vehicles. Instruction must include methods for calibrating safe following distances under an array of conditions including traffic, weather, and CMV weight and length.
Driver-trainees must demonstrate proficiency in safe driver behavior during their operation of the CMV.
Driver-trainees must demonstrate proficiency in the basic activities required by the HOS regulations, such as completing a Driver's Daily Log (electronic and paper), timesheet, and logbook recap, as appropriate.
Driver-trainees must demonstrate their ability to recognize potential hazards in the driving environment in time to reduce the severity of the hazard and neutralize possible emergency situations. Driver-trainees must demonstrate the ability to identify road conditions and other road users that are a potential threat to vehicle safety and suggest appropriate adjustments.
Driver-trainees must demonstrate the ability to recognize potential dangers and to demonstrate appropriate safety procedures when RR-highway grade crossings are reasonably available.
Driver-trainees must be familiar with how to operate a CMV safely at night. Training providers must teach driver-trainees that night driving presents specific circumstances that require heightened attention on the part of the driver. Driver-trainees must be taught special requirements for night vision, communications, speed, space management, and proper use of lights.
Driver-trainees must be familiar with the special risks created by, and the heightened precautions required by, driving CMVs under extreme driving conditions, such as heavy rain, high wind, high heat, fog, snow, ice, steep grades, and curves. Training providers must teach driver-trainees the basic driving habits needed to deal with the specific challenges presented by these extreme driving conditions.
Driver-trainees must know the causes of skidding and jackknifing and techniques for avoiding and recovering from them. Driver-trainees must know how to maintain directional control and bring the CMV to a stop in the shortest possible distance while operating over a slippery surface. Driver-trainees must be familiar with proper techniques for responding to CMV emergencies, such as evasive steering, emergency braking, and off-road recovery. They must also know how to prevent or respond to brake failures, tire blowouts, hydroplaning, and rollovers.
Passenger (P) endorsement applicants must complete the curriculum outlined in this section, which applies to driver-trainees who expect to operate CMVs in the any of the vehicle groups defined in § 383.91(a)(1)–(3) for which a P endorsement is required.
There is no required minimum number of instruction hours for theory training, but the training provider must cover all the topics set forth in the curriculum. There is no required minimum number of instruction hours for BTW training, but training providers must determine whether driver-trainees have demonstrated proficiency in all elements of the BTW curriculum. Training instructors must document the total number of clock hours each driver-trainee spends to complete the BTW curriculum. The training must be conducted in a passenger vehicle of the same vehicle group as the applicant intends to drive. The passenger endorsement training must, at a minimum, contain the following:
This unit must teach driver-trainees appropriate post-crash procedures, including the requirement that the driver, if possible, assess his or her physical condition immediately after the crash and notify authorities, or assign the task to a passenger or other individuals at the crash scene. Also, training providers must teach driver-trainees how to obtain emergency medical assistance; move on-road vehicles off the road in minor crashes so as to avoid subsequent crashes or injuries; engage flashers, reflective triangles and other warning devices for stopped vehicles; and properly use a fire extinguisher if necessary.
This unit must instruct driver-trainees in managing security breaches, on-board fires, emergency exit and passenger evacuation training, medical emergencies, and emergency stopping procedures including the deployment of various emergency hazard signals. Instruction must also include procedures for dealing with mechanical breakdowns and vehicle defects while enroute.
This unit must teach driver-trainees the basic physical and operational characteristics of passenger-carrying CMV (
This unit must teach the driver-trainee the importance of pre-trip, enroute, and post-trip inspections; and provide instruction in techniques for conducting such inspections as stated in §§ 392.7 and 396.11, and demonstrate their ability to inspect the following:
(1) Emergency exits;
(2) Passenger-carrying CMV interiors (including passenger seats as applicable);
(3) Restrooms and associated environmental requirements;
(4) Temperature controls (for maintaining passenger comfort);
(5) Driver and passenger seat belts.
Additionally, training providers must instruct driver-trainees in procedures, as applicable, in security-related inspections, including inspections for unusual wires or other abnormal visible materials, interior and exterior luggage compartments, packages or luggage left behind, and signs of cargo or vehicle tampering. Finally, training providers must instruct driver-trainees in cycling-accessible lifts and procedures for inspecting them for functionality and defects.
This unit must instruct driver-trainees on the significance of avoiding refueling a bus while passengers are onboard and the imperative of avoiding refueling in an enclosed space.
This unit must teach driver-trainees the importance of compliance with State and local laws and regulations, including for example, idling limits, fuel savings; and the consequences of non-compliance, including adverse health effects and penalties.
In this unit, training providers must teach driver-trainees:
(1) Proper methods for handling and securing passenger baggage and containers, as applicable.
(2) Procedures for identifying and inspecting baggage and containers for prohibited items, such as hazardous materials.
(3) Proper handling and securement of devices associated with the Americans with Disabilities Act (ADA) compliance, including oxygen, wheeled mobility devices, and other associated apparatuses.
This unit must teach driver-trainees how to brief passengers on safety topics including fastening seat belts, emergency exits, emergency phone contact information, fire extinguisher location, safely walking in the aisle when the bus is moving, and restroom emergency push button or switch.
In this unit, training providers must teach driver-trainees:
(1) Proper procedures for safe loading and unloading of passengers prior to departure, including rules concerning standing passengers and the standee line.
(2) Procedures for dealing with disruptive passengers.
Along with addressing the proper operation of accessibility equipment (
This unit must teach driver-trainees the HOS regulations that apply to drivers for interstate passenger carriers. Training providers must teach driver-trainees the basic activities required by the HOS regulations, such as completing a Driver's Daily Log (electronic and paper), timesheet, and logbook recap, as appropriate. Training providers must teach driver-trainees how to recognize the signs of fatigue and basic fatigue countermeasures as a means to avoid crashes.
This unit must teach driver-trainees the Federal rules governing the proper use of safety restraint systems by CMV drivers, as set forth in § 392.16.
This unit must teach driver-trainees FMCSA regulations that prohibit drivers from texting or using hand-held mobile phones while operating their vehicles (
This unit must instruct driver-trainees in applicable regulations, techniques, and procedures for navigating RR-highway grade crossings and drawbridges appropriate to passenger buses.
This unit must teach driver-trainees the weigh-station regulations that apply to buses.
This unit must teach driver-trainees the basic techniques for recognizing and minimizing physical risks from criminal activities.
This unit must teach driver-trainees what to expect during a standard roadside inspection conducted by authorized personnel. Training providers must teach driver-trainees what passenger-carrying vehicle and driver violations are classified as out-of-service (OOS), including the ramifications and penalties for operating a CMV when subject to an OOS order as defined in § 390.5.
This unit must teach driver-trainees the potential consequences of violating driver-related regulations, including impacts on driver and motor carrier safety records, adverse impacts on the driver's Pre-employment Screening Program record; financial penalties for both the driver and carrier; and possible loss of CMV driving privileges.
This BTW training consists of exercises related to basic vehicle control skills and mastery of basic maneuvers necessary to operate the vehicle safely. Activities in this unit will take place on a driving range or a public road as defined in § 380.605. The instructor must engage in active communication with the driver-trainees during all BTW training sessions.
Driver-trainees must demonstrate their familiarity with basic passenger-carrying CMV physical and operational characteristics including overall height, length, width,
Driver-trainees must demonstrate proficiency in conducting such pre-trip, enroute and post-trip inspections of buses and key components of §§ 392.7 and 396.11, and demonstrate their ability to inspect the following:
(1) Emergency exits;
(2) Passenger-carrying CMV interiors (including passenger seats as applicable);
(3) Restrooms and associated environmental requirements;
(4) Temperature controls (for maintaining passenger comfort); and
(5) Driver and passenger seat belts.
Additionally, driver-trainees must demonstrate their knowledge of procedures, as applicable, in security-related inspections, including inspections for unusual wires or other abnormal visible materials, interior and exterior luggage compartments, packages or luggage left behind, and signs of cargo or vehicle tampering. Driver-trainees must be familiar with the operation of cycling-accessible lifts and the procedures for inspecting them for functionality and defects. For passenger-carrying vehicles equipped with said lifts and tie-down positions, trainee must demonstrate their ability to operate the cycling-accessible lifts.
In this unit, driver-trainees must demonstrate their ability to:
(1) Properly handle passenger baggage and containers to avoid worker, passenger, and non-passenger related injuries and property damage;
(2) Visually inspect baggage and containers for prohibited items, such as hazardous materials and identify such items;
(3) Properly handle and secure devices associated with ADA compliance including oxygen, wheeled mobility devices, and other associated apparatuses.
Driver-trainees must demonstrate their ability to brief passengers on safety on topics including: Fastening seat belts, emergency exits, emergency phone contact information, fire extinguisher location, safely walking in the aisle when the bus is moving, and restroom emergency push button or switch.
In this unit, driver-trainees must demonstrate their ability to safely load and unload passengers prior to departure and to deal with disruptive passengers.
Driver-trainees must demonstrate proper procedures for safely navigating railroad-highway grade crossings in a passenger-carrying CMV.
School bus (S) endorsement applicants must complete the curriculum outlined in this section, which applies to driver-trainees who expect to operate a “school bus” as defined in § 383.5. There is no required minimum number of instruction hours for theory training, but the training provider must cover all the topics set forth in the curriculum. There is no required minimum number of instruction hours for BTW training, but the training provider must determine whether driver-trainees have demonstrated proficiency in all elements of the BTW curriculum. Training instructors must document the total number of clock hours each driver-trainee spends to complete the BTW curriculum. The training must be conducted in a school bus of the same vehicle group as the applicant intends to drive. The school bus endorsement training must, at a minimum, include the following:
This unit must teach driver-trainees the danger zones that exist around the school bus and the techniques to ensure the safety of those around the bus. These techniques include correct mirror adjustment and usage. The types of mirrors and their use must be discussed, as well as the requirements found in Federal Motor Vehicle Safety Standard (FMVSS) 111 (49 CFR 571.111). Training providers must teach driver-trainees the dangers of “dart-outs.” Training providers must teach driver-trainees the importance of training students how to keep out of the danger zone when around school buses and the techniques for doing so.
This unit must be instruct driver-trainees on the laws and regulations for loading and unloading, as well as the required procedures for students waiting at a bus stop and crossing the roadway at a bus stop. Special dangers involved in loading and unloading must be specifically discussed, including procedures to ensure the danger zone is clear and that no student has been caught in the doorway prior to moving the vehicle. Instruction also must be included on the proper use of lights, stop arms, crossing gates, and safe operation of the door during loading and unloading; the risks involved with leaving students unattended on a school bus; and the proper techniques for checking the bus for sleeping children and lost items at the end of each route.
This unit must teach driver-trainees the basic physical and operational characteristics of school buses, including overall height, length, width, ground clearances, rear overhang, Gross Vehicle Weight and Gross Vehicle Weight Rating, axle weights, wheels and rims, tires, tire ratings, mirrors, steer wheels, lighting, windshield, windshield wipers, engine compartments, basic electrical system, brake systems, as applicable, and spare tire storage. Additionally, the training providers must instruct driver-trainees in techniques for proper driver seat and mirror adjustments.
This unit must instruct driver-trainees on the proper procedures following a school bus crash. The instruction must include use of fire extinguisher(s), first aid kit(s), tending to injured passengers, post-crash vehicle securement, notification procedures, deciding whether to evacuate the bus, data gathering, and interaction with law enforcement officials.
This unit must teach driver-trainees their role in safely evacuating the bus in an emergency and planning for an emergency in advance. Training must include proper evacuation methods and procedures, such as the safe evacuation of students on field and activity trips who only occasionally ride school buses and thus may not be familiar with the procedures.
This unit must teach driver-trainees the dangers trains present and the importance of the school bus driver and students strictly following railroad crossing procedures. Instruction must be given on the types of crossings, warning signs and devices, and State and local procedures and regulations for school buses when crossing railroad-highway grade crossings.
This unit must teach driver-trainees how to manage student behavior on the bus to ensure that safety is maintained and the rights of others are respected. Specific student management techniques must be discussed, including warning signs of bullying and the techniques for managing student behavior and administering discipline. Training providers must teach driver-trainees to avoid becoming distracted by student behavior while driving, especially when crossing railroad tracks and during loading and unloading.
This unit must teach the driver-trainees the special safety considerations and equipment in school bus operations. Topics discussed must include use of strobe lights, driving in high winds, safe backing techniques, and preventing tail swing crashes.
This unit must teach the driver-trainees the importance of pre-trip, enroute, and post-trip inspections; and provide instruction in techniques for conducting such inspections of buses as stated in §§ 392.7 and 396.11, and additionally demonstrate their ability to inspect the following:
(1) Stop arms,
(2) Crossing arms,
(3) Emergency exits,
(4) Fire extinguishers,
(5) Passenger seats,
(6) First aid kits,
(7) Interior lights, and
(8) Temperature control (for maintaining passenger comfort).
Training providers must instruct driver-trainees in State and local requirements, as applicable, for inspection of school bus equipment.
This unit must teach driver-trainees the security issues facing school bus drivers. Training providers must also teach driver-trainees potential security threats, techniques for preventing and responding to security threats, how to recognize and report suspicious behavior, and what to do in the event of a hijacking or attack on a school bus.
This unit must teach driver-trainees the importance of planning their routes prior to beginning driving in order to avoid distraction while on the road. The training provider must also teach driver-trainees the techniques for reviewing routes and stops, as well as State and local procedures for reporting hazards along the route and at bus stops.
This unit must consist of exercises related to basic vehicle control skills and mastery of basic maneuvers. Activities in this unit will take place on a driving range or a public road as defined in § 380.605. The instructor must engage in active communication with the driver-trainees during all active training sessions.
Driver-trainees must demonstrate the techniques necessary to ensure the safety of persons in the danger zone around the bus. Driver-trainees must practice mirror adjustment and usage. The types of mirrors and their use are shown, and cones used to demonstrate the requirements of 49 CFR 571.111.
Driver-trainees must demonstrate the loading and unloading techniques learned in the theory portion of the training. Driver-trainees must demonstrate checking the vehicle for sleeping children and lost items at the end of the route.
Driver-trainees must demonstrate their role in safely evacuating the bus in an emergency.
Driver-trainees must demonstrate safe backing techniques and demonstrate their ability to avoid tail swing crashes by using reference points when making turns.
Driver-trainees must demonstrate proficiency in conducting pre-and post-trip inspections, as stated in §§ 392.7 and 396.11, and of school bus-specific equipment, such as mirrors, stop arms, crossing arms, emergency exits, fire extinguishers, passenger seats, first aid kits, interior lights, and temperature control.
Driver-trainees must demonstrate proper procedures for safely navigating railroad-highway grade crossings in a school bus.
Hazardous materials (H) endorsement applicants must complete the Hazardous materials curriculum, which apply to driver-trainees who intend to operate CMVs used in the transportation of hazardous materials (HM) as defined in § 383.5. Driver-trainees seeking an H endorsement, as defined in § 383.93(c)(4), must complete this curriculum in order to take the State-administered knowledge test for the H endorsement. There is no required minimum number of instruction hours for theory training, but the training provider must cover all the topics in the curriculum. The HM curriculum must, at a minimum, include the following:
This unit must teach driver-trainees the basic HM competencies, including applicable FMCSR requirements when HM is being transported. The training provider must also teach driver-trainees HM communication requirements including: Shipping paper requirements, marking, labeling, placarding, emergency response information, and shipper's responsibilities.
This unit must teach driver-trainees the basic competencies for transportation of HM.
The unit must teach driver-trainees the proper procedures and contacts for the immediate notification related to certain HM incidents, including instruction in the proper completion and submission of HM Incident Reports.
This unit must teach driver-trainees the proper operation of an HM vehicle at RR-highway grade crossings and in vehicular tunnels.
This unit must teach driver-trainees the proper loading and unloading procedures for hazardous material cargo. Training providers must also teach driver-trainees the requirements for proper segregation and securement of HM, and the prohibitions on transporting certain solid and liquid poisons with foodstuffs.
This unit must teach driver-trainees the various requirements for vehicles transporting passengers and property, and the types and quantities of HM that can and cannot be transported in these vehicles/situations.
This unit must teach driver-trainees the specialized requirements for transportation of cargo in bulk packages, including cargo tanks, intermediate bulk containers, bulk cylinders and portable tanks. The unit must include training in the operation of emergency control features, special vehicle handling characteristics, rollover prevention, and the properties and hazards of the HM transported. Training providers must teach driver-trainees methods specifically designed to reduce cargo tank rollovers including, but not limited to, vehicle design and performance, load effects, highway factors, and driver factors.
This unit must teach driver-trainees the applicable requirements of the FMCSRs and the procedures necessary for the safe operation of the motor vehicle. This includes training in special precautions for fires, loading and unloading, operation of cargo tank motor vehicle equipment, and shut-off/shut-down equipment.
This unit must teach driver-trainees the proper procedures and best practices for handling an emergency response and post-response operations, including what to do in the event of an unintended release of an HM. All training, preparation, and response efforts must focus on the hazards of the materials that have been released and the protection of people, property, and the environment.
This unit must teach driver-trainees the procedures for fueling a vehicle that contains HM.
This unit must teach driver-trainees the proper procedures for checking the vehicle tires at the start of a trip and each time the vehicle is parked.
This unit must teach driver-trainees the proper routing procedures that they are required to follow for the transportation of radioactive and non-radioactive HM.
This unit must teach driver-trainees the proper procedures and operational requirements including communications, constant attendance, and parking that apply to the transportation of HM for which an HMSP is required.
49 U.S.C. 521, 31136, 31301
(a) * * *
(3) Beginning on February 7, 2020, a person must complete the training prescribed in subpart F of part 380 of this chapter before taking the skills test for a Class A or B CDL for the first time, or a skills test for a passenger (P) or school bus (S) endorsement for the first time, or the knowledge test for a hazardous materials (H) endorsement for the first time. The training must be administered by a provider listed on the Training Provider Registry.
(b) * * *
(11) Beginning on February 7, 2020, a person must complete the training prescribed in subpart F of part 380 of this chapter before taking the skills test for a Class A or B CDL, a passenger (P) or school bus (S) endorsement for the first time or the knowledge test for a hazardous materials (H) endorsement for the first time. The training must be administered by a provider listed on the Training Provider Registry.
(e) * * *
(3) Comply with the requirements specified in paragraph (b)(8) of this section to obtain a hazardous materials endorsement;
(4) Surrender the previous CDL; and
(5) Beginning on February 7, 2020, a person must complete the training prescribed in subpart F of part 380 of this chapter before taking the skills test for upgrading to a Class A or B for the first time; or adding a passenger or school bus endorsement to a CDL for the first time; or knowledge test for hazardous materials endorsement for the first time. The training must be administered by a provider on the Training Provider Registry.
(b) * * *
(3) Initiate and complete a check of the applicant's driving record to ensure that the person is not subject to any disqualification under § 383.51, or any license disqualification under State law, does not have a driver's license from more than one State or jurisdiction, and has completed the required training prescribed in subpart F of part 380 of this subchapter. The record check must include, but is not limited to, the following:
(ii) A check with the CDLIS to determine whether the driver applicant already has been issued a CDL, whether the applicant's license has been disqualified, or if the applicant has been disqualified from operating a commercial motor vehicle; and beginning February 7, 2020, before an applicant is issued a Class A or Class B CDL, or a passenger (P), school bus (S), or hazardous materials (H) endorsement, whether the applicant has completed the training required by subpart F of part 380 of this subchapter;
(10) Beginning on February 7, 2020, not conduct a skills test of an applicant for a Class A or Class B CDL, or a passenger (P) or school bus (S) endorsement until the State verifies electronically that the applicant completed the training prescribed in subpart F of part 380 of this subchapter.
(e) * * *
(8) Beginning on February 7, 2020, not issue an upgrade to a Class A or Class B CDL, or a passenger (P), school bus (S), or hazardous materials (H) endorsement, unless the applicant has completed the training required by subpart F of part 380 of this subchapter.
(p) After February 7, 2020, the State must notify FMCSA that a training provider in the State does not meet applicable State requirements for CMV instruction.
49 U.S.C. 31136, 31301,
(a) Beginning on February 7, 2020, a State must comply with the requirements of § 383.73(b)(3)(ii), (b)(10), and (e)(8) to verify that the applicant completed the training prescribed in subpart F of part 380.
(b)(1) A State may issue a CDL to individuals who obtain a CLP before February 7, 2020, who have not complied with subpart F of part 380 of this subchapter so long as they obtain a CDL before the CLP or renewed CLP expires.
(2) A State may not issue a CDL to individuals who obtain a CLP on or after February 7, 2020, unless they comply with subpart F of part 380 of this subchapter.
The State must meet the entry-level driver training provider notification requirement of § 383.73(p).
(j) A State must come into substantial compliance with the requirements of subpart B of this part and part 383 of this chapter in effect as of February 6, 2017, but not later than February 7, 2020.
Internal Revenue Service (IRS), Treasury.
Final regulations.
This document contains final regulations that provide guidance under section 987 of the Internal Revenue Code (Code) regarding the determination of the taxable income or loss of a taxpayer with respect to a qualified business unit (QBU) subject to section 987, as well as the timing, amount, character, and source of any section 987 gain or loss. Taxpayers affected by these regulations are corporations and individuals that own QBUs subject to section 987. In addition, published elsewhere in this issue of the
Sheila Ramaswamy at (202) 317–6938 (not a toll-free number).
The collection of information contained in these final regulations has been 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 1545–2265. Responses to this collection of information are mandatory.
The collection of information in these final regulations is in §§ 1.987–1(b)(2)(ii), 1.987–1(c)(1)(ii), 1.987–1(c)(1)(iii), 1.987–1(g)(3)(i)(A), 1.987–1(g)(3)(i)(B), 1.987–1(g)(3)(i)(C), 1.987–1(g)(3)(i)(D), 1.987–3(c)(2)(iv)(B),1.987–9, and 1.987–10(e). This collection of information is required to establish the taxable income or loss of a taxpayer with respect to a QBU subject to section 987, as well as the timing, amount, character, and source of any section 987 gain or loss and the exchange rates used for foreign currency translation purposes.
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 and 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. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
This document contains final regulations relating to the determination of the taxable income or loss of a taxpayer with respect to a QBU subject to section 987 of the Code, as well as the timing, amount, character, and source of any section 987 gain or loss. The final regulations also amend existing regulations under sections 861, 985, 988, and 989.
On September 6, 2006, the Treasury Department and the IRS published a notice of proposed rulemaking (REG–208270–86, 71 FR 52876) that proposed new regulations under section 987 (the 2006 proposed regulations) and withdrew proposed regulations under section 987 published on September 25, 1991 (INTL–965–86, 56 FR 48457) (the 1991 proposed regulations). The Treasury Department and the IRS received many written comments in response to the 2006 proposed regulations. After consideration of all the comments, the 2006 proposed regulations, as revised by this Treasury decision, are adopted as final regulations. Temporary regulations (
Section 987 generally provides that, when a taxpayer owns one or more QBUs with a functional currency other than the U.S. dollar and such functional currency is different than that of the taxpayer, the taxable income or loss of the taxpayer with respect to each QBU is determined by computing the taxable income or loss of each QBU separately in its functional currency and translating such income or loss at the appropriate exchange rate. Section 987 further requires the taxpayer to make “proper adjustments” (as prescribed by the Secretary) for transfers of property between QBUs having different functional currencies, including by treating post-1986 remittances from each such QBU as made on a pro rata basis out of post-1986 accumulated earnings and by treating section 987 gain or loss as ordinary income or loss and sourcing such gain or loss by reference to the source of the income giving rise to post-1986 accumulated earnings.
The 1991 proposed regulations generally provided that the net income of a QBU with a functional currency other than that of the taxpayer was determined annually. Such determination was based on the profit and loss appearing on the QBU's books and records, adjusted to conform to U.S. tax principles, and translated into the functional currency of the taxpayer using the weighted average exchange rate for the taxable year. The 1991 proposed regulations also provided for the recognition of exchange gain or loss upon a remittance from the QBU's equity pool. In general, the equity pool consisted of the contributed capital and earnings of the QBU, reduced by remittances, determined in the QBU's functional currency. The 1991 proposed regulations also provided for a basis pool, which consisted of the basis of the capital and earnings in the equity pool, expressed in the functional currency of the taxpayer. The portion of the basis pool that was attributable to a remittance generally was determined according to the following formula:
Under the 1991 proposed regulations, section 987 gain or loss was the difference between the value of the remittance from the QBU, translated into the taxpayer's functional currency at the spot rate on the date of the remittance, and the basis associated with the remittance.
One important consequence of the equity pool paradigm was that all branch equity gave rise to exchange gain or loss, regardless of whether the equity was invested in assets that actually exposed the QBU's owner to currency fluctuations. For example, both cash denominated in the QBU's functional currency and mobile equipment equally gave rise to exchange gain or loss. As a result, under the 1991 proposed regulations, exchange rate changes that, at most, had only an uncertain and remote effect on the economic results experienced by the owner of a QBU gave rise to substantial exchange gains and losses that taxpayers selectively could recognize by strategically timing remittances or causing a termination of the QBU. Given these distortions, the Treasury Department and the IRS withdrew the 1991 proposed regulations and proposed new regulations on September 6, 2006.
The 2006 proposed regulations adopted a different paradigm referred to as the foreign exchange exposure pool (FEEP) method. In general, the FEEP method provides that, as under the 1991 proposed regulations, the income of a QBU that is subject to section 987 (a section 987 QBU) is determined by reference to the items of income, gain, deduction, and loss booked to the section 987 QBU in its functional currency, adjusted to reflect U.S. tax principles. Items of income and deduction generally are translated, consistent with the 1991 proposed regulations, into the functional currency of the section 987 QBU's owner at the average exchange rate for the year. However, the basis of certain “historic assets” and the deductions for depreciation, depletion, and amortization of such assets are translated at the historic rates for such assets. Translating these items at historic rates represents a major difference from the 1991 proposed regulations and prevents the imputation of foreign currency gains or losses to such assets. Additionally, the 2006 proposed regulations required the adjusted basis and amount realized with respect to marked assets to be translated using a spot rate, which for assets acquired in a prior taxable year would be the spot rate for the closing balance sheet of the prior taxable year.
Consistent with the 1991 proposed regulations, the FEEP method uses a balance sheet approach to determine exchange gain or loss, which is not recognized until the section 987 QBU makes a remittance. Under the FEEP method, exchange gain or loss with respect to “marked items” is determined annually but is pooled and deferred until a remittance is made. A marked item generally is defined under the 2006 proposed regulations as an asset (marked asset) or liability (marked liability) that would generate section 988 gain or loss if such asset or liability were held or entered into directly by the owner of the section 987 QBU. The balance sheet approach, together with the use of historic rates for historic items (generally defined as an asset or liability that is not a marked item), allows taxpayers and the IRS to distinguish between items whose value is highly responsive to changes in the functional currency of the owner and items for which exchange rate changes have no effect on value, or only an uncertain or remote effect that is more appropriately recognized upon a realization event with respect to the item.
The 2006 proposed regulations define a remittance as a net transfer of amounts from a section 987 QBU to its owner during a taxable year, determined in the owner's functional currency. When a section 987 QBU makes a remittance, a portion of the pooled exchange gain or loss is recognized. In general, the amount taken into account equals the section 987 QBU's net unrecognized exchange gain or loss multiplied by the owner's remittance proportion. The owner's remittance proportion generally equals the amount of the remittance divided by the aggregate basis of the section 987 QBU's gross assets reflected on its year-end balance sheet, determined in the owner's functional currency, without reduction for the remittance.
Many comments were received in response to the 2006 proposed regulations. This Part II discusses those comments and the changes made in response to them. Certain comments received in response to the 2006 proposed regulations are addressed in the temporary regulations and are discussed in the preamble to the temporary regulations rather than in this preamble.
A number of comments suggested that the FEEP method, in particular §§ 1.987–3 and –4 of the 2006 proposed regulations, would be difficult to administer. Some of those comments expressed a preference to more closely align regulations under section 987 with the financial accounting rules under Accounting Standards Codification, Foreign Currency Matters, section 830 (ASC 830).
ASC 830 adopts a functional currency paradigm in which assets, liabilities, and operations of a foreign entity are measured using the entity's functional currency
Translation adjustments are solely a result of the translation process and have no direct effect on reporting currency cash flows. Exchange rate changes have an indirect effect on the net investment that may be realized upon sale or liquidation, but that effect is related to the net investment and not to the operations of the investee. Prior to sale or liquidation, that effect is so uncertain and remote as to require that translation adjustments arising currently should not be reported as part of operating results.
The treatment of translation gains and losses can be contrasted with the financial accounting treatment of transactions denominated in a currency other than the entity's functional currency. Changes in exchange rates between the functional currency of the foreign entity and the currency in which such transactions are denominated give rise to changes in expected cash flows in the functional currency, resulting in “transaction” gains or losses. The financial accounting rules require the inclusion of transaction gains and losses in net income for the period in which the exchange rate changes occur.
Some comments suggested that, in enacting section 987, Congress intended to substantially adopt the financial accounting rules for foreign currency translation for tax purposes. The Treasury Department and the IRS do not find support for this position in the legislative history to section 987 and, to the contrary, find the position belied by the significant discontinuities between section 987 and the financial accounting rules, particularly regarding the recognition of foreign currency gains and losses. Under Financial Accounting Standard No. 52 (FAS 52), translation gain or loss is deferred in an equity account until a sale or liquidation of the foreign entity, at which point the economic effects of the aggregate translation gain or loss can be measured against a real economic event. The “equity pool” paradigm of the 1991 proposed regulations determined the amount of section 987 gain or loss in a manner that was similar to the determination of translation gain or loss under FAS 52 by imputing foreign currency gain or loss to all assets and liabilities on the balance sheet. In contrast with the accounting rules under FAS 52, however, the translation gain or loss was not sequestered in an equity account but rather was included in income upon a remittance as required by the section 987 statute, making the consequences of imputing foreign currency gain or loss to all assets and liabilities substantially greater.
As expressed in the preamble to the 2006 proposed regulations, the administrative convenience achieved by generally adopting the FAS 52 computational methodology in the 1991 proposed regulations gave rise to many cases in which the section 987 gain or loss taken into account on a remittance deviated substantially from the economic results experienced by the QBU. For example, currency loss was imputed with respect to assets (such as a commercial building or an oil rig) for which, due to the mobility of investment capital or the assets themselves, exchange rate fluctuations would have, at most, only a remote and uncertain effect on asset value. Moreover, because remittances could be funded from other assets, such loss could be recognized without regard to any realization event with respect to the assets that gave rise to the speculative or noneconomic section 987 loss.
Given the inappropriate economic and timing results attributable to adopting the FAS 52 translation methodology in the 1991 proposed regulations and the significant differences between the purposes of the FAS 52 computation of CTA and the computation of unrecognized section 987 gain or loss, the Treasury Department and the IRS remain of the view that the FAS 52 model is not appropriate for tax purposes. Similarly, the Treasury Department and the IRS have determined that an approach based on consistency with FAS 52 computations modified to address abuses, as suggested in some comments, is inappropriate because such a system would impute foreign currency gain or loss to all assets and liabilities on the balance sheet and generally allow for the recognition of such gains and losses based on remittances without regard to the owner's actual economic exposure to the QBU's functional currency. Rather, the Treasury Department and the IRS have determined that an approach premised on consistency with section 988, modified to take into account administrability and policy considerations unique to section 987, will carry out the purposes of section 987 most appropriately.
Other comments recommended a hybrid approach that would combine the methodology of the 1991 proposed regulations for computing a section 987 QBU's net income with the methodology of the 2006 proposed regulations for computing section 987 gain or loss. Under the proposed hybrid approach, section 987 gain or loss generally would be determined under the method of the 2006 proposed regulations, but taxable income or loss would be translated into the owner's functional currency at the yearly average exchange rate without any adjustments. A consequence of this hybrid approach is that a different exchange rate would be used to translate recovered basis with respect to historic assets in determining taxable income or loss than would be used to translate such basis to determine section 987 gain or loss. These comments generally favored the FEEP method for determining section 987 gain or loss because it avoids imputing section 987 gain or loss to all assets and liabilities on the balance sheet, as under the 1991 proposed regulations, but asserted that determining taxable income or loss in the functional currency of the section 987 QBU and translating that amount into the owner's functional currency at the yearly average exchange rate without any adjustments is more administrable and more consistent with sections 987(1) and (2) and the legislative history of section 987.
The Treasury Department and the IRS have concluded that the proposed hybrid approach would not achieve the goal of ensuring remittances trigger only “exchange gain or loss inherent in accumulated earnings or branch capital,” as contemplated by Congress, and inappropriately would cause offsetting exchange rate effects to be reflected in section 987 taxable income or loss and in the FEEP. (H.R. Conf. Rep. No. 99–841, at 675 (1986)). Although a hybrid approach would simplify the calculation of section 987 taxable income or loss, the simplification would cause basis recovery deductions with respect to depreciable and amortizable assets that are included in section 987 taxable income or loss to reflect exchange rate fluctuations with respect to the asset (for which exchange rate fluctuations may have, at most, only a remote and uncertain effect on value). If the asset is retained on the closing
An example illustrates the equal and offsetting exchange rate effects that can arise with respect to a historic asset under the hybrid approach. Consider the situation of a section 987 QBU (euro QBU) that has the euro as its functional currency and that has an owner that has the dollar as its functional currency. If euro QBU acquires depreciable equipment for €100 on the last day of year 1, when the historic exchange rate is €1 = $1, and takes into account €10 of depreciation with respect to the equipment in year 2, when the yearly average exchange rate is €1 = $1.50, the €10 of depreciation would be translated at the year 2 average exchange rate into $15 under the hybrid approach rather than $10, as would happen if depreciation were translated at the €1 = $1 historic rate under the 2006 proposed regulations. As a result, section 987 taxable income of euro QBU is $5 lower under the hybrid approach than it would be under the 2006 proposed regulations.
In this example, the FEEP, in turn, would be higher by $5 under the hybrid approach than it would be under the 2006 proposed regulations. This is because, in determining the change to the FEEP for a taxable year, section 987 taxable income is subtracted from the change in OFCNV of euro QBU, which is computed by translating the adjusted basis of historic assets using the historic exchange rate for each asset. For euro QBU, solely with reference to the depreciable equipment, year 2 depreciation causes a $10 reduction in OFCNV, because in computing the change in OFCNV, the €10 change in equipment basis during year 2 is translated at the €1 = $1 historic rate (year 2 closing balance sheet of $90 adjusted basis, less year 1 closing balance sheet of $100 adjusted basis). In order to compute the change to the FEEP for year 2 with respect to the depreciable equipment, section 987 taxable income with respect to the equipment is subtracted from the $10 reduction in OFCNV. Thus, the net effect of the depreciation in the FEEP is to increase section 987 gain reflected in the FEEP by $5 (negative $10 change in OFCNV, less $15 depreciation deduction).
Considering all of these effects together, under the hybrid approach, the appreciation of the euro decreases section 987 taxable income by $5 and increases section 987 gain reflected in the FEEP by $5. In other words, the FEEP reflects currency gain or loss with respect to the depreciable asset that is offset by an amount that was included in section 987 taxable income. This effect on the FEEP persists even after the asset is sold.
The Treasury Department and the IRS have determined that the offsetting effects in section 987 taxable income or loss and in the FEEP under the hybrid approach raise concerns similar to the concerns that Congress addressed, albeit in a different context, in enacting section 1092. In particular, section 1092 reflects a policy concern regarding inconsistent timing of recognition of gains and losses from offsetting positions. Under the hybrid approach, the exchange rate effect with respect to historic assets would be reflected in section 987 taxable income or loss to the extent of any cost recovery deductions with respect to those assets, but equal and offsetting amounts would be reflected in the FEEP and would not be recognized until there are remittances. Thus, offsetting effects arising from a single asset would be taken into account at different times. Accordingly, the Treasury Department and the IRS have determined that it would be inappropriate for regulations under section 987 to permit distortions to section 987 taxable income or loss, for the sake of enhancing administrability, that have the effect of causing offsetting amounts of gain or loss to be reflected in the FEEP with respect to the same asset, where the latter amounts would be recognized only upon voluntary remittances from the QBU. Rather, consistent with the discussion in the preamble to the 2006 proposed regulations, the Treasury Department and the IRS have determined that, in order to carry out the purposes of section 987(3) as indicated by the legislative history, as well as sections 987(1) and (2), and taking into account the authority granted in sections 989(b) and (c), it is appropriate to account for recovered basis for historic assets at the relevant historic rate in determining taxable income or loss of a section 987 QBU. This result could be accomplished by translating recovered basis at the historic rate in the first instance or by translating taxable income or loss determined in the section 987 QBU's functional currency at the yearly average exchange rate and adjusting that amount to properly account for recovered basis, as under the simplified inventory method described in Part II.A.3 of this preamble.
Nonetheless, the Treasury Department and the IRS acknowledge the observations about the complexity and administrability of the 2006 proposed regulations that underlie the recommendation of the hybrid approach. The concerns about offsetting amounts recognized at different times under the hybrid approach would not arise for taxpayers that make the deemed annual termination election set forth in § 1.987–8T(d) of the temporary regulations. Accordingly, as described in the preamble to the temporary regulations, a taxpayer that makes the deemed annual termination election may also elect under § 1.987–3T(d) to apply the hybrid approach. Additionally, the Treasury Department and the IRS have made several changes in these final regulations in response to comments expressing concern about the complexity and administrability of the 2006 proposed regulations.
In addition to the comments recommending a hybrid approach under which taxable income would be translated at a single exchange rate without any adjustments, other comments expressed more particular concerns regarding the complexity and administrability of the FEEP paradigm specifically with respect to inventory and certain other high-volume, low-value assets. Comments suggested that treating items that turn over quickly, such as inventory, or that have low value as marked items would facilitate administration and compliance while introducing little distortion into the FEEP calculation. The Treasury Department and the IRS do not agree with these specific recommendations to expand the scope of marked assets, because even assets that turn over quickly or have low-value individually could inappropriately give rise to significant amounts of section 987 gain or loss in the aggregate over time. The Treasury Department and the IRS do, however, acknowledge the general points about complexity and administrability reflected in these suggestions, which are similar to the concerns expressed in the comments recommending the hybrid approach.
In order to reduce complexity and improve administrability, the final
Under §§ 1.987–1(c)(3)(i) and 1.987–2(d) of the 2006 proposed regulations, the historic rate used to translate the basis of historic assets was the spot rate on the date on which the asset was transferred to, or otherwise acquired by, a section 987 QBU. Thus, when assets were acquired by a section 987 QBU on multiple days during a single taxable year, the 2006 proposed regulations required taxpayers to track multiple historic spot rates. A comment observed that taxpayer systems often only identify the date an asset is placed in service and recommended that taxpayers be permitted to use a yearly average exchange rate in lieu of a spot rate in translating historic items.
The Treasury Department and the IRS agree that using the yearly average exchange rate rather than a spot rate to translate historic items would reduce complexity and improve administrability without introducing significant distortions into the determination of section 987 taxable income or loss or section 987 gain or loss. Accordingly, § 1.987–1(c)(3)(i) generally provides that the historic rate is the yearly average exchange rate for the taxable year when a historic asset is acquired, or a historic liability is incurred, by a section 987 QBU. Taxpayers that prefer to use the spot rate as the historic rate, as under the 2006 proposed regulations, may so elect under § 1.987–1(c)(1)(iii). A taxpayer that makes this election is deemed to also make the historic inventory election under § 1.987–3(c)(2)(iv)(B) that is described in Part II.A.3 of this preamble.
In addition, to further improve administrability, § 1.987–1(c)(3)(iii) permits a section 987 QBU that acquires depreciable or amortizable property in one year and places the asset in service in another year to determine the historic rate for the property based on the date the property is placed in service rather than the year the property was acquired, provided that this convention is consistently applied for all such property attributable to that section 987 QBU.
Comments suggested that prepaid expenses and liabilities for advance payments of unearned income should be treated as section 987 marked items because they typically have a short duration and often concern small amounts. The Treasury Department and the IRS have determined that treating these items as marked items generally would promote administrability without introducing significant distortions in the determination of section 987 gain or loss. Accordingly, the definition of marked item under § 1.987–1(d) includes prepaid expenses and liabilities for an advance payment of unearned income where such items have an original term of one year or less.
Under the 2006 proposed regulations, inventory was treated as a historic item. As a result, to determine section 987 taxable income or loss with respect to a section 987 QBU under proposed § 1.987–3, cost of goods sold (COGS) had to be translated at a historic spot rate that corresponded to the date the liquidated inventory was acquired or manufactured. A historic spot rate also had to be used to determine the OFCNV of the QBU under proposed § 1.987–4 with respect to inventory that was reflected on the section 987 QBU's year-end balance sheet. For these purposes, the cost basis of inventory purchased for resale generally would have been translated into the owner's functional currency at the spot rate on the date of purchase. With respect to inventory that was manufactured by the section 987 QBU, it would have been necessary to translate individually the various components of COGS at the appropriate historic spot rate for each cost component, resulting in an effective historic rate for manufactured inventory that was a blend of the historic rates applicable to such components. That is, labor, materials and other inventoriable costs would have been translated at the spot rate on the date the cost was incurred or, in the case of depreciation, the date the relevant depreciable asset was acquired. Comments suggested that translating inventoriable costs at their historic spot rates presented significant administrative difficulties. In addition to the comments requesting that certain high volume property be treated as a marked asset, one comment requested that a simplified method be provided to deal with the administrative difficulties in applying the 2006 proposed regulations to inventory.
In response to comments, these final regulations simplify the translation of COGS and ending inventory in two significant ways. First, the use under § 1.987–1(c)(3) of the yearly average exchange rate rather than a spot rate as the historic rate will significantly simplify the translation of COGS and ending inventory. This change makes it possible to translate all inventory purchased in a given year, and all costs incurred in the production of inventory in a given year (other than depreciation, which is always translated at the historic rate for the year the depreciated property was acquired or placed in service, regardless of whether it is an inventoriable cost), using a single exchange rate. Second, § 1.987–3(c)(2)(iv)(A) prescribes a simplified inventory method under which (i) COGS is translated into the functional currency of the section 987 QBU's owner at the yearly average exchange rate for the current taxable year with a requirement to make only two discrete adjustments to the translated COGS amount, and (ii) a simplified historic rate is used for purposes of determining the OFCNV under Reg. § 1.987–4 for inventory to which the simplified inventory method applies. A taxpayer that prefers the inventory method under the 2006 proposed regulations can elect under § 1.987–3(c)(2)(iv)(B) to translate inventoriable costs that are included in COGS or ending inventory at the historic rate for each such cost and, if they wish, can further elect under
Under the simplified inventory method, a section 987 QBU determines COGS in its functional currency and translates that amount at the yearly average exchange rate for the taxable year rather than translating each inventoriable cost at the appropriate historic rate. Taxpayers applying the simplified inventory method must make two adjustments to COGS described in § 1.987–3(c)(3). These adjustments mitigate the consequences of translating COGS at the yearly average exchange rate, as if inventory were a marked asset, rather than translating the inventoriable costs reflected in inventory sold during the taxable year at the appropriate historic rates, as under the 2006 proposed regulations. In particular, the adjustments generally prevent inventory from giving rise to section 987 gain or loss reflected in the FEEP. The adjustments also cause section 987 taxable income or loss to correspond over time to the section 987 taxable income or loss that would have resulted if inventoriable costs were translated at historic rates.
The first adjustment requires the translated COGS amount to be adjusted to reverse the effect of translating (as part of the translation of COGS) cost recovery deductions treated as inventoriable costs at the current yearly average exchange rate rather than at the appropriate historic rates. For a particular cost recovery deduction, this adjustment is calculated as the portion of the deduction treated as an inventoriable cost, computed in the functional currency of the QBU, multiplied by the amount (whether positive or negative) that is determined by subtracting the yearly average exchange rate at which COGS was translated from the historic rate applicable to the property whose cost is being recovered. For example, in a period in which the functional currency of a section 987 QBU has strengthened against its owner's functional currency, the adjustment would reduce the amount of COGS determined in the owner's functional currency to correspond to the amount that would have been determined if cost recovery deductions that are inventoriable costs had been translated at the historic rate, as other cost recovery deductions are translated. To enhance administrability and respond to comments received, this adjustment is taken into account in determining COGS in full in the taxable year in which the inventoriable cost recovery deductions are allowed, regardless of whether a portion of such costs is capitalized into ending inventory.
The second adjustment required under the simplified inventory method differs for inventory accounted for under the last-in, first-out (LIFO) method and for non-LIFO inventory, to reflect the different cost flow assumptions under these accounting methods. For both non-LIFO and LIFO inventory, the adjustment generally causes the amount of section 987 taxable income or loss taken into account by the owner of a section 987 QBU to correspond over time to the amount that would be taken into account if inventoriable costs were translated at their respective historic rates rather than at the yearly average exchange rate. For non-LIFO inventory, the adjustment is made on an annual basis with respect to beginning inventory. For LIFO inventory, the adjustment is made only when a LIFO layer is liquidated or partially liquidated.
For non-LIFO inventory, the second adjustment required under the simplified inventory method is an adjustment with respect to beginning inventory. The adjustment, which must be made annually, corrects the distortion that arises from translating beginning inventory at the current yearly average exchange rate as part of translating COGS, after the same inventory was translated in the immediately preceding year (when the inventory represented ending inventory in the cost of goods calculation) at the yearly average exchange rate for that year. This adjustment to COGS is calculated as the amount of beginning inventory, computed in the functional currency of the QBU, multiplied by the amount (whether positive or negative) that is determined by subtracting the yearly average exchange rate for the current taxable year from the yearly average exchange rate for the immediately preceding taxable year. For example, in a period in which the functional currency of a section 987 QBU has strengthened against the owner's functional currency, this adjustment would reduce the amount of COGS determined in the owner's functional currency by the difference between beginning inventory translated at the current yearly average exchange rate and at the yearly average exchange rate for the immediately preceding taxable year.
Over time, this adjustment generally causes the owner of a section 987 QBU to take into account the same amount of section 987 taxable income or loss as would have occurred under the 2006 proposed regulations if the yearly average exchange rate had been used as the historic rate. Additionally, because this adjustment is reflected in section 987 taxable income or loss, which is a component of the § 1.987–4 calculation of section 987 gain or loss with respect to the section 987 QBU, the adjustment ultimately has the effect of preventing non-LIFO inventory on the year-end balance sheet from giving rise to section 987 gain or loss, notwithstanding that the historic rate at which it is translated each year is the yearly average exchange rate.
For LIFO inventory, the second adjustment required under the simplified inventory method is an adjustment with respect to LIFO layers liquidated in whole or part during the year. The adjustment, which must be made only in taxable years in which a LIFO layer is partially or fully liquidated, compensates for the translation of COGS attributable to a liquidated LIFO layer at the current yearly average exchange rate rather than at the historic rate associated with the taxable year in which the inventory layer arose. The adjustment is calculated as the amount of each LIFO layer that has been fully or partially liquidated during the year multiplied by the amount (whether positive or negative) that is determined by subtracting the yearly average exchange rate for the current taxable year from the yearly average exchange rate for the taxable year to which the liquidated layer relates.
As a result of this adjustment, each LIFO layer is treated as having a single historic rate, which is the yearly average exchange rate for the taxable year in which the layer arose.
For purposes of determining section 987 gain or loss under § 1.987–4 with respect to inventory that is reflected on the section 987 QBU's year-end balance sheet, § 1.987–1(c)(3)(i)(B) provides a simplified historic rate for inventory to which the simplified inventory method applies. Under § 1.987–1(c)(3)(i)(B), the simplified historic rate for inventory differs depending on whether the inventory is accounted for under the LIFO method. If the inventory is accounted for under the LIFO method, the historic rate is the average exchange rate for the taxable year in which the relevant LIFO layer arose. If the
The 2006 proposed regulations provided special rules for translating the adjusted basis and amount realized upon a disposition of a marked asset. For a marked asset that was held by a section 987 QBU on the first day of a taxable year, the required translation rate for the adjusted basis and amount realized with respect to the asset was the rate used to translate the basis of such asset from the section 987 QBU's functional currency into the owner's functional currency in determining the owner functional currency net value of the section 987 QBU for the preceding taxable year under § 1.987–4. For a marked asset acquired during the taxable year, the adjusted basis and amount realized were translated at the spot rate on the date the asset was acquired. In response to general comments on the complexity of administering the 2006 proposed regulations, and considering the relatively minor distortion that would arise from eliminating these special translation rules, the final regulations do not include a special rule for translating the adjusted basis or amount realized with respect to marked assets. Accordingly, the gain or loss on marked assets generally is determined in the functional currency of the section 987 QBU and translated into the owner's functional currency at the yearly average exchange rate for the year of disposition.
The 2006 proposed regulations provided that banks, insurance companies, and similar financial entities would not be subject to the regulations. In addition, the 2006 proposed regulations identified leasing companies, finance coordination centers, regulated investment companies, and real estate investment trusts as “similar financial entities.” A comment requested that the final regulations clarify the meaning of “similar financial entities.” Comments also suggested excluding entities from the scope of “similar financial entity” (and therefore making such entities subject to the final regulations) if they primarily engage in transactions with related parties that are not themselves financial entities. A comment noted that it would be anomalous to apply the final regulations with respect to all of the operating entities transacting with a related finance coordination center but not apply the final regulations to the center itself.
The Treasury Department and the IRS agree that the reference to “similar financial entities” in the 2006 proposed regulations is unclear and agree that entities primarily engaged in transactions with related persons that are not themselves financial entities should be subject to the final regulations. Accordingly, § 1.987–1(b)(1)(ii) omits the reference to “similar financial entities,” and replaces it with specific references to the entities that the 2006 proposed regulations explicitly identified as “similar financial entities.” Additionally, the exception from the application of the final regulations is revised based on the comment received to not apply (such that the final regulations do apply) to entities that engage in transactions primarily with persons that are related within the meaning of sections 267(b) or 707(b) and that are not themselves entities identified in § 1.987–1(b)(1)(ii).
The preamble to the 2006 proposed regulations requested comments on the application of the FEEP method to entities excluded from the scope of the 2006 proposed regulations. The Treasury Department and the IRS are still considering how section 987 should apply to excluded entities and request additional comments regarding the appropriate design of rules applying section 987 to excluded entities in light of the rules contained in these final regulations and the temporary regulations. Until regulations providing rules for applying section 987 with respect to such excluded entities are effective, the excluded entities must use a reasonable method to comply with section 987 and cannot rely on these final regulations.
A comment recommended allowing an owner of a section 987 QBU that has a relatively small amount of marked items to elect to not apply section 987 with respect to the QBU and instead to apply section 988 with respect to the items that would be considered marked items of the QBU if section 987 applied. The same comment recommended that the Treasury Department and the IRS consider providing such an election more generally without regard to the relative amount of marked items held by an eligible QBU. The Treasury Department and the IRS have determined that the proposed election would create substantial administrative difficulties for the IRS, particularly given that an electing QBU would maintain books and records in its functional currency but would determine tax consequences by reference to the functional currency of the owner. Accordingly, the recommendation to allow an election not to apply section 987 has not been adopted.
Under § 1.987–2(b)(2) of the 2006 proposed regulations, stock other than portfolio stock is not attributed to an eligible QBU even if it is reflected on the books and records of the eligible QBU. For this purpose, the 2006 proposed regulations provided that stock is portfolio stock if the owner of the eligible QBU owns (directly, indirectly, or constructively) less than 10 percent of the voting power or value of all classes of stock of the corporation. A comment recommended that this rule be based solely on value because voting power should not be a relevant factor in determining whether items of income, gain, deduction, and loss arising from stock are included in section 987 taxable income or loss. The Treasury Department and the IRS agree with this recommendation, which is reflected in § 1.987–2(b)(2).
A comment observed that the 2006 proposed regulations provide rules for attributing assets and liabilities, and items of income or expense, to an eligible QBU and that those rules should apply for purposes of sections 985, 987, and 989 to avoid inconsistencies across subpart J. Accordingly, § 1.989(a)–1(d)(3) is revised to provide that the principles of § 1.987–2(b) apply in determining whether an asset, liability, or item of income or expense is properly reflected on the books and records of a QBU.
To further enhance consistency, the definition of an eligible QBU in § 1.987–1(b)(3) is revised to cross-reference the QBU definition under § 1.989–1(a). The 1991 proposed regulations generally would have applied to a QBU within the
Under § 1.987–2(b)(3)(iii)(C) of the 2006 proposed regulations, if a principal purpose of recording (or failing to record) an item on the books and records of an eligible QBU was the avoidance of U.S. tax under section 987, the Commissioner could reallocate any item between or among the eligible QBU, its owner, and other persons, entities, or eligible QBUs. One relevant factor identified in the 2006 proposed regulations as indicating tax avoidance as a principal purpose of recording (or failing to record) an item on the books and records of an eligible QBU was the presence or absence of an item on such books and records that results in the taxpayer (or a person related to the taxpayer as defined in section 267(b) or 707(b)) having offsetting positions in the functional currency of a section 987 QBU. The “offsetting position” concern might arise, for example, when a home office borrows funds denominated in the functional currency of a section 987 QBU and then onlends those funds to its section 987 QBU. Since the intra-taxpayer loan is not recognized, the funding transaction booked to the home office will be a section 988 transaction and the cash booked to the section 987 QBU derived from the funding transaction will be subject to section 987. A comment recommended that the Treasury Department and the IRS restrict the parameters of the “offsetting position” factor, particularly in the context of banks.
As discussed in Part II.B of this preamble, these regulations do not apply to banks. Accordingly, this comment will be reconsidered when regulations applying section 987 to banks and other financial entities are developed. Outside of the financial entity context, the Treasury Department and the IRS have determined that the “offsetting position” factor in § 1.987–2(b)(3)(iii)(C) is necessary to prevent the use of transactions involving offsetting gains and losses to selectively recognize losses without recognition of gain. Accordingly, the recommendation to restrict the parameters of the “offsetting position” factor has not been adopted.
Several comments recommended that transactions entered into between two section 987 QBUs of the same taxpayer, or by a section 987 QBU and its home office, in the ordinary course of business should not be considered “transfers” that are taken into account in determining the amount of a remittance. These comments noted the complexity associated with tracking a large number of ordinary-course transactions and contended that such transactions were not appropriate occasions to recognize section 987 gain or loss.
The Treasury Department and the IRS have determined that it is not feasible to define the parameters of an ordinary-course exception to the definition of a transfer with sufficient clarity to avoid abuse and permit effective enforcement given the potentially high volume and variety of transactions between a section 987 QBU and its home office. More significantly, determining the net transfer to or from a section 987 QBU, without regard to whether transfers occur in the ordinary course of business, is essential for appropriately determining section 987 gain or loss under § 1.987–4 because all transfers affect the OFCNV of the section 987 QBU. Furthermore, the Treasury Department and the IRS have determined that the annual netting convention of § 1.987–5, which simplifies the calculation of a remittance relative to the 1991 proposed regulations by taking into account only the net transfer to or from a section 987 QBU during a taxable year, appropriately limits the extent to which ordinary course transactions between a section 987 QBU and its home office give rise to a remittance. Accordingly, the recommendation to include an ordinary-course exception to the definition of transfer has not been adopted.
A comment also recommended that the final regulations permit taxpayers to elect to treat disregarded sales of property and services in the ordinary course of business as regarded transactions. The Treasury Department and the IRS have determined that this recommendation, which would result in income or loss recognition on intra-taxpayer transactions, is inconsistent with the paradigm of section 987 and the entity classification regulations under section 7701. Accordingly, the recommendation has not been adopted.
Section 1.987–1(b)(2)(ii) of the 2006 proposed regulations allows a taxpayer to elect to treat all of its directly owned section 987 QBUs with the same functional currency as a single QBU for purposes of section 987. This rule, however, does not allow different members of a consolidated group to group their section 987 QBUs with the same currency into a single QBU. In the preamble to the 2006 proposed regulations, the Treasury Department and the IRS requested comments on whether a grouping election should be allowed with respect to section 987 QBUs owned by different members of a consolidated group and how this election should be technically effectuated.
Several comments recommended extending the grouping rules to corporations that file a consolidated return so that a consolidated group could make transfers among section 987 QBUs without causing a remittance. However, based on the comments received, the Treasury Department and the IRS have been unable to reconcile in a satisfactory manner the timing of section 987 gain or loss and section 987 taxable income or loss under the final regulations with the principles of § 1.1502–13, including separate entity accounting for consolidated group members. As a result, this recommendation has not been adopted in the final regulations. The Treasury Department and the IRS continue to welcome comments with specific recommendations regarding how grouping of section 987 QBUs owned by different consolidated group members could be achieved in a manner consistent with the consolidated return regulations.
A comment requested an election to group section 987 QBUs that are directly owned with section 987 QBUs that are indirectly owned through section 987 aggregate partnerships. The Treasury Department and the IRS have determined that allowing grouping of directly and indirectly owned section 987 QBUs would be inconsistent with the treatment of transactions between a partnership and its partner (and between eligible QBUs of the partnership and of the partner) as regarded transactions for Federal income tax purposes. Additionally, it is unclear how the treatment of directly and indirectly owned section 987 QBUs as a single section 987 QBU could be reconciled with the general requirement under sections 702 and 703 that a
A comment requested that an owner be permitted to elect to group less than all of its section 987 QBUs with the same functional currency. The Treasury Department and the IRS observe that it is possible for an owner to have section 987 gain with respect to some of its section 987 QBUs and section 987 loss with respect to other section 987 QBUs with the same functional currency. In light of this possibility, the Treasury Department and the IRS are concerned that the ability to group section 987 QBUs without the constraint of a consistency requirement for all section 987 QBUs with the same functional currency could inappropriately facilitate the recognition of section 987 losses coupled with the deferral of section 987 gains. Accordingly, the recommendation has not been adopted.
Section 1.987–4 of the 2006 proposed regulations provided a seven-step process for determining the unrecognized section 987 gain or loss of a section 987 QBU for a taxable year. Comments noted that this calculation did not take into account the effects of tax-exempt income and non-deductible expenses on a section 987 QBU's cash flows. The comments advised that this omission would introduce distortions into the calculation of unrecognized section 987 gain or loss for a taxable year since these items affect a section 987 QBU's balance sheet. In response to these comments, § 1.987–4(d) reflects additional steps in the calculation of unrecognized section 987 gain or loss that account for nondeductible expenses (Step 7) and tax-exempt income (Step 8). Step 7 also now explicitly accounts for foreign taxes claimed as a credit, which must be translated at the same rate at which such taxes were translated under section 986(a).
Comments indicated that the 2006 proposed regulations did not clearly specify whether the rules provided for determining section 987 taxable income or loss applied for purposes of determining the earnings and profits of a foreign corporation. Accordingly, § 1.987–3(a) clarifies that a foreign corporation that owns a section 987 QBU must apply § 1.987–3 in determining earnings and profits with respect to the section 987 QBU.
Section 1.987–4(a) of the 2006 proposed regulations required the determination of the net unrecognized section 987 gain or loss of a section 987 QBU by the owner annually. In addition, § 1.987–9 of the 2006 proposed regulations required the taxpayer to keep annual records that are sufficient to establish each section 987 QBU's section 987 gain or loss. A comment requested elimination of these annual calculations and recordkeeping requirements. The Treasury Department and the IRS remain of the view that the annual calculation and recordkeeping requirements are necessary for IRS examiners to verify taxpayer compliance with the final regulations. Based on its experience examining taxpayer positions that relate to events in prior years, the IRS has determined that contemporaneous recordkeeping and calculation requirements provide a significantly more reliable basis for verifying compliance than calculations performed years after the relevant events, which in many cases would be performed by individuals without direct access to the individuals most familiar with the underlying facts or responsible for producing and maintaining the records. Accordingly, the annual requirements have been retained.
Consistent with the 1991 proposed regulations, the 2006 proposed regulations required the owner of a section 987 QBU to determine the character and source of section 987 gain or loss for all purposes of the Code, including for determining the extent to which section 987 gain or loss gives rise to subpart F income. In particular, § 1.987–6(b)(2) of the 2006 proposed regulations required the owner to use the asset method under § 1.861–9T(g) in the year of a remittance to characterize and source section 987 gain or loss for all purposes by reference to the assets of the section 987 QBU.
A comment recommended an exception that would allow a taxpayer to elect to trace identified amounts of section 987 gain or loss to particular assets or liabilities and to characterize such gain or loss by reference to the income or expense derived (or to be derived) from such items. The Treasury Department and the IRS have determined that tracing section 987 gain or loss to particular assets and liabilities is inconsistent with the FEEP method, which aggregates and pools section 987 gain and loss for all assets and liabilities and for all years prior to a remittance. Accordingly, the Treasury Department and the IRS decline to adopt this comment.
A comment questioned whether section 987(3), which refers to sourcing section 987 gain or loss by reference to post-1986 accumulated earnings, provided a sufficient basis for characterizing section 987 gain or loss as subpart F income. The comment recommended against treating section 987 gain as subpart F income but also recommended that, if it were so treated, the final regulations provide a business needs exception similar to that under section 954(c)(1)(D). Another comment acknowledged the Treasury Department's authority under section 989(c)(5) to characterize section 987 gain as subpart F income but questioned the consistency of the requirement in the 2006 proposed regulations to use the asset method of § 1.861–9T to characterize section 987 gain or loss with the reference in section 987(3) to sourcing section 987 gain or loss by reference to post-1986 accumulated earnings. The comment recommended that the character and source of section 987 gain or loss be determined by reference to post-1986 accumulated earnings.
The Treasury Department and the IRS have determined that sourcing and characterizing section 987 gain or loss with direct reference to post-1986 accumulated earnings would give rise to substantial complexity and compliance burdens, including the need to track earnings of a section 987 QBU in separate categories over a long period of time. This approach also presents conceptual difficulties, given that section 987 gain or loss arises from marked assets and liabilities rather than accumulated earnings, and allows for planning opportunities if there are deficits in post-1986 accumulated earnings. The Treasury Department and the IRS continue to believe that, as noted in the preamble to the 2006 proposed regulations, the average tax book value of assets is a reasonable proxy for post-1986 accumulated earnings in the context of section 987. For these reasons, the Treasury Department and the IRS decline to adopt this recommendation. Pursuant to sections 987(3) and 989(c)(5), these regulations follow the approach of the 2006 proposed regulations in requiring the owner to use the asset method of § 1.861–9T(g) to characterize and source
Additionally, given the significant symmetry (other than timing) between the FEEP paradigm and section 988, the Treasury Department and the IRS have determined that, for purposes of determining the excess of foreign currency gains over foreign currency losses characterized as foreign personal holding company income under section 954(c)(1)(D), it is appropriate for taxpayers to treat section 987 gain or loss that is characterized by reference to assets that give rise to subpart F income as foreign currency gain or loss attributable to section 988 transactions not directly related to the business needs of the controlled foreign corporation (CFC). This policy, which has been adopted in § 1.987–6(b)(3), will allow taxpayers to offset a section 987 net loss characterized by reference to assets that give rise to subpart F income against a section 988 net gain, and vice versa, in determining subpart F income. Section 987 gain or loss characterized by reference to assets that give rise to subpart F income is treated as attributable to section 988 transactions not directly related to the business needs of the CFC because the Treasury Department and the IRS have determined that using the asset method of § 1.861–9T(g) to characterize and source section 987 gain or loss effectively carries out the purpose of the business needs exclusion of section 954(c)(1)(D). In particular, because the asset method characterizes section 987 gain or loss based on whether assets give rise to subpart F income, section 987 gain or loss will not enter into the determination of foreign personal holding company income to the extent assets of the section 987 QBU do not give rise to subpart F income.
The 2006 proposed regulations applied to all partnerships based on an approach (the aggregate approach) that treated a partnership as an aggregate of its partners, rather than as an entity separate from its partners. As explained in the preamble to the 2006 proposed regulations, the Treasury Department and the IRS proposed the aggregate approach because it appropriately determines section 987 gain or loss with respect to partnership assets and liabilities by reference to the functional currencies of the partners that ultimately bear the economic exposure to fluctuations in the exchange rate between their own functional currency and the functional currency of the activities of the partnership. Accordingly, under §§ 1.989(a)–1(b)(2)(i) of the 2006 proposed regulations, a partnership itself was not treated as a section 987 QBU, but certain activities of a partnership that constituted a trade or business could qualify as a QBU that is an eligible QBU of a partner. Thus, a partner generally was treated as owning an eligible QBU consisting of a share of the assets and liabilities held in the partnership's trade or business. Such an eligible QBU could qualify as a section 987 QBU if it had a functional currency different from that of the partner.
Comments requested that the Treasury Department and the IRS reconsider this aggregate approach and that final regulations instead treat a partnership as a separate entity with its own functional currency. The comments generally were premised on the concern that the aggregate approach was overly complex and that minority partners would not have the power to compel a partnership to provide them with the information needed to make the calculations required under the aggregate approach. One comment acknowledged the economic rationale for the aggregate approach but, in light of its complexity, recommended that it apply only in cases in which a partner's interest in partnership capital or profits exceeds a certain threshold, such as 10 percent.
The Treasury Department and the IRS acknowledge the concerns expressed about the complexity of applying the aggregate approach in the context of partnerships with partners that are unrelated to each other. Nonetheless, consistent with the comment recommending the aggregate approach for partners with substantial partnership interests, the Treasury Department and the IRS have determined that it is feasible to administer the aggregate approach with respect to a partnership that is wholly owned by related persons. Moreover, adopting the aggregate approach in that context is important for preventing planning opportunities that would arise if the interposition of a partnership within a group of related parties could significantly alter the results that the group otherwise would experience under section 987 without meaningfully altering the group's economic position. Accordingly, the final section 987 regulations retain the aggregate approach of the 2006 proposed regulations only for so-called “section 987 aggregate partnerships,” which are defined in § 1.987–1(b)(5) as partnerships for which all of the capital and profits interests are owned, directly or indirectly, by persons that are related within the meaning of section 267(b) or 707(b). The final regulations reflect a conforming amendment to the definition of a QBU at § 1.989(a)–1(b)(2)(i)(C), which now provides that a partnership, other than a section 987 aggregate partnership, is a QBU.
The 2006 proposed regulations provided a rule for determining a partner's share of the assets and liabilities of an eligible QBU owned indirectly through a partnership. Specifically, § 1.987–7(b) provided that a partner's share of assets and liabilities reflected on the books and records of the eligible QBU must be determined in a manner consistent with how the partners have agreed to share the economic benefits and burdens corresponding to partnership assets and liabilities, taking into account the rules and principles of subchapter K. One comment noted that this rule for allocating assets and liabilities to a partner's indirectly owned section 987 QBU was ambiguous and that the rules and principles of subchapter K do not provide sufficient guidance in this regard. Accordingly, as discussed in the preamble to the temporary regulations, the temporary regulations provide more specific rules for determining a partner's share of the assets and liabilities reflected on the books and records of an eligible QBU owned indirectly through a section 987 aggregate partnership.
As previously discussed in this section, comments recommended that the Treasury Department and the IRS consider adopting an entity approach with respect to partnerships. Under the recommended entity approach, a partnership would have its own functional currency and would apply section 987 with respect to each of its section 987 QBUs to determine its taxable income or loss and section 987 gain or loss in that functional currency. Each partner then would be required to take into account its share of the section 987 taxable income or loss and section 987 gain or loss of the partnership, translated into the partner's functional currency at the average exchange rate for the partner's taxable year.
Although the Treasury Department and the IRS have determined that the aggregate approach is appropriate for applying section 987 to section 987 aggregate partnerships, the Treasury Department and the IRS anticipate that regulations for applying section 987 to other partnerships (non-aggregate partnerships) will be developed under a separate project and may adopt a different approach. Accordingly, the
Under the 2006 proposed regulations, a section 987 QBU terminates when the activities of the section 987 QBU cease, substantially all of the assets of the section 987 QBU are transferred to its owner, a CFC owner of a section 987 QBU ceases being a CFC, or the owner of the section 987 QBU ceases to exist in a transaction other than certain liquidations and reorganizations described in section 381(a). The preamble to the 2006 proposed regulations requested comments on whether transfers of some or all of the assets of a section 987 QBU from one member of a consolidated group to another member of the group should result in a remittance or termination, respectively. Several comments supported a rule under which a section 351 transfer of some or all of the assets of a section 987 QBU to other members of a consolidated group would not cause a remittance or termination where those assets continue to be held in a section 987 QBU following the transaction.
The Treasury Department and the IRS remain of the view that a transfer of substantially all of a section 987 QBU's assets and liabilities under section 351 should result in a termination under § 1.987–8(b)(2) because the owner ceases to be subject to section 987 with respect to the section 987 QBU and has no successor in a section 381(a) transaction. Nonetheless, the Treasury Department and the IRS agree that it is appropriate in certain circumstances to defer section 987 gain or loss that otherwise would be recognized as a result of certain transactions, including terminations, that result in deemed transfers from a section 987 QBU where some or all of the assets of the section 987 QBU continue to be reflected on the books and records of a section 987 QBU in the same controlled group. Additionally, the Treasury Department and the IRS have determined that combinations and separations of section 987 QBUs of the same owner generally should not result in recognition of section 987 gain or loss. As discussed in the preamble to the temporary regulations, the temporary regulations provide rules under which certain section 987 gain or loss that otherwise would be recognized upon a combination, separation, termination, or other event with respect to a section 987 QBU is deferred and recognized upon a subsequent event to the extent assets of the section 987 QBU continue to be reflected on the books and records of a section 987 QBU in the same controlled group. Under these rules, a section 351 transfer of some or all of the assets of a section 987 QBU within a consolidated group generally would not result in recognition of section 987 gain or loss, provided the transferred assets continue to be reflected on the books and records of a section 987 QBU.
Comments recommended eliminating the rule in the 2006 proposed regulations under which a section 987 QBU terminates upon its owner ceasing to be a CFC. The comments indicated that the rule is inconsistent with the policy of subpart F and section 1248. One of the comments questioned the authority under subpart J for such a rule. A comment also recommended that the final regulations eliminate the rule under which a section 987 QBU terminates when it is acquired by a non-CFC from a CFC owner in a reorganization in which the CFC owner goes out of existence but has a successor under section 381(a). The Treasury Department and the IRS acknowledge that the policy concern motivating these rules pertains primarily to situations in which a section 987 QBU ceases to be owned by a CFC but continues to be owned by related persons within the meaning of section 267(b). Accordingly, consistent with section 989(c)(5), a section 987 QBU will terminate under § 1.987–8(b)(3), (b)(4) and (c) only in that circumstance.
Comments indicated that it was unclear under the 2006 proposed regulations whether a check-the-box election to treat a foreign disregarded entity that legally owns a section 987 QBU as a corporation for U.S. tax purposes would cause the section 987 QBU to terminate. To provide greater clarity,
Under the 2006 proposed regulations, a section 987 QBU terminates when its activities cease, such that it no longer meets the definition of an eligible QBU under § 1.987–1(b)(3). For administrative convenience, § 1.987–8(b)(1) reflects a new provision allowing the owner of a section 987 QBU that ceases its trade or business to continue to treat the section 987 QBU as a section 987 QBU for a reasonable period during the wind-up of the trade or business, which period may not exceed two years from the date the section 987 QBU ceases its activities carried on for profit.
Under the 2006 proposed regulations, a taxpayer that used a reasonable method to comply with section 987 prior to transitioning to the final regulations could choose between the deferral transition method and the fresh start transition method. The deferral transition method generally preserved section 987 gain or loss determined under the taxpayer's prior method, whereas the fresh start method did not.
Under the deferral transition method, a taxpayer would determine section 987 gain or loss under the taxpayer's prior method as if all section 987 QBUs of the taxpayer terminated on the last day of the taxable year preceding the transition date. Such section 987 gain or loss was not recognized but rather was considered as net unrecognized section 987 gain or loss of new section 987 QBUs for purposes of applying section 987 to the taxable year that begins on the transition date. The owner of a section 987 QBU that was deemed terminated under this rule was treated as having transferred all of the assets and liabilities attributable to such section 987 QBU to the new section 987 QBU on the transition date. Exchange rates for translating the amounts of assets and liabilities transferred to the
Under the fresh start transition method, the same deemed transactions would be deemed to occur as under the deferral transition method, but no section 987 gain or loss would be determined upon the deemed termination. Exchange rates for translating the amounts of assets and liabilities deemed transferred to the new section 987 QBU were determined with reference to the historic spot rates for such assets and liabilities without adjustment. Accordingly, section 987 gain or loss determined under the owner's prior method was not taken into account. Except to the extent of any previously recognized section 987 gain or loss, the effect of the fresh start method is as if the assets and liabilities on the books and records of a section 987 QBU on the transition date had been the only assets and liabilities held by the QBU from its inception.
The Treasury Department and the IRS received several comments recommending changes to the transition rules under § 1.987–10 of the 2006 proposed regulations. One comment recommended that the deferral transition method be eliminated. The comment stated that the availability of two transition methods seemed overly generous to taxpayers and that the fresh start method was sufficient. The comment further noted that the effect of the elections made by taxpayers would be very one-sided in a manner detrimental to the fisc. Another comment recommended that taxpayers be permitted to elect a “true fresh start” method that would translate all assets and liabilities on the first opening balance sheet after the transition at the spot rate on the date of transition and therefore disregard any section 987 gain or loss attributable to the assets and liabilities of the QBU for periods prior to the transition date.
The Treasury Department and the IRS agree with the comment that suggested that the fresh start method is sufficient and that the availability of an election between two different transition methods is unnecessary and detrimental to the fisc. By requiring the translation of assets and liabilities of transitioning QBUs at historic rates, unlike the “true fresh start” method suggested by a comment, the fresh start transition method appropriately takes into account the applicability of section 987 prior to the issuance of final regulations. Allowing an election to use the deferral method would allow taxpayers with substantial overall section 987 losses determined under their prior method, which may not correspond to economic losses, to preserve those losses while taxpayers with substantial overall section 987 gains determined under their prior method could avoid taking some of those gains into account by using the fresh start method. Such an election effectively would operate as a one-time election for certain taxpayers to reduce Federal income tax liability. Additionally, the Treasury Department and the IRS have determined that there would be considerable administrative difficulty, as well as potential for opportunistic planning, associated with determining the appropriate translation rates for transitioning under the deferral method from a section 987 method other than the method of the 1991 proposed regulations. Accordingly, the final regulations do not include an election to use the deferral method. Additionally, the final regulations do not include an election to use a “true fresh start” method, since that method would fail to account in any way for the applicability of section 987 prior to the transition date with respect to assets and liabilities held by a section 987 QBU on the transition date.
A comment recommended that the final regulations provide further guidance on the application of the fresh start method where a taxpayer cannot trace historic spot exchange rates. In response to this comment, § 1.987–10(b)(3) provides that, if a taxpayer cannot reliably determine the historic rate for a particular asset or liability, the historic rate must be determined based on reasonable assumptions consistently applied. In addition, the general rules of § 1.987–1(c)(3)(i)(A) and (D) ease this burden by providing that the historic rate for assets and liabilities is the relevant yearly average exchange rate, rather than the spot rate.
A comment recommended that taxpayers be permitted to elect retroactively to apply the final regulations to all open years. Such an election effectively would operate as one-time election to reduce Federal income tax liability. Additionally, consistent with the discussion in Part II.K of this preamble about the need for contemporaneous recordkeeping, the Treasury Department and the IRS have determined that retroactive application of the final regulations would present significant administrative and compliance difficulties, given that it would be necessary in many cases to make determinations under the final regulations based on facts that may not be readily ascertainable or verifiable in hindsight. Accordingly, this recommendation has not been adopted.
A comment asserted that taxpayers that recognized section 987 gain or loss under the principles of the 1991 proposed regulations may be treated unfairly relative to taxpayers that did not follow those proposed regulations. To address this perceived unfairness, the comment recommended that taxpayers be permitted to elect to include a section 481(a) adjustment to account for the difference between the amount of section 987 gain or loss that was taken into account under the taxpayer's prior method and the amount that would have been determined under the method in the final regulations. As an initial matter, it is not evident to the Treasury Department and the IRS that any inequity could result from a taxpayer's chosen method of applying section 987, given that, in the absence of applicable regulations, taxpayers have been permitted to apply section 987 using any reasonable method. Regardless of any perceived inequity, however, as discussed earlier in this Part II.O of the preamble, the Treasury Department and the IRS have determined that the fresh start transition method is the appropriate method for transitioning section 987 QBUs to the final regulations. Under the fresh start transition method, unrecognized section 987 gain or loss determined under a prior section 987 method is not taken into account, and marked assets and liabilities reflected on a section 987 QBU's balance sheet on the transition date are translated using a historic rate. These rules, together with the requirement under § 1.987–10(d) to adjust unrecognized section 987 gain or loss to prevent double counting, have a similar effect as allowing a section 481(a) adjustment with respect to section 987 gain or loss arising from assets and liabilities reflected on a section 987 QBU's transition date balance sheet. Additionally, it is unclear how a section 481(a) adjustment could apply with respect to section 987 gain or loss arising from assets and liabilities that are no longer on the balance sheet on the transition date, absent a requirement to redetermine section 987 gain or loss as if the final regulations had applied from the inception of the QBU. For the reasons described in Part II.K of this preamble, the Treasury Department and the IRS have determined that such a requirement would be inadministrable. Furthermore, the Treasury Department and the IRS are concerned that an election to compute a full section 481(a) adjustment, like an election to use the
The Treasury Department and the IRS recognize that certain taxpayers have adopted a section 987 method based on a reasonable application of the 2006 proposed regulations (2006 method). Taxpayers that adopted the 2006 method generally already transitioned to that method in accordance with the principles § 1.987–10 of the 2006 proposed regulations. Because the final regulations adopt the 2006 proposed regulations without fundamental changes, it is not necessary or appropriate for taxpayers to transition from the 2006 method to the final regulations under the fresh start method. However, § 1.987–10(c)(2) provides rules clarifying how net unrecognized section 987 gain or loss with respect to a QBU that was subject to the 2006 method is determined under the final regulations. Additionally, because the 2006 proposed regulations required the use of a spot rate for the historic rate and the final regulations specify as a general rule that the historic rate is the yearly average exchange rate, § 1.987–10(c)(3) permits taxpayers to use historic rates determined under their prior 2006 method for assets and liabilities reflected on the balance sheet of a transitioning QBU on the transition date.
Several elections have been included in the final regulations to mitigate potential complexity or administrative burden associated with complying with these regulations. Section 1.987–1(g) provides rules for making elections. As under the 2006 proposed regulations, elections must be made by the owner and must be made for the first taxable year in which the election is relevant in determining the section 987 taxable income or loss or section 987 gain or loss of the section 987 QBU. Elections may not be revoked or changed without the consent of the Commissioner or his delegate. A revocation will be considered if the taxpayer can demonstrate significantly changed circumstances or other circumstances that demonstrate a substantial non-tax business reason for revoking the election.
A comment recommended that the final regulations allow a taxpayer, without the consent of the Commissioner, to adopt or change the translation conventions for any section 987 QBU acquired from an unrelated person in a transaction that does not cause the QBU to terminate. The Treasury Department and the IRS have determined that requiring Commissioner consent to change an election in this circumstance promotes the ability of the IRS to administer the final regulations and does not create an undue burden. Accordingly, this recommendation has not been adopted.
With one exception, the elections under the final regulations are made on a QBU-by-QBU basis. As provided under the 2006 proposed regulations and described in Part II.H of this preamble, an owner must make the grouping election described in § 1.987–1(b)(2)(ii) with respect to all of its section 987 QBUs that have the same functional currency.
The 2006 proposed regulations described elections made under section 987 as methods of accounting but provided procedures for making and revoking such elections that were inconsistent with treating the elections as methods of accounting. This inconsistency is resolved in the final regulations, which do not follow the 2006 proposed regulations in identifying all section 987 elections as methods of accounting and clarify at § 1.987–1(g)(4) that an election under section 987 is not governed by the general rules concerning changes in methods of accounting.
Under § 1.987–1(f) of the 2006 proposed regulations, an election was made by attaching a statement to the timely filed tax return for the first taxable year in which the owner intends the election to be effective. If the owner failed to make an election in a timely manner, the owner was considered to have satisfied the timeliness requirement if (1) the owner was able to demonstrate that the failure was due to reasonable cause and not willful neglect; and (2) once the owner became aware of the failure, the owner attached the election as well as a written statement setting forth the reasons for the failure to timely comply to an amended tax return. The Director of Field Operations had 120 days following the filing to respond if it determined that the failure to comply was not due to reasonable cause or if additional time was needed to make a determination. If the Director did not respond to the taxpayer within 120 days of filing, the owner was deemed to have demonstrated that such failure to timely file was due to reasonable cause.
The Treasury Department and the IRS have determined, in part based on the experience of the IRS in administering other regulations, that the procedures described in the 2006 proposed regulations may inappropriately shift to the IRS a burden that arises in the first instance as a result of a taxpayer's failure to make a timely election. Accordingly, those procedures are not included in the final regulations, and taxpayers who fail to make a timely election may seek relief in accordance with the general rules described in § 301.9100–1 for requesting an extension of time to make an election.
The final regulations reflect other modifications to the language and structure of the 2006 proposed regulations, as well as the inclusion of additional examples, to enhance clarity. The Treasury Department and the IRS do not intend these changes to be interpreted as substantive changes to the 2006 proposed regulations.
Certain IRS regulations, including these, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory assessment is not required. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities within the meaning of section 601(6) of the Regulatory Flexibility Act (5 U.S.C. chapter 6). Accordingly, a regulatory flexibility analysis is not required. This certification is based on the fact that these regulations will primarily affect U.S. corporations that have foreign operations, which tend to be larger businesses. Pursuant to section 7805(f) of the Internal Revenue Code, the NPRM preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.
The principal authors of these final regulations are Mark E. Erwin, Steven D. Jensen and Sheila Ramaswamy of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is amended as follows:
26 U.S.C. 987, 989(c), and7805 * * *
(g) * * *
(2) * * *
(ii) * * *
(A) * * *
(
(vi)
(a)
(b)
(c)
(d)
(ii)
(A)
(B)
(iii)
(2)
(e)
(2)
(3)
(4)
(A)
(B)
(C)
(ii)
(iii)
(f)
(i)
(ii)
(iii)
(g)
This section lists captioned paragraphs contained in §§ 1.987–1 through 1.987–11.
(a) In general.
(b) Scope of section 987 and definitions.
(1) Taxpayers subject to section 987.
(2) Definition of section 987 QBU.
(3) Definition of an eligible QBU.
(4) Definition of owner.
(5) Section 987 aggregate partnership.
(6) [Reserved].
(7) Examples illustrating paragraph (b) of this section.
(c) Exchange rates.
(1) Spot rate.
(2) Yearly average exchange rate.
(3) Historic rate.
(d) Marked item.
(e) Historic item.
(f) [Reserved].
(g) Elections.
(1) In general.
(2) Exceptions to the general rules.
(3) Manner of making elections.
(4) No change in method of accounting.
(5) Revocation of an election.
(a) Scope and general principles.
(b) Attribution of items to an eligible QBU.
(1) General rules.
(2) Exceptions for non-portfolio stock, interests in partnerships, and certain acquisition indebtedness.
(3) Adjustments to items reflected on the books and records.
(4) Assets and liabilities of a section 987 aggregate partnership or DE that are not attributed to an eligible QBU.
(c) Transfers to and from section 987 QBUs.
(1) In general.
(2) Disregarded transactions.
(3) Transfers of assets to and from section 987 QBUs owned through section 987 aggregate partnerships.
(4) Transfers of liabilities to and from section 987 QBUs owned through section 987 aggregate partnerships.
(5) Acquisitions and dispositions of interests in DEs and section 987 aggregate partnerships.
(6) Changes in form of ownership.
(7) Application of general tax law principles.
(8) Interaction with § 1.988–1(a)(10).
(9) [Reserved].
(10) Examples.
(d) Translation of items transferred to a section 987 QBU.
(1) Marked items.
(2) Historic items.
(a) In general.
(b) Determination of each item of income, gain, deduction, or loss in the section 987 QBU's functional currency.
(1) In general.
(2) Translation of items of income, gain, deduction, or loss that are denominated in a nonfunctional currency.
(3) Determination in the case of a section 987 QBU owned through a section 987 aggregate partnership.
(4) [Reserved].
(c) Translation of items of income, gain, deduction, or loss of a section 987 QBU into the owner's functional currency.
(1) In general.
(2) Exceptions.
(3) Adjustments to COGS required under the simplified inventory method.
(d) [Reserved].
(e) Examples.
(a) In general.
(b) Calculation of net unrecognized section 987 gain or loss.
(c) Net accumulated unrecognized section 987 gain or loss for all prior taxable years.
(1) In general.
(2) [Reserved].
(d) Calculation of unrecognized section 987 gain or loss for a taxable year.
(1) Step 1: Determine the change in the owner functional currency net value of the section 987 QBU for the taxable year.
(2) Step 2: Increase the amount determined in step 1 by the amount of assets transferred from the section 987 QBU to the owner.
(3) Step 3: Decrease the amount determined in steps 1 and 2 by the amount of assets transferred from the owner to the section 987 QBU.
(4) Step 4: Decrease the amount determined in steps 1 through 3 by the amount of liabilities transferred from the section 987 QBU to the owner.
(5) Step 5: Increase the amount determined in steps 1 through 4 by the amount of liabilities transferred from the owner to the section 987 QBU.
(6) Step 6: Decrease or increase the amount determined in steps 1 through 5 by the
(7) Step 7: Increase the amount determined in steps 1 through 6 by any expenses that are not deductible in computing the section 987 taxable income or loss of the section 987 QBU for the taxable year.
(8) Step 8: Decrease the amount determined in steps 1 through 7 by the amount of any tax-exempt income.
(e) Determination of the owner functional currency net value of a section 987 QBU.
(1) In general.
(2) Translation of balance sheet items into the owner's functional currency.
(f) [Reserved].
(g) Examples.
(a) Recognition of section 987 gain or loss by the owner of a section 987 QBU.
(b) Remittance proportion.
(c) Remittance.
(1) Definition.
(2) Day when a remittance is determined.
(3) Termination.
(d) Aggregate of all amounts transferred from the section 987 QBU to the owner for the taxable year.
(e) Aggregate of all amounts transferred from the owner to the section 987 QBU for the taxable year.
(f) Determination of owner's adjusted basis in transferred assets.
(1) In general.
(2) Marked asset.
(3) Historic asset.
(g) Example.
(a) Ordinary income or loss.
(b) Character and source of section 987 gain or loss.
(1) In general.
(2) Method required to characterize and source section 987 gain or loss.
(3) Coordination with section 954.
(c) Examples.
(a) In general.
(b) [Reserved].
(c) Coordination with subchapter K.
(a) Scope.
(b) In general.
(1) Trade or business ceases.
(2) Substantially all assets transferred.
(3) Owner no longer a CFC.
(4) Owner ceases to exist.
(c) Transactions described in section 381(a).
(1) Liquidations.
(2) Reorganizations.
(d) [Reserved].
(e) Effect of terminations.
(f) Examples.
(a) In general.
(b) Supplemental information.
(c) Retention of records.
(d) Information on a dedicated section 987 form.
(a) Scope.
(b) Fresh start transition method.
(1) In general.
(2) Application of § 1.987–4.
(3) Determination of historic rate.
(4) Example.
(c) Transition of section 987 QBUs that applied the method set forth in the 2006 proposed section 987 regulations.
(1) In general.
(2) Application of § 1.987–4.
(3) Use of prior historic rate.
(4) Example.
(d) Adjustments to avoid double counting.
(e) Reporting.
(1) In general.
(2) Attachments not required where information is reported on a form.
(a) In general.
(b) Application of these regulations to taxable years beginning after December 7, 2016.
(c) Transition date.
(a)
(b)
(ii)
(iii) [Reserved].
(2)
(ii)
(B)
(3)
(ii)
(4)
(i)
(ii)
(5)
(A) All of the interests in partnership capital and profits are owned, directly or indirectly, by persons related to each other within the meaning of sections 267(b) or 707(b). For purposes of this paragraph (b)(5), ownership of an interest in partnership capital or profits is determined in accordance with the rules for constructive ownership provided in section 267(c), other than section 267(c)(3); and
(B) The partnership has one or more eligible QBUs, at least one of which would be a section 987 QBU with respect to a partner if the partner owned the eligible QBU directly.
(ii)
(iii)
(6) [Reserved].
(7)
(i)
(ii)
(B) Holding the stock of FC and pounds and servicing a liability does not constitute a trade or business within the meaning of § 1.989(a)–1(c). Because the activities of DE1 do not constitute a trade or business within the meaning of § 1.989(a)–1(c), such activities are not an eligible QBU. In addition, pursuant to paragraph (b)(3)(ii) of this section, DE1 itself is not an eligible QBU. As a result, neither DE1 nor its activities qualify as a section 987 QBU of U.S. Corp. Therefore, neither the activities of DE1 nor DE1 itself is subject to section 987. For the foreign currency treatment of payments on DE1's pound-denominated liability, see § 1.988–2(b).
(i)
(ii)
(B) Because Business A and Business B are eligible QBUs with functional currencies that are different than the functional currency of U.S. Corp, Business A and Business B are section 987 QBUs (as defined in paragraph (b)(2) of this section).
(C) The Business C eligible QBU has the same functional currency as U.S. Corp. Therefore, the Business C eligible QBU is not a section 987 QBU.
(i)
(ii)
(B) Business A and Business B constitute two separate eligible QBUs, each with the euro as its functional currency. Accordingly, Business A and Business B are section 987 QBUs of U.S. Corp. U.S. Corp may elect to treat Business A and Business B as a single section 987 QBU pursuant to paragraph (b)(2)(ii)(A) of this section. If such election is made, pursuant to paragraph (b)(4)(i) of this section, U.S. Corp would be the direct owner
(i)
(ii)
(B) Because Business A and Business B are eligible QBUs with different functional currencies than Y, the portions of Business A and Business B allocated to Y under § 1.987–7 are section 987 QBUs of Y.
(C) Because the Business A eligible QBU has a different functional currency than CFC, the portion of Business A that is allocated to CFC under § 1.987–7 is a section 987 QBU, and CFC and its section 987 QBU are subject to section 987. Because the Business B eligible QBU has the same functional currency as CFC, the portion of Business B that is allocated to CFC under § 1.987–7 is not a section 987 QBU of CFC.
(i)
(ii)
(c)
(1)
(ii)
(B) [Reserved].
(iii)
(2)
(3)
(A)
(B)
(C)
(D)
(E) [Reserved].
(ii)
(iii)
(iv)
(d)
(1) Is denominated in, or determined by reference to, the functional currency of the section 987 QBU, is not a section 988 transaction of the section 987 QBU, and would be a section 988 transaction if such item were held or entered into directly by the owner of the section 987 QBU;
(2) Is a prepaid expense or a liability for an advance payment of unearned income, in either case having an original term of one year or less on the date the prepaid expense or liability for an advance payment of unearned income arises; or
(3) [Reserved].
(e)
(f) [Reserved].
(g)
(i) May be made separately for each section 987 QBU;
(ii) Are made by the owner of the section 987 QBU (as defined in paragraph (b)(4) of this section); and
(iii) Must be made for the first taxable year in which the election is relevant in determining the section 987 taxable income or loss, or section 987 gain or loss, of the section 987 QBU and in which the regulations implementing the election are applicable with respect to the section 987 QBU.
(2)
(A)
(B) [Reserved].
(ii)
(3)
(A)
(
(
(B)
(
(
(C)
(
(
(D)
(ii)
(4)
(5)
(a)
(b)
(2)
(i) Stock of a corporation (whether domestic or foreign), other than stock of a corporation reflected on the books and records (within the meaning of paragraph (b)(1) of this section) of an eligible QBU if the owner of the eligible QBU owns less than 10 percent of the total value of all classes of stock of such corporation. For this purpose, section 318(a) applies in determining ownership, except that in applying section 318(a)(2)(C), the phrase “10 percent” is used instead of the phrase “50 percent.”
(ii) An interest in a partnership (whether domestic or foreign).
(iii) A liability that was incurred to acquire stock described in paragraph (b)(2)(i) of this section or that was incurred to acquire a partnership interest described in paragraph (b)(2)(ii) of this section.
(iv) Income, gain, deduction, or loss arising from the items described in paragraphs (b)(2)(i) through (iii) of this section. For example, a section 951 inclusion with respect to stock of a foreign corporation described in paragraph (b)(2)(i) of this section shall not be considered to be on the books and records of an eligible QBU.
(3)
(ii)
(A) For a significant and bona fide business purpose;
(B) In a manner that is consistent with the economics of the underlying transaction;
(C) In accordance with generally accepted accounting principles (or similar comprehensive accounting standard);
(D) In a manner that is consistent with the treatment of similar items from year to year;
(E) In accordance with accepted conditions or practices in the particular trade or business of the eligible QBU;
(F) In a manner that is consistent with an explanation of existing internal accounting policies that is evidenced by documentation contemporaneous with the timely filing of a Federal income tax return for the taxable year; and
(G) As a result of a transaction between legal entities (for example, the transfer of an asset or the assumption of a liability), even if such transaction is not regarded for Federal income tax purposes (for example, a transaction between a DE and its owner).
(iii)
(A) The presence or absence of an item on the books and records that is the result of one or more transactions that are transitory, for example, due to a circular flow of cash or other property;
(B) The presence or absence of an item on the books and records that is the result of one or more transactions that do not have substance;
(C) The presence or absence of an item on the books and records that results in the taxpayer (or a person related to the taxpayer within the meaning of section 267(b) or section 707(b)) having offsetting positions with respect to the functional currency of a section 987 QBU; and
(D) The absence of any or all of the factors listed in paragraph (b)(3)(ii) of this section.
(4)
(c)
(2)
(ii)
(iii)
(3)
(ii)
(4)
(ii)
(5)
(6)
(7)
(8)
(9) [Reserved].
(10)
(ii)
(B) As a result of the disregarded transaction, the €100 is reflected on the books and records of Business A. Therefore, X is treated as transferring €100 to its Business A section 987 QBU for purposes of section 987. This transfer is taken into account in determining the amount of any remittance for the taxable year under § 1.987–5(c). See § 1.988–1(a)(10)(ii) for the application of section 988 to X as a result of the transfer of non-functional currency to its section 987 QBU.
(ii)
(ii)
(B) As a result of the disregarded transaction, the equipment ceases to be reflected on the books and records of Business A and becomes reflected on the books and records of Business B. Therefore, the Business A section 987 QBU is treated as transferring the equipment to X, and X is subsequently treated as transferring such equipment to the Business B section 987 QBU.
(C) Additionally, as a result of the disregarded transaction, the yen currency ceases to be reflected on the books and records of Business B and becomes reflected on the books and records of Business A. Therefore, the Business B section 987 QBU is treated as transferring the yen to X, and X is subsequently treated as transferring such yen from X to the Business A section 987 QBU. The transfers among Business A, Business B and X are taken into account in determining the amount of any remittance for the taxable year under § 1.987–5(c).
(ii)
(B) In connection with Business A, DE1 licenses intangible property to both DE2 and X. X enters into the license agreement in a transaction other than in its capacity as a partner of P and, therefore, the license is considered as occurring between P and one who is not a partner within the meaning of section 707(a). X uses the intangible property in its own trade or business in the U.S. DE2 uses the intangible property in Business B. Pursuant to the license agreement, X and DE2 pay a €30 and a €50 royalty, respectively, to DE1.
(ii)
(B) The license from DE1 to DE2 is not regarded for Federal income tax purposes (because it is an interbranch agreement) and, as a result, royalty payments under the license are disregarded transactions. Thus, pursuant to paragraph (c)(2)(iii) of this section, DE1's receipt of the royalty pursuant to the license agreement does not give rise to
(C) The €30 royalty payment from X to DE1 is regarded for Federal income tax purposes (because it is a payment from a partnership to a separate entity). Accordingly, the royalty payment is not a disregarded transaction for purposes of this paragraph (c) and is therefore not treated as a transfer of an asset from an owner to a section 987 QBU. As a result, the payment is not taken into account in determining the amount of any remittance for the taxable year under § 1.987–5(c). Instead, the payment gives rise to an item of income and deduction that must be taken into account in computing section 987 taxable income or loss of Business A pursuant to § 1.987–3.
(B) Z contributes cash to P in exchange for a 20 percent interest in the capital and profits of P. The cash Z contributes to P is used in Business A and is reflected on Business A's books and records.
(ii)
(B) Following Z's acquisition of a 20 percent interest in P, P remains a section 987 aggregate partnership because X, Y and Z own all the interests in partnership capital and profits; X, Y, and Z are related within the meaning of section 267(b); and the requirements of § 1.987–1(b)(5)(i)(B) are satisfied. Z acquires a 20 percent allocable share of the assets and liabilities of Business A, as determined under § 1.987–7. Under § 1.987–1(b)(5)(ii), the assets and liabilities of Business A allocated to Z are a section 987 QBU of Z (because Z becomes an indirect owner of Business A and Z and Business A have different functional currencies).
(C) As a result of Z's contribution of cash to Business A, through its contribution to P, each of X, Y, and Z are allocated a share of that Business A asset. Accordingly, under § 1.987–2(c)(5), Z is treated as contributing its allocable share of the cash to its Business A section 987 QBU. In addition, Z is treated as transferring X's and Y's respective allocable shares of the cash to X and Y, and X and Y are subsequently treated as transferring that cash to their respective Business A section 987 QBUs.
(D) In addition, as a result of Z's acquisition of its interest in P and Z's consequent acquisition of a Business A section 987 QBU, Z's allocable portion of the assets and liabilities of Business A (other than the cash) cease being reflected on the books and records of the respective Business A section 987 QBUs of each of X and Y. Those allocable portions of assets and liabilities from the Business A section 987 QBUs of X and Y are treated as if they are transferred from such section 987 QBUs to their respective owners, X and Y. These assets and liabilities are consequently recorded on the books and records of Z's Business A section 987 QBU. Accordingly, X and Y are treated as transferring those assets and liabilities to Z, and Z is treated as contributing those assets and liabilities to its new Business A section 987 QBU.
(ii)
(B) As a result of Z's acquisition of its interest in P and Z's consequent acquisition of a Business A section 987 QBU, Z's allocable portion of the assets and liabilities of Business A cease being reflected on the books and records of the respective Business A section 987 QBUs of each of X and Y. Those allocable portions of assets and liabilities from the Business A section 987 QBUs of X and Y are treated as if they are transferred from such section 987 QBUs to their respective owners, X and Y. These assets and liabilities are consequently recorded on the books and records of Z's Business A section 987 QBU. Accordingly, X and Y are treated as transferring those assets and liabilities to Z, and Z is treated as contributing those assets and liabilities to its new Business A section 987 QBU.
(ii)
(B) For purposes of this paragraph (c), these deemed transactions are disregarded transactions. Under § 1.987–1(b)(5)(i), the newly formed partnership is a section 987 aggregate partnership because X and Y own all the interests in partnership capital and profits, X and Y are related within the meaning of section 267(b), and the requirements of § 1.987–1(b)(5)(i)(B) are satisfied. Because Y is a partner in a section 987 aggregate partnership that owns Business A and because Y and Business A have different functional currencies, Y's portion of the Business A assets and liabilities constitutes a section 987 QBU of Y.
(C) As a result of the conversion of DE1 to a partnership, Y acquires an allocable share of 50 percent of the assets and liabilities of Business A, as determined under § 1.987–7. Accordingly, 50 percent of the assets and liabilities of Business A cease being reflected on the books and records of X's section 987 QBU. Under § 1.987–2(b)(5), these amounts are treated as if they are transferred from X's section 987 QBU to X, and X is treated as transferring these assets and liabilities to Y. Accordingly, the assets and liabilities of Business A allocated to Y are treated as transferred by Y to Y's newly formed Business A section 987 QBU.
(ii)
(B) For purposes of this paragraph (c), these deemed transactions are disregarded
(C) As a result of the conversion of DE1 to a partnership, Y acquires an allocable share of 50 percent of the assets and liabilities of Business A, as determined under § 1.987–7. Accordingly, under § 1.987–2(c)(5), Y is treated as contributing its allocable share of its contributed property to its Business A section 987 QBU. In addition, Y is treated as transferring X's allocable share of the contributed property to X, and X is subsequently treated as transferring that property to its Business A section 987 QBUs. In addition, Y's allocable share of the original (pre-conversion) assets and liabilities of Business A cease being reflected on the books and records of X's section 987 QBU. Under § 1.987–2(b)(5), these amounts are treated as if they are transferred from X's section 987 QBU to X, and X is treated as transferring these assets and liabilities to Y. Y is subsequently treated as transferring these assets and liabilities to Y's Business A section 987 QBU.
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(ii)
(d)
(2)
(a)
(b)
(2)
(ii) [Reserved].
(3)
(ii)
(iii)
(iv)
(4) [Reserved].
(c)
(2)
(ii) [Reserved].
(iii)
(iv)
(B)
(3)
(ii)
(A) The cost recovery deduction, expressed in the functional currency of the section 987 QBU; and
(B) The exchange rate specified in paragraph (c)(2)(i) of this section for translating the cost recovery deduction (that is, the historic rate for the property to which such deduction is attributable) less the exchange rate used to translate COGS under the simplified inventory method described in paragraph (c)(2)(iv)(A) of this section (that is, the yearly average exchange rate for the taxable year).
(iii)
(A) The ending non-LIFO inventory included on the closing balance sheet for the preceding year, expressed in the functional currency of the section 987 QBU; and
(B) The exchange rate described in §§ 1.987–4(e)(2)(ii) and 1.987–1(c)(3)(i)(C) that is used for translating ending inventory on the closing balance sheet for the preceding year (that is, the yearly average exchange rate for the preceding year) less the exchange rate used to translate COGS under paragraph (c)(2)(iv)(A) of this section (that is, the yearly average exchange rate for the taxable year).
(iv)
(A) The amount of the LIFO layer liquidated during the taxable year, expressed in the functional currency of the section 987 QBU; and
(B) The exchange rate described in §§ 1.987–4(e)(2)(ii) and 1.987–1(c)(3)(i)(C) that is used for translating such LIFO layer (that is, the yearly average exchange rate for the year such LIFO layer arose) less the exchange rate used to translate COGS under paragraph (c)(2)(iv)(A) of this section (that is, the yearly average exchange rate for the taxable year).
(d) [Reserved].
(e)
Business A properly accrues £100 of income from the provision of services. Under paragraph (b)(2)(i) of this section, the £100 is translated into €90 at the spot rate (as defined in § 1.987–1(c)(1)) on the date of accrual, without the use of a spot rate convention. In determining U.S. Corp's taxable income, the €90 of income is translated into dollars at the rate provided in paragraph (c)(1) of this section.
Business A sells a historic asset consisting of non-inventory property for £100. Under paragraph (b)(2)(i) of this section, the £100 amount realized is translated into €85 at the spot rate (as defined in § 1.987–1(c)(1)) on the sale date without the use of a spot rate convention. In determining U.S. Corp's taxable income, the €85 is translated into dollars at the rate provided in paragraph (c)(1) of this section. The euro basis of the property is translated into dollars at the rate provided in paragraph (c)(2)(i) of this section (that is, the historic rate as determined under § 1.987–1(c)(3)).
(i) Business A uses a first-in, first-out (FIFO) method of accounting for inventory. Business A sells 1,200 units of inventory in 2021 for €3 per unit. Business A's gross sales are translated under paragraph (c)(1) of this section at the yearly average exchange rate for the year of the sale. The yearly average exchange rate is €1 = $1.02 for 2020 and €1 = $1.05 for 2021. Thus, Business A's dollar gross sales will be computed as follows:
(ii) The purchase price for each inventory unit was €1.50. Under § 1.987–1(c)(3)(i) and paragraph (c)(2)(iv)(B) of this section, the basis of each item of inventory is translated into dollars at the yearly average exchange rate for the year the inventory was acquired.
(iii) Because Business A uses a FIFO method for inventory, Business A is considered to have sold in 2021 the 100 units of opening inventory purchased in 2020 ($153.00), the 300 units purchased in January 2021 ($472.50), the 300 units purchased in April 2021 ($472.50), the 300 units purchased in July 2021 ($472.50), and 200 of the 300 units purchased in November 2021 ($315.00). Accordingly, Business A's translated dollar COGS for 2021 is $1,885.50. Business A's opening inventory for 2022 is 100 units of inventory with a translated dollar basis of $157.50.
(iv) Accordingly, for purposes of section 987 Business A has gross income in dollars of $1,894.50 ($3,780.00—$1,885.50).
(i) The facts are the same as in
(ii) As in
(iii) As set forth in (i), Business A's gross sales are $3,783.
(iv) Because Business A uses a FIFO method for inventory, Business A is considered to have sold in 2021 the 100 units of opening inventory purchased in December 2020 ($150), the 300 units purchased in January 2021 ($450), the 300 units purchased in April 2021 ($459), the 300 units purchased in July 2021 ($477), and 200 of the 300 units purchased in November 2021 ($324). Thus, Business A's COGS is $1,860.
(v) Accordingly, Business A has gross income in dollars of $1,923 ($3,783 − $1,860).
The facts are the same as in
The facts are the same as in
Business A purchased raw land on October 16, 2020, for €8,000 and sold the land on November 1, 2021, for €10,000. The yearly average exchange rate was €1 = $1.02 for 2020 and €1 = $1.05 for 2021. Under paragraph (c)(1) of this section, the amount realized is translated into dollars at the yearly average exchange rate for 2021 (€10,000 × $1.05 = $10,500). Under paragraph (c)(2)(i) of this section, the basis is determined at the historic rate for 2020, which is the yearly average rate under section § 1.987–1(c)(3)(i) for such year (€8,000 × $1.02 = $8,160). Accordingly, the amount of gain reported by U.S. Corp on the sale of the land is $2,340 ($10,500 − $8,160).
The facts are the same as in
(a)
(b)
(1) The section 987 QBU's net accumulated unrecognized section 987 gain or loss for all prior taxable years to
(2) The section 987 QBU's unrecognized section 987 gain or loss for the current taxable year as determined in paragraph (d) of this section.
(c)
(2) [Reserved].
(d)
(1)
(A) The owner functional currency net value of the section 987 QBU, determined in the functional currency of the owner under paragraph (e) of this section, on the last day of the taxable year; less
(B) The owner functional currency net value of the section 987 QBU, determined in the functional currency of the owner under paragraph (e) of this section, on the last day of the preceding taxable year. This amount shall be zero in the case of the section 987 QBU's first taxable year.
(ii)
(2)
(ii)
(A) The amount of the section 987 QBU's functional currency and the aggregate adjusted basis of all marked assets (as defined in § 1.987–1(d)), after taking into account § 1.988–1(a)(10), transferred to the owner during the taxable year determined in the functional currency of the section 987 QBU and translated into the owner's functional currency at the spot rate (as defined in § 1.987–1(c)(1)) applicable to the date of transfer; and
(B) The aggregate adjusted basis of all historic assets (as defined in § 1.987–1(e)), after taking into account § 1.988–1(a)(10), transferred to the owner during the taxable year determined in the functional currency of the section 987 QBU and translated into the owner's functional currency at the historic rate for each such asset (as defined in § 1.987–1(c)(3)).
(3)
(ii)
(A) The total amount of functional currency of the owner transferred to the section 987 QBU during the taxable year; and
(B) The adjusted basis, determined in the functional currency of the owner, of any asset transferred to the section 987 QBU during the taxable year (after taking into account § 1.988–1(a)(10)).
(4)
(5)
(6)
(7)
(8)
(e)
(i) Preparing a balance sheet for the relevant date from the section 987 QBU's books and records (within the meaning of § 1.989(a)–1(d)), as recorded in the section 987 QBU's functional currency and showing all assets and liabilities reflected on such books and records as provided in § 1.987–2(b);
(ii) Making adjustments necessary to conform the items reflected on the balance sheet described in paragraph (e)(1)(i) of this section to United States tax accounting principles; and
(iii) Translating the asset and liability amounts on the adjusted balance sheet described in paragraph (e)(1)(ii) of this section into the functional currency of the owner in accordance with paragraph (e)(2) of this section.
(2)
(i)
(ii)
(f) [Reserved].
(g)
(i) On July 1, 2021, U.S. Corp establishes Japan Branch, a section 987 QBU of U.S. Corp that has the yen as its functional currency, and transfers to Japan Branch $1,000 and raw land with a basis of $500. Japan Branch immediately exchanges the $1,000 for ¥100,000. On the same day, Japan Branch borrows ¥10,000. For the taxable year 2021, Japan Branch earns ¥2,000 per month (total of ¥12,000 for the six-month period from July 1, 2021, through December 31, 2021) for providing services and incurs ¥333.33 per month (total of ¥2,000 when rounded for the six-month period from July 1, 2021, through December 31, 2021) of related expenses. Assume that the spot rate on July 1, 2021, is $1 = ¥100; the spot rate on December 31, 2021, is $1 = ¥120; and the average rate for the period of July 1, 2021, to December 31, 2021, is $1 = ¥110. Thus, the ¥12,000 of services revenue when properly translated under § 1.987–3(c)(1) at the yearly average exchange rate equals $109.09 (¥12,000 × ($1/¥110)) = $109.09). The ¥2,000 of expenses translated at the same yearly average exchange rate equals $18.18 (¥2,000 × ($1/¥110) = $18.18). Thus, Japan Branch's net income translated into dollars equals $90.91 ($109.09 − $18.18 = $90.91).
(ii) Under paragraph (a) of this section, U.S. Corp must compute the net unrecognized section 987 gain or loss of Japan Branch for 2021. Because this is Japan Branch's first taxable year, the net unrecognized section 987 gain or loss (as defined under paragraph (b) of this section) is the branch's unrecognized section 987 gain or loss for 2021 as determined in paragraph (d) of this section. The calculation under paragraph (d) of this section is made as follows:
(iii)
(A) The OFCNV of Japan Branch determined in dollars on the last day of the current taxable year is determined under paragraph (e) of this section as the sum of the basis of each asset on Japan Branch's balance sheet on December 31, 2021, less the sum of each liability on Japan Branch's balance sheet on that date, translated into dollars as provided in paragraph (e)(2) of this section.
(B) For this purpose, Japan Branch will show the following assets and liabilities on its balance sheet for December 31, 2021:
(1) ¥120,000;
(2) Raw land with a basis of ¥55,000 ($500 translated under § 1.987–2(d)(2) at the historic rate of $1 = ¥110); and
(3) Liabilities of ¥10,000.
(C) Under paragraph (e)(2) of this section, U.S. Corp will translate these items as follows. The ¥120,000 is a marked asset and the ¥10,000 liability is a marked liability (as each is defined in § 1.987–1(d)). These items are translated into dollars on December 31, 2021, using the spot rate on December 31, 2021, of $1 = ¥120. The raw land is a historic asset (as defined in § 1.987–1(e)) and is translated into dollars under paragraph (e)(2)(ii) of this section at the historic rate, which under § 1.987–1(c)(3)(1)(A) is the yearly average exchange rate of $1 = ¥110 applicable to the year the land was transferred to the QBU. Thus, the OFCNV of Japan Branch on December 31, 2021, in dollars is $1,416.67 determined as follows:
(D) Under paragraph (d)(1) of this section, the change in OFCNV of Japan Branch for 2021 is equal to the OFCNV of the branch determined in dollars on December 31, 2021, ($1,416.67) less the OFCNV of the branch determined in dollars on the last day of the preceding taxable year. Because this is the first taxable year of Japan Branch, the OFCNV of Japan Branch determined in dollars on the last day of the preceding taxable year is zero under paragraph (d)(1)(i)(B) of this section. Accordingly, the change in OFCNV of Japan Branch for 2021 is $1,416.67.
(iv)
(v)
(vi)
(vii)
(viii)
(i) U.S. Corp operates in the United Kingdom through U.K. Branch, a section 987 QBU of U.S. Corp that has the pound as its functional currency. U.S. Corp properly elects under § 1.987–1(c)(1)(ii) for U.K. Branch to use a spot rate convention (when permitted). Under the chosen convention, the spot rate (the “convention rate”) for any transaction occurring during a month is the average of the pound spot rate and the 30-day forward rate for pounds on the next-to-last Thursday of the preceding month. The yearly average exchange rate was £1 = $0.90 for 2020, £1 = $1.00 for 2021, and £1 = $1.10 for 2022. The closing balance sheet of U.K. Branch in 2021 reflected the following assets:
(A) £100;
(B) A sales office purchased in 2020 with an adjusted basis of £1,000;
(C) A delivery truck purchased in 2020 with an adjusted basis of £200;
(D) Inventory of 100 units purchased in 2021 with a basis of £100; and
(E) Stock in ABC Corporation purchased in 2021 with a basis of £150, representing less than 10 percent of the total voting power and value of all classes of stock of ABC Corporation.
The closing balance sheet of U.K. Branch for 2021 reflected one liability, £50 of long-term debt entered into in 2020 with F Bank, an unrelated bank.
The office, truck, stock, and inventory are historic assets (as defined in § 1.987–1(e)). The £100 and long-term debt are marked items (as defined in § 1.987–1(d)). Assume that U.S. Corp translated U.K. Branch's 2021 closing balance sheet as follows:
(ii) U.K. Branch uses the first-in, first-out (FIFO) method of accounting for inventory. In 2022, U.K. Branch sold 100 units of inventory for a total of £300 and purchased another 100 units of inventory for £100. There is depreciation of £33 with respect to the office and £40 with respect to the truck, and U.K. Branch incurred £30 of business expenses during 2022. Neither the depreciation nor the business expenses are inventoriable costs. All items of income earned and expenses incurred during 2022 are received and paid, respectively, in pounds. Under § 1.987–3, U.K. Branch's section 987 taxable income or loss is determined as follows:
Accordingly, U.K. Branch has $131.30 of section 987 taxable income in 2022.
(iii) In December 2022, U.K. Branch transferred £30 to U.S. Corp, and U.S. Corp transferred a computer with a basis of $10 to U.K. Branch. U.S. Corp's net accumulated unrecognized section 987 gain or loss for all prior taxable years as determined in paragraph (c) of this section is $30.
(iv) The unrecognized section 987 gain or loss of U.K. Branch for 2022 is determined as follows:
(A)
(B)
(C)
(D)
(E)
(F)
(H)
(v)
Thus, U.S. Corp's unrecognized section 987 gain for 2022 with respect to U.K. Branch is $13.50. As of the end of 2022, before taking into account the recognition of any section 987 gain or loss under § 1.987–5, U.S. Corp's net unrecognized section 987 gain is $43.50 (that is, $30.00 accumulated from prior years, plus $13.50 in 2022).
(i)
(ii)
(A)
Adjustment for cost recovery deductions included in inventoriable costs.
(B)
Under the simplified inventory method, the OFCNV of Business A for 2020 and 2021 is determined under paragraph (e) of this section as follows:
(C)
(
(
(iii)
(A)
Adjustment for cost recovery deductions.
Adjustment for beginning inventory.
(B)
(C)
(
(
(i)
(ii)
(A)
(B)
(C)
(
(
(iii)
(A)
(B)
(
(
(iv)
(A)
Adjustment for cost recovery deductions.
Adjustment for LIFO liquidation.
(B)
(C)
(
(
(a)
(1) The owner's net unrecognized section 987 gain or loss with respect to the section 987 QBU determined under § 1.987–4 on the last day of such taxable year (or, if earlier, on the day the section 987 QBU is terminated under § 1.987–8); multiplied by
(2) The owner's remittance proportion for the taxable year, as determined under paragraph (b) of this section.
(b)
(1) The remittance, as determined under paragraph (c) of this section, to the owner from the section 987 QBU for such taxable year; divided by
(2) The sum of
(A) The aggregate adjusted basis of the gross assets of the section 987 QBU as of the end of the taxable year that are reflected on its year-end balance sheet translated into the owner's functional currency as provided in § 1.987–4(e)(2) and
(B) The amount of the remittance as determined under paragraph (c) of this section.
(c)
(i) The aggregate of all amounts transferred from the section 987 QBU to the owner during the taxable year, as determined in paragraph (d) of this section; over
(ii) The aggregate of all amounts transferred from the owner to the section 987 QBU during the taxable year, as determined in paragraph (e) of this section.
(2)
(3)
(d)
(e)
(f)
(2)
(3)
(g)
(i) U.S. Corp, a domestic corporation with the dollar as its functional currency, operates in the United Kingdom through Business A, a section 987 QBU with the pound as its functional currency. During 2021, the following transfers took place between U.S. Corp and Business A. On January 5, 2021, U.S. Corp transferred to Business A $300, which Business A used during the year to purchase services. On March 5, 2021, Business A transferred a machine to U.S. Corp. The pound adjusted basis of the machine when properly translated into dollars as described under § 1.987–4(d)(2)(ii)(B) and paragraph (d) of this section is $500. On November 1, 2021, Business A transferred pounds to U.S. Corp. The dollar amount of the pounds when properly translated as described under § 1.987–4(d)(2)(ii)(A) and paragraph (d) of this section is $2,300. On December 7, 2021, U.S. Corp transferred a truck to Business A with an adjusted basis of $2,000.
(ii) At the end of 2021, Business A holds assets, properly translated into the owner's functional currency pursuant to § 1.987–4(e)(2), consisting of a computer with a pound adjusted basis equivalent to $500, a truck with a pound adjusted basis equivalent to $2,000, and pounds equivalent to $2,850. In addition, Business A has a pound liability entered into in 2020 with Bank A. All such assets and liabilities are reflected on the books and records of Business A. Assume that the net unrecognized section 987 gain for Business A as determined under § 1.987–4 as of the last day of 2021 is $80.
(iii) U.S. Corp's section 987 gain with respect to Business A is determined as follows:
(A)
Transfers from Business A to U.S. Corp in dollars:
Transfers from U.S. Corp to Business A in dollars:
Computation of amount of remittance:
(B)
(C)
(D)
(a)
(b)
(2)
(3)
(c)
CFC is a controlled foreign corporation as defined in section 957 with the Swiss franc (Sf) as its functional currency. CFC is the owner of Business A, a section 987 QBU that has the euro as its functional currency. For the year 2021, CFC recognizes section 987 gain of Sf10,000 under § 1.987–5. Applying the rules of this section, Business A has average total assets of Sf1,000,000, which generate income as follows: Sf750,000 of assets that generate foreign source general limitation income under section 904(d)(1)(A), none of which is subpart F income under section 952; and Sf250,000 of assets that generate foreign source passive income under section 904(d)(1)(B), all of which is subpart F income. Under paragraph (b) of this section, Sf7,500 (Sf750,000/Sf1,000,000 × Sf10,000) of the section 987 gain will be characterized as foreign source general limitation income that is not subpart F income under section 952, and Sf2,500 (Sf250,000/Sf1,000,000 × Sf10,000) will be characterized as foreign source passive income that is characterized as foreign personal holding company income under section 954(c)(1)(D). All of the section 987 gain is treated as ordinary income.
The facts are the same as in
(a)
(b) [Reserved].
(c)
(a)
(b)
(1)
(2)
(3)
(4)
(c)
(i) The distributor is a domestic corporation and the distributee is a foreign corporation.
(ii) The distributor is a foreign corporation and the distributee is a domestic corporation.
(iii) The distributor and the distributee are both foreign corporations and the functional currency of the distributee is the same as the functional currency of the distributor's section 987 QBU.
(2)
(i) The transferor is a domestic corporation and the acquiring corporation is a foreign corporation.
(ii) The transferor is a foreign corporation and the acquiring corporation is a domestic corporation.
(iii) The transferor is a controlled foreign corporation immediately before the transfer, the acquiring corporation is a foreign corporation that is not a controlled foreign corporation immediately after the transfer, and the acquiring corporation was related to the transferor within the meaning of section 267(b) immediately before the transfer.
(iv) The transferor and the acquiring corporation are foreign corporations and the functional currency of the acquiring corporation is the same as the functional currency of the transferor's section 987 QBU.
(d) [Reserved].
(e)
(f)
(ii)
(ii)
(ii)
(ii)
(ii)
(B) Under § 1.987–1(b)(5)(i), Entity A is converted to a section 987 aggregate partnership when DC2 contributes property to Entity A in exchange for a 95 percent interest in Entity A because DC1 and DC2 own all the interests in partnership capital and profits, DC1 and DC2 are related within the meaning of section 267(b), and the requirements of § 1.987–1(b)(5)(i)(B) are satisfied. Because DC2 is a partner in a section 987 aggregate partnership that owns Business A and because DC2 and Business A have different functional currencies, DC2's portion of the Business A assets constitutes a section 987 QBU of DC2.
(C) As a result of the conversion of Entity A to a partnership, DC2 acquires an allocable share of 95 percent of the assets of Business A, as determined under § 1.987–7. Accordingly, under § 1.987–2(c)(5), DC2 is treated as contributing 95 percent of its contributed property to its Business A section 987 QBU. In addition, DC2 is treated as transferring 5 percent of the contributed property to DC1, and DC1 is subsequently treated as transferring that property to DC1's Business A section 987 QBU. In addition, 95 percent of the original (pre-conversion) assets of Business A cease being reflected on the books and records of DC1's section 987 QBU. Under § 1.987–2(b)(5), these amounts are treated as if they are transferred from DC1's section 987 QBU to DC1, and DC1 is treated as transferring these assets to DC2. DC2 is subsequently treated as transferring these assets to DC2's Business A section 987 QBU. The other 5 percent of the original (pre-conversion) assets are treated as remaining on the books and records of DC1's section 987 QBU and are not deemed to be transferred.
(D) For purposes of determining whether substantially all the assets of Business A were transferred from DC1's section 987 QBU as provided under paragraph (b)(2) of this section, the amount of assets transferred from Business A to DC1 under § 1.987–2(c) (95 percent of the assets held by Business A before the contribution by DC2) must be reduced by the 5 percent of the assets contributed by DC2, which were treated as transferred from DC2 to DC1 and subsequently transferred from DC1 to its Business A section 987 QBU, as a result of the formation of the section 987 aggregate partnership. Accordingly, the amount of assets transferred from DC1's section 987 QBU for purposes of paragraph (b)(2) of this section is equal to 95 percent of the original (pre-conversion) assets minus 5 percent of DC2's contributed assets.
(ii)
(B) Terminations also would have occurred in 2026 if U.S. Corp had contributed Entity A and Entity B to an existing foreign corporation owned by U.S. Corp or to a newly created foreign corporation owned by U.S. Corp pursuant to a section 351 exchange because the transfer of all of the assets of Business A and Business B would cause terminations of those section 987 QBUs under paragraph (b)(2) of this section.
(ii)
(a)
(b)
(1) The amount of the items of income, gain, deduction, or loss attributed to the section 987 QBU in the functional currency of the section 987 QBU.
(2) The amount of assets and liabilities attributed to the section 987 QBU in the functional currency of the section 987 QBU.
(3) The exchange rates used to translate items of income, gain, deduction, or loss of the section 987 QBU into the owner's functional currency and, if a spot rate convention is used, the manner in which such convention is determined.
(4) The exchange rates used to translate the assets and liabilities of the section 987 QBU into the owner's functional currency and, if a spot rate convention is used, the manner in which such convention is determined.
(5) The amount of the items of income, gain, deduction, or loss attributed to the section 987 QBU translated into the functional currency of the owner.
(6) The amount of assets and liabilities attributed to the section 987 QBU translated into the functional currency of the owner.
(7) The amount of assets and liabilities transferred by the owner to the section 987 QBU determined in the functional currency of the owner.
(8) The amount of assets and liabilities transferred by the section 987 QBU to the owner determined in the functional currency of the owner.
(9) The amount of the unrecognized section 987 gain or loss for the taxable year.
(10) The amount of the net accumulated unrecognized section 987 gain or loss at the close of the taxable year.
(11) If a remittance is made, the computations determined under § 1.861–9T(g) for purposes of sourcing and characterizing the remittance under § 1.987–5.
(12) The transition information required to be determined under § 1.987–10(e).
(c)
(d)
(a)
(b)
(2)
(3)
(4)
(i) U.S. Corp is a domestic corporation with the dollar as its functional currency. U.S. Corp owns Business A, a U.K. branch with the pound as its functional currency. Business A was formed on January 1, year 1. U.S. Corp uses the method prescribed in the 1991 proposed section 987 regulations to determine the section 987 gain or loss of Business A. U.S. Corp contributed £6,000 to Business A on January 1, year 1. On the same day, Business A bought a truck for £4,000 and a computer for £1,000.
(ii) On January 1, year 5, Business A transitions to the method provided in these regulations pursuant to the fresh start transition method described in paragraph (b) of this section. Pursuant to paragraph (b)(1) of this section, Business A is deemed to terminate on December 31, year 4. However, no section 987 gain or loss is determined or recognized as a result of the deemed termination. Pursuant to paragraph (b)(2) of this section, for purposes of applying § 1.987–4 with respect to Business A for year 5, the amount of assets and liabilities transferred from U.S. Corp to Business A on the transition date shall be determined by translating all of Business A's assets at the historic rates for those assets as determined under § 1.987–1(c)(3) and paragraph (b)(3) of this section. Because U.S. Corp is not able to determine reliably the historic rate for the pound currency it is deemed to transfer to Business A, U.S. Corp determines the historic rate for these pounds based on a last-in, first-out cash flow assumption. Thus, it is assumed that the £50 loss in each of year 4 and year 5 first reduces the £250 earned in year 3. Accordingly, for purposes of determining the amount of assets and liabilities deemed transferred from U.S. Corp to Business A on January 1, year 5, U.S. Corp translates Business A's assets and liabilities as follows:
(c)
(2)
(3)
(4)
(i) U.S. Corp is a domestic corporation with the dollar as its functional currency. U.S. Corp owns Business A, a U.K. branch with the pound as its functional currency. Business A was formed on January 1, year 1. U.S. Corp uses a reasonable application of the method described in the 2006 proposed section 987 regulations to determine the section 987 gain or loss of Business A. On January 1, year 5, Business A transitions to the method provided in these regulations pursuant to the method described in this paragraph (c). Business A's opening balance sheet on January 1, year 5, includes pounds, a truck acquired in year 2, inventory accounted for under the FIFO method, and no liabilities. These assets remain on the balance sheet on December 31, year 5.
(ii) Pursuant to paragraph (c)(3) of this section, U.S. Corp chooses to use the same historic exchange rates as were used under its application of the 2006 proposed regulations in place of the historic rates prescribed under § 1.987–1(c)(3) for purposes of applying these regulations with respect to historic items (other than inventory) held on the transition date.
(iii) The pounds are marked items under § 1.987–1(d). Because the pounds are marked items, for purposes of determining the owner functional currency net value of Business A on the last day of year 5 pursuant to § 1.987–4(e), the pounds are translated into dollars using the spot rate (as defined in § 1.987–1(c)(1)) applicable to the last day of year 5.
(iv) The truck held on Business A's balance sheet on January 1, year 5, is a historic item under § 1.987–1(e). For purposes of determining the owner functional currency net value of Business A on the last day of year 5 pursuant to § 1.987–4(e), the basis of the truck is translated into dollars using the spot rate on the day the truck was acquired in year 2, as determined under § 1.987–1(c)(3) of the 2006 proposed section 987 regulations. If U.S. Corp had not chosen pursuant to paragraph (c)(3) of this section to use the same historic exchange rates as were used under its application of the 2006 proposed regulations, the basis of the truck would have been translated into dollars using the historic rate described in § 1.987–1(c)(3), which is the yearly average exchange rate for year 5.
(v) The inventory held on Business A's balance sheet on January 1, year 5, is a historic item under § 1.987–1(e). For purposes of determining the owner functional currency net value of Business A on the last day of year 5 pursuant to § 1.987–4(e), the FIFO cost basis of the inventory is translated into dollars using the historic rate, which pursuant to § 1.987–1(c)(3)(i)(B) is the yearly average exchange rate for year 5.
(vi) Pursuant to paragraph (c)(3) of this section, for purposes of applying § 1.987–4 with respect to Business A for year 5, the owner functional currency net value of Business A on the last day of year 4 under § 1.987–4(d)(1)(B) is the amount that was determined under § 1.987–4(d)(1)(A) of the 2006 proposed section 987 regulations for year 4. Additionally, Business A's net unrecognized section 987 gain or loss for all prior years under § 1.987–4(c) shall take into account the aggregate of the amounts determined under § 1.987–4(d) of the 2006 proposed section 987 regulations for year 1 through year 4, reduced by the amounts taken into account under § 1.987–5 of the 2006 proposed section 987 regulations upon a remittance for all such prior taxable years.
(d)
(e)
(i) A description of each section 987 QBU to which these rules apply, the section 987 QBU's owner, the section 987 QBU's principal place of business, and a description of the prior section 987 method used by the taxpayer to determine section 987 gain or loss with respect to the section 987 QBU.
(ii) Any assumptions used by the taxpayer for determining the exchange rates used to translate the amount of assets and liabilities transferred to the section 987 QBU on the transition date, as provided in paragraph (b)(3) of this section.
(iii) With respect to each section 987 QBU subject to paragraph (c) of this section, a statement regarding whether historic items (as defined in § 1.987–1(c)(3)) are translated pursuant to paragraph (c)(2) of this section at the same historic rates as were used under the taxpayer's application of the 2006 proposed regulations or at the historic rates determined under § 1.987–1(c)(3).
(iv) With respect to each section 987 QBU with respect to which an adjustment is made pursuant to paragraph (d) of this section, a description of the adjustment and the basis for the computation of such adjustments.
(2)
(a)
(b)
(c)
(a) * * *
(4) Treatment of assets and liabilities of a section 987 aggregate partnership or DE that are not attributed to an eligible QBU.
The additions and revision read as follows:
(a) * * *
(4)
(ii)
(iii)
(iv)
(ii)
(10) * * *
(ii)
(
(
(B)
(i) * * * Generally, the revisions to paragraphs (a)(3), (a)(4), and (a)(10)(ii) of this section shall apply to taxable years beginning one year after the first day of the first taxable year following December 7, 2016. If pursuant to § 1.987–11(b) a taxpayer applies §§ 1.987–1 through 1.987–11 beginning in a taxable year prior to the earliest taxable year described in § 1.987–11(a), then the revisions to paragraphs (a)(3), (a)(4), and (a)(10)(ii) of this section shall apply to taxable years of the taxpayer beginning on or after the first day of such prior taxable year.
(b) * * *
(2)
(ii)
(b) * * *
(2) * * *
(i)
(B)
(C)
(D)
(4)
(d) * * *
(3)
(4)
26 U.S.C. 7805.
(b) * * *
Internal Revenue Service (IRS), Treasury.
Final and temporary regulations.
This document contains temporary regulations under section 987 of the Internal Revenue Code (Code) relating to the recognition and deferral of foreign currency gain or loss under section 987 with respect to a qualified business unit (QBU) in connection with certain QBU terminations and certain other transactions involving partnerships. This document also contains temporary regulations under section 987 providing: an annual deemed termination election for a section 987 QBU; an elective method, available to taxpayers that make the annual deemed termination election, for translating all items of income or loss with respect to a section 987 QBU at the yearly average exchange rate; rules regarding the treatment of section 988 transactions of a section 987 QBU; rules regarding QBUs with the U.S. dollar as their functional currency; rules regarding combinations and separations of section 987 QBUs; rules regarding the translation of income used to pay creditable foreign income taxes; and rules regarding the allocation of assets and liabilities of certain partnerships for purposes of section 987. Finally, this document contains temporary regulations under section 988 requiring the deferral of certain section 988 loss that arises with respect to related-party loans. The text of these temporary regulations also serves as the text of the proposed regulations set forth in the Proposed Rules section in this issue of the
Steven D. Jensen at (202) 317–6938 (not a toll-free number).
These temporary regulations are being issued without prior notice and public procedure pursuant to the Administrative Procedure Act (5 U.S.C. 553). For this reason, the collection of information contained in these regulations has been reviewed and, pending receipt and evaluation of public comments, approved by the Office of Management and Budget under control number 1545–2265. Responses to this collection of information are mandatory.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.
For further information concerning this collection of information, the accuracy of the estimated burden and suggestions for reducing this burden, and where to submit comments on the collection of information, please refer to the preamble to the cross-referencing notice of proposed rulemaking published in the Proposed Rules section of this issue of the
Books and 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. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
This document contains temporary regulations under section 987 of the Code relating to the recognition and deferral of foreign currency gain or loss under section 987 with respect to a QBU in connection with certain QBU terminations and certain other transactions involving partnerships. This document also contains temporary regulations under section 987 providing (i) an annual deemed termination election for a section 987 QBU; (ii) an elective method, available to taxpayers that make the annual deemed termination election, for translating all items of income or loss with respect to a section 987 QBU at the yearly average exchange rate; (iii) rules regarding the treatment of section 988 transactions of a section 987 QBU; (iv) rules regarding QBUs with the U.S. dollar as their functional currency; (v) rules regarding combinations and separations of section 987 QBUs; (vi) rules regarding the translation of income used to pay creditable foreign income taxes; and (vii) rules regarding the allocation of assets and liabilities of certain partnerships for purposes of section 987. Finally, this document contains temporary regulations under section 988 requiring the deferral of certain section 988 loss that arises with respect to related-party loans.
Section 987 generally provides that, when a taxpayer owns one or more QBUs with a functional currency other than the U.S. dollar and such functional currency is different than that of the taxpayer, the taxable income or loss of the taxpayer with respect to each such QBU is determined by computing the taxable income or loss of each QBU separately in its functional currency and translating such income or loss at the appropriate exchange rate. Section 987 further requires the taxpayer to make “proper adjustments” (as prescribed by the Secretary of the Treasury (the Secretary)) for transfers of property between QBUs having different functional currencies, including by treating post-1986 remittances from each such QBU as made on a pro rata basis out of post-1986 accumulated earnings, by treating section 987 gain or loss as ordinary income or loss, and by sourcing such gain or loss by reference to the source of the income giving rise to post-1986 accumulated earnings.
Section 989(c) directs the Secretary to “prescribe such regulations as may be necessary or appropriate to carry out the purposes of [subpart J], including regulations . . . limiting the recognition of foreign currency loss on certain remittances from qualified business units . . . [and] providing for the appropriate treatment of related party transactions (including transactions between qualified business units of the same taxpayer). . . .”
On September 6, 2006, the Treasury Department and the IRS issued proposed regulations under section 987 (REG–208270–86, 71 FR 52876) (the 2006 proposed regulations). The Treasury Department and the IRS received many written comments in response to the 2006 proposed regulations and, after consideration of those comments, are issuing final regulations (TD 9794) under section 987 (the final regulations) that are being published contemporaneously with these temporary regulations. These temporary regulations also reflect the consideration of comments received on the 2006 proposed regulations, as well as other considerations described in this preamble.
Under the final regulations, the owner of a section 987 QBU that terminates includes in income all of the net unrecognized section 987 gain or loss with respect to the section 987 QBU in the year it terminates. See §§ 1.987–5(c)(3) and 1.987–8(e). Section 1.987–8(b) and (c) describe the circumstances in which a section 987 QBU terminates, which include the transfer (or deemed transfer) of substantially all of the assets of the section 987 QBU and when the section 987 QBU's owner ceases to exist (except in connection with certain liquidations or reorganizations described in section 381(a)). Under these rules, a termination can result solely from a transfer of a section 987 QBU between related parties or, when a QBU is owned by an entity that is disregarded as an entity separate from its owner for Federal tax purposes (DE), from the deemed transfer that occurs when an election is made to treat the DE as a corporation for Federal tax purposes, notwithstanding that the QBU's assets continue to be used in the same trade or business.
The preamble to the 2006 proposed regulations requested comments regarding whether inbound liquidations under section 332 and inbound asset reorganizations under section 368(a) should result in terminations of section 987 QBUs. The preamble also requested comments on the interaction of the rules of § 1.1502–13 regarding intercompany transactions with the 2006 proposed regulations, including whether section 987 gain or loss resulting from the transfer of assets and liabilities of a section 987 QBU between members of the same consolidated group in a section 351 transaction should be deferred under § 1.1502–13. Many comments recommended that such a section 351 exchange should not trigger the recognition of section 987 gain or loss.
Because a termination can result in the deemed remittance of all the assets of a section 987 QBU in circumstances in which the assets continue to be used by a related person in the conduct of the same trade or business that formerly was conducted by the section 987 QBU, terminations can facilitate the selective recognition of section 987 losses. Section 989(c)(2) provides the Treasury Department and the IRS with authority to “limit[] the recognition of foreign currency loss on certain remittances from qualified business units.” The Treasury Department and the IRS have determined that terminations of section 987 QBUs generally should not be permitted to achieve the selective recognition of losses when the assets and liabilities of the section 987 QBU are transferred to a related person and remain subject to section 987 in the hands of the transferee, as in the case, for example, of a section 351 transfer of a section 987 QBU within a consolidated group. Similar policy considerations arise when the transfer of a partnership interest to a related person results in deemed transfers that cause the recognition of section 987 loss with respect to a section 987 QBU owned through the partnership, notwithstanding that the trade or business of the section 987 QBU continues without interruption and remains subject to section 987. In order to address these policy concerns, as described in greater detail in Part 1.C of this Explanation of Provisions, the temporary regulations defer section 987 losses resulting from certain termination events and partnership transactions in which the assets and liabilities of the section 987 QBU remain within a single controlled group (defined as all persons with the relationships to each other described in sections 267(b) or 707(b)) and remain subject to section 987.
The Treasury Department and the IRS also acknowledge, however, that part of the rationale for deferring section 987 losses—that is, the continuity of ownership of the section 987 QBU within a single controlled group—applies equally to section 987 gains that otherwise would be triggered when taxpayers transfer a section 987 QBU within a single controlled group. Thus, consistent with the recommendations of comments on the 2006 proposed regulations, the temporary regulations generally apply to defer the recognition of section 987 gains as well as losses when the transferee is subject to section 987 with respect to the assets of the section 987 QBU. The Treasury Department and the IRS have determined, however, that gain should not be deferred to the extent the assets of a section 987 QBU are transferred by a U.S. person to a related foreign person. Since recognition of the deferred gain generally would occur only as a result of remittances to the foreign owner, the IRS could face administrative difficulty in attempting to ensure that such deferred gain is appropriately recognized and not indefinitely deferred. Treating gains differently than losses in the context of transfers to related foreign persons generally is consistent with the policies underlying sections 267 and 367. In particular, this rule is consistent with the policy of recognizing foreign currency gains and not losses with respect to property transferred outbound in a nonrecognition transaction. See section 367(a)(3)(B)(iii).
In addition, the Treasury Department and the IRS have determined that selective recognition of losses should not be permitted in the context of certain outbound transfers even when the assets do not remain subject to section 987 in the hands of the transferee (because, for example, the transferee has the same functional currency as the QBU). Accordingly, consistent with the principles of sections 267 and 367(a), the temporary regulations also provide special rules to prevent the selective recognition of section 987 losses in certain other transactions involving outbound transfers.
Section 1.987–12T provides for the deferral of certain net unrecognized section 987 gain or loss that otherwise would be recognized in connection with specified events under § 1.987–5, which governs the recognition of section 987 gain or loss by the owner of a section 987 QBU to which the final regulations apply. In addition, because the policy concerns that motivate § 1.987–12T exist regardless of whether section 987 gain or loss is computed pursuant to the final regulations or some other reasonable method, § 1.987–12T applies to any foreign currency gain or loss realized under section 987(3), including foreign currency gain or loss realized under section 987 with respect to a QBU to which the final regulations generally are not applicable. In order to achieve this, the temporary regulations specify that references in § 1.987–12T to section 987 gain or loss refer to any foreign currency gain or loss realized under section 987(3) and that references to a section 987 QBU refer to any eligible QBU (as defined in § 1.987–1(b)(3)(i), but without regard to § 1.987–1(b)(3)(ii)) that is subject to section 987. Additionally, the temporary regulations specify that references in § 1.987–12T to the recognition of section 987 gain or loss under § 1.987–5 encompass any determination and recognition of gain or loss under section 987(3) that would occur but for § 1.987–12T. Accordingly, the temporary regulations require an owner of a QBU that is not subject to § 1.987–5 to adapt the rules set forth in § 1.987–12T to recognize section 987 gains or losses consistent with the principles of § 1.987–12T.
The policy concerns regarding selective realization of section 987 losses do not apply, however, with respect to a section 987 QBU that has made the annual deemed termination election described in Part 2 of this Explanation of Provisions, because all section 987 gain and loss is recognized annually under that election. Accordingly, § 1.987–12T is not applicable to section 987 gain or loss of a section 987 QBU with respect to which the annual deemed termination election is in effect.
Finally, in order to avoid any compliance burden associated with applying § 1.987–12T in circumstances involving relatively small amounts of section 987 gain or loss, § 1.987–12T includes a de minimis rule. That rule provides that § 1.987–12T does not apply to a section 987 QBU if the net unrecognized section 987 gain or loss of the section 987 QBU that, as a result of § 1.987–12T, would not be recognized under § 1.987–5 does not exceed $5 million.
Section 1.987–12T defers the recognition of section 987 gains and losses in connection with two types of specified events, which are referred to as “deferral events” and “outbound loss events.” Parts 1.C and 1.D of this Explanation of Provisions describe the rules governing deferral events and outbound loss events, respectively.
As described in greater detail below, the temporary regulations provide that, notwithstanding § 1.987–5, the owner of a section 987 QBU with respect to which a deferral event occurs (a deferral QBU) must defer section 987 gain or loss that otherwise would be taken into account under § 1.987–5 in connection with the deferral event to the extent determined under § 1.987–12T(b)(3) and (c). Such deferred gain or loss is taken into account based on subsequent events in accordance with § 1.987–12T(c).
The temporary regulations provide that a deferral event with respect to a section 987 QBU means any transaction or series of transactions that satisfy two conditions. Under the first condition, the transaction or series of transactions must be described in one of two categories. The first category, which is set forth in § 1.987–12T(b)(2)(ii)(A), is any termination of a section 987 QBU other than (i) a termination described in § 1.987–8(b)(3) (that is, a termination that results from the owner of the section 987 QBU ceasing to be a controlled foreign corporation (as defined in section 957(a)) (CFC) after certain related-party transactions); (ii) a termination described in § 1.987–8(c) (that is, a termination that results from a liquidation or asset reorganization described in section 381(a) involving an inbound or outbound transfer, a transfer by a CFC to a related non-CFC foreign corporation, or a transfer to a transferee that has the same functional currency as the section 987 QBU);
The second category, which is described in § 1.987–12T(b)(ii)(B), encompasses certain partnership transactions that result in a net deemed transfer from a section 987 QBU to its owner as a result of which section 987 gain or loss otherwise would be recognized under § 1.987–5. The second category refers to two types of transactions involving partnerships.
First, the second category includes a disposition of part of an interest in a DE or partnership. Under § 1.987–2(c)(5), a transfer of part of an interest in a DE or section 987 aggregate partnership results in deemed transfers to the owner of a section 987 QBU held through that DE or partnership that may result in a remittance, but that generally do not cause a termination. For an illustration of the application of § 1.987–12T to a deferral event resulting from the conversion of a disregarded entity into a section 987 aggregate partnership, see § 1.987–12T(h),
The second type of transaction included in the second category is a contribution of assets by a related person to a partnership or DE through which a section 987 QBU is held, provided that the contributed assets are not included on the books and records of an eligible QBU and the contribution causes a net transfer from a section 987 QBU owned through the partnership or DE. The rules of § 1.987–2 must be applied to determine whether the contribution would cause a net transfer from any section 987 QBUs held through a partnership. For example, if two partners (Partner A and Partner B) each own a 50% interest in an existing section 987 aggregate partnership with a single section 987 QBU, and Partner A contributes cash that is included on the books of the section 987 QBU after the contribution and Partner B contributes an equal amount of non-portfolio stock, the contributions would not cause either Partner A nor Partner B to have a net transfer from the section 987 QBU under § 1.987–2 and there would be no section 987 gain or loss to defer. As a result of the broad scope of application for § 1.987–12T specified in § 1.987–12T(a)(2), the second category includes transactions involving partnerships that are not section 987 aggregate partnerships even though QBUs that are held through such partnerships generally are not subject to the final regulations. Accordingly, § 1.987–12T applies to a disposition of a partnership interest or a contribution to a partnership if it otherwise would result in recognition of gain or loss under a taxpayer's reasonable method of applying section 987.
The second condition described in § 1.987–12T(b)(2) is that, immediately after the transaction or series of transactions, assets of the section 987 QBU are reflected on the books and records of a successor QBU. For this purpose, a successor QBU with respect to a section 987 QBU (original QBU) generally means a section 987 QBU on whose books and records assets of the original QBU are reflected immediately after the deferral event, provided that, immediately after the deferral event, the section 987 QBU is owned by a member of the controlled group that includes the person that owned the original QBU immediately before the deferral event. This relatedness requirement would not be met, for example, if the person that owned the original QBU ceased to exist in connection with the deferral event.
However, if the owner of the original QBU is a U.S. person, then a successor QBU does not include a section 987 QBU owned by a foreign person, except in the case of a deferral event that is solely described in the second category of transactions involving partnership and DE interests. This limitation on the definition of a successor QBU in the context of outbound transfers serves two purposes. First, consistent with the general policy of recognizing foreign currency gains upon an outbound transfer, the limitation ensures that section 987 gain is recognized to the extent section 987 QBU assets are transferred outbound in connection with a termination. Second, the
The temporary regulations provide that, in the taxable year of a deferral event, the owner of the deferral QBU generally recognizes section 987 gain or loss as determined under § 1.987–5, except that, solely for purposes of applying § 1.987–5, all assets and liabilities of the deferral QBU that, immediately after the deferral event, are properly reflected on the balance sheet of a successor QBU are treated as not having been transferred and therefore as remaining on the balance sheet of the deferral QBU, notwithstanding the deferral event. The effect of these rules is that, in the taxable year of a deferral event, only assets and liabilities of the deferral QBU that are not reflected on the books and records of a successor QBU immediately after the deferral event are taken into account in determining the amount of a remittance from the deferral QBU. Section 987 gain or loss that, as a result of these rules, is not recognized under § 1.987–5 in the taxable year of the deferral event is referred to as deferred section 987 gain or loss. As discussed in Part 1.D of this Explanation of Provisions, if the deferral event also constitutes an outbound loss event, the amount of loss recognized by the owner may be further limited under the rules applicable to outbound loss events.
The temporary regulations provide rules for determining when a deferral QBU owner recognizes deferred section 987 gain or loss. For this purpose, a deferral QBU owner means, with respect to a deferral QBU, the owner of the deferral QBU immediately before the deferral event with respect to the deferral QBU or the owner's qualified successor. The temporary regulations define a qualified successor with respect to a corporation (transferor corporation) as another corporation (acquiring corporation) that acquires the assets of the transferor corporation in a transaction described in section 381(a), but only if (A) the acquiring corporation is a domestic corporation and the transferor corporation was a domestic corporation, or (B) the acquiring corporation is a CFC and the transferor corporation was a CFC. A qualified successor of a corporation includes a qualified successor of a qualified successor of the corporation.
As described in the remainder of this Part 1.C.iii, the temporary regulations provide that deferred section 987 gain or loss is recognized upon subsequent remittances from a successor QBU, or upon a deemed remittance that occurs when a successor QBU ceases to be owned by a member of the deferral QBU owner's controlled group, subject to an exception that applies when a successor QBU terminates in an outbound transfer. In general, these rules depend on the continued existence of a deferral QBU owner (which includes a qualified successor) and a successor QBU and preserve the location of the deferred section 987 gain or loss as gain or loss of the deferral QBU owner.
A deferral QBU owner generally recognizes deferred section 987 gain or loss in the taxable year of a remittance from a successor QBU to the owner of the successor QBU (successor QBU owner). The amount of deferred section 987 gain or loss that a deferral QBU owner recognizes upon a remittance is the outstanding deferred section 987 gain or loss (that is, the deferred section 987 gain or loss not previously recognized) multiplied by the remittance proportion of the successor QBU owner with respect to the successor QBU for the taxable year as determined under § 1.987–5(b) and, to the extent relevant, § 1.987–12T. For an illustration of this rule, see § 1.987–12T(h),
In certain cases, there may be multiple successor QBUs with respect to a single deferral QBU. For instance, there may be multiple successor QBUs if the owner of a section 987 aggregate partnership interest transfers part of its interest or if a successor QBU separates into two or more separated QBUs under § 1.987–2T(c)(9)(ii). To ensure that a deferral QBU owner recognizes the appropriate amount of deferred section 987 gain or loss in connection with a remittance in such cases, the temporary regulations provide that multiple successor QBUs of the same deferral QBU are treated as a single successor QBU for purposes of determining the amount of deferred section 987 gain or loss that is recognized.
For example, if the owner (Corp A) of a section 987 aggregate partnership interest transfers part of its interest to another member of Corp A's consolidated group (Corp B), the transfer would give rise to a deferral event with respect to the section 987 QBU (QBU A) that Corp A indirectly owns through the partnership. QBU A would be considered a deferral QBU, and Corp A would be considered a deferral QBU owner. In addition, QBU A would be considered a successor QBU with respect to itself, and the section 987 QBU (QBU B) that Corp B owns indirectly through the partnership interest it acquired also would be considered a successor QBU with respect to QBU A. In determining the amount of deferred section 987 gain or loss recognized upon subsequent remittances from successor QBUs, the two successor QBUs are treated as a single successor QBU, such that their remittance proportion is determined under § 1.987–5 on a combined basis, taking into account the assets and remittances of both successor QBUs.
Solely for purposes of determining a deferral QBU owner's recognition of any outstanding deferred section 987 gain or loss, a successor QBU owner is treated as having a remittance proportion of 1 in a taxable year in which its successor QBU ceases to be owned by a member of a controlled group that includes the deferral QBU owner, including as a result of the deferral QBU owner ceasing to exist without having a qualified successor. Accordingly, a deferral QBU owner would recognize all outstanding deferred section 987 gain or loss upon a successor QBU ceasing to be owned by a member of the deferral QBU owner's controlled group if there is only one successor QBU, but would recognize only a proportional amount if there are multiple successor QBUs, one or more of which remain in the deferral QBU owner's controlled group.
Notwithstanding that deferred section 987 gain or loss generally is recognized upon remittances from a successor QBU, § 1.987–12T(c)(3) provides that, if assets of a successor QBU are transferred (or deemed transferred) in an exchange that would constitute an outbound loss event if the successor QBU had a net accumulated section 987 loss at the time of the exchange, the deferral QBU owner recognizes any outstanding deferred section 987 loss on a similar basis as it would if it originally had transferred the
The temporary regulations include three special rules regarding successor QBUs that are relevant to the recognition of deferred section 987 gain or loss. First, if a section 987 QBU is a successor QBU with respect to a deferral QBU that is a successor QBU with respect to another deferral QBU, the first-mentioned section 987 QBU is considered a successor QBU with respect to the second-mentioned deferral QBU. For example, if QBU A is a successor QBU with respect to QBU B, and QBU B is a successor QBU with respect to QBU C, then QBU A is a successor QBU with respect to QBU C.
Second, if a successor QBU with respect to a deferral QBU separates into two or more separated QBUs (as defined in § 1.987–2T(c)(9)(iii)), each separated QBU is considered a successor QBU with respect to the deferral QBU.
Third, if a successor QBU with respect to a deferral QBU combines with another section 987 QBU of the same owner, resulting in a combined QBU (as defined in § 1.987–2T(c)(9)(i)), the combined QBU is considered a successor QBU with respect to the deferral QBU.
The temporary regulations provide that the source and character of deferred section 987 gain or loss is determined under § 1.987–6 as if such gain or loss had been recognized with respect to the deferral QBU under § 1.987–5 on the date of the deferral event that gave rise to the deferred section 987 gain or loss. Thus, the source and character of deferred section 987 gain or loss is determined under § 1.987–6 without regard to the timing rules of § 1.987–12T.
Section 1.987–12T(d) of the temporary regulations contains rules that defer section 987 loss to the extent assets of a section 987 QBU are transferred outbound to a related foreign person in connection with an “outbound loss event.” Specifically, the temporary regulations provide that, notwithstanding § 1.987–5, the owner of a section 987 QBU with respect to which an outbound loss event occurs (outbound loss QBU) includes in taxable income in the year of the outbound loss event section 987 loss with respect to that section 987 QBU only to the extent provided in § 1.987–12T(d)(3). Sections 1.987–12T(d)(4) and (5) provide rules for the subsequent recognition of losses that are deferred under § 1.987–12T(d) that differ from the remittance-based rules that generally apply following deferral events.
Like the definition of deferral event, an outbound loss event includes two categories of transactions with respect to a section 987 QBU with net unrecognized section 987 loss. First, an outbound loss event includes any termination of the section 987 QBU in connection with a transfer of assets of the section 987 QBU by a U.S. person to a foreign person that was a member of the same controlled group as the U.S. transferor immediately before the transaction or, if the transferee did not exist immediately before the transaction, immediately after the transaction (related foreign person). The second category of outbound loss events includes any transfer by a U.S. person of part of an interest in a section 987 aggregate partnership or DE through which the U.S. person owns the section 987 QBU to a related foreign person that has the same functional currency as the section 987 QBU. The second category also includes a contribution of assets by such a related foreign person to the partnership or DE if the contribution has the effect of reducing the U.S. person's interest in the section 987 QBU (and therefore causes a deemed transfer of assets and liabilities to the U.S. person from the section 987 QBU) and the contributed assets are not included on the books and records of an eligible QBU of the partnership or DE. The second category would be implicated, for example, if a U.S. person transferred part of the interest in a DE through which it owned a section 987 QBU to a foreign corporation that had the same functional currency as the section 987 QBU in an outbound section 351 transaction.
Under these rules, the owner of the outbound loss QBU recognizes section 987 loss in the taxable year of the outbound loss event as determined under § 1.987–5 and the deferral event rules of § 1.987–12T(b) and (c), except that, solely for purposes of applying § 1.987–5, certain assets and liabilities of the outbound loss QBU are treated as not having been transferred and therefore as remaining on the balance sheet of the section 987 QBU, notwithstanding the outbound loss event. In the first category of outbound loss event (involving outbound asset transfers resulting in terminations), assets and liabilities that, immediately after the outbound loss event, are properly reflected on the books and records of the related foreign person or a section 987 QBU of the related foreign person are treated as not having been transferred. In the second category of outbound loss event (involving certain partnership and DE transactions), assets and liabilities that, immediately after the outbound loss event, are reflected on the books and records of the eligible QBU from which the assets and liabilities of the outbound loss QBU are allocated, and not on the books and records of a section 987 QBU, are treated as not having been transferred. The difference between the amount that otherwise would have been recognized and the amount actually recognized under this rule is referred to as outbound section 987 loss.
Although an outbound loss event in the second category also would constitute a deferral event, the rules governing deferral events only defer section 987 loss of a deferral QBU to the extent assets and liabilities are reflected on the books and records of a successor QBU immediately after the deferral event. Assets and liabilities of a deferral QBU that are reflected on the books and records of an eligible QBU of a partnership and allocated to a partner that has the same functional currency as the eligible QBU, as would occur in an outbound loss event, are not reflected on the books and records of a successor QBU and so would not cause section 987 loss to be deferred under the deferral event rules. Thus, there is no overlap in terms of the effect of the outbound loss event rules and the deferral event rules.
If an outbound loss event results from the transfer of assets of the outbound loss QBU in a nonrecognition transaction, the basis of the stock that is received in the transaction is increased by an amount equal to the outbound section 987 loss. In effect, this rule converts a section 987 loss into an unrealized stock loss, which may be recognized upon a recognition event with respect to the stock. This treatment
The temporary regulations provide that, if loss is recognized on the sale or exchange of stock within two years of an outbound loss event that gave rise to an adjustment to the basis of the stock, then, to the extent of the outbound section 987 loss, the source and character of the loss recognized on the sale or exchange will be determined under § 1.987–6 as if such loss were section 987 loss recognized pursuant to § 1.987–5 without regard to § 1.987–12T on the date of the outbound loss event.
The temporary regulations provide an anti-abuse rule to address transactions structured to avoid the deferral rules in § 1.987–12T. This rule provides that no section 987 loss is recognized under § 1.987–5 in connection with a transaction or series of transactions that are undertaken with a principal purpose of avoiding the purposes of § 1.987–12T. This rule would apply, for example, if, with a principal purpose of recognizing a deferred section 987 loss, a taxpayer engaged in a transaction that caused a deferral QBU owner to cease to exist without a qualified successor or caused a successor QBU to cease to exist, such that deferred section 987 loss otherwise would be recognized under § 1.987–12T(c).
The temporary regulations require adjustments to coordinate the application of § 1.987–12T with the fresh start transition method described in § 1.987–10(b) for transitioning to the final regulations. If a deferral QBU owner is required under § 1.987–10(a) to apply the fresh start transition method with respect to the deferral QBU on the transition date, or if a deferral QBU owner would have been so required if it had owned the deferral QBU on the transition date, the outstanding deferred section 987 gain or loss of the deferral QBU owner with respect to the deferral QBU must be adjusted on the transition date to equal the amount of outstanding deferred section 987 gain or loss that the deferral QBU owner would have had with respect to the deferral QBU on the transition date if, immediately before the deferral event, the deferral QBU had transitioned to the final regulations pursuant to the fresh start transition method. Additionally, if the owner of an outbound loss QBU is required under § 1.987–10(a) to apply the fresh start transition method with respect to the outbound loss QBU on the transition date, or if the owner would have been so required if it had owned the outbound loss QBU on the transition date, the basis of any stock that was subject to a basis adjustment under § 1.987–12T as a result of the outbound loss event must be adjusted to equal the basis that such stock would have had on the transition date if, immediately prior to the outbound loss event, the outbound loss QBU had transitioned to the final regulations pursuant to the fresh start transition method. Outbound section 987 loss that is not reflected in stock basis but that will be recognized when the owner and the related foreign person that participated in the outbound loss event cease to be members of the same controlled group must be adjusted in a similar manner. These adjustments to coordinate the application of § 1.987–12T with the fresh start transition method must be made even if the deferral QBU owner or the owner of the outbound loss QBU continues to own the deferral QBU or the outbound loss QBU on the transition date, as in the case of a deferral event or outbound loss event resulting from a transfer of part of an interest in a section 987 aggregate partnership that does not result in the termination of the deferral QBU or outbound loss QBU.
The temporary regulations under § 1.987–12T generally apply to any deferral event or outbound loss event that occurs on or after
A comment on the 2006 proposed regulations recommended that taxpayers be permitted to make a one-time election under § 1.987–5 to deem a section 987 QBU as having terminated at the end of each year, thereby requiring the owner to recognize all section 987 gains or losses with respect to the QBU on an annual basis. The comment suggested that such an election would allow taxpayers to reduce the complexity and administrative cost of complying with section 987 because taxpayers would not be required to track transactions between an owner and its section 987 QBU or unrecognized section 987 gains and losses carried over from previous years.
The Treasury Department and the IRS have determined that an annual deemed termination election would not obviate the need to track transactions between an owner and its section 987 QBU, since the net transfer would remain relevant to the annual calculation of section 987 gain or loss. Nonetheless, the Treasury Department and the IRS agree that an annual deemed termination election could enhance administrability of the final regulations by reducing the recordkeeping requirements necessary to apply the final regulations. Additionally, when an annual deemed termination election is in effect, taxpayers could not strategically time remittances in order to selectively recognize section 987 losses but not section 987 gains. Eliminating this planning opportunity would obviate the need for the deferral provisions of § 1.987–12T. Furthermore, as discussed in Part 3 of this Explanation of Provisions, an annual deemed termination election would address a policy concern with permitting the hybrid approach to section 987 suggested by comments on the 2006 proposed regulations.
Based on the foregoing considerations, § 1.987–8T(d) provides an election for a taxpayer to deem its section 987 QBUs to terminate on the last day of each taxable year for which the election is in effect. Because the considerations supporting an annual deemed termination election generally are relevant regardless of whether a taxpayer is subject to the final regulations, the election under § 1.987–8T(d) is available to any taxpayer without regard to the applicability of the final regulations to that taxpayer or any of its section 987 QBUs. A section 987 QBU to which this election applies is treated as having made a remittance of all of its gross assets to its owner
As noted in Part 1 of this Explanation of Provisions, the temporary regulations provide that the deferral provisions of § 1.987–12T do not apply with respect to section 987 QBUs for which the annual deemed termination election is in effect. Consequently, a taxpayer that finds the annual deemed termination election preferable to § 1.987–12T based on ease of compliance or other reasons may make the annual deemed termination election. Moreover, as discussed in Part 3 of this Explanation of Provisions, a taxpayer that makes the annual deemed termination election with respect to a section 987 QBU may reduce the compliance burden associated with computing taxable income or loss under the final regulations by electing to translate taxable income or loss of the section 987 QBU into the owner's functional currency at the yearly average exchange rate without any adjustments.
The Treasury Department and the IRS have determined that special consistency and effective date rules are needed for the annual deemed termination election to prevent taxpayers from using the election to selectively recognize section 987 losses without recognizing section 987 gains. Unless the annual deemed termination election is required to be made with respect to all section QBUs owned by related persons at the time of the election, taxpayers could choose to make the election only with respect to section 987 QBUs that have net unrecognized section 987 losses at the time of the election. Accordingly, § 1.987–1T(g)(2)(i)(B)(
A taxpayer that is subject to the final regulations and that must transition to the final regulations under the fresh start transition method of § 1.987–10(b) (fresh start taxpayer) may make the annual deemed termination election only if the first taxable year for which the election would apply is either (i) the first taxable year beginning on or after the transition date (as defined in § 1.987–11(c)) with respect to the taxpayer or (ii) a subsequent taxable year in which the “taxpayer's controlled group aggregate section 987 loss” (if any) does not exceed $5 million. For this purpose, a “taxpayer's controlled group aggregate section 987 loss” means the aggregate net amount of section 987 gain or loss that would be recognized pursuant to the election under § 1.987–8T(d) by the taxpayer and all related persons in the first taxable year of each person for which the election would apply.
Taxpayers that used a method based on a reasonable application of the 2006 proposed regulations prior to the transition date, and which therefore are not subject to the fresh start transition method pursuant to § 1.987–10(c), and taxpayers for which the final regulations are not applicable, must follow the election rules for fresh start taxpayers if any related party is a fresh start taxpayer. If no related party is a fresh start taxpayer, the annual deemed termination election may be made only if the first taxable year for which the election would apply is either (i) the first taxable year beginning on or after December 7, 2016, in which the election is relevant in determining section 987 taxable income or loss or section 987 gain or loss or (ii) a subsequent taxable year in which the “taxpayer's controlled group aggregate section 987 loss” (if any) does not exceed $5 million.
If a taxpayer makes the annual deemed termination election, the election will apply to the first taxable year of a related person that ends with or within a taxable year of the taxpayer to which the taxpayer's election applies. Once made, the annual deemed termination election may not be revoked.
As provided in § 1.987–1T(g)(2)(i)(B)(
As discussed in the preamble to the final regulations, comments on the 2006 proposed regulations recommended a hybrid approach that would combine the methodology of the regulations proposed under section 987 in 1991 (INTL–965–86, 56 FR 48457) for computing a section 987 QBU's net income with the methodology of the 2006 proposed regulations for computing section 987 gain or loss. Under the proposed hybrid approach, section 987 gain or loss generally would be determined under the method of the 2006 proposed regulations, but taxable income or loss would be translated into the owner's functional currency at the yearly average exchange rate without any adjustments.
Although a hybrid approach would simplify the calculation of section 987 taxable income or loss, the preamble to the final regulations observes that the hybrid approach gives rise to offsetting effects in section 987 taxable income or loss and in the foreign exchange exposure pool (FEEP) that raise concerns similar to those addressed by Congress in enacting section 1092. In particular, under the hybrid approach, exchange rate effects with respect to historic assets would be reflected in section 987 taxable income or loss to the extent of any cost recovery deductions with respect to those assets, but equal and offsetting amounts would be reflected in the FEEP and would be recognized only upon remittances. Thus, offsetting effects arising from a single asset would be taken into account at different times. The Treasury Department and the IRS have determined that it would be inappropriate for regulations under section 987 to permit distortions to section 987 taxable income or loss that have the effect of causing potentially large offsetting amounts of loss or gain to be reflected in the FEEP with respect to the same asset, since the loss or gain in the FEEP would be recognized only upon voluntary remittances from the QBU.
Nonetheless, the Treasury Department and the IRS acknowledge the concerns expressed in comments regarding the complexity of the 2006 proposed regulations that underlie the recommendation to adopt the hybrid approach. Concerns about offsetting amounts recognized at different times under the hybrid approach would not
Accordingly, the temporary regulations provide that a taxpayer that is otherwise generally subject to the final regulations may elect to apply the hybrid approach with respect to a section 987 QBU that is subject to the annual deemed termination election. In particular, § 1.987–3T(d) provides that, notwithstanding the rules of § 1.987–3(c) for translating items determined under § 1.987–3(b) in a section 987 QBU's functional currency into the owner's functional currency, a taxpayer may elect to translate all items of income, gain, deduction, and loss of a section 987 QBU with respect to which the annual deemed termination election described in § 1.987–8T(d) is in effect into the owner's functional currency, if necessary, at the yearly average exchange rate for the taxable year. An owner of multiple section 987 QBUs may make the election described in § 1.987–3T(d) with respect to all of its section 987 QBUs or only certain designated section 987 QBUs.
The 2006 proposed regulations reflected a two-pronged approach to the application of section 988 to transactions of a section 987 QBU, with different consequences generally depending on whether a transaction is denominated in (or determined by reference to) the owner's functional currency or a currency that is a nonfunctional currency with respect to both the owner and the section 987 QBU (third currency). As a general rule, § 1.987–3(e)(1) of the 2006 proposed regulations provided that section 988 applies to section 988 transactions attributable to a section 987 QBU and that the timing of any gain or loss is determined under the applicable provisions of the Code, but the 2006 proposed regulations did not clearly specify whether section 988 gain or loss would be determined with respect to the functional currency of the section 987 QBU or the owner's functional currency. Assets and liabilities giving rise to section 988 transactions were defined under proposed § 1.987–1(d) and (e) as historic items. Under § 1.987–3(e)(2) of the 2006 proposed regulations, transactions of a section 987 QBU described in section 988(c)(1)(B)(i) (relating to the acquisition of, or becoming an obligor under, a debt instrument), section 988(c)(1)(B)(ii) (relating to accrual of items of expense or gross income or receipts) or section 988(c)(1)(C) (relating to the disposition of nonfunctional currency) that are denominated in (or determined by reference to) the owner's functional currency, however, were not treated as section 988 transactions of the section 987 QBU, and no gain or loss was recognized under section 988 with respect to such transactions. Assets and liabilities giving rise to such transactions were required to be reflected on the balance sheet of the section 987 QBU in the owner's functional currency under § 1.987–2(d)(2) of the 2006 proposed regulations.
Additionally, § 1.987–3(d) of the 2006 proposed regulations provided that an item of income, gain, deduction, or loss of a section 987 QBU denominated in a currency other than the functional currency of the owner is translated at the spot rate on date the item is appropriately taken into account. Under § 1.987–3(c) of the 2006 proposed regulations, an item of income, gain, deduction, or loss of a section 987 QBU denominated in the owner's functional currency is not translated and is taken into account by the section 987 QBU in the owner's functional currency.
One comment indicated that the 2006 proposed regulations were unclear regarding the interaction of the rules for the treatment of section 988 transactions denominated in a third currency with the treatment of assets that give rise to section 988 transactions as historic assets. Upon the disposition of a historic asset, the 2006 proposed regulations required translation of the basis of the historic asset at the historic rate and the amount realized with respect to the asset at the yearly average exchange rate for the taxable year of the disposition or, if properly elected, the appropriate spot rate. Yet, § 1.987–3(f),
In light of the comment regarding the uncertain application of section 988 to transactions of a section 987 QBU under the 2006 proposed regulations and further consideration of the appropriate rules, the temporary regulations clarify and elaborate upon the application of section 988 to transactions attributable to a section 987 QBU. In this regard, the Treasury Department and the IRS have determined that computing section 988 gain or loss by reference to the functional currency of the section 987 QBU, rather than the owner's functional currency, and translating that amount at the yearly average exchange rate would be inconsistent with the treatment of items that give rise to section 988 transactions as historic items. Such items were treated as historic items under the 2006 proposed regulations because they do not economically expose the owner to fluctuations in the section 987 QBU's functional currency.
Taking these considerations into account, the Treasury Department and the IRS have determined that it is appropriate to continue to treat assets and liabilities giving rise to section 988 transactions of a section 987 QBU as historic items under §§ 1.987–1(d) and (e) of the final regulations. Thus, for example, a note denominated in a nonfunctional currency that gives rise to a section 988 transaction when acquired is a historic asset. However, the temporary regulations generally provide that section 988 gain or loss arising from section 988 transactions of a section 987 QBU is determined by reference to the owner's functional currency, rather than the functional currency of the section 987 QBU. See § 1.987–3T(b)(4)(i). Accordingly, in determining section 988 gain or loss with respect to a section 988 transaction of a section 987 QBU, the amounts required under section 988 to be translated on the applicable booking date or payment date with respect to the section 988 transaction are translated from the currency in which the amounts are denominated (or by reference to
When a section 987 QBU recognizes gain or loss on the disposition of a historic asset that gives rise to a section 988 transaction, some or all of the total gain or loss that is realized on the disposition may be section 988 gain or loss that, under section 988, is ordinary income that is sourced by reference to the residence of the section 987 QBU. For example, on the disposition of a nonfunctional currency note, the total gain or loss realized may be comprised of section 988 gain or loss that reflects exchange rate changes and other gain or loss that reflects other factors, such as changes in prevailing interest rates or in the creditworthiness of the note issuer. The total gain or loss on the disposition of a historic asset that gives rise to a section 988 transaction is determined under the general rules of section 987 by reference to the functional currency of the section 987 QBU. Section 988 gain or loss on the note is determined under §§ 1.988–2(b)(5) and (8) and 1.987–3T(b)(4)(i) by comparing the section 987 QBU's acquisition price for the note in nonfunctional currency translated into the owner's functional currency at the spot rates on the date of acquisition and the date of disposition, respectively. See § 1.987–3T(e),
Because assets and liabilities that give rise to section 988 transactions generally are historic items that have a spot rate as the historic rate under § 1.987–1T(c)(3)(i)(E), such assets and liabilities are translated at historic rates and do not give rise to section 987 gain or loss. Thus, when the general rules for section 988 transactions of a section 987 QBU apply, the owner will take into account under subpart J foreign currency exposure with respect to a section 988 transaction of a section 987 QBU only to the extent of the owner's economic exposure to fluctuations of its functional currency relative to the currency in which the section 988 transaction is denominated.
Additionally, consistent with the 2006 proposed regulations, the temporary regulations confirm that certain transactions that are denominated in (or determined by reference to) the owner's functional currency are not subject to section 988. Specifically, § 1.987–3T(b)(4)(ii) provides that specified owner functional currency transactions, which are defined as transactions described in section 988(c)(1)(B)(i) or (ii) or section 988(c)(1)(C) (including the acquisition of nonfunctional currency described in § 1.988–1(a)(1)) that are denominated in (or determined by reference to) the owner's functional currency, other than certain transactions described in § 1.987–3T(b)(4)(iii)(A) that are subject to a mark-to-market regime (discussed in Part 4.C of this Explanation of Provisions), are not treated as section 988 transactions. Although the temporary regulations do not follow the 2006 proposed regulations in specifying that assets and liabilities that give rise to specified owner functional currency transactions must be reflected on the balance sheet of the section 987 QBU in the owner's functional currency, the temporary regulations treat items that give rise to specified owner functional currency transactions as historic items that generally have a spot rate as the historic rate under § 1.987–1T(c)(3)(i)(E) and provide under § 1.987–3T(b)(2)(ii) that the basis and amount realized of a historic asset that gives rise to a specified owner functional currency transactions are not translated if denominated in the owner's functional currency. Together, these rules have the same effect as the treatment of specified owner functional currency transactions under the 2006 proposed regulations.
As discussed in the preamble to the final regulations, under the financial accounting standard described in Accounting Standards Codification, Foreign Currency Matters, section 830 (ASC 830), gains and losses from changes in exchange rates with respect to transactions that are denominated in a currency other than the entity's functional currency are referred to as “transaction” gains and losses. The category of foreign currency transactions that give rise to transaction gains and losses for financial accounting purposes overlaps considerably with the definition of a section 988 transaction for tax purposes, such that transaction gains and losses under financial accounting rules are conceptually similar to section 988 gains and losses. The financial accounting rules require the inclusion of transaction gains and losses in net income for the period in which the exchange rate changes occur. See ASC 830–20–35–1. Moreover, transaction gain or loss is always determined by reference to the functional currency of the entity that entered into the transaction. Thus, the financial accounting rules differ from the general tax rules applicable to section 988 transactions entered into by a section 987 QBU in two respects. First, the financial accounting rules require transaction gain or loss to be determined on a mark-to-market basis, whereas gain or loss from a section 988 transaction generally is not recognized until there is a realization event under general tax principles and the applicable provisions of the Code. Second, the financial accounting rules require transaction gain or loss to be determined by reference to the entity's functional currency, even when it differs from the reporting currency used in the consolidated financial statements and the transaction is denominated in the reporting currency.
As noted in the preamble to the final regulations, comments on the 2006 proposed regulations expressed a preference for greater consistency of the section 987 regulations with financial accounting rules. Taking these comments into account, the Treasury Department and the IRS have determined that providing treatment similar to the financial accounting treatment for certain section 988 transactions of section 987 QBUs will enhance administrability of the section 987 regulations with respect to such transactions and is consistent with the policies of sections 987 and 988.
Accordingly, as discussed in Part 1.C.i of this Explanation of Provisions, the temporary regulations permit a taxpayer to elect to determine section 987 gain or loss with respect to qualified short-term section 988 transactions (described in Part 1.C.i of this Explanation of Provisions) of a section 987 QBU under a foreign currency mark-to-market method of accounting. In addition, as discussed in Part 4.C.ii of this
The Treasury Department and the IRS have determined that allowing a taxpayer to mark to market foreign currency gain or loss with respect to qualified short-term section 988 transactions of a section 987 QBU will enhance administrability by aligning the timing for recognizing gain or loss with respect to such transactions with the financial accounting rules. Accordingly, a taxpayer may elect, on a QBU-by-QBU basis, under § 1.987–3T(b)(4)(iii)(C) to apply the foreign currency mark-to-market method of accounting to qualified short-term section 988 transactions. Under this election, the timing of section 988 gain or loss is determined for applicable transactions under the principles of section 1256(a)(1). Thus, when the election applies, section 988 gain or loss with respect to a qualified short-term section 988 transaction is recognized on an annual basis, but other gain or loss with respect to any property underlying the transaction (
A qualified short-term section 988 transaction is defined in § 1.987–3T(b)(4)(iii)(B) as a section 988 transaction, including a transaction denominated in the owner's functional currency, that both (1) occurs in the ordinary course of the section 987 QBU's business and (2) has an original term of one year or less on the day it is entered into by the section 987 QBU. The holding of currency that is nonfunctional currency (within the meaning of section 988(c)(1)(C)(ii)) to the section 987 QBU in the ordinary course of a section 987 QBU's trade or business also is treated as a qualified short-term section 988 transaction.
The temporary regulations include a special rule for determining section 988 gain or loss with respect to qualified short-term section 988 transactions (as described in Part 4.C.i of this Explanation of Provisions) of a section 987 QBU that are accounted for under a mark-to-market method of accounting. Specifically, § 1.987–3T(b)(4)(iii)(A) provides that section 988 gain or loss with respect to qualified short-term section 988 transactions of a section 987 QBU, and certain related hedges, that are accounted for under a mark-to-market method of accounting under section 475, section 1256, or § 1.987–3T(b)(4)(iii)(C) (discussed in Part 4.C.i of this Explanation of Provisions) is determined in, and by reference to, the functional currency of the section 987 QBU rather than the owner's functional currency. Items that give rise to qualified short-term section 988 transactions for which section 988 gain or loss is determined under § 1.987–3T(b)(4)(iii)(A) by reference to the section 987 QBU's functional currency are treated as marked items under § 1.987–1T(d)(3), with the result that gain or loss attributable to such items is translated at the yearly average exchange rate and that such items give rise to net unrecognized section 987 gain or loss.
Under the rules for qualified short-term section 988 transactions accounted for under a mark-to-market method of accounting, a section 987 QBU owner will take into account the full amount of its economic foreign currency exposure arising from such transactions, but the effects of such exposure generally will be bifurcated into a component reflected in section 987 taxable income or loss and a component reflected in the FEEP pool and recognized upon a remittance. These components could offset each other if the currency in which the section 988 transaction is denominated and the owner's functional currency moved in opposite directions relative to the section 987 QBU's functional currency. Restricting this treatment to qualified short-term section 988 transactions accounted for under a mark-to-market method of accounting limits the potential for abusive planning. In particular, the restriction to transactions accounted for under a mark-to-market method of accounting prevents selective realization of section 988 losses that would be taken into account in section 987 taxable income or loss in situations in which an offsetting gain is reflected in the FEEP. Additionally, short-term, ordinary-course section 988 transactions are less likely than other section 988 transactions to give rise to substantial offsetting effects in section 987 taxable income or loss and in the FEEP.
Consistent with the opening clause of section 987, which indicates that section 987 applies to the determination of the taxable income of any taxpayer “having 1 or more qualified business units with a functional currency other than the dollar,” § 1.987–1T(b)(6)(i) sets forth a general rule that section 987 and the regulations thereunder do not apply with respect to an eligible QBU (determined without regard to the scope limitations of § 1.987–1(b)(3)(ii)) that has the U.S. dollar as its functional currency and that would be subject to section 987 if it had a functional currency other than the U.S. dollar (dollar QBU).
The Treasury Department and the IRS have determined, however, that it is appropriate for a CFC that is the owner of a dollar QBU to recognize foreign currency gain or loss with respect to transactions of the dollar QBU that would be section 988 transactions if entered into directly by the owner. Accordingly, pursuant to the authority granted in section 985(a), § 1.987–1T(b)(6)(ii)(A) provides that the CFC owner of a dollar QBU will be subject to section 988 with respect to any item that is properly reflected on the books and records of the dollar QBU and that would give rise to a section 988 transaction if such item were acquired, accrued, or entered into directly by the owner of the dollar QBU. For purposes of applying section 988 to such items, § 1.987–1T(b)(6)(ii)(A) provides that such items are treated as properly reflected on the books and records of the dollar QBU's owner. Thus, except as provided in the special rule described later in this Part 5 of this Explanation of Provisions for computing income that is effectively connected with the conduct of a trade or business within the United States (ECI), a CFC would determine section 988 gain or loss from transactions of a dollar QBU by reference to the CFC's functional currency. For example, for purposes of determining its earnings and profits, a CFC that has a euro functional currency and that is the owner of a dollar QBU with a U.S. dollar-denominated liability
As a result of treating such items as properly reflected on the books and records of the CFC, instead of those of the dollar QBU, the CFC's section 988 gain or loss with respect to such items generally would be treated as foreign source income because section 988(a)(3) generally provides that the source of section 988 gain or loss is determined by reference to the residence of the taxpayer or QBU on whose books the asset, liability, or other item giving rise to the section 988 transaction is properly reflected. Section 1.988–4 then would apply to determine whether the section 988 gain or loss would be treated as ECI. Because a QBU with ECI must have the U.S. dollar as its functional currency (§ 1.985–1(b)(1)(v)), section 988 gain or loss measured by reference to the owner CFC's functional currency would not be ECI. However, the temporary regulations provide a special rule for certain section 988 transactions of a dollar QBU (including section 988 transactions denominated in the owner's functional currency) that arise from the conduct of a United States trade or business.
The special rule applies to a CFC owner of a dollar QBU that would have a section 988 transaction that would give rise to section 988 gain or loss that would be treated as ECI under § 1.988–4(c) if the item that would give rise to the section 988 transaction were treated as properly reflected on the books and records of the dollar QBU. Under § 1.987–1T(b)(6)(ii)(B), solely for purposes of determining the amount of section 988 gain or loss of the CFC that is ECI, any section 988 gain or loss that would be determined under section 988 as a result of the acquisition or accrual of any item and treated as ECI if the item were treated as properly reflected on the books and records of the dollar QBU is determined by treating such item as properly reflected on the books and records of the dollar QBU and, consequently, is determined by reference to the U.S. dollar.
The application of § 1.987–1T(b)(6)(ii) to a section 988 transaction that is denominated in a third currency (that is, neither the CFC's functional currency nor the U.S. dollar) could result in the same section 988 transaction generating ECI (determined by reference to the U.S. dollar) and generating subpart F income (determined by reference to the CFC owner's functional currency), subject to any limitation imposed by section 952(b). Under section 952(b), if the amount determined under § 1.987–1T(b)(6)(ii)(A) by reference to the owner's functional currency and the amount of ECI determined under § 1.987–1T(b)(6)(ii)(B) were both gains, only the excess, if any, of the gain determined by reference to the owner's functional currency over the ECI gain would be taken into account in determining subpart F income. If the amount determined under § 1.987–1T(b)(6)(ii)(A) by reference to the owner's functional currency and the amount of ECI determined under § 1.987–1T(b)(6)(ii)(B) were both losses, the loss determined by reference to the owner's functional currency would be taken into account in determining subpart F income only to the extent it exceeds the ECI loss.
The Treasury Department and the IRS recognize the potential administrative burden associated with applying the foregoing rules to a dollar QBU, which may give rise to a large number of section 988 transactions. Accordingly, § 1.987–1T(b)(6)(iii) provides an election for a CFC that directly or indirectly owns a dollar QBU to apply section 987 and the regulations thereunder in lieu of applying section 988 pursuant to § 1.987–1T(b)(6)(ii). The Treasury Department and the IRS have determined that, when this election applies, the source of foreign currency gain or loss that is determined under section 987 pursuant to the election should be consistent with the source that would have been determined under section 988 in the absence of the election. Accordingly, consistent with the source rule in section 988(a)(3), § 1.987–6T(b)(4) provides that the source of section 987 gain or loss determined with respect to a dollar QBU for which the owner has elected to apply section 987 is determined by reference to the residence of the CFC owner. Thus, such section 987 gain or loss will have a foreign source.
As is the case for dollar QBUs of CFCs that do not make the election under § 1.987–1T(b)(6)(iii) to apply section 987, CFCs that make the election and that have a dollar QBU that engages in a U.S. trade or business must apply a special rule to determine the amount of ECI that arises from transactions that would give rise to section 988 gain or loss if determined by reference to the dollar QBU's U.S. dollar functional currency. This special rule for determining the amount of ECI applies only to dollar QBUs that generate ECI because, under § 1.985–1(b)(1)(v), a QBU that produces income or loss that is, or is treated as, ECI must use the dollar as its functional currency. The special rule is needed for dollar QBUs that elect to be treated as section 987 QBUs because, under the general rules of § 1.987–3T(b)(4)(i) and (ii), which apply to all section 987 QBUs other than with respect to certain short-term transactions described in § 1.987–3T(b)(4)(iii)(B) that are accounted for under a mark-to-market method of accounting, section 988 gain or loss of a section 987 QBU with respect to transactions denominated in a third currency is determined in, and by reference to, the functional currency of the owner of the section 987 QBU, and section 988 gain or loss generally is not determined with respect to specified owner functional currency transactions described in Part 4.B of this Explanation of Provisions. Thus, in order to determine the appropriate amount of ECI from transactions of a dollar QBU for which an election to apply section 987 is in effect, § 1.987–1T(b)(6)(iii)(B) provides that, solely for purposes of determining the amount of section 988 gain or loss that is ECI, any section 988 gain or loss that would be determined under section 988 as a result of the acquisition or accrual of any item and treated as ECI under § 1.988–4(c) if the item were treated as properly reflected on the books and records of the dollar QBU is determined by treating the item as properly reflected on the books and records of the dollar QBU. Consequently, solely for that purpose, such section 988 gain or loss is determined by reference to the U.S. dollar. For purposes of determining the amount of section 988 gain or loss for other purposes, including to determine the earnings and profits of the CFC, the rules in § 1.987–3T(b)(4)(i) and (ii) continue to apply. As is the case for a CFC that has not made the election to apply section 987 in lieu of section 988, a transaction to which the special rule applies could generate both ECI and subpart F income.
Under § 1.987–2(c), an asset or liability is treated as transferred to a section 987 QBU from its owner if, as a result of a disregarded transaction, the asset or liability is reflected on the books and records of the section 987 QBU. Similarly, an asset or liability is treated as transferred from a section 987 QBU to its owner if, as a result of a disregarded transaction, the asset or liability is no longer reflected on the books and records of the section 987 QBU. For this purpose, a disregarded transaction generally means a
Consistent with the policy of deferring section 987 gain or loss under § 1.987–12T when assets of a section 987 QBU are reflected on the books and records of another section 987 QBU in the same controlled group as a result of certain transactions that result in deemed transfers, the Treasury Department and the IRS have determined that it would not be appropriate for combinations or separations of section 987 QBUs of the same owner to give rise to transfers to or from the section 987 QBUs. Accordingly, under the temporary regulations, section 987 gain or loss generally is not recognized when two or more section 987 QBUs (combining QBUs) with the same owner combine into a single section 987 QBU (combined QBU) or when a section 987 QBU (separating QBU) separates into multiple section 987 QBUs (each, a separated QBU).
Specifically, notwithstanding the general rule of the final regulations, § 1.987–2T(c)(9)(i) provides that the combination of two or more combining QBUs that have the same owner into a combined QBU does not give rise to a transfer of any combining QBU's assets or liabilities to the owner. In addition, § 1.987–2T(c)(9)(i) provides that transactions between the combining QBUs occurring in the taxable year of the combination, which otherwise would give rise to transfers, do not result in a transfer of the combining QBUs' assets or liabilities to the owner under § 1.987–2(c). For this purpose, a combination occurs when the assets and liabilities that are properly reflected on the books and records of two or more combining QBUs begin to be properly reflected on the books and records of a combined QBU and the separate existence of the combining QBUs ceases. A combination may result from any transaction or series of transactions in which combining QBUs become a combined QBU.
Similarly, § 1.987–2T(c)(9)(iii) provides that the separation of a separating QBU into two or more separated QBUs that have the same owner after the separation does not give rise to a transfer of any of the separating QBU's assets or liabilities to the owner. For this purpose, a separation occurs when assets and liabilities that are properly reflected on the books and records of a separating QBU begin to be properly reflected on the books and records of two or more separated QBUs. A separation may result from any transaction or series of transactions in which the separating QBU becomes two or more separated QBUs.
The temporary regulations generally require combining the aggregate net unrecognized section 987 gain or loss of combining QBUs for purposes of determining net unrecognized section 987 gain or loss of the combined QBU and require apportioning the net unrecognized section 987 gain or loss of a separating QBU among separated QBUs in proportion to their respective shares of the aggregate adjusted basis of the separating QBU's gross assets. Specifically, § 1.987–4T(f)(1) provides that the net unrecognized section 987 gain or loss of a combined QBU for a taxable year is determined by taking into account the net accumulated unrecognized section 987 gain or loss of each combining QBU for all prior taxable years for which the final regulations apply and treating the combining QBUs as having combined immediately prior to the beginning of the taxable year of combination. Additionally, § 1.987–4T(f)(2) provides that the net unrecognized section 987 gain or loss of a separated QBU for a taxable year is determined by taking into account the separated QBU's share of the net accumulated unrecognized section 987 gain or loss of the separating QBU for all prior taxable years for which the final regulations apply and treating the separating QBU as having separated immediately prior to the beginning of the taxable year of separation. No transactions are deemed to occur between the separating QBUs in the taxable year of separation prior to the completion of the separation. A separated QBU's share of the separating QBU's net accumulated unrecognized section 987 gain or loss for all prior taxable years is determined by apportioning the separating QBU's net accumulated unrecognized section 987 gain or loss for all prior taxable years to each separated QBU in proportion to the aggregate adjusted basis of the gross assets properly reflected on the books and records of each separated QBU immediately after the separation.
The temporary regulations also clarify at § 1.987–2T(c)(9)(ii) that, if a combining section 987 QBU has a different functional currency than the combined QBU, the combining section 987 QBU will be deemed to have automatically changed its functional currency to the functional currency of the combined section 987 QBU immediately prior to the combination. A combining section 987 QBU that is deemed to change its functional currency under this paragraph must make the adjustments described in § 1.985–5.
Under the general rule of § 1.987–3(c)(1), the owner of a section 987 QBU uses the yearly average exchange rate (as defined in § 1.987–1(c)(2)) to translate an item of income, gain, deduction, or loss of a section 987 QBU into the owner's functional currency. Alternatively, the owner of a section 987 QBU may elect to use the spot rate (as defined in § 1.987–1(c)(1)) for the day each item is taken into account.
Under section 986(a)(1)(A), for purposes of determining the amount of its foreign tax credit, a taxpayer that takes foreign income taxes into account when accrued generally translates the amount of any foreign income taxes (and any adjustments thereto) into dollars using the average exchange rate for the taxable year to which such taxes relate. However, sections 986(a)(1)(B) and (C) contain exceptions to this general rule, including for taxes that are not paid within two years of the close of the taxable year to which the taxes relate (two-year rule). In addition, section 986(a)(1)(D) provides that a taxpayer may elect to translate foreign income taxes denominated in a functional currency other than the taxpayer's functional currency using a spot rate in lieu of using the yearly average exchange rate. Section 986(a)(2)(A) generally provides that, for purposes of determining the amount of the foreign tax credit with respect to any foreign income taxes not subject to section 986(a)(1)(A) (or section 986(a)(1)(E), which provides a special rule for regulated investment companies), including by reason of the two-year rule or an election under section 986(a)(1)(D), the taxes are translated into dollars using the spot rate on the date such taxes were paid. Adjustments to such taxes are subject to the same rule, except that any refund or credit is translated into dollars using the exchange rate that applied to the original payment of such foreign income taxes.
Taking into account the translation rules of § 1.987–3(c) and section 986(a),
Consistent with Notice 89–74, § 1.987–3T(c)(2)(v) includes a special translation rule providing that income in an amount equal to the functional currency amount of the section 987 QBU's foreign income taxes claimed as a credit must be translated at the same rate used to translate the taxes. This translation rule applies to the owner of a section 987 QBU claiming a credit under section 901 for foreign income taxes, other than income taxes deemed paid under section 902 or section 960, that are properly reflected on the books of the section 987 QBU. Mechanically, this rule requires the owner to reduce the amount of section 987 taxable income or loss that otherwise would be determined under § 1.987–3 by an amount equal to the creditable tax amount, translated into U.S. dollars at the yearly average exchange rate for the taxable year in which the creditable tax is accrued, and then to increase the resulting amount by an amount equal to the creditable tax amount translated into U.S. dollars at the same exchange rate used to translate the creditable taxes into U.S. dollars under section 986(a). If the foreign taxes and the income are both translated at the same rate (that is, the same yearly average exchange rate), no adjustment is necessary under § 1.987–3T(c)(2)(v).
As discussed in the preamble to the final regulations, the final regulations apply an aggregate approach with respect to section 987 aggregate partnerships, which are defined in § 1.987–1(b)(5) as partnerships for which all of the capital and profits interests are owned, directly or indirectly, by persons that are related within the meaning of section 267(b) or section 707(b). This approach is consistent with the aggregate approach to partnerships reflected in the 2006 proposed regulations, but the 2006 proposed regulations would have applied to all partnerships. Under the aggregate approach, assets and liabilities reflected on the books and records of an eligible QBU of a partnership are allocated to each partner, which is considered an indirect owner of the eligible QBU. If the eligible QBU has a different functional currency than its indirect owner, then the assets and liabilities of the eligible QBU that are allocated to the partner are treated as a section 987 QBU of the indirect owner.
The 2006 proposed regulations provided a rule for determining a partner's share of the assets and liabilities of an eligible QBU that is owned indirectly through a section 987 aggregate partnership. Specifically, proposed § 1.987–7(b) provided that a partner's share of assets and liabilities reflected on the books and records of an eligible QBU owned through a section 987 aggregate partnership must be determined in a manner consistent with how the partners have agreed to share the economic benefits and burdens corresponding to partnership assets and liabilities, taking into account the rules and principles of subchapter K. One comment noted that this rule for allocating assets and liabilities to a partner's indirectly owned section 987 QBU was ambiguous and that the rules and principles of subchapter K do not provide sufficient guidance in this regard.
The Treasury Department and the IRS acknowledge the ambiguity in the 2006 proposed regulations regarding the manner in which assets and liabilities of a partnership are allocated to a partner's indirectly owned section 987 QBU under the aggregate approach. Accordingly, the temporary regulations provide more specific rules for determining a partner's share of the assets and liabilities reflected on the books and records of an eligible QBU owned indirectly through a section 987 aggregate partnership. Specifically, § 1.987–7T(b) provides that, in any taxable year, a partner's share of each asset and liability of a section 987 aggregate partnership is proportional to the partner's liquidation value percentage with respect to the aggregate partnership. A partner's liquidation value percentage is defined as the ratio of the liquidation value of the partner's interest in the partnership to the aggregate liquidation value of all the partners' interests in the partnership. The liquidation value of the partner's interest in the partnership is the amount of cash the partner would receive with respect to its interest if, immediately following the applicable determination date, the partnership sold all of its assets for cash equal to the fair market value of such assets (taking into account section 7701(g)), satisfied all of its liabilities (other than those described in § 1.752–7), paid an unrelated third party to assume all of its § 1.752–7 liabilities in a fully taxable transaction, and then liquidated.
In general, the temporary regulations provide that the determination date for determining a partner's liquidation value percentage is the date of the most recent event described in § 1.704–1(b)(2)(iv)(
The Treasury Department and the IRS have determined that the liquidation value percentage methodology reflected
Section 267(a)(1) provides that no deduction is allowed in respect of any loss from the sale or exchange of property, directly or indirectly, between persons who have a relationship described in section 267(b). Section 267(f)(2) modifies the general rule of section 267(a)(1) in the case of a sale or exchange of property between corporations that are members of the same controlled group (as defined in section 267(f)(1)), generally providing that a loss realized upon such a sale or exchange is deferred until the property is transferred outside the group such that there would be recognition of loss under consolidated return principles. Section 267(f)(3)(C) provides that, to the extent provided in regulations, section 267(a)(1) does not apply to any loss sustained by a member of a controlled group on the repayment of a loan made to another member of such controlled group if such loan is payable or denominated in a foreign currency and attributable to a reduction in the value of that foreign currency. Section 1.267(f)–1(e) provides that section 267(a) generally does not apply to an exchange loss realized with respect to a loan of nonfunctional currency to another controlled group member if the transaction that causes the realization of the loss does not have as a significant purpose the avoidance of Federal income tax. Additionally, § 1.267(f)–1(h) provides that if a transaction is engaged in with a principal purpose to avoid the purposes of § 1.267(f)–1, including by distorting the timing of losses, adjustments may be made to carry out such purposes. Section 1.988–2(b)(16)(i) cross-references the regulations under section 267 regarding the coordination of sections 267 and 988 with respect to the treatment of a creditor under a debt instrument, but § 1.988–2(b)(16)(ii) is reserved with respect to the treatment of a debtor. The temporary regulations correct the cross-reference in § 1.988–2(b)(16)(i) to refer to § 1.267(f)–1(e) rather than § 1.267(f)–1(h).
The Treasury Department and the IRS have determined that the policy considerations underlying section 267(f)(3)(C) and § 1.267(f)–1(e) with respect to creditors on loans to related persons also apply with respect to debtors on such loans and that there is no reason to distinguish between a creditor and debtor with regard to the application of an anti-avoidance rule to the same transaction. Accordingly, pursuant to the authority granted to the Secretary in section 989(c)(5) to prescribe regulations providing for the appropriate treatment of related-party transactions, § 1.988–2T(b)(16)(ii) provides that exchange loss of a debtor with respect to a loan (original loan) from a person with whom the debtor has a relationship described in section 267(b) or section 707(b) is deferred if the transaction resulting in realization of the loss has a principal purpose of avoiding Federal income tax. Such deferred loss will be recognized at the end of the term of the original loan.
Certain IRS regulations, including these, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory assessment is not required. For applicability of the Regulatory Flexibility Act (5 U.S.C. chapter 6), please refer to the Special Analyses section in the preamble to the cross-referenced notice of proposed rulemaking in the Proposed Rules section of this issue of the
The principal author of these regulations is Mark E. Erwin of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1 is amended as follows:
26 U.S.C. 985, 987, 989(c) and 7805 * * *
(b) * * *
(4) [Reserved].
(a) through (h) [Reserved].
(b) * * *
(1) * * *
(iii) [Reserved]. For further guidance, see § 1.987–1T(b)(1)(iii).
(b) * * *
(6) [Reserved]. For further guidance, see § 1.987–1T(b)(6).
(c) * * *
(1) * * *
(ii) * * *
(B) [Reserved]. For further guidance, see § 1.987–1T(c)(1)(ii)(B).
(c) * * *
(3) * * *
(i) * * *
(E) [Reserved]. For further guidance, see § 1.987–1T(c)(3)(i)(E).
(d) * * *
(3) [Reserved]. For further guidance, see § 1.987–1T(d)(3).
(f) [Reserved]. For further guidance, see § 1.987–1T(f).
(g) * * *
(2) * * *
(i) * * *
(B) through (C) [Reserved]. For further guidance, see § 1.987–1T(g)(2)(i)(B) through (C).
(g) * * *
(3) * * *
(i) * * *
(E) through (H) [Reserved]. For further guidance, see § 1.987–1T(g)(3)(i)(E) through (H).
(a) through (b)(1)(ii) [Reserved]. For further guidance, see § 1.987–1(a) through (b)(1)(ii).
(iii)
(b)(2) through (b)(5) [Reserved]. For further guidance, see § 1.987–1(b)(2) through (b)(5).
(6)
(ii)
(B)
(iii)
(B)
(b)(7) through (c)(1)(ii)(A) [Reserved]. For further guidance, see § 1.987–1(b)(7) through (c)(1)(ii)(A).
(B)
(c)(2) through (c)(3)(i)(D) [Reserved]. For further guidance, see § 1.987–1(c)(2) through (c)(3)(i)(D).
(E)
(c)(3)(ii) through (d)(2) [Reserved]. For further guidance, see § 1.987–1(c)(3)(ii) through (d)(2).
(3) Gives rise to a qualified short-term section 988 transaction (as defined in § 1.987–3T(b)(4)(iii)(B)) of the section 987 QBU, whether denominated in the functional currency of the owner or other nonfunctional currency with respect to the section 987 QBU, for which section 988 gain or loss is determined under § 1.987–3T(b)(4)(iii)(A) in, and by reference to, the functional currency of the section 987 QBU.
(e) [Reserved]. For further guidance, see § 1.987–1(e).
(f)
U.S. Corp is a domestic corporation with the U.S. dollar as its
The facts are the same as
(g)(1) through (g)(2)(i)(A) [Reserved]. For further guidance, see § 1.987–1(g)(1) through (g)(2)(i)(A).
(B)
(
(
(
(C)
(g)(2)(ii) through (g)(3)(i)(D) [Reserved]. For further guidance, see § 1.987–1(g)(2)(ii) through (g)(3)(i)(D).
(E)
(F)
(G)
(H)
(g)(4) through (6) [Reserved]. For further guidance, see § 1.987–1(g)(4) through (6).
(h)
(i)
(c) * * *
(9) [Reserved]. For further guidance, see § 1.987–2T(c)(9).
(a) through (c)(8) [Reserved]. For further guidance, see § 1.987–2(a) through (c)(8).
(9)
(ii)
(iii)
(c)(10) through (d) [Reserved]. For further guidance see § 1.987–2(c)(10) through (d).
(e)
(f)
(b) * * *
(2) * * *
(ii) [Reserved]. For further guidance, see § 1.987–3T(b)(2)(ii).
(b) * * *
(4) [Reserved]. For further guidance, see § 1.987–3T(b)(4).
(c) * * *
(2) * * *
(ii) [Reserved]. For further guidance, see § 1.987–3T(c)(2)(ii).
(c) * * *
(2) * * *
(v) through (d) [Reserved]. For further guidance, see § 1.987–3T(c)(2)(v) through (d).
(e)
(a) through (b)(2)(i) [Reserved]. For further guidance, see § 1.987–3(a) through (b)(2)(i).
(ii)
(3) [Reserved]. For further guidance, see § 1.987–3(b)(3).
(4)
(ii)
(iii)
(B)
(C)
(iv)
(c)(1) through (c)(2)(i) [Reserved]. For further guidance, see § 1.987–3(c)(1) through (c)(2)(i).
(ii)
(iii) through (iv) [Reserved]. For further guidance, see § 1.987–3(c)(2)(iii) through (iv).
(v)
(d)
(e)
The facts are the same as in
Business A acquires £100 on August 27, 2021, for €120 and sells the pounds on November 17, 2021, for €125. The dollar-pound spot rate (without the use of a spot rate convention) is £1 = $1 on August
(i) Business A purchases a £100 2-year note for €75 on October 1, 2021, and receives a £100 repayment of principal with respect to the note on December 31, 2021. At the spot rates on October 1, 2021 (as defined in § 1.987–1(c)(1)), without the use of a spot rate convention, Business A's €75 purchase price translates into £80 and $95. At the spot rates on December 31, 2021, without the use of a spot rate convention, the £100 principal amount on the note translates into €90 and $130, and £80 translates into $104.
(ii) The acquisition of the note is a section 988 transaction of Business A under paragraph (b)(4)(i) of this section, and the note is a historic asset under § 1.987–1(e). To determine its section 987 taxable income or loss with respect to Business A, U.S. Corp must determine Business A's total gain or loss on the disposition of the note in U.S. Corp's dollar functional currency. Consistent with § 1.988–2(b)(8), U.S. Corp also must determine whether some or all of that gain or loss constitutes section 987 gain or loss described in section 988(b).
(iii) To determine Business A's total gain or loss on the disposition of the note, Business A's basis and amount realized on the note must be determined in euros under § 1.987–3(b), if necessary, and translated into dollars under § 1.987–3(c). Business A has a €75 basis in the note that is translated into $95 under § 1.987–3(c)(2)(i) at the historic rate described in § 1.987–1T(c)(3)(i)(E), which is the spot rate on the date the note was acquired without the use of a spot rate convention. Business A's £100 amount realized on the note is translated into €90 under § 1.987–3(b)(2)(i) using the spot rate on December 31, 2021, without the use of a spot rate convention. That €90 amount realized is then translated into $130 under paragraph (c)(2)(ii) of this section using the spot rate on December 31, 2021, without the use of a spot rate convention. Accordingly, the total gain with respect to the disposition of the note that is included in section 987 taxable income is $35 ($130 less $95).
(iv) U.S. Corp must determine whether some or all of the $35 total gain with respect to the note constitutes section 988 gain. The amount of section 988 gain realized with respect to the note is determined under § 1.988–2(b)(5), which requires a comparison of the functional currency value of the principal amount of the note on the booking date and payment date spot rates, respectively, and defines the principal amount of the note as Business A's purchase price in units of nonfunctional currency, which is £80. Under paragraph (b)(4)(i) of this section, section 988 gain or loss with respect to the note is determined by reference to U.S. Corp's dollar functional currency, such that the amounts required under section 988 to be translated on the booking date and payment date are translated into the dollars at the booking date and payment date spot rates. Accordingly, Business A's £80 principal amount with respect to the note is translated at the booking date and payment date spots rates into $95 and $104, respectively. Thus, $9 ($104 less $95) of the $35 total gain taken into account by U.S. Corp as section 987 taxable income with respect to the note is section 988 gain. The remaining $26 of gain, which may be attributable to credit risk or another factor unrelated to currency fluctuations, is sourced and characterized without regard to section 988.
The facts are the same as in
(i) Business A receives and accrues $100 of income from the provision of services on January 1, 2021. Business A continues to hold the $100 as a U.S. dollar-denominated demand deposit at a bank on December 31, 2021. U.S. Corp has elected under paragraph (b)(4)(iii)(C) of this section to use the foreign currency mark-to-market method of accounting for qualified short-term section 988 transactions entered into by Business A. The euro-dollar spot rate without the use of a spot rate convention is €1 = $1 on January 1, 2021, and €1 = $2 on December 31, 2021, and the yearly average exchange rate for 2021 is €1 = $1.50.
(ii) Under § 1.987–3(b)(2)(i), the $100 earned by Business A is translated into €100 at the spot rate on January 1, 2021, as defined in § 1.987–1(c)(1) without the use of a spot rate convention. In determining U.S. Corp's taxable income, the €100 of service income is translated into $150 at the yearly average exchange rate for 2021, as provided in § 1.987–3(c)(1).
(iii) The $100 demand deposit constitutes a qualified short-term section 988 transaction under paragraph (b)(4)(iii)(B) of this section because the demand deposit is treated as nonfunctional currency within the meaning of section 988(c)(1)(C)(ii). Because Business A uses the foreign currency mark-to-market method of accounting for qualified short-term section 988 transactions, under paragraph (b)(4)(iii)(A) of this section, section 988 gain or loss for such transactions is determined in, and by reference to, euros, the functional currency of Business A. Accordingly, section 988 gain or loss must be determined on Business A's holding of the $100 demand deposit in, and by reference to, the euro. Under § 1.988–2(a)(2), Business A is treated as having an amount realized of €50 when the $100 is marked to market at the end of 2021 under paragraph (b)(4)(iii)(C) of this section. Marking the dollars to market gives rise to a section 988 loss of €50 (€50 amount realized, less Business A's €100 basis in the $100). In determining U.S. Corp's taxable income, that €50 loss is translated into a $75 loss at the yearly average exchange rate for 2021, as provided in § 1.987–3(c)(1).
(i)
(ii)
(f)
(g)
(c) * * *
(2) [Reserved]. For further guidance, see § 1.987–4T(c)(2).
(f) [Reserved]. For further guidance, see § 1.987–4T(f).
(a) through (c)(1) [Reserved]. For further guidance, see § 1.987–4(a) through (c)(1).
(2)
(d) through (e) [Reserved]. For further guidance, see § 1.987–4(d) through (e).
(f)
(2)
(3)
(ii)
(ii)
(g) [Reserved]. For further guidance, see § 1.987–4(g).
(h)
(i)
(b) * * *
(4) [Reserved]. For further guidance, see § 1.987–6T(b)(4).
(a) through (b)(3) [Reserved]. For further guidance, see § 1.987–6(a) through (b)(3).
(4)
(c) [Reserved]. For further guidance, see § 1.987–6(c).
(d)
(e)
(b) [Reserved]. For further guidance, see § 1.987–7T(b).
(a) [Reserved]. For further guidance, see § 1.987–7(a).
(b)
(2)
(ii)
(B)
(3)
(i)
(ii)
(c) [Reserved]. For further guidance, see § 1.987–7(c).
(d)
(e)
(d) [Reserved]. For further guidance, see § 1.987–8T(d).
(a) through (c) [Reserved]. For further guidance, see § 1.987–8(a) through (c).
(d)
(e) through (f) [Reserved]. For further guidance, see § 1.987–8(e) through (f).
(g)
(h)
(a) through (h) [Reserved]. For further guidance, see § 1.987–12T(a) through (h).
(a)
(2)
(3)
(ii)
(b)
(2)
(ii)
(A) A termination of the section 987 QBU other than any of the following terminations: a termination described in § 1.987–8(b)(3), a termination described in § 1.987–8(c), or a termination described solely in § 1.987–8(b)(1); or
(B) A disposition of part of an interest in a section 987 aggregate partnership or DE through which the section 987 QBU is owned or any contribution by another
(iii)
(3)
(4)
(i) The books and records of the potential successor QBU reflect assets that, immediately before the transaction or series of transactions described in paragraph (b)(2)(ii) of this section, were reflected on the books and records of the section 987 QBU referred to in that paragraph.
(ii) The owner of the potential successor QBU and the owner of the section 987 QBU referred to in paragraph (b)(2)(ii) of this section immediately before the transaction or series of transactions described in that paragraph are members of the same controlled group.
(iii) In the case of a section 987 QBU referred to in paragraph (b)(2)(ii)(A) of this section, if the owner of the section 987 QBU immediately before the transaction or series of transactions described in that paragraph was a U.S. person, the potential successor QBU is owned by a U.S. person.
(c)
(ii)
(2)
(ii)
(iii)
(3)
(4)
(ii)
(iii)
(d)
(2)
(i) Any termination of the section 987 QBU in connection with a transfer by a U.S. person of assets of the section 987 QBU to a foreign person that is a member of the same controlled group as the U.S. transferor immediately before the transaction or, if the transferee did not exist immediately before the transaction, immediately after the transaction (related foreign person), provided that the termination would result in the recognition of section 987 loss with respect to the section 987 QBU under § 1.987–5 and paragraph (b) of this section but for this paragraph (d);
(ii) Any transfer by a U.S. person of part of an interest in a section 987 aggregate partnership or DE through which the U.S. person owns the section 987 QBU to a related foreign person that has the same functional currency as the section 987 QBU, or any contribution by such a related foreign person to such a partnership or DE of assets that, immediately after the contribution, are not considered to be included on the books and records of an eligible QBU, provided that the transfer would result in the recognition of section 987 loss with respect to the section 987 QBU under § 1.987–5 and paragraph (b) of this section but for this paragraph (d).
(3)
(i) In the case of an outbound loss event described in paragraph (d)(2)(i) of this section, assets and liabilities that, immediately after the outbound loss event, are reflected on the books and records of the related foreign person described in that paragraph or of a section 987 QBU owned by such related foreign person; and
(ii) In the case of an outbound loss event described in paragraph (d)(2)(ii) of this section, assets and liabilities that, immediately after the outbound loss event, are reflected on the books and records of the eligible QBU from which the assets and liabilities of the outbound loss QBU are allocated and not on the books and records of a section 987 QBU.
(4)
(5)
(e)
(2)
(f)
(2)
(g)
(h)
(ii)
(B) Under paragraph (b)(3) of this section, DC1's taxable income in the taxable year of the deferral event includes DC1's section 987 gain or loss determined with respect to Business A under § 1.987–5, except that, for purposes of applying § 1.987–5, all assets and liabilities of Business A that are reflected on the books and records of Business B immediately after Business A's termination are treated as not having been transferred and therefore as though they remained on Business A's books and records (notwithstanding the deemed transfer of those assets under § 1.987–8(e)). Accordingly, in the taxable year of the deferral event, DC1 is treated as making a remittance of €100x, corresponding to the assets of Business A that are no longer reflected on the books and records of a section 987 QBU, and is treated as having a remittance proportion with respect to Business A of 0.1, determined by dividing the €100x remittance by the sum of the remittance and the €900x aggregate adjusted basis of the gross assets deemed to remain on Business A's books at the end of the year. Thus, DC1 recognizes $10x of section 987 gain in the taxable year of the deferral event. DC1's deferred section 987 gain equals $90x, which is the amount of section 987 gain that, but for the application of paragraph (b) of this section, DC1 would have recognized under § 1.987–5 ($100x), less the amount of section 987 gain recognized by DC1 under § 1.987–5 and this section ($10x).
(ii)
(ii)
(B) Under paragraphs (d)(1) and (d)(3) of this section, in the taxable year of the outbound loss event, DC1 includes in taxable income section 987 loss recognized with respect to Business A as determined under § 1.987–5, except that, for purposes of applying § 1.987–5, all assets and liabilities of Business A that are reflected on the books and records of CFC1, a related foreign person described in paragraph (d)(2) of this section, are treated as not having been transferred. Accordingly, DC1's remittance proportion with respect to Business A is 0, and DC1 recognizes no section 987 loss with respect to Business A. DC1's outbound section 987 loss is $500x, which is the amount of section 987 loss that DC1 would have recognized under § 1.987–5 ($500x) without regard to paragraph (d) of this section, less the amount of section 987 loss recognized by DC1 under paragraph (d)(3) of this section ($0). Under paragraph (d)(4) of this section, DC1 must increase its basis in its CFC1 shares by the amount of the outbound section 987 loss ($500x).
(ii)
(B) Immediately after the Entity A sale, Entity A is a section 987 aggregate partnership within the meaning of § 1.987–1(b)(5) because DC1 and DC2 own all the interests in partnership capital and profits, DC1 and DC2 are related within the meaning of section 267(b), and the partnership has an eligible QBU (Business A) that would be a section 987 QBU with respect to a partner if owned by the partner directly. As a result of the Entity A sale, 50 percent of the assets and liabilities of Business A ceased to be reflected on the books and records of DC1's Business A section 987 QBU. As a result, such assets and liabilities are treated as if they were transferred from DC1's Business A section 987 QBU to DC1. Additionally, following DC2's acquisition of 50 percent of the interest in Entity A, DC2 is allocated 50 percent of the assets and liabilities of Business A under §§ 1.987–2(b), 1.987–7(a), and 1.987–7T(b). Because DC2 and Business A have different functional currencies, DC2's portion of the Business A assets and liabilities constitutes a section 987 QBU. Accordingly, 50 percent of the assets and liabilities of Business A are treated as transferred by DC2 to DC2's Business A section 987 QBU.
(C) The Entity A sale is a deferral event described in paragraph (b)(2) of this section because: (1) The sale constitutes the disposition of part of an interest in a DE; and (2) immediately after the transaction, assets of DC1's Business A section 987 QBU are reflected on the books and records of DC1's Business A section 987 QBU and DC2's Business A section 987 QBU, each of which is a successor QBU with respect to DC1's Business A section 987 QBU within the meaning of paragraph (b)(4) of this section. Accordingly, DC1's Business A section 987 QBU is a deferral QBU within the meaning of paragraph (b)(1) of this section, and DC1 is a deferral QBU owner within the meaning of paragraph (c)(1)(ii) of this section. Under paragraph (b)(1) of this section, DC1 includes in taxable income section 987 gain or loss with respect to Business A in connection with the deferral event to the extent provided in paragraphs (b)(3) and (c) of this section.
(D) Under paragraph (b) of this section, in the taxable year of the Entity A sale, DC1 includes in taxable income section 987 gain or loss with respect to Business A as determined under § 1.987–5, except that, for purposes of applying § 1.987–5, all assets and liabilities of Business A that, immediately
(ii)
(B) Under paragraph (c)(1) of this section, DC1 recognizes deferred section 987 gain with respect to Business A in accordance with paragraphs (c)(2) through (4) of this section. Under paragraph (c)(2)(i) of this section, DC1 recognizes deferred section 987 gain in Year 3 as a result of the remittance from Business B to DC2. Under paragraph (c)(2)(ii) of this section, the amount of deferred section 987 gain that DC1 recognizes is $25x, which is DC1's outstanding deferred section 987 gain or loss ($100x) with respect to Business A multiplied by the remittance proportion (0.25) of DC2 with respect to Business B for the taxable year as determined under § 1.987–5(b).
(i)
(2)
(3)
(j)
(2)
(k)
(b) * * *
(16) [Reserved].
(i) [Reserved].
(a) * * *
(3) [Reserved]. For further guidance, see § 1.988–1T(a)(3).
(a)(1) through (a)(2) [Reserved]. For further guidance, see § 1.988–1(a)(1) through (2).
(3)
(4) through (i) [Reserved]. For further guidance, see § 1.988–1(a)(4) through (i).
(j)
(k)
(b) * * *
(16) [Reserved]. For further guidance, see § 1.988–2T(b)(16).
(i) [Reserved]. For further guidance, see § 1.988–2T(i).
(a) through (b)(15) [Reserved]. For further guidance, see § 1.988–2(a) through (b)(15).
(16)
(ii)
(
(
(B)
(17) through (h) [Reserved]. For further guidance, see § 1.988–2(b)(17) through (h).
(i)
(j)
(k)
Internal Revenue Service (IRS), Treasury.
Notice of proposed rulemaking by cross-reference to temporary regulations.
Published elsewhere in this issue of the
Written or electronic comments and requests for a public hearing must be received by March 8, 2017.
Send submissions to: CC:PA:LPD:PR (REG–128276–12), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG–128276–12), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC, or sent electronically via the Federal eRulemaking Portal at
Concerning the proposed regulations, Steven D. Jensen at (202) 317–6938; concerning submissions of comments or requests for a public hearing, Regina Johnson, (202) 317–6901 (not toll-free numbers).
The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by February 6, 2017. Comments are specifically requested concerning:
Whether the proposed collection of information is necessary for the proper performance of the Internal Revenue Service, including whether the information will have practical utility;
The accuracy of the estimated burden associated with the proposed collection of information (see below);
How the quality, utility, and clarity of the information to be collected may be enhanced;
How the burden of complying with the proposed collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and
Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of service to provide information.
The collection of information in this proposed regulation is in: (1) §§ 1.987–1(b)(6)(iii)(A) and 1.987–1(g)(3)(i)(E); (2) §§ 1.987–3(b)(4)(iii)(C) and 1.987–1(g)(3)(i)(F); (3) §§ 1.987–3(d) and 1.987–1(g)(3)(i)(G); and (4) §§ 1.987–8(d) and 1.987–1(g)(3)(i)(H). Sections 1.987–1(b)(6)(iii)(A) and 1.987–1(g)(3)(i)(E) allow a controlled foreign corporation to elect to apply section 987 and the regulations thereunder (with certain exceptions) to a dollar QBU. Sections 1.987–3(b)(4)(iii)(C) and 1.987–1(g)(3)(i)(F) allow a taxpayer to elect to apply a foreign currency mark-to-market method of accounting for qualified short-term section 988 transactions. Sections 1.987–3(d) and 1.987–1(g)(3)(i)(G) allow a taxpayer to elect to translate all items of income, gain, deduction, and loss of the section 987 QBU at the yearly average exchange rate. Sections 1.987–8(d) and 1.987–1(g)(3)(i)(H) allow a taxpayer to elect to deem all of its section 987 QBUs to terminate on the last day of each taxable year. The preceding elections are to be made pursuant to § 1.987–1(g). The collection of information is voluntary to obtain a benefit. The likely respondents are business or other for-profit institutions.
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. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.
The temporary regulations (published in the Rules and Regulations section of this issue of the
Certain IRS regulations, including these, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. It is hereby certified that these regulations will not have a significant economic impact on a substantial number of small entities within the meaning of section 601(6) of the Regulatory Flexibility Act (5 U.S.C. chapter 6). Accordingly, a regulatory flexibility analysis is not required. This certification is based on the fact that these regulations will primarily affect U.S. corporations that have foreign operations, which tend to be larger businesses. Pursuant to section 7805(f) of the Code, these regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.
Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the
The principal author of these regulations is Mark E. Erwin of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.
Income taxes, Reporting and recordkeeping requirements.
Accordingly, 26 CFR part 1, as amended elsewhere in this issue of the
26 U.S.C. 985, 987, 989(c) and 7805 * * *
(b) * * *
(1) * * *
(iii) [The text of the proposed amendment to § 1.987–1(b)(1)(iii) is the same as the text of § 1.987–1T(b)(1)(iii) published elsewhere in this issue of the
(6) [The text of the proposed amendment to § 1.987–1(b)(6) is the same as the text of § 1.987–1T(b)(6) published elsewhere in this issue of the
(c) * * *
(1) * * *
(ii) * * *
(B) [The text of the proposed amendment to § 1.987–1(c)(1)(ii)(B) is the same as the text of § 1.987–1T(c)(1)(ii)(B) published elsewhere in this issue of the
(c) * * *
(3) * * *
(i) * * *
(E) [The text of the proposed amendment to § 1.987–1(c)(3)(i)(E) is the same as the text of § 1.987–1T(c)(3)(i)(E) published elsewhere in this issue of the
(d) * * *
(3) [The text of the proposed amendment to § 1.987–1(d)(3) is the same as the text of § 1.987–1T(d)(3) published elsewhere in this issue of the
(f) [The text of the proposed amendment to § 1.987–1(f) is the same as the text of § 1.987–1T(f) published elsewhere in this issue of the
(g) * * *
(2) * * *
(i) * * *
(B) [The text of the proposed amendment to § 1.987–1(g)(2)(i)(B) is the same as the text of § 1.987–1T(g)(2)(i)(B) published elsewhere in this issue of the
(C) [The text of the proposed amendment to § 1.987–1(g)(2)(i)(C) is the same as the text of § 1.987–1T(g)(2)(i)(C) published elsewhere in this issue of the
(3) * * *
(i) * * *
(E) [The text of the proposed amendment to § 1.987–1(g)(3)(i)(E) is the same as the text of § 1.987–1T(g)(3)(i)(E) published elsewhere in this issue of the
(F) [The text of the proposed amendment to § 1.987–1(g)(3)(i)(F) is the same as the text of § 1.987–1T(g)(3)(i)(F) published elsewhere in this issue of the
(G) [The text of the proposed amendment to § 1.987–1(g)(3)(i)(G) is the same as the text of § 1.987–1T(g)(3)(i)(G) published elsewhere in this issue of the
(H) [The text of the proposed amendment to § 1.987–1(g)(3)(i)(H) is the same as the text of § 1.987–1T(g)(3)(i)(H) published elsewhere in this issue of the
(c) * * *
(9) [The text of the proposed amendment to § 1.987–2(c)(9) is the same as the text of § 1.987–2T(c)(9) published elsewhere in this issue of the
(b) * * *
(2) * * *
(ii) [The text of the proposed amendment to § 1.987–3(b)(2)(ii) is the same as the text of § 1.987–3T(b)(2)(ii) published elsewhere in this issue of the
(4) [The text of the proposed amendment to § 1.987–3(b)(4) is the same as the text of § 1.987–3T(b)(4) published elsewhere in this issue of the
(c) * * *
(2) * * *
(ii) [The text of the proposed amendment to § 1.987–3(c)(2)(ii) is the same as the text of § 1.987–3T(c)(2)(ii) published elsewhere in this issue of the
(v) [The text of the proposed amendment to § 1.987–3(c)(2)(v) is the same as the text of § 1.987–3T(c)(2)(v) published elsewhere in this issue of the
(d) [The text of the proposed amendment to § 1.987–3(d) is the same as the text of § 1.987–3T(d) published elsewhere in this issue of the
(e)
The text of the proposed amendment to § 1.987–3(e)
[The text of the proposed amendment to § 1.987–3(e)
[The text of the proposed amendment to § 1.987–3(e)
[The text of the proposed amendment to § 1.987–3(e)
[The text of the proposed amendment to § 1.987–3(e)
[The text of the proposed amendment to § 1.987–3(e)
(c) * * *
(2) [The text of the proposed amendment to § 1.987–4(c)(2) is the same as the text of § 1.987–4T(c)(2) published elsewhere in this issue of the
(f) [The text of the proposed amendment to § 1.987–4(f) is the same as the text of § 1.987–4T(f) published elsewhere in this issue of the
(b) * * *
(4) [The text of the proposed amendment to § 1.987–6(b)(4) is the same as the text of § 1.987–6T(b)(4) published elsewhere in this issue of the
(b) [The text of the proposed amendment to § 1.987–7(b) is the same as the text of § 1.987–7T(b) published elsewhere in this issue of the
(d) [The text of the proposed amendment to § 1.987–8(d) is the same as the text of § 1.987–8T(d) published elsewhere in this issue of the
[The text of the proposed amendment to § 1.987–12 is the same as the text of § 1.987–12T published elsewhere in this issue of the
(a) * * *
(3) [The text of the proposed amendment to § 1.988–1(a)(3) is the same as the text of § 1.988–1T(a)(3) published elsewhere in this issue of the
(b) * * *
(16) [The text of the proposed amendment to § 1.988–2(b)(16) is the same as the text of § 1.988–2T(b)(16) published elsewhere in this issue of the
(i) [The text of the proposed amendment to § 1.988–2(i) is the same as the text of § 1.988–2T(i) published elsewhere in this issue of the
Office of Elementary and Secondary Education, Department of Education.
Final regulations.
The Secretary amends the regulations implementing academic assessment requirements under title I, part A of the Elementary and Secondary Education Act of 1965 (ESEA) to implement changes to the ESEA by the Every Student Succeeds Act (ESSA) enacted on December 10, 2015.
These regulations are effective January 9, 2017.
Jessica McKinney, U.S. Department of Education, 400 Maryland Avenue SW., Room 3W107, Washington, DC 20202–2800. Telephone: (202) 401–1960 or by email:
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1–800–877–8339.
We amend §§ 200.2–200.6 and §§ 200.8–200.9 of title 34 of the Code of Federal Regulations (CFR) in order to implement these statutory changes, as well as other key statutory provisions, including those related to the assessment of English learners and students in Native American language schools and programs. We are changing these regulations to provide clarity and support to State educational agencies (SEAs), LEAs, and schools as they implement the ESEA requirements regarding statewide assessment systems, and to ensure that key requirements in title I of the ESEA are implemented in a manner consistent with the purposes of the law—“to provide all children significant opportunity to receive a fair, equitable, and high-quality education, and to close educational achievement gaps.”
Section 1601(b) of the ESEA required the Secretary, before publishing proposed regulations on the assessment requirements under title I, part A of the ESEA, to establish a negotiated rulemaking process. Consistent with this section, the Department subjected the proposed assessment regulations to a negotiated rulemaking process, through which the Department convened a diverse committee of stakeholders representing Federal, State, and local administrators, tribal leaders, teachers and paraprofessionals, principals and other school leaders, parents, the civil rights community, and the business community that met in three sessions during March and April 2016. The negotiating committee's protocols provided that it would operate by consensus, which meant unanimous agreement—that is, with no dissent by any voting member. Under the protocols, if the negotiating committee reached final consensus on regulatory language for assessments, the Department would use the consensus language in the proposed regulations. The negotiating committee reached consensus on all of the proposed regulations related to assessments. Accordingly, the Department published the consensus language to which the negotiated rulemaking committee agreed as a notice of proposed rulemaking (NPRM) and took public comment from July 11 through September 9, 2016.
• Section 200.2(b)(7) has been revised to provide a number of examples to describe higher-order thinking skills.
• Section 200.3(b)(1)(v) has been revised to clarify that comparability between a locally selected, nationally recognized high school academic assessment and the statewide assessment is expected at each academic achievement level.
• Section 200.3(b)(3) has been revised to explicitly permit an SEA to disapprove or revoke approval of, for good cause, an LEA's request to administer a locally selected, nationally recognized high school academic assessment.
• Section 200.5(a)(2) has been revised to clarify that a State must administer its English language proficiency (ELP) assessments annually to all English learners in schools served by the State, kindergarten through grade 12.
• Section 200.6(b)(2)(i) has been revised to clarify that a State must develop appropriate accommodations for students with disabilities; disseminate information and resources about such accommodations to, at a minimum, LEAs, schools, and parents; and promote the use of those
• Section 200.6(b)(2)(ii) has been revised to include teachers of English learners among those who should receive necessary training regarding administering assessments, including training on how to administer appropriate accommodations and alternate assessments.
• Section 200.6(c)(4) has been revised by making a number of changes to the list of criteria a State would need to meet in seeking a waiver to exceed the State-level cap on the number of students with the most significant cognitive disabilities taking an AA–AAAS in each subject area:
• Section 200.6(c)(4)(i) has been revised to clarify that a State must submit a waiver request 90 days prior to the start of the testing window for the relevant subject.
• Section 200.6(c)(4)(iii) has been revised to require that a State only verify that each LEA that the State anticipates will assess more than 1.0 percent of its assessed students in a subject using an AA–AAAS followed the State's guidelines and will address disproportionality in use of the AA–AAAS.
• Proposed § 200.6(c)(4)(iii)(B) has been removed to no longer require a State to verify that an LEA that the State anticipates will exceed the State cap on using an AA–AAAS will not significantly increase that use from the prior year.
• Section 200.6(c)(4)(iv)(B) has been revised to require that a State only include a plan and timeline to support and provide appropriate oversight to each LEA that the State anticipates will exceed the State cap using an AA–AAAS.
• Section 200.6(d)(1)(i) has been clarified so that a student's status as an English learner may not determine whether the student is a “student with the most significant cognitive disabilities,” as defined by each State.
• Proposed § 200.6(f)–(h) has been renumbered and reorganized as § 200.6(f)–(k) to contain all the requirements regarding English learners and students in Native American language schools and programs. Proposed § 200.6(i) regarding highly mobile student populations has also been moved to new § 200.2(b)(1)(ii)(A)–(D). Revisions to the renumbered paragraphs are described below.
• Section 200.6(f)(1)(i) has been added to require a State to develop appropriate accommodations for English learners; disseminate information and resources about such accommodations to, at a minimum, LEAs, schools, and parents; and promote the use of those appropriate accommodations to ensure that all English learners are able to participate in academic instruction and assessments.
• Section 200.6(h)(4)(ii) (proposed § 200.6(f)(3)(iv)) has been revised to clarify that where a determination has been made, on an individualized basis by the student's IEP team, 504 team, or for students covered under title II of the ADA, by the team or individual designated by the LEA to make those decisions, as set forth in § 200.6(b)(1), that an English learner has a disability that precludes assessment of the student in one or more domains of the English language proficiency (ELP) assessment such that there are no appropriate accommodations for the affected domain(s), a State must assess the student's English proficiency based on the remaining domains in which it is possible to assess the student.
• Section 200.6(j) (proposed § 200.6(g)) permits students in Native American language schools and programs to be assessed in their Native American language in any subject area, including reading/language arts, mathematics, and science, with evidence pertaining to these assessments required to be submitted for assessment peer review and approval, consistent with § 200.2(d).
• Section 200.6(j)(2) (proposed § 200.6(g)) requires assessment of students in Native American language schools and programs in reading/language arts in English in at least high school, instead of beginning in eighth grade.
Please refer to the
We discuss substantive issues under the sections of the regulations to which they pertain, with the exception of a number of cross-cutting issues, which are discussed together under the heading “Cross-Cutting Issues.” Generally, we do not address technical and other minor changes, or suggested changes the law does not authorize us to make under the applicable statutory authority. In addition, we do not address general comments that raised concerns not directly related to the proposed regulations or that were otherwise outside the scope of the regulations, including comments that raised concerns pertaining to particular sets of academic standards or assessments or the Department's authority to require a State to adopt a particular set of academic standards or assessments, as well as comments pertaining to the Department's regulations on statewide accountability systems.
We do wish to clarify, however, that the ESEA does include Federal testing requirements under section 1111(b)(2)(B)(v)(I)–(II), to assess all students in a State annually in reading/language arts and mathematics in grades 3–8 and once in grades 9–12 and to assess all students in the State in science at least once in each grade span (
However, a few commenters objected to the proposed regulation, contending it would narrow the focus of education for these students to employability and would ignore important outcomes other than competitive integrated employment that they felt were more fair and attainable for some students with the most significant cognitive disabilities. One commenter also noted that the statute requires alignment of academic achievement standards to the purposes of the Rehabilitation Act and that competitive integrated employment is but one of those purposes. These commenters recommended that the final regulations only include the statutory language and reference the purposes, generally, of WIOA.
Rubie-Davies, C.M., Peterson, E.R., Sibley, C.G., & Rosenthal, R. (2015). A teacher expectation intervention: Modelling the practices of high expectation teachers.
Klehm, M. (2014). The effects of teacher beliefs on teaching practices and achievement of students with disabilities.
Courtade, G, Spooner, F., Browder, D., & Jimenez, B. (2012). Seven reasons to promote standards-based instruction for students with severe disabilities: A Reply to Ayres, Lowrey, Douglas, & Sievers (2011).
One commenter, however, recommended deleting § 200.2(b)(4)(i), stating that separate requirements for validity, reliability, and fairness were unnecessary as § 200.2(b)(4)(ii) (which requires State assessments to be consistent with relevant, nationally recognized professional and technical testing standards) adequately covers topics of validity, reliability, and fairness. Other commenters recommended deleting “fair” from § 200.2(b)(4)(i), contending that it has no basis in the statute and adds confusion. One of these commenters also argued that the addition of “fair” was in conflict with the prohibition in section 1111(e)(2) of the ESEA, related to the
We also disagree with the contention that requiring that assessments be “fair” is in conflict with the prohibition in section 1111(e)(2) of the ESEA on defining terms that are inconsistent with or outside the scope of the law. Rather, the law itself affirms the importance of fair assessment, for example, by requiring the use of principles of UDL (section 1111(b)(2)(B)(xiii) of the ESEA), prohibiting assessments that would evaluate personal or family beliefs (section 1111(b)(2)(B)(iii) of the ESEA), and requiring that the State provide for the participation of all students (section 1111(b)(2)(B)(vii) of the ESEA). Moreover, the regulations do not, in fact, propose a definition of “fair.” For these reasons, we believe highlighting the importance that assessments be “fair” in addition to valid and reliable is consistent with the requirements in section 1111(b)(2) of the ESEA and not outside the scope of title I, part A.
One commenter, however, urged caution about the use of portfolios, projects, or extended performance tasks in State assessment systems and recommended the Department revise § 200.2(b)(7)(ii) to require States seeking to use these forms of assessment to develop and submit a plan to the Department for approval that would describe the efficacy, reliability, and comparability of these assessments and how the State will monitor their implementation.
Another commenter, however, urged caution about the use of multiple, interim assessments throughout the year that result in a summative score. This commenter suggested the Department revise § 200.2(b)(10) to require States seeking to use these forms of assessment to develop and submit a plan to the Department for approval that would describe the efficacy, reliability, and comparability of these assessments and
We reaffirm the statutory and regulatory requirements to assess all students in the State using the same assessments, except in specific circumstances outlined in § 200.2(b)(1)(i). This is essential to promote ongoing transparency, meaningful and fair school accountability, and equity.
However, a couple of commenters were concerned that the proposed requirements for computer-adaptive assessments to produce a grade-level determination would mean such assessments would not also produce a valid result for a student's performance above or below grade level and advocated for allowing computer-adaptive tests that primarily assess performance above or below grade level, potentially with reduced focus on grade level content.
As previously discussed, annual assessments, as required by the ESEA, are tools for learning and promoting equity when they are done well and thoughtfully. When assessments are done poorly, in excess, or without a clear purpose, they take time away from teaching and learning. President Obama's Testing Action Plan (see footnote 1), released in October 2015, provides a set of principles and actions that the Department put forward to help protect the vital role that good assessment plays in guiding progress for students and evaluating schools, while providing help in reducing practices that have burdened classroom time or not served students or educators well.
Further, section 1204 of the ESEA allows States granted Innovative Assessment Demonstration Authority to begin administering them in some schools or LEAs and then take such assessments to scale statewide over several years. The Department wishes to emphasize, however, that a State does not need to be granted such authority in order to innovate or improve its assessments, provided it annually assesses all students in each required grade level and subject area using the
Finally, the Department offers competitive grant funds to State applicants to support specific kinds of assessment development. Under the ESEA, as amended by the NCLB, these grants were called the Enhanced Assessment Grants; in the ESEA, as amended by the ESSA, similar authority exists in section 1203. The most recent competition included a competitive preference priority for applicants proposing projects that develop innovative assessment items, which a State would incorporate into its statewide assessment system (for more information, see
However, a few commenters argued the opposite—that compliance with § 200.2(e) would be overly burdensome and costly for local districts, particularly those requirements related to providing information in a language that parents can understand. One commenter noted that these provisions could be particularly challenging to implement in States with Native American populations, and sought additional guidance from the Department on circumstances in which a language is more common at a local level, yet rare nationally, and where some languages are primarily oral and not written. In addition, another commenter recommended only including the statutory language, thereby removing requirements related to written and oral translations and alternate formats.
Given that such information is essential for meaningful parent engagement and involvement in decision-making related to their child's education, we disagree with the contention that compliance with § 200.2(e) would be overly burdensome and costly. Likewise, we note that if this information is provided through an LEA Web site, the information is required to be accessible for individuals with a disability not only by the ESEA, but also based on the Federal civil rights requirements of Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. 794 (section 504), title II of the Americans with Disabilities Act, 42 U.S.C. 12131
We disagree with commenters that we should require only written translations and not allow for oral translations, or require oral translations and alternate formats only to the extent practicable. Parents with disabilities or limited
We decline to further define the term “to the extent practicable” under these regulations, but remind States and LEAs of their Title VI obligation to take reasonable steps to communicate the information required by the ESEA, as amended by the ESSA, to parents with limited English proficiency in a meaningful way.
Other commenters opposed the requirement that an LEA use the same locally selected, nationally recognized high school academic assessment for all high school students in the LEA and requested that the Department revise the language in § 200.3(a)(2) to permit an LEA to administer multiple locally selected, nationally recognized high school assessments, arguing that decisions should be made at either the school or student level. Of these, certain commenters were particularly concerned that requiring a single assessment across an entire LEA makes it harder for larger LEAs to take advantage of this flexibility. Some commenters argued that the Department exceeded its authority, including one commenter who asserted that the Department violated prohibitions in section 1111(e) of the ESEA, in requiring a single locally selected, nationally recognized assessment in a district, and others expressed concern that requiring a single assessment would limit career and technical education pathways. Another commenter argued that the limit of one assessment per district should be unnecessary if any locally selected, nationally recognized high school academic assessment must be as rigorous as or more rigorous than the statewide test.
Given that locally selected, nationally recognized high school academic assessments would be used in the Academic Achievement indicator for purposes of the statewide accountability system under section 1111(c) of the ESEA, including the requirements that a State must meet regarding annual meaningful differentiation and identification of schools having the greatest success and those in need of additional support, meaningful school-to-school comparisons of student achievement are needed. During negotiated rulemaking, the negotiators reached consensus on the value of preserving within-district direct comparability of results, particularly for reporting on LEA report cards, transparency, and school accountability determinations.
Furthermore, the statutory language in this case is singular, articulating what a State does if it chooses to allow an LEA to request “a” locally selected, nationally recognized assessment. For all of these reasons, we believe that the application of the single assessment per LEA is consistent with the statute. However, we believe section 1111(b)(2)(H)(iii) of the ESEA is clear that LEAs could each select a distinct nationally recognized high school academic assessment so long as such assessment is supported with evidence that it meets the State's technical criteria and the Department's assessment peer review.
In response to questions about the Department's authority, the regulations are well within the Department's rulemaking authority. As provided in section 1601(a) of the ESEA, the Secretary may “issue, in accordance with subsections (b) through (d) and subject to section 1111(e), such regulations as are necessary to reasonably ensure that there is compliance with this title.” As discussed above, we believe requiring an LEA to administer the same nationally recognized high school academic assessment to all high school students in the LEA is necessary to ensure, as required by section 1111(b)(1) and (b)(2)(B)(i) of the ESEA, that an LEA applies the same high expectations to all students so that all students have the opportunity to graduate college and career ready. The alternative opens the door to an LEA's decreasing expectations over time for some students if higher-achieving students consistently take a different test. The
Regarding commenters' concerns that the regulations would preclude use of a particular assessment, the regulations are intended to ensure that assessments approved by a State through this flexibility meet all requirements for statewide assessments in general. This flexibility is only appropriate in such cases. The regulations do not either preclude, or proactively include, any particular assessments. However, if an assessment does not meet all general assessment requirements and statutory and regulatory requirements specific to this flexibility, including the definition of a “nationally recognized high school academic assessment,” it would not be eligible for use under this flexibility.
Regarding requests for specific guidance, we encourage States to work with support organizations, such as Regional Education Laboratories, Comprehensive Centers, and State program officers at the Department, to gain technical assistance for implementation, including on establishing technical criteria for reviewing locally selected, nationally recognized academic assessments.
The Department agrees that additional specificity is needed in § 200.3(b)(1)(v) to clarify that the comparability expected is at each level of the State's academic achievement standards, not scale scores. We also note that, in addition to producing comparable data as described in § 200.3(b)(1)(v), section 1111(b)(2)(H)(v)(I) of the ESEA and § 200.3(b)(1)(iii) require that a locally selected, nationally recognized high school academic assessment must be equivalent to or more rigorous than the statewide assessments regarding academic content coverage, difficulty, overall quality, and any other aspect of assessments that a State may choose to identify in its technical criteria.
A locally selected, nationally recognized high school academic assessment approved by a State must measure the same challenging State academic standards and produce valid, reliable, and comparable results to the statewide high school assessment. These requirements should serve to ensure reasonable continuity across LEAs for mobile students.
Since a State will determine the specific process for review and approval, it will also have discretion over the individuals involved in such a decision, including whether any election would be held. We expect that State education officials, who may be elected, appointed, or otherwise selected, would lead the process; however, States have discretion in this area.
Regarding opportunities for consultation, § 200.3(c)(1) requires an LEA to notify all parents of high school students it serves that the LEA intends to request to use a locally selected, nationally recognized high school academic assessment in place of the statewide academic assessment and inform parents of how they may provide meaningful input regarding the LEA's request as well as of any effect such request may have on the instructional program in the LEA. It also requires meaningful consultation with all public charter schools whose students would be included in such assessment. In addition, § 200.3(c)(2) requires an LEA to update its LEA plan under section 1112 or section 8305 of the ESEA, including by describing how the request was developed consistent with all requirements for consultation under the respective sections of the ESEA. While the Department appreciates the commenter's suggestion that review of this requirement become a requirement of assessment peer review, the Department declines to specify the mechanism for monitoring this requirement at this time, but notes that monitoring of this and all other
Further, this requirement does not create the expectation that all students must take advanced mathematics coursework in middle school, even in the limited number of SEAs covered by this section. Rather, the SEA must provide the opportunity to all students to become prepared and, if prepared, to take such advanced courses in middle school in order to ensure that this flexibility benefits students across the State, not only those in certain communities or from certain backgrounds. This is consistent with the statutory purpose of title I to “provide all children significant opportunity to receive a fair, equitable, and high-quality education.” In seeking waivers under ESEA flexibility between 2012 and 2015, States demonstrated their efforts to make such opportunity widely available, including through support for distance and virtual learning, flexibility regarding course-taking across campuses, and other appropriate methods.
The ESEA limits the middle school advanced mathematics exception to States that administer a high school end-of-course assessment to meet the requirements of section 1111(b)(2)(B)(v)(I)(bb) of the ESEA. The statute indicates that only States using an end-of-course mathematics assessment as the State's high school assessment may take advantage of the middle school mathematics exception and only for students who are taking that end-of-course assessment in eighth grade (
A State may request a waiver to extend this flexibility to other grades or subjects if the State meets the requirements in section 8401 of the ESEA. We do not believe it is necessary or appropriate, however, to highlight in the final regulations this one example of a provision subject to a waiver.
With respect to options other than an end-of-course test or a nationally recognized test, since a State taking advantage of this flexibility is using an end-of-course assessment as its high school assessment to meet the requirements in § 200.5(a)(1)(i)(B), the State will likely not have a non-end-of-course, State-administered assessment in high school unless the State is taking advantage of the ability to permit LEAs to administer a nationally recognized assessment in place of the State test.
We are heartened by progress in the field of assessments generally, and in the development of alternate assessments and accessibility features. These advances expand opportunities for all students to demonstrate their knowledge and skills, including students with disabilities. Further, research shows positive impacts of instructing and assessing students, including students with the most significant cognitive disabilities, to high academic standards.
The applicability of the requirements in this section to students with disabilities in private schools depends upon whether the student has been enrolled in the private school by the LEA in order to meet the student's special education and related services needs under the IDEA, as opposed to a student attending a private school at the discretion of the parents. For students with disabilities who have been placed in a private school by an LEA, the requirements in this subpart apply.
Similarly, two commenters recommended greater flexibility, given the 1.0 percent cap statewide, on student participation in the AA–AAAS. These commenters suggested that States be permitted to administer an assessment that is not aligned to grade-level academic content standards to a subset of students with severe cognitive disabilities, which one of these commenters believed would be consistent with section 1111(b)(2)(B)(vii)(II) of the ESEA.
As previously discussed, a State has the right also to assess a student against academic content standards above and below the grade in which the student is enrolled, including by using a computer-adaptive assessment, provided the State meets all applicable requirements. Those requirements include: Producing a summative score that measures a student's academic achievement against the State's academic achievement standards; reporting that score and the corresponding achievement level to parents and educators and, in the aggregate and disaggregated by subgroups, reporting student academic achievement information on State and LEA report cards; and using that score in the Academic Achievement indicator and long-term goals in the State's accountability determinations. The State does not need specific authority to offer a student assessment items, in addition to items that produce the student's annual summative score measuring achievement of the challenging State academic content standards for the grade in which the student is enrolled, regardless of whether the student takes a general assessment or an AA–AAAS.
Separately, one commenter interpreted § 200.6(b)(1) in the opposite manner—that it required any accommodation selected by an IEP team to be subject to the accessibility standards—and opposed the purported requirement as unduly limiting IEP teams. Another commenter requested that the Department strike any reference to “nationally recognized accessibility standards” on the basis that the Department should not cede control of a regulatory provision to third parties. However, an additional commenter generally supported the provision as proposed, finding it sufficient to promote appropriate accommodations for all students with disabilities.
Optimal use of nationally recognized accessibility standards applies equally to assessment development and to assistive technology devices. When a State identifies the technical and data standards with which its assessment system is compatible, this creates the conditions for successful, continuous integration with assistive technology devices if such devices are also consistent with the nationally recognized accessibility standards a State uses. Since both assessment development and assistive technology device development are continuous processes, clarity and common understanding are keys to integration. Data standards are a useful method of communication between States or assessment developers and assistive technology device-makers (and those who use such devices). The change most commenters requested would apply the expectation for interoperability in a manner distinct from the statute, where it is an example and not a requirement, and would place full responsibility for consistency with nationally recognized standards on States in developing the assessment system, without recognizing the importance of also expecting that assistive technology devices be compatible with common data standards. Accordingly, the Department disagrees with those commenters that such a change is needed or is appropriate.
Regarding the concern that the provision as written would limit IEP teams, the Department disagrees with the commenter. Consistent with § 200.6(b)(1)(i), IEP teams may identify needed accommodations for any child with a disability on an individualized, case-by-case basis, and must follow the State guidelines for appropriate accommodations when making such decisions. In accordance with section 612(a)(16)(B) of the IDEA and 34 CFR 300.160(b), a State's guidelines for IEP teams must identify for each assessment only those accommodations that do not invalidate the score, and instruct teams to select for each assessment only those accommodations that do not invalidate the test score. Both the ESSA and these regulations use “interoperability with assistive technology devices” as an example of appropriate accommodations, but do not necessarily require their use. However, if an IEP team determines that it is necessary for a student with a disability to use an assistive technology device in order to participate in an assessment under this part, the team would need to ensure that the device selected for the student will not invalidate the student's test score. States and school districts will need to communicate this information to IEP teams to ensure that they can make informed decisions in this regard. The same expectations apply to the State with respect to making information about assistive technology devices available to the teams and individuals described in § 200.6(b)(1)(ii) and (iii).
The Department disagrees with the commenter who requested removal of all references to nationally recognized accessibility standards. First, as previously stated, interoperability with assistive technology devices is included in the statute and these regulations as an example of how to provide appropriate accommodations and ensure assessments are accessible to all students. Further, we do not believe that the Department would be ceding control over regulatory implementation to a third party. Generally, we enforce regulatory assessment expectations through assessment peer review, which is a process that the Department, with input from external experts, administers. The Department does not propose specifying any particular nationally recognized accessibility standards that should be used; however, the Department has previously worked with States and the broader field to develop the Common Education Data Standards (CEDS), which could serve as one option. Further, in the experience of the Department's Office for Civil Rights, where an SEA provides or collects information through electronic and information technology, such as on Web sites, it is difficult to ensure compliance with Federal civil rights accessibility requirements without adherence to modern standards such as the WCAG 2.0 Level AA standard. More broadly, we rely on nationally recognized professional and technical testing standards regarding assessment technical quality, which substantially inform assessment peer review. In certain cases, such as this one, collaboration with professionals in the field is essential to successful regulatory implementation.
However, two commenters recommended not listing in the regulations the specific types of staff required to receive training (
Some commenters also suggested that the Department clarify § 200.6(b)(3)(ii), which requires a State to ensure that the use of appropriate accommodations on assessments does not deny a student with a disability any benefit from participation in the assessment that is afforded to students without disabilities by defining appropriate accommodations within the scope of accommodations that may be provided without jeopardizing test validity and reliability. To illustrate, one commenter cited examples where the use of an accommodation would invalidate test scores for a particular student (such as measuring an English learner's reading comprehension by administering a test with a third-party “read-aloud” accommodation)—which the commenter believed would help ensure that all scores could be college-reportable.
The Department expects that assessment peer review will provide an opportunity to promote and enforce the use of high-quality assessments, which includes the AA–AAAS. While an AA–AAAS must be aligned with the challenging State academic content standards, the Department notes that, by definition, such an assessment will not be comparable to the general statewide assessments, since students taking an AA–AAAS are measured against alternate academic achievement standards. Similarly, each State is already required by section 1111(b)(2)(B)(vii) of the ESEA and section 612(a)(16)(A) of the IDEA to ensure that children with disabilities served under the IDEA are provided appropriate accommodations on title I, part A assessments, where necessary, as determined on an individualized case-by-case basis by their IEP team. To ensure that this occurs, section 612(a)(16)(B) of the IDEA requires a State to develop guidelines for the provision of appropriate accommodations. Under 34 CFR 300.160(b), these State guidelines must identify only those accommodations for each assessment that do not invalidate
Because a State must ensure that the total number of students assessed using the AA–AAAS in each subject does not exceed 1.0 percent of assessed students in that subject in the State, but cannot impose any similar cap on its LEAs, § 200.6(c)(3) helps ensure that States review and act upon information from LEAs, provide sufficient oversight, and take meaningful steps to ensure that, under State and LEA policies, only students with the most significant cognitive disabilities are assessed with an AA–AAAS, consistent with the statutory requirement limiting participation in the AA–AAAS. Section 200.6(c)(3), therefore, is well within the Department's rulemaking authority under section 1601(a) of the ESEA, which authorizes the Secretary to “issue, in accordance with subsections (b) through (d) and subject to section 1111(e), such regulations as are necessary to reasonably ensure that there is compliance with this title.” As discussed above, the regulations are necessary to support a State in meeting its statutory obligations. Moreover, § 200.6(c)(3) was submitted to negotiated rulemaking under section 1601(b) and the negotiating committee reached consensus on it. Finally, in light of the statutory requirements in section 1111(b)(2)(D)(i)(I) and (b)(2)(D)(ii)(I)–(III) of the ESEA, § 200.6(c)(3) certainly is not inconsistent with or outside the scope of title I, part A, and therefore does not violate section 1111(e)(1)(B)(i) of the ESEA. The Department also has rulemaking authority under section 410 of GEPA, 20 U.S.C. 1221e–3, and section 414 of the DEOA, 20 U.S.C. 3474.
Similarly, the waiver criteria outlined in § 200.6(c)(4) do not exceed the Department's authority. We are well aware that section 1111(e)(1)(B) of the ESEA prohibits the Department from requiring, as a condition of approval of a waiver request under section 8401, requirements that are inconsistent with or outside the scope of part A of title I. Clearly, the waiver criteria in § 200.6(c)(4) are not inconsistent with or outside the scope of section 1111(b)(2)(D) of the ESEA. Rather, they are consistent with ensuring that the statutory restriction on a State's use of an AA–AAAS is not vitiated through waivers. In order to evaluate whether a State has a legitimate justification for a waiver to assess more than 1.0 percent of assessed students in a given subject with an AA–AAAS, it is necessary for
With regard to the application of a 1.0 percent cap on the number of proficient scores that may be counted in accountability determinations, we do not believe such a cap is appropriate. Rather than codifying the regulations
Commenters supporting the waiver criteria as drafted acknowledge that the data that will be submitted along with such waiver requests are necessary so that States are transparent about how many students are assessed with an AA–AAAS, and we likewise value the transparency that will be provided by requiring this information prior to receipt of a waiver. Furthermore, a State should be able to determine whether there will be a need to request a waiver in a particular school year based on the prior year's data, and we note that the data a State submits along with a waiver request, consistent with § 200.6(c)(4)(ii) may be State-level data from either the current or previous school year. Therefore, we maintain that it is necessary to receive waiver requests in advance of the State's testing window and decline to make these requested changes.
With regard to the commenters who believe this requirement inappropriately ties an accountability requirement to a waiver request, we disagree. We acknowledge that, under section 1111(e)(1)(B)(i) of the ESEA, the Department is prohibited from requiring a State to add any requirements for receipt of a waiver that are inconsistent with or outside the scope of title I, part A. The requirement to ensure that at least 95 percent of all students and 95 percent of students in the subgroup of children with disabilities participate in State assessments is not in conflict with such a prohibition, given that section 1111(b)(2)(B)(i)(II) of the ESEA requires
Finally, it is not necessary for the ESEA to specifically authorize the Secretary to include the 95 percent participation requirement as a waiver criterion in order for us to do so. Section 1601(a) of the ESEA allows the Secretary to “issue, in accordance with subsections (b) through (d) and subject to section 1111(e), such regulations as are necessary to reasonably ensure that there is compliance” with the statute. Section 200.6(c)(4)(ii)(B) is necessary to ensure that only those States that truly need to assess more than 1.0 percent of assessed students with an AA–AAAS are eligible for a waiver; otherwise, waivers would vitiate the statutory prohibition. Moreover, § 200.6(c)(4)(ii)(B) was submitted to negotiated rulemaking under section 1601(b) and the negotiating committee reached consensus on it. Finally, as noted above, § 200.6(c)(4)(ii)(B) is not inconsistent with or outside the scope of title I, part A, and therefore does not violate section 1111(e)(1)(B)(i) of the ESEA. The Department also has rulemaking authority under section 410 of GEPA, 20 U.S.C. 1221e–3, and section 414 of the DEOA, 20 U.S.C. 3474.
We also disagree with the contention that the requirement to ensure 95 percent test participation for all students and students in the subgroup of children with disabilities is in violation of section 8401(b)(4)(D) of the ESEA. Such a requirement is not an external condition outside the scope of a waiver request but, rather, is consistent with requirements for the administration of assessments to all students in section 1111(b)(2)(B)(i)(II) of the ESEA and necessary to ensure that the 1.0 percent cap on the number of assessed students who may participate in an AA–AAAS is applied in such a way that continues to expect full test participation for all students and all children with disabilities.
That said, we are revising § 200.6(c)(4)(iii)(B) and (iv)(C) to clarify that the assurances a State must provide and its plan and timeline related to disproportionality in the AA–AAAS must be focused on the “percentage” of students in each subgroup that are assessed using an AA–AAAS in a particular subject, and not the raw “number” of students in each subgroup. Using the “number” of students assessed using an AA–AAAS would be insufficient to identify disproportionalities given that raw numbers also reflect the size of the student population in the State. However, the data that must be included as part of the waiver request described in § 200.6(c)(4)(ii)(A) must still include the number and percentage of students in each subgroup assessed using an AA–AAAS in the relevant subject.
A few commenters more broadly objected to the requirement that SEAs verify information with LEAs through the assurances required under § 200.6(c)(4)(iii), with one commenter noting that in a State with a large number of LEAs this is a significant burden on SEA resources. A few other commenters opposed the same assurances, specifically objecting to the proposed language that allows a State discretion to verify certain information with LEAs that “contribute to the State's exceeding” the 1.0 percent cap. A few commenters contended that the proposed regulations would result in a de facto, or back-door, LEA-level cap on participation in the AA–AAAS in LEAs that have no record of assessing more than 1.0 percent of students with such an assessment. One commenter asserted that the proposed regulations regarding LEAs that “contribute to the State's exceeding” the 1.0 percent cap exceed the scope of the law since the ESEA provides that LEAs that assess more than 1.0 percent of students with an AA–AAAS shall submit information to the SEA justifying the need to exceed such cap, and permits the SEA to provide oversight of such LEAs, but it does not extend such oversight to LEAs that do not exceed the cap. Thus, the commenter argued that the ESEA prohibits these proposed regulations.
One commenter argued that the assurance in proposed § 200.6(c)(4)(iii)(B) is unattainable because an LEA will not be able to predict the extent to which it will assess less than 1.0 percent of students with an AA–AAAS since a decision as to which assessment a student will take is an individualized decision based on whether the student is a student with the most significant cognitive disabilities and eligible for the assessment.
With regard to the comment that § 200.6(c)(4)(iii) should be revised so that it extends only to LEAs that the State anticipates will assess more than 1.0 percent of the number of students assessed with an AA–AAAS and not to other LEAs that the State determines will significantly contribute to the State's exceeding the cap, we agree. Both LEAs that the State anticipates will assess more than 1.0 percent of students in the LEA with an AA–AAAS and LEAs that do not assess more than 1.0 percent of students with an AA–AAAS but that significantly contribute to a State's exceeding the 1.0 percent State cap were incorporated into the waiver criteria during negotiated rulemaking. Including both categories of LEAs was intended to provide a State with discretion to focus attention on those LEAs that assess less than 1.0 percent of students with an AA–AAAS but significantly contribute to the State exceeding its 1.0 percent cap, as well as those LEAs already assessing more than 1.0 percent. However, we acknowledge that this may, in some States, unfairly call attention to LEAs that will not assess more than 1.0 percent of assessed students with an AA–AAAS. While we strongly encourage States to look not only to LEAs that are assessing more than 1.0 percent of students with an AA–AAAS but also those significantly contributing to the State exceeding the cap of 1.0 percent, we are removing the language in § 200.6(c)(4)(iii) that extends the assurances that a State submits with a waiver to LEAs that “significantly contribute” to the State exceeding the 1.0 percent State cap.
With regard to the commenters asking for changes in proposed § 200.6(c)(4)(iii) to the specific assurances that a State has verified certain information with respect to LEAs that the State anticipates will assess more than 1.0 percent of their assessed students with an AA–AAAS, we maintain that the requirements in § 200.6(c)(4)(iii)(A), to follow each of the State's guidelines, and § 200.6(c)(4)(iii)(C), to address any disproportionality in the percentage of students in any subgroup assessed with an AA–AAAS, are critical to ensure that IEP teams within a State comply with the State's guidelines to determine that only students with the most significant
In response to the specific commenter who suggested that proposed § 200.6(c)(4)(iii)(B) be removed, we agree. While LEAs should not significantly increase, from the prior year, the extent to which they assess more than 1.0 percent of all students assessed using an AA–AAAS without a demonstration of a higher prevalence rate of students with the most significant cognitive disabilities, we have determined that the practices this assurance are intended to address will also be addressed through the plan and timeline requirements in § 200.6(c)(4)(iv) and that some burden on the State and LEAs can be reduced by eliminating this assurance.
Given the changes that we are making to the waiver requirements contained in § 200.6(c)(4)(iii) to remove language referring to LEAs that significantly contributed to a State's exceeding the 1.0 percent cap, which commenters alleged was outside the Department's regulatory authority, the remaining assurances that are required in this section clearly do not exceed that authority. Based on the authority discussed above in response to comments regarding SEA oversight and disproportionality, the assurances a State is required to make related to an LEA that the State anticipates will exceed the State's 1.0 percent cap are necessary to evaluate whether a State is only assessing students with the most significant cognitive disabilities with an AA–AAAS and therefore warrants a waiver to exceed the 1.0 percent cap. Section 200.6(c)(4)(iii), as revised, is therefore well within the Department's regulatory authority under section 1601(a) of the ESEA as well as under section 410 of GEPA, 20 U.S.C. 1221e–3, and section 414 of the DEOA, 20 U.S.C. 3474.
Therefore, we decline to make the suggested change.
In addition, one commenter suggested adding specific examples to the regulations to provide States greater understanding of what might qualify as a “significant cognitive disability,” and provided several suggested examples such as students who require dependence on others for daily living activities. Two commenters supported adding that a student's intelligence quotient (IQ) score may not be a factor in determining whether a student should take an AA–AAAS. Finally, a commenter recommended modifying one of the parameters for States' definitions to emphasize the role of IEP teams and not equivocally state these students require extensive, direct individualized instruction and substantial supports to achieve measurable gains on the challenging State academic content standards for the grade in which the student is enrolled. Instead, the commenter proposed that IEP teams consider the provision of such instruction and supports.
With regard to the comments about IEP team discretion, we refer to the discussion above in which we note that, under both the ESEA and the IDEA, decisions of IEP teams must be informed by State guidelines. We agree with the consensus reached by the negotiated rulemaking committee that students with the most significant cognitive disabilities require extensive, direct individualized instruction and substantial supports to achieve measurable gain on the challenging State academic content standards for the grade in which the student is enrolled. However, we believe this is only one factor for a State to consider in the development of its State guidelines and strongly encourage States to work with local stakeholders to develop State definitions that best reflect local needs.
Additionally, a commenter wrote in support of § 200.6(d)(3), which requires a State to notify parents of students participating in an AA–AAAS that their child's achievement will be measured based on alternate academic achievement standards and provide information on how participation in such assessment may delay or affect their child's completion of the requirements for a regular high school diploma, noting that these provisions empower parents to effectively advocate for their child's inclusion in the general assessment and the course of study that will help them prepare for the general assessment.
A few commenters, however, voiced concern with requiring States to develop native language assessments, citing concerns with: the number of assessments that must be peer reviewed; assessments that would measure different constructs, thus yielding data that are not comparable; and encouraging student assessment in languages in which they are not necessarily receiving academic instruction.
We agree that results from State assessments in languages other than English that meet the requirements of these final regulations should be included in the State's accountability system; however, provisions related to school accountability are outside the scope of these regulations.
With regard to a timeline, § 200.6(f)(2)(ii)(D)(
We further agree that it is important that any content assessments that States develop in languages other than English measure the same construct as the assessments administered in English, including alignment to the same challenging State academic standards, as required in section 1111(b)(2)(B)(ii) of the ESEA, but believe that the regulations, as proposed, help mitigate the concern that the assessments will be non-comparable to those in English. The Department's peer review of these assessments will help ensure that all content assessments in languages other than English are valid, reliable, fair, of high technical quality, and aligned to the challenging State academic content and achievement standards. Finally, with regard to the concerns that these provisions encourage students to be assessed in languages for which they are not receiving academic instruction, we note that an English learner is not required to be assessed using a reading/language arts or mathematics assessment in their native language, if a State develops one (
Other commenters, however, opposed the specific factors a State must consider regarding establishing a definition of languages present to a significant extent, particularly the requirement to identify the most populous language, arguing that the requirements are outside the scope of the law.
In response to commenters requesting additional parameters for States to consider, we note that § 200.6(f)(2)(ii)(D) (proposed § 200.6(f)(1)(ii)(E)) requires a State to describe the process it used to gather meaningful input on the need for assessments in languages other than English; collect and respond to public comment; and consult with educators, parents and families of English learners, and other stakeholders. In order to meet these requirements, we believe a State will need to make the criteria used to establish its definition of “languages present to a significant extent” publicly available. Therefore, we believe no further clarification is needed. Additionally, as States have different populations, with different backgrounds and needs, we do not believe that it is appropriate to further specify the number of languages States must identify as present to a significant extent. With regard to a State in which one LEA has a particular language spoken to a significant extent, we leave to the State's discretion how to define “languages present to a significant extent,” and we believe such a situation is already sufficiently addressed in § 200.6(f)(4)(iii) (proposed § 200.6(f)(1)(iv)(C)).
On the other hand, a number of commenters urged the Department to remove all restrictions pertaining to the use of assessments in Native American languages for a school or program that provides instruction primarily in a Native American language in the final regulations. These commenters indicated that various Federal statutes, including the Native American Languages Act (NALA) and portions of the ESEA (specifically sections 3124 and 3127 of title III), protect the right of Tribes to use Native American languages in education without restriction and that the limitations on their assessments in Native American languages in the proposed regulations
Some of these commenters suggested changes to the proposed regulations that would make the use of this flexibility (
We also agree that States should have more flexibility to administer Native American language assessments to students in Native American language schools or programs. Therefore, we have made changes to § 200.6(j) (proposed § 200.6(g)) to make it clear that a State may administer mathematics and science assessments in Native American languages to students enrolled in Native American language schools and programs, in addition to reading/language arts assessments.
We agree that the Department should extend the flexibility for students in Native American language schools or programs to take reading/language arts assessments written in English past eighth grade. However, we disagree with removing the requirement entirely. We believe requiring the use of a reading/language arts assessment in English is essential to support all students in meeting the State's challenging academic content standards under section 1111(b)(1) of the ESEA, which, consistent with section 1111(b)(1)(D) and § 200.2(b)(3), must be aligned with entrance requirements for credit-bearing coursework in the system of public higher education in the State and relevant State career and technical education standards. Therefore, we have revised § 200.6(j)(2) (proposed § 200.6(g)(2)) to require States to assess students in reading/language arts least once during grades 9 through 12 using an assessment written in English. This change is consistent with the statutory requirement in 1111(b)(2)(B)(v)(I) for reading/language arts to be assessed once during grades 9 through 12. Furthermore, assessing the achievement of students enrolled in a Native American language school or program in reading/language arts in English, during high school, at a minimum, is necessary to ensure that educators and schools provide supports to these students prior to their graduation. Regardless of whether students take reading/language arts assessments in elementary and middle school in a Native American language or in English, participating students should have the opportunity to become college and career ready in English.
In addition, the Department declines to make changes to shift the authority to utilize this flexibility from States to Tribes. We note that these regulations only apply to State-funded public schools and not to schools funded only by the BIE or by Tribes. For State-funded public schools, each State is responsible for the development and administration of the statewide assessment system, and the use of assessments in languages other than English is a core part of this responsibility. Nevertheless, collaboration with tribal communities will be essential in developing high-quality Native American language assessments. While we decline to make the requested change, we strongly encourage States to engage and to work closely with Tribes in developing and administering these assessments.
The Department also declines to remove the requirement that a State must ensure that it administers the annual English language proficiency assessments to all English learners enrolled in Native American schools or programs, and to add a required assessment of Native American language proficiency instead. First, we note that a State is free to develop and administer an assessment of Native American language proficiency, in addition to the assessments required under the ESEA; if it chooses so to do, we encourage the State to work collaboratively with Tribal communities to create such an assessment. However, there is no statutory authority for exempting English learners from the annual ELP assessment requirement. Puerto Rico provides a unique situation because all public school instruction is in Spanish in all schools and Spanish is the language of instruction at the public institutions of higher education; therefore, English language acquisition is not required to ensure college and career readiness. Puerto Rico provides services to limited Spanish proficient students in order for those students to access the general curriculum, and provides an assessment of limited Spanish proficiency to such students. We also note that the ESEA provisions cited by commenters (sections 3124 and 3127) are provisions of title III that apply only to the use of title III funds.
We disagree that § 200.6(j) (proposed § 200.6(g)) results in either discrimination or a civil rights violation for students in schools that use a Native American language. The section expressly permits students in such schools to be assessed in a Native American language, and it applies only to State-funded public schools, which are subject to State and local law. This Federal provision only provides flexibility to States with regard to assessments in such schools, rather than continuing to treat such schools the same as all schools as under prior regulations; it does not impose any new restrictions.
We also decline to remove the requirement that evidence regarding Native American language assessments be submitted for assessment peer review, as this is a critical means of ensuring that a State's assessments meet the statutory requirements. We note that the language of the proposed regulations led some commenters to believe that the assessments themselves would be submitted to the Department; we are clarifying in the final regulations that, consistent with § 200.2(d), States need submit for assessment peer review only evidence relating to compliance with applicable requirements, rather than the actual assessments, so that the Department can determine that the assessment meets all of the statutory and regulatory requirements. We are also clarifying that, in addition to submitting evidence for assessment peer review, the State must receive approval through the assessment peer review in order to use this flexibility.
Finally, the Department declines to change the regulations to allow Native American language assessments to be aligned with different standards than are used for a State's other assessments. There is no statutory authority for allowing separate academic content and achievement standards for students in Native American language schools or programs (see sections 1111(b)(1) and (b)(2)(B) of the ESEA).
Under Executive Order 12866, OMB must determine whether this regulatory action is significant and, therefore, subject to the requirements of the Executive order and to review by the OMB. Section 3(f) of Executive Order 12866 defines “significant regulatory action” as an action likely to result in a rule that may—
(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities in a material way (also referred to as an “economically significant” rule);
(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement 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 stated in the Executive order.
This final regulatory action is significant and is subject to review by OMB under section 3(f) of Executive Order 12866.
We have also reviewed these regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—
(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account, among other things and to the extent practicable, the costs of cumulative regulations;
(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and
(5) Identify and assess available alternatives to direct regulation, including economic incentives such as user fees or marketable permits, to encourage the desired behavior, or provide information that enables the public to make choices.
Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”
We are issuing these final regulations only on a reasoned determination that their benefits justify their costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that these final regulations are consistent with the principles in Executive Order 13563.
We also have determined that this regulatory action would not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.
In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs associated with this regulatory action are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities. Elsewhere in this section under
The Department believes that this regulatory action will generally not impose significant new costs on States or their LEAs. This action implements and clarifies the changes to the assessment provisions in part A of title I of the ESEA made by the ESSA, which as discussed elsewhere in this document are limited in scope. The costs to States and LEAs for complying with these changes will similarly be limited, and can be financed with Federal education funds, including funds available under Grants for State Assessments and Related Activities.
Moreover, the regulations implement statutory provisions that can ease assessment burden on States and LEAs. For example, § 200.5(b) implements the provision in section 1111(b)(2)(C) of the ESEA under which a State that administers an end-of-course mathematics assessment to meet the high school assessment requirement may exempt an eighth-grade student who takes the end-of-course assessment from also taking the mathematics assessment the State typically administers in eighth grade (provided that the student takes a more advanced mathematics assessment in high school), thus avoiding the double-testing of eighth-grade students who take advanced mathematics coursework.
In general, the Department believes that the costs associated with the regulations (which are discussed in more detail below for cost-bearing requirements not related to information collection requirements) are outweighed by their benefits, which include the administration of assessments that produce valid and reliable information on the achievement of all students, including students with disabilities and English learners, that can be used by States to effectively measure school performance and identify underperforming schools, by LEAs and schools to inform and improve classroom instruction and student supports, and by parents and other stakeholders to hold schools accountable for progress, ultimately leading to improved academic outcomes and the closing of achievement gaps, consistent with the purpose of title I of the ESEA.
Section 200.3(b) implements the new provision in section 1111(b)(2)(H) of the ESEA under which a State may permit an LEA to administer a State-approved nationally recognized high school academic assessment in reading/language arts, mathematics, or science in lieu of the high school assessment the State typically administers in that subject. If a State seeks to approve a nationally recognized high school academic assessment for use by one or more of its LEAs, § 200.3(b)(1) requires, consistent with the statute, that the State establish technical criteria to determine whether the assessment meets specific requirements for technical quality and comparability. In establishing these criteria, we expect States to rely in large part on existing Department non-regulatory assessment peer review guidance and other assessment technical quality resources. Accordingly, we believe that the costs of complying with § 200.3(b)(1) will be minimal for the 20 States that we estimate will seek to approve a nationally recognized high school academic assessment for LEA use. Further, we believe the costs of this regulation are outweighed by its benefit to LEAs in those States, namely, the flexibility to administer for accountability purposes the assessments they believe most effectively measure the academic achievement of their high school students and can be used to identify and address their academic needs.
Section 200.6(f) implements the new provision in section 1111(b)(2)(F) of the ESEA requiring a State to make every effort to develop, for English learners, annual academic assessments in languages other than English that are present to a significant extent in the participating student population. In doing so, § 200.6(f) requires a State, in its title I State plan, to define “languages other than English that are present to a significant extent in the participating student population,” ensure that its definition includes at least the most populous language other than English spoken by the participating student population, describe how it will make every effort to develop assessments consistent with its definition where such assessments are not available and are needed, and explain, if applicable, why it is unable to complete the development of those assessments despite making every effort. Although a State may incur costs in complying with the requirement to make every effort to develop these assessments consistent with its definition, we believe these costs are outweighed by the potential benefits to States and their LEAs, which include fairer and more accurate assessments of the achievement of English learners. In addition, and in response to several commenters expressing concern about the potential costliness of developing assessments in multiple languages other than English, we note that § 200.6(f) does not require a State to complete development of an assessment in a language other than English if it is unable to do so, including for reasons related to cost.
The Secretary certifies that these final requirements will not have a significant economic impact on a substantial number of small entities. Under the U.S. Small Business Administration's Size Standards, small entities include small governmental jurisdictions such as cities, towns, or school districts (LEAs) with a population of less than 50,000. Although the majority of LEAs that receive ESEA funds qualify as small entities under this definition, these regulations will not have a significant economic impact on these small LEAs because the costs of implementing these requirements will be borne largely by States and will be covered by funding received by States under Federal education programs including Grants for State Assessments and Related Activities. The Department believes the benefits provided under this final regulatory action outweigh any associated costs for these small LEAs. In particular, the final regulations will help ensure that assessments administered in these LEAs produce valid and reliable information on the achievement of all students, including students with disabilities and English learners, that can be used to inform and improve classroom instruction and student supports, ultimately leading to improved student academic outcomes.
The Paperwork Reduction Act of 1995 does not require you to respond to a collection of information unless it displays a valid OMB control number. We display the valid OMB control numbers assigned to the collections of information in these final regulations at the end of the affected sections of the regulations.
As part of its continuing effort to reduce paperwork and respondent burden, the Department provides the general public and Federal agencies with an opportunity to comment on proposed and continuing collections of information in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)). This helps ensure that: The public understands the Department's collection instructions, respondents can provide the requested data in the desired format, reporting burden (time and financial resources) is minimized, collection instruments are clearly understood, and the Department can properly assess the impact of collection requirements on respondents.
Sections 200.2, 200.3, 200.5, 200.6, and 200.8 contain information collection requirements. Under the PRA, the Department has submitted a copy of these sections to OMB for its review.
A Federal agency may not conduct or sponsor a collection of information unless OMB approves the collection under the PRA and the corresponding information collection instrument displays a currently valid OMB control
The regulations affect currently approved information collections, 1810–0576 and 1810–0581. Under 1810–0576, the Department is approved to collect information from States, including assessment information. Under 1810–0581, the Department is approved to require States and LEAs to prepare and disseminate State and LEA report cards. On November 29, 2016, the Department published in the
One commenter stated that the reporting requirements were both understated and represented a significant burden on all SEAs. The commenter did not provide specific feedback explaining the commenter's estimation of the burden hours. In the absence of specific feedback or explanation, we continue to believe our estimates to be accurate, and make no changes.
To demonstrate the significant of the burden, the commenter noted that the expected burden for §§ 200.2(b), 200.2(d), and 200.3(b) totals an estimated 4,133 hours, and that this would result in a workload of approximately 15 hours per day. The calculation resulted from a lack of clarity in the description; we anticipate that collectively, all States will devote 4,133 hours to this work on an annual basis, rather than that each State will devote 4,133 hours to this work on an annual basis. We expect that each State will devote 80 hours to this task annually.
Section 200.2(d) requires States to submit evidence regarding their general assessments, AA–AAASs, and English language proficiency assessments for the Department's assessment peer review process, and § 200.2(b)(5)(ii) requires that States make evidence of technical quality publicly available. Section 200.3(b)(2)(ii) requires a State that allows an LEA to administer a locally selected, nationally recognized high school academic assessment in place of the State assessment to submit the selected assessment for the Department's assessment peer review process. We anticipate that 52 States will spend 200 hours preparing and submitting evidence regarding their general academic content assessments, AA–AAASs, and English language proficiency assessments for peer review, and that 20 States will spend an additional 100 hours preparing and submitting evidence relating to locally selected, nationally recognized high school academic assessments. Accordingly, we anticipate the total burden over the three-year information collection period, to be 12,400 hours for all respondents, resulting in an annual burden of 4,133 hours under 1810–0576.
Section 200.5(b)(4) requires a State that uses the middle school mathematics exception to describe in its title I State plan its strategies to provide all students in the State the opportunity to be prepared for and take advanced mathematics coursework in middle school. We anticipate that this will not increase burden, as information collection 1810–0576 already accounts for the burden associated with preparing the title I State plan.
Section 200.6(b)(2)(i) requires all States to develop appropriate accommodations for students with disabilities, disseminate information to LEAs, schools, and parents regarding such accommodations, and promote the use of such accommodations to ensure that all students with disabilities are able to participate in academic instruction and assessments. In response to comments, § 200.6(f)(1)(i) now requires States to develop appropriate accommodations for English learners, disseminate information and resources to LEAs, schools, and parents regarding such accommodations, and promote the use of such accommodations for English learners to ensure that all English learners are able to participate in academic instruction and assessments. Because of these additional dissemination requirements, we now anticipate that 52 States will spend 80 hours developing and disseminating this information annually, resulting in an annual burden increase of 4,160 hours under 1810–0576.
Section 200.6(c)(3)(iv) requires all States to make publicly available information submitted by an LEA justifying the need of the LEA to assess more than 1.0 percent of assessed students with an AA–AAAS for students with the most significant cognitive disabilities. We anticipate that 52 States will spend 20 hours annually making this information available, resulting in an annual burden increase of 1,040 hours under 1810–0576.
Section 200.6(c)(4) allows a State that anticipates that it will exceed the 1.0 percent cap for assessing students with the most significant cognitive disabilities with an AA–AAAS to request a waiver for the relevant subject for one year. We anticipate that 15 States will spend 40 hours annually preparing a waiver request, resulting in an annual burden increase of 600 hours under 1810–0576.
Section 200.6(c)(5) requires each State to report annually to the Secretary data relating to the assessment of children with disabilities. We anticipate that 52 States will spend 40 hours annually preparing a waiver request, resulting in an annual burden increase of 2,080 hours under 1810–0576.
Section 200.6(d)(3) establishes requirements for each State that adopts alternate academic achievement standards for students with the most significant cognitive disabilities. Such a State will be required to ensure that parents of students with the most significant cognitive disabilities assessed using an AA–AAAS are informed that their child's achievement will be measured based on alternate academic achievement standards, and informed how participation in such assessment may delay or otherwise affect the student from completing the requirements for a regular high school diploma. We anticipate that 52 States will spend 100 hours annually ensuring that relevant parents receive this information, resulting in an annual burden of 5,200 hours under 1810–0576.
Section 200.8(a)(2) requires a State to provide to parents, teachers, and principals individual student interpretive, descriptive, and diagnostic reports, including information regarding academic achievement on academic assessments. Section 200.8(b)(1) requires a State to produce and report to LEAs and schools itemized score analyses. Section 200.6(c)(2) specifies that if a State chooses to administer computer-adaptive assessments, such assessments must be included in the reports under section 200.8. We anticipate that 52 States will spend 1,500 hours annually providing this information, resulting in a total burden increase of 78,000 hours under 1810–0576.
Section 200.3(c)(1)(i) requires an LEA that intends to request approval from a State to use a locally selected, nationally recognized high school academic assessment in place of the statewide academic assessment to notify parents. Section 200.3(c)(3) requires any LEA that receives such approval to notify all parents of high school students it serves that the LEA received approval and will use these assessments. Finally, § 200.3(c)(4) requires the LEA to notify both parents and the State in any subsequent years in which the LEA elects to administer a locally selected, nationally recognized high school academic assessment. We anticipate that 850 LEAs will spend 30 hours preparing each notification and that, over the three-year information collection period, an LEA will be required to conduct these notifications four times.
Accordingly, we anticipate the total burden over the three-year information collection period to be 102,000 hours, resulting in an annual burden of 34,000 hours under 1810–0576.
This program is not subject to Executive Order 12372 and the regulations in 34 CFR part 79.
Executive Order 13132 requires us to ensure meaningful and timely input by State and local elected officials in the development of regulatory policies that have federalism implications. “Federalism implications” means 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.
In the NPRM, while we did not believe that the proposed regulations had any federalism implications, we encouraged State and local elected officials to review and comment on the proposed regulations. In the
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Elementary and secondary education, Grant programs—education, Indians—education, Infants and children, Juvenile delinquency, Migrant labor, Private schools, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Department of Education amends part 200 of title 34 of the Code of Federal Regulations as follows:
20 U.S.C 6301–6576, unless otherwise noted.
(a)(1) Each State, in consultation with its LEAs, must implement a system of high-quality, yearly student academic assessments that include, at a minimum, academic assessments in mathematics, reading/language arts, and science.
(2)(i) The State may also measure the achievement of students in other academic subjects in which the State has adopted challenging State academic standards.
(ii) If a State has developed assessments in other subjects for all students, the State must include students participating under this subpart in those assessments.
(b) The assessments required under this section must:
(1)(i) Except as provided in §§ 200.3, 200.5(b), and 200.6(c) and section 1204 of the Elementary and Secondary Education Act, as amended by the Every Student Succeeds Act (hereinafter “the Act”), be the same assessments used to measure the achievement of all students; and
(ii) Be administered to all students consistent with § 200.5(a), including the following highly-mobile student populations as defined in paragraph (b)(11) of this section:
(A) Students with status as a migratory child.
(B) Students with status as a homeless child or youth.
(C) Students with status as a child in foster care.
(D) Students with status as a student with a parent who is a member of the armed forces on active duty or serves on full-time National Guard duty;
(2)(i) Be designed to be valid and accessible for use by all students, including students with disabilities and English learners; and
(ii) Be developed, to the extent practicable, using the principles of universal design for learning. For the purposes of this section, “universal design for learning” means a scientifically valid framework for guiding educational practice that—
(A) Provides flexibility in the ways information is presented, in the ways students respond or demonstrate knowledge and skills, and in the ways students are engaged; and
(B) Reduces barriers in instruction, provides appropriate accommodations, supports, and challenges, and maintains high achievement expectations for all students, including students with disabilities and English learners;
(3)(i)(A) Be aligned with challenging academic content standards and aligned academic achievement standards (hereinafter “challenging State academic standards”) as defined in section 1111(b)(1)(A) of the Act; and
(B) Provide coherent and timely information about student attainment of those standards and whether a student is performing at the grade in which the student is enrolled; and
(ii)(A)(
(
(B)(
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(4)(i) Be valid, reliable, and fair for the purposes for which the assessments are used; and
(ii) Be consistent with relevant, nationally recognized professional and technical testing standards;
(5) Be supported by evidence that—
(i) The assessments are of adequate technical quality—
(A) For each purpose required under the Act; and
(B) Consistent with the requirements of this section; and
(ii) For each assessment administered to meet the requirements of this subpart, is made available to the public, including on the State's Web site;
(6) Be administered in accordance with the frequency described in § 200.5(a);
(7) Involve multiple up-to-date measures of student academic achievement, including measures that assess higher-order thinking skills—such as critical thinking, reasoning, analysis, complex problem solving, effective communication, and understanding of challenging content—as defined by the State. These measures may—
(i) Include valid and reliable measures of student academic growth at all achievement levels to help ensure that the assessment results could be used to improve student instruction; and
(ii) Be partially delivered in the form of portfolios, projects, or extended performance tasks;
(8) Objectively measure academic achievement, knowledge, and skills without evaluating or assessing personal or family beliefs and attitudes, except that this provision does not preclude the use of—
(i) Constructed-response, short answer, or essay questions; or
(ii) Items that require a student to analyze a passage of text or to express opinions;
(9) Provide for participation in the assessments of all students in the grades assessed consistent with §§ 200.5(a) and 200.6;
(10) At the State's discretion, be administered through—
(i) A single summative assessment; or
(ii) Multiple statewide interim assessments during the course of the academic year that result in a single summative score that provides valid, reliable, and transparent information on student achievement and, at the State's discretion, student growth, consistent with paragraph (b)(4) of this section;
(11)(i) Consistent with sections 1111(b)(2)(B)(xi) and 1111(h)(1)(C)(ii) of the Act, enable results to be disaggregated within each State, LEA, and school by—
(A) Gender;
(B) Each major racial and ethnic group;
(C) Status as an English learner as defined in section 8101(20) of the Act;
(D) Status as a migratory child as defined in section 1309(3) of the Act;
(E) Children with disabilities as defined in section 602(3) of the Individuals with Disabilities Education Act (IDEA) as compared to all other students;
(F) Economically disadvantaged students as compared to students who are not economically disadvantaged;
(G) Status as a homeless child or youth as defined in section 725(2) of title VII, subtitle B of the McKinney-Vento Homeless Assistance Act, as amended;
(H) Status as a child in foster care. “Foster care” means 24-hour substitute care for children placed away from their parents and for whom the agency under title IV–E of the Social Security Act has placement and care responsibility. This includes, but is not limited to, placements in foster family homes, foster homes of relatives, group homes, emergency shelters, residential facilities, child care institutions, and preadoptive homes. A child is in foster care in accordance with this definition regardless of whether the foster care facility is licensed and payments are made by the State, tribal, or local agency for the care of the child, whether adoption subsidy payments are being made prior to the finalization of an adoption, or whether there is Federal matching of any payments that are made; and
(I) Status as a student with a parent who is a member of the armed forces on active duty or serves on full-time National Guard duty, where “armed forces,” “active duty,” and “full-time National Guard duty” have the same meanings given them in 10 U.S.C. 101(a)(4), 101(d)(1), and 101(d)(5).
(ii) Disaggregation is not required in the case of a State, LEA, or school in which the number of students in a subgroup is insufficient to yield statistically reliable information or the results would reveal personally identifiable information about an individual student.
(12) Produce individual student reports consistent with § 200.8(a); and
(13) Enable itemized score analyses to be produced and reported to LEAs and schools consistent with § 200.8(b).
(c)(1) At its discretion, a State may administer the assessments required under this section in the form of computer-adaptive assessments if such assessments meet the requirements of section 1111(b)(2)(J) of the Act and this section. A computer-adaptive assessment—
(i) Must, except as provided in § 200.6(c)(7)(iii), measure a student's academic proficiency based on the challenging State academic standards for the grade in which the student is enrolled and growth toward those standards; and
(ii) May measure a student's academic proficiency and growth using items above or below the student's grade level.
(2) If a State administers a computer-adaptive assessment, the determination under paragraph (b)(3)(i)(B) of this section of a student's academic proficiency for the grade in which the student is enrolled must be reported on all reports required by § 200.8 and section 1111(h) of the Act.
(d) A State must submit evidence for peer review under section 1111(a)(4) of the Act that its assessments under this section and §§ 200.3, 200.4, 200.5(b), 200.6(c), 200.6(f), 200.6(h), and 200.6(j) meet all applicable requirements.
(e) Information provided to parents under section 1111(b)(2) of the Act must—
(1) Be in an understandable and uniform format;
(2) Be, to the extent practicable, written in a language that parents can understand or, if it is not practicable to provide written translations to a parent with limited English proficiency, be orally translated for such parent; and
(3) Be, upon request by a parent who is an individual with a disability as defined by the Americans with Disabilities Act (ADA), as amended, provided in an alternative format accessible to that parent.
(a)
(2) An LEA must administer the same locally selected, nationally recognized academic assessment to all high school students in the LEA consistent with the requirements in § 200.5(a)(1)(i)(B) and (a)(1)(ii)(C), except for students with the most significant cognitive disabilities who are assessed on an alternate assessment aligned with alternate
(b)
(1) Establish and use technical criteria to determine if the assessment—
(i) Is aligned with the challenging State academic standards;
(ii) Addresses the depth and breadth of those standards;
(iii) Is equivalent to or more rigorous than the statewide assessments under § 200.5(a)(1)(i)(B) and (a)(1)(ii)(C), as applicable, with respect to—
(A) The coverage of academic content;
(B) The difficulty of the assessment;
(C) The overall quality of the assessment; and
(D) Any other aspects of the assessment that the State may establish in its technical criteria;
(iv) Meets all requirements under § 200.2(b), except for § 200.2(b)(1), and ensures that all high school students in the LEA are assessed consistent with §§ 200.5(a) and 200.6; and
(v) Produces valid and reliable data on student academic achievement with respect to all high school students and each subgroup of high school students in the LEA that—
(A) Are comparable to student academic achievement data for all high school students and each subgroup of high school students produced by the statewide assessment at each academic achievement level;
(B) Are expressed in terms consistent with the State's academic achievement standards under section 1111(b)(1)(A) of the Act; and
(C) Provide unbiased, rational, and consistent differentiation among schools within the State for the purpose of the State-determined accountability system under section 1111(c) of the Act, including calculating the Academic Achievement indicator under section 1111(c)(4)(B)(i) of the Act and annually meaningfully differentiating between schools under section 1111(c)(4)(C) of the Act;
(2) Before approving any nationally recognized high school academic assessment for use by an LEA in the State—
(i) Ensure that the use of appropriate accommodations under § 200.6(b) and (f) does not deny a student with a disability or an English learner—
(A) The opportunity to participate in the assessment; and
(B) Any of the benefits from participation in the assessment that are afforded to students without disabilities or students who are not English learners; and
(ii) Submit evidence to the Secretary in accordance with the requirements for peer review under section 1111(a)(4) of the Act demonstrating that any such assessment meets the requirements of this section; and
(3)(i) Approve an LEA's request to use a locally selected, nationally recognized high school academic assessment that meets the requirements of this section;
(ii) Disapprove an LEA's request if it does not meet the requirements of this section; or
(iii) Revoke approval for good cause.
(c)
(i) Notify all parents of high school students it serves—
(A) That the LEA intends to request approval from the State to use a locally selected, nationally recognized high school academic assessment in place of the statewide academic assessment under § 200.5(a)(1)(i)(B) and (a)(1)(ii)(C), as applicable;
(B) Of how parents and, as appropriate, students, may provide meaningful input regarding the LEA's request; and
(C) Of any effect of such request on the instructional program in the LEA; and
(ii) Provide an opportunity for meaningful consultation to all public charter schools whose students would be included in such assessments.
(2) As part of requesting approval to use a locally selected, nationally recognized high school academic assessment, an LEA must—
(i) Update its LEA plan under section 1112 or section 8305 of the Act, including to describe how the request was developed consistent with all requirements for consultation under sections 1112 and 8538 of the Act; and
(ii) If the LEA is a charter school under State law, provide an assurance that the use of the assessment is consistent with State charter school law and it has consulted with the authorized public chartering agency.
(3) Upon approval, the LEA must notify all parents of high school students it serves that the LEA received approval and will use such locally selected, nationally recognized high school academic assessment instead of the statewide academic assessment under § 200.5(a)(1)(i)(B) and (a)(1)(ii)(C), as applicable.
(4) In each subsequent year following approval in which the LEA elects to administer a locally selected, nationally recognized high school academic assessment, the LEA must notify—
(i) The State of its intention to continue administering such assessment; and
(ii) Parents of which assessment the LEA will administer to students to meet the requirements of § 200.5(a)(1)(i)(B) and (a)(1)(ii)(C), as applicable, at the beginning of the school year.
(5) The notices to parents under this paragraph (c) of this section must be consistent with § 200.2(e).
(d)
The revision reads as follows:
(a)
(i) With respect to both the reading/language arts and mathematics assessments—
(A) In each of grades 3 through 8; and
(B) At least once in grades 9 through 12.
(ii) With respect to science assessments, not less than one time during each of—
(A) Grades 3 through 5;
(B) Grades 6 through 9; and
(C) Grades 10 through 12.
(2) A State must administer the English language proficiency assessment
(3) With respect to any other subject chosen by a State, the State may administer the assessments at its discretion.
(b)
(1) The student instead takes the end-of-course mathematics assessment the State administers to high school students under paragraph (a)(1)(i)(B) of this section;
(2) The student's performance on the high school assessment is used in the year in which the student takes the assessment for purposes of measuring academic achievement under section 1111(c)(4)(B)(i) of the Act and participation in assessments under section 1111(c)(4)(E) of the Act;
(3) In high school—
(i) The student takes a State-administered end-of-course assessment or nationally recognized high school academic assessment as defined in § 200.3(d) in mathematics that—
(A) Is more advanced than the assessment the State administers under paragraph (a)(1)(i)(B) of this section; and
(B) Provides for appropriate accommodations consistent with § 200.6(b) and (f); and
(ii) The student's performance on the more advanced mathematics assessment is used for purposes of measuring academic achievement under section 1111(c)(4)(B)(i) of the Act and participation in assessments under section 1111(c)(4)(E) of the Act; and
(4) The State describes in its State plan, with regard to this exception, its strategies to provide all students in the State the opportunity to be prepared for and to take advanced mathematics coursework in middle school.
(a)
(i) All children with disabilities as defined under section 602(3) of the IDEA;
(ii) Students with the most significant cognitive disabilities who are identified from among the students in paragraph (a)(1)(i) of this section; and
(iii) Students with disabilities covered under other acts, including—
(A) Section 504 of the Rehabilitation Act of 1973, as amended; and
(B) Title II of the ADA, as amended.
(2)(i) Except as provided in paragraph (a)(2)(ii)(B) of this section, a student with a disability under paragraph (a)(1) of this section must be assessed with an assessment aligned with the challenging State academic standards for the grade in which the student is enrolled.
(ii) A student with the most significant cognitive disabilities under paragraph (a)(1)(ii) of this section may be assessed with—
(A) The general assessment under paragraph (a)(2)(i) of this section; or
(B) If a State has adopted alternate academic achievement standards permitted under section 1111(b)(1)(E) of the Act for students with the most significant cognitive disabilities, an alternate assessment under paragraph (c) of this section aligned with the challenging State academic content standards for the grade in which the student is enrolled and the State's alternate academic achievement standards.
(b)
(i) For each student under paragraph (a)(1)(i) and (ii) of this section, the student's IEP team;
(ii) For each student under paragraph (a)(1)(iii)(A) of this section, the student's placement team; or
(iii) For each student under paragraph (a)(1)(iii)(B) of this section, the individual or team designated by the LEA to make these decisions.
(2) A State must—
(i)(A) Develop appropriate accommodations for students with disabilities;
(B) Disseminate information and resources to, at a minimum, LEAs, schools, and parents; and
(C) Promote the use of such accommodations to ensure that all students with disabilities are able to participate in academic instruction and assessments consistent with paragraph (a)(2) of this section and with § 200.2(e); and
(ii) Ensure that general and special education teachers, paraprofessionals, teachers of English learners, specialized instructional support personnel, and other appropriate staff receive necessary training to administer assessments and know how to administer assessments, including, as necessary, alternate assessments under paragraphs (c) and (h)(5) of this section, and know how to make use of appropriate accommodations during assessment for all students with disabilities, consistent with section 1111(b)(2)(B)(vii)(III) of the Act.
(3) A State must ensure that the use of appropriate accommodations under this paragraph (b) of this section does not deny a student with a disability—
(i) The opportunity to participate in the assessment; and
(ii) Any of the benefits from participation in the assessment that are afforded to students without disabilities.
(c)
(i) Is aligned with the challenging State academic content standards under section 1111(b)(1) of the Act for the grade in which the student is enrolled;
(ii) Yields results relative to the alternate academic achievement standards; and
(iii) At the State's discretion, provides valid and reliable measures of student growth at all alternate academic achievement levels to help ensure that the assessment results can be used to improve student instruction.
(2) For each subject for which assessments are administered under § 200.2(a)(1), the total number of students assessed in that subject using an alternate assessment aligned with alternate academic achievement standards under paragraph (c)(1) of this
(3) A State must—
(i) Not prohibit an LEA from assessing more than 1.0 percent of its assessed students in any subject for which assessments are administered under § 200.2(a)(1) with an alternate assessment aligned with alternate academic achievement standards;
(ii) Require that an LEA submit information justifying the need of the LEA to assess more than 1.0 percent of its assessed students in any such subject with such an alternate assessment;
(iii) Provide appropriate oversight, as determined by the State, of an LEA that is required to submit information to the State; and
(iv) Make the information submitted by an LEA under paragraph (c)(3)(ii) of this section publicly available, provided that such information does not reveal personally identifiable information about an individual student.
(4) If a State anticipates that it will exceed the cap under paragraph (c)(2) of this section with respect to any subject for which assessments are administered under § 200.2(a)(1) in any school year, the State may request that the Secretary waive the cap for the relevant subject, pursuant to section 8401 of the Act, for one year. Such request must—
(i) Be submitted at least 90 days prior to the start of the State's testing window for the relevant subject;
(ii) Provide State-level data, from the current or previous school year, to show—
(A) The number and percentage of students in each subgroup of students defined in section 1111(c)(2)(A), (B), and (D) of the Act who took the alternate assessment aligned with alternate academic achievement standards; and
(B) The State has measured the achievement of at least 95 percent of all students and 95 percent of students in the children with disabilities subgroup under section 1111(c)(2)(C) of the Act who are enrolled in grades for which the assessment is required under § 200.5(a);
(iii) Include assurances from the State that it has verified that each LEA that the State anticipates will assess more than 1.0 percent of its assessed students in any subject for which assessments are administered under § 200.2(a)(1) in that school year using an alternate assessment aligned with alternate academic achievement standards—
(A) Followed each of the State's guidelines under paragraph (d) of this section, except paragraph (d)(6); and
(B) Will address any disproportionality in the percentage of students in any subgroup under section 1111(c)(2)(A), (B), or (D) of the Act taking an alternate assessment aligned with alternate academic achievement standards;
(iv) Include a plan and timeline by which—
(A) The State will improve the implementation of its guidelines under paragraph (d) of this section, including by reviewing and, if necessary, revising its definition under paragraph (d)(1), so that the State meets the cap in paragraph (c)(2) of this section in each subject for which assessments are administered under § 200.2(a)(1) in future school years;
(B) The State will take additional steps to support and provide appropriate oversight to each LEA that the State anticipates will assess more than 1.0 percent of its assessed students in a given subject in a school year using an alternate assessment aligned with alternate academic achievement standards to ensure that only students with the most significant cognitive disabilities take an alternate assessment aligned with alternate academic achievement standards. The State must describe how it will monitor and regularly evaluate each such LEA to ensure that the LEA provides sufficient training such that school staff who participate as members of an IEP team or other placement team understand and implement the guidelines established by the State under paragraph (d) of this section so that all students are appropriately assessed; and
(C) The State will address any disproportionality in the percentage of students taking an alternate assessment aligned with alternate academic achievement standards as identified through the data provided in accordance with paragraph (c)(4)(ii)(A) of this section; and
(v) If the State is requesting to extend a waiver for an additional year, meet the requirements in paragraph (c)(4)(i) through (iv) of this section and demonstrate substantial progress towards achieving each component of the prior year's plan and timeline required under paragraph (c)(4)(iv) of this section.
(5) A State must report separately to the Secretary, under section 1111(h)(5) of the Act, the number and percentage of children with disabilities under paragraph (a)(1)(i) and (ii) of this section taking—
(i) General assessments described in § 200.2;
(ii) General assessments with accommodations; and
(iii) Alternate assessments aligned with alternate academic achievement standards under paragraph (c) of this section.
(6) A State may not develop, or implement for use under this part, any alternate or modified academic achievement standards that are not alternate academic achievement standards for students with the most significant cognitive disabilities that meet the requirements of section 1111(b)(1)(E) of the Act.
(7) For students with the most significant cognitive disabilities, a computer-adaptive alternate assessment aligned with alternate academic achievement standards must—
(i) Assess a student's academic achievement based on the challenging State academic content standards for the grade in which the student is enrolled;
(ii) Meet the requirements for alternate assessments aligned with alternate academic achievement standards under paragraph (c) of this section; and
(iii) Meet the requirements in § 200.2, except that the alternate assessment need not measure a student's academic proficiency based on the challenging State academic achievement standards for the grade in which the student is enrolled and growth toward those standards.
(d)
(1) Establish, consistent with section 612(a)(16)(C) of the IDEA, and monitor implementation of clear and appropriate guidelines for IEP teams to apply in determining, on a case-by-case basis, which students with the most significant cognitive disabilities will be assessed based on alternate academic achievement standards. Such guidelines must include a State definition of “students with the most significant cognitive disabilities” that addresses factors related to cognitive functioning and adaptive behavior, such that—
(i) The identification of a student as having a particular disability as defined in the IDEA or as an English learner does not determine whether a student is a student with the most significant cognitive disabilities;
(ii) A student with the most significant cognitive disabilities is not identified solely on the basis of the student's previous low academic achievement, or the student's previous need for accommodations to participate in general State or districtwide assessments; and
(iii) A student is identified as having the most significant cognitive disabilities because the student requires extensive, direct individualized instruction and substantial supports to achieve measurable gains on the challenging State academic content standards for the grade in which the student is enrolled;
(2) Provide to IEP teams a clear explanation of the differences between assessments based on grade-level academic achievement standards and those based on alternate academic achievement standards, including any effects of State and local policies on a student's education resulting from taking an alternate assessment aligned with alternate academic achievement standards, such as how participation in such assessments may delay or otherwise affect the student from completing the requirements for a regular high school diploma;
(3) Ensure that parents of students selected to be assessed using an alternate assessment aligned with alternate academic achievement standards under the State's guidelines in paragraph (d) of this section are informed, consistent with § 200.2(e), that their child's achievement will be measured based on alternate academic achievement standards, and how participation in such assessments may delay or otherwise affect the student from completing the requirements for a regular high school diploma;
(4) Not preclude a student with the most significant cognitive disabilities who takes an alternate assessment aligned with alternate academic achievement standards from attempting to complete the requirements for a regular high school diploma;
(5) Promote, consistent with requirements under the IDEA, the involvement and progress of students with the most significant cognitive disabilities in the general education curriculum that is based on the State's academic content standards for the grade in which the student is enrolled;
(6) Incorporate the principles of universal design for learning, to the extent feasible, in any alternate assessments aligned with alternate academic achievement standards that the State administers consistent with § 200.2(b)(2)(ii); and
(7) Develop, disseminate information on, and promote the use of appropriate accommodations consistent with paragraph (b) of this section to ensure that a student with significant cognitive disabilities who does not meet the criteria in paragraph (a)(1)(ii) of this section—
(i) Participates in academic instruction and assessments for the grade in which the student is enrolled; and
(ii) Is assessed based on challenging State academic standards for the grade in which the student is enrolled.
(e)
(f)
(i) Appropriate accommodations with respect to a student's status as an English learner and, if applicable, the student's status under paragraph (a) of this section. A State must—
(A) Develop appropriate accommodations for English learners;
(B) Disseminate information and resources to, at a minimum, LEAs, schools, and parents; and
(C) Promote the use of such accommodations to ensure that all English learners are able to participate in academic instruction and assessments; and
(ii) To the extent practicable, assessments in the language and form most likely to yield accurate and reliable information on what those students know and can do to determine the students' mastery of skills in academic content areas until the students have achieved English language proficiency consistent with the standardized, statewide exit procedures in section 3113(b)(2) of the Act.
(2) To meet the requirements under paragraph (f)(1) of this section, the State must—
(i) Ensure that the use of appropriate accommodations under paragraph (f)(1)(i) of this section and, if applicable, under paragraph (b) of this section does not deny an English learner—
(A) The opportunity to participate in the assessment; and
(B) Any of the benefits from participation in the assessment that are afforded to students who are not English learners; and
(ii) In its State plan, consistent with section 1111(a) of the Act—
(A) Provide its definition for “languages other than English that are present to a significant extent in the participating student population,” consistent with paragraph (f)(4) of this section, and identify the specific languages that meet that definition;
(B) Identify any existing assessments in languages other than English, and specify for which grades and content areas those assessments are available;
(C) Indicate the languages identified under paragraph (f)(2)(ii)(A) of this section for which yearly student academic assessments are not available and are needed; and
(D) Describe how it will make every effort to develop assessments, at a minimum, in languages other than English that are present to a significant extent in the participating student population including by providing—
(
(
(
(3) A State may request assistance from the Secretary in identifying linguistically accessible academic assessments that are needed.
(4) In determining which languages other than English are present to a significant extent in a State's participating student population, a State must, at a minimum—
(i) Ensure that its definition of “languages other than English that are present to a significant extent in the participating student population” encompasses at least the most populous language other than English spoken by the State's participating student population;
(ii) Consider languages other than English that are spoken by distinct populations of English learners, including English learners who are migratory, English learners who were not born in the United States, and English learners who are Native Americans; and
(iii) Consider languages other than English that are spoken by a significant portion of the participating student population in one or more of a State's LEAs as well as languages spoken by a
(g)
(2) An LEA may continue, for no more than two additional consecutive years, to assess an English learner under paragraph (g)(1) of this section if the LEA determines, on a case-by-case individual basis, that the student has not reached a level of English language proficiency sufficient to yield valid and reliable information on what the student knows and can do on reading/language arts assessments written in English.
(3) The requirements in paragraph (g)(1)–(2) of this section do not permit a State or LEA to exempt English learners from participating in the State assessment system.
(h)
(i) Develop a uniform, valid, and reliable statewide assessment of English language proficiency, including reading, writing, speaking, and listening skills; and
(ii) Require each LEA to use such assessment to assess annually the English language proficiency, including reading, writing, speaking, and listening skills, of all English learners in kindergarten through grade 12 in schools served by the LEA.
(2) The assessment under paragraph (h)(1) of this section must—
(i) Be aligned with the State's English language proficiency standards under section 1111(b)(1)(F) of the Act;
(ii) Be developed and used consistent with the requirements of § 200.2(b)(2), (4), and (5); and
(iii) Provide coherent and timely information about each student's attainment of the State's English language proficiency standards to parents consistent with § 200.2(e) and section 1112(e)(3) of the Act.
(3) If a State develops a computer-adaptive assessment to measure English language proficiency, the State must ensure that the computer-adaptive assessment—
(i) Assesses a student's language proficiency, which may include growth toward proficiency, in order to measure the student's acquisition of English; and
(ii) Meets the requirements for English language proficiency assessments in paragraph (h) of this section.
(4)(i) A State must provide appropriate accommodations that are necessary to measure a student's English language proficiency relative to the State's English language proficiency standards under section 1111(b)(1)(F) of the Act for each English learner covered under paragraph (a)(1)(i) or (iii) of this section.
(ii) If an English learner has a disability that precludes assessment of the student in one or more domains of the English language proficiency assessment required under section 1111(b)(2)(G) of the Act such that there are no appropriate accommodations for the affected domain(s) (
(5) A State must provide for an alternate English language proficiency assessment for each English learner covered under paragraph (a)(1)(ii) of this section who cannot participate in the assessment under paragraph (h)(1) of this section even with appropriate accommodations.
(i)
(ii) If a State does not assess a recently arrived English learner on the State's reading/language arts assessment consistent with section 1111(b)(3)(A)(i)(I) of the Act, the State must count the year in which the assessment would have been administered as the first of the three years in which the student may take the State's reading/language arts assessment in a native language consistent with paragraph (g)(1) of this section.
(iii) A State and its LEAs must report on State and local report cards required under section 1111(h) of the Act the number of recently arrived English learners who are not assessed on the State's reading/language arts assessment.
(iv) Nothing in this section relieves an LEA from its responsibility under applicable law to provide recently arrived English learners with appropriate instruction to enable them to attain English language proficiency as well as grade-level content knowledge in reading/language arts, mathematics, and science.
(2) A State must assess the English language proficiency of a recently arrived English learner pursuant to paragraph (h) of this section.
(3) A State must assess the mathematics and science achievement of a recently arrived English learner pursuant to § 200.2 with the frequency described in § 200.5(a).
(j)
(i) The State provides such an assessment in the Native American language to all students in the school or program, consistent with the requirements of § 200.2;
(ii) The State submits evidence regarding any such assessment in the Native American language for peer review as part of its State assessment system, consistent with § 200.2(d), and receives approval that the assessment meets all applicable requirements; and
(iii) For an English learner, as defined in section 8101(20)(C)(ii) of the Act, the State continues to assess the English language proficiency of such English learner, using the annual English language proficiency assessment required under paragraph (h) of this section, and provides appropriate services to enable him or her to attain proficiency in English.
(2) Notwithstanding paragraph (g) of this section, the State must assess under § 200.5(a)(1)(i)(B), using assessments written in English, the achievement of each student enrolled in such a school or program in meeting the challenging State academic standards in reading/language arts, at a minimum, at least once in grades 9 through 12.
(k)
(1) “Native American” means “Indian” as defined in section 6151 of the Act, which includes Alaska Native
(2) A “recently arrived English learner” is an English learner who has been enrolled in schools in the United States for less than twelve months.
(3) The phrase “schools in the United States” includes only schools in the 50 States and the District of Columbia.
The addition and revision read as follows:
(a) A State may defer the start or suspend the administration of the assessments required under § 200.2 for one year for each year for which the amount appropriated for State assessment grants under section 1002(b) of the Act is less than $369,100,000.
(b) A State may not cease the development of the assessments referred to in paragraph (a) of this section even if sufficient funds are not appropriated under section 1002(b) of the Act.
Office of Elementary and Secondary Education, Department of Education.
Final regulations.
The Secretary issues final regulations under title I, part B of the Elementary and Secondary Education Act of 1965 (ESEA) to implement changes made to the ESEA by the Every Student Succeeds Act (ESSA) enacted on December 10, 2015, including the ability of the Secretary to provide demonstration authority to a State educational agency (SEA) to pilot an innovative assessment and use it for accountability and reporting purposes under title I, part A of the ESEA before scaling such an assessment statewide.
These regulations are effective January 9, 2017.
Jessica McKinney, U.S. Department of Education, 400 Maryland Avenue SW., Room 3W107, Washington, DC 20202–2800.
If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1–800–877–8339.
On July 11, 2016, the Secretary published a notice of proposed rulemaking (NPRM) for the title I, part B regulations pertaining to the innovative assessment demonstration authority in the
• The Department has renumbered the proposed regulatory sections, as follows, in the final regulations:
• The Department has made a number of changes to new § 200.104 (proposed § 200.76), which provides definitions and describes general requirements for SEAs and consortia of SEAs applying for and implementing the innovative assessment demonstration authority:
• Produces an annual summative determination of each student's mastery of grade-level content standards aligned to the challenging State academic standards under section 1111(b)(1) of the ESEA.
• In the case of a student with the most significant cognitive disabilities assessed with an alternate assessment aligned with alternate academic achievement standards (AA–AAAS) under section 1111(b)(1)(E) of the ESEA and aligned with the State's academic content standards for the grade in which the student is enrolled, produces an annual summative determination relative to such alternate academic achievement standards for each such student;
• May include any combination of general assessments or AA–AAAS in reading/language arts, mathematics, or science; and
• May, in any required grade or subject, include one or more types of assessments listed in § 200.104(b)(3)(ii).
• The Department made a number of changes to § 200.105 (proposed § 200.77), which sets forth the application requirements that an SEA or consortium of SEAs must meet in order to receive approval to implement demonstration authority:
• The Department made a number of changes to § 200.106 (proposed § 200.78), which describes the selection criteria the Secretary will use to evaluate an application for demonstration authority:
• The Department has revised § 200.107 (proposed § 200.79) to clarify that the baseline year used for purposes of evaluating the innovative assessment to determine if a State may administer the assessment statewide is the first year the innovative assessment is administered by a participating LEA under the demonstration authority.
We discuss substantive issues under the sections of the proposed regulations to which they pertain, except for a number of cross-cutting issues, which are discussed together under the heading “Cross-cutting issues.” Generally, we do not address technical and other minor changes, or suggested changes the law does not authorize us to make under the applicable statutory authority. In addition, we do not address general comments that raised concerns not directly related to the proposed regulations or that were otherwise outside the scope of the regulations, including comments that raised concerns pertaining to instructional curriculum, particular sets of academic standards or assessments or the Department's authority to require a State to adopt a particular set of academic standards or assessments, as well as comments pertaining to the Department's regulations on statewide accountability systems, data reporting, and State plans.
• New § 200.104 (proposed § 200.76) entitled “Innovative assessment demonstration authority.”
• New § 200.105 (proposed § 200.77) entitled “Demonstration authority application requirements.”
• New § 200.106 (proposed § 200.78) entitled “Innovative assessment selection criteria.”
• New § 200.107 (proposed § 200.79) entitled “Transition to statewide use.”
• New § 200.108 (proposed § 200.80) entitled “Extensions, waivers, and withdrawal of authority.”
We note that a State may always consult with additional groups beyond those required in the regulations in developing its innovative assessment system, and we strongly encourage States to ensure meaningful and ongoing engagement with a diverse group of stakeholders. The Department has issued non-regulatory guidance, generally, on conducting effective outreach with stakeholders in implementing the ESSA, with suggestions and examples of best practices for meaningful stakeholder engagement.
We agree that it would be helpful to emphasize that parents of particular subgroups of students, as well as organizations representing these students, must be consulted, and are revising the final regulations accordingly. The State must consider the appropriate services to ensure meaningful communication for parents with limited English proficiency and parents with disabilities.
In addition, we agree that it would be beneficial to add representatives of Indian tribes to the list of required stakeholders, as some LEAs have a high percentage of their student population who are American Indian or Alaska Native, and these LEAs will be expected to implement the innovative assessment by the time the State transitions to statewide use of the innovative assessment system. This requirement is consistent with the new requirement in title I, part A for States to consult with representatives of Tribes prior to submitting a State plan (section 1111(a)(1) of the ESEA), and the new requirement that certain LEAs consult with Tribes prior to submitting a plan or application for covered programs (section 8538 of the ESEA).
One commenter appreciated the opportunity to use the advances in assessment to better measure student learning, but asked the Department to ensure that this focus on innovation does not jeopardize assessment rigor and comparability. Multiple commenters felt that the regulations provided appropriate flexibility with protections to ensure that assessments are high-quality, valid, and reliable measurements consistent with the provisions of ESEA.
In developing these regulations, we worked carefully to balance the flexibility offered to States under this authority and the need to provide room for innovation with the responsibility to ensure that States continue to meet the requirements of title I of the ESEA. As long as States meet the requirements of title I of the ESEA, they may explore new ways to assess students beyond
We disagree that the requirements are unnecessarily burdensome or too prescriptive. Under section 1204 of the ESEA, the demonstration authority is for those States interested in piloting new innovative assessments and administering the innovative assessments in a subset of schools for the purposes of accountability and reporting instead of the statewide assessment, until a State fully scales use of the innovative assessment among all LEAs and schools. If a State wants to create an innovative assessment outside of the demonstration authority while continuing to use the statewide assessment in all schools and LEAs, the State may do so. Section 1204 of the ESEA further establishes the application requirements for States seeking innovative assessment demonstration authority. The regulations clarify and organize those statutory requirements in new §§ 200.105 and 200.106 (proposed §§ 200.77 and 200.78). Given that the demonstration authority is initially limited to seven States, we particularly believe the selection criteria outlined in new § 200.106 will provide the chance for peer reviewers to distinguish high-quality applications consistent with the requirements of the statute. Moreover, section 1601(a) of the ESEA provides that the Secretary “may issue . . . such regulations as are necessary to reasonably ensure that there is compliance” with the law. The Department also has rulemaking authority under section 410 of the General Education Provisions Act (GEPA), 20 U.S.C. 1221e–3, and section 414 of the Department of Education Organization Act (DEOA), 20 U.S.C. 3474. These regulations are necessary and appropriate to assist States in developing new, innovative assessments while maintaining high expectations, validity, and rigor; further, they are consistent and specifically intended to ensure compliance with section 1204 of the ESEA.
The Department, through its peer review process, will review the innovative assessment system overall, including a review of documentation and evidence provided for the innovative assessment at each grade level that comprises the innovative assessment system. The provision in new § 200.107(b) (proposed § 200.79(b)), which requires an innovative assessment to meet all of the requirements of section 1111(b)(2) of the ESEA, does not mean that each part of a grade-level innovative assessment (
To provide further clarity, we are revising the definition of “innovative assessment system” in new § 200.104(b)(3) (proposed § 200.76(b)(2)) to specify that an “innovative assessment system” produces an annual summative determination of each student's mastery of grade-level content standards aligned to the challenging State academic standards under section 1111(b)(1) of the ESEA, or, in the case of a student with the most significant cognitive disabilities assessed with an AA–AAAS under section 1111(b)(1)(E) of the ESEA and aligned with the State's academic content standards for the grade in which the student is enrolled, an annual summative determination relative to such alternate academic achievement standards for each such student. We also are revising the definition of “innovative assessment system” to specify that an innovative assessment may include, in any required grade or subject, one or more types of assessments, such as cumulative year-end assessments, competency-based assessments, instructionally embedded assessments, interim assessments, or performance-based assessments.
• Produces an annual summative determination of each student's mastery of grade-level content standards aligned to the challenging State academic standards under section 1111(b)(1) of the ESEA, or, in the case of a student with the most significant cognitive disabilities assessed with an alternate assessment aligned with alternate academic achievement standards under section 1111(b)(1)(E) of the ESEA and aligned with the State's academic content standards for the grade in which the student is enrolled, an annual summative determination relative to such alternate academic achievement standards for each such student;
• May include any combination of general assessments or alternate assessments aligned to alternate academic achievement standards (AA–AAAS) in reading/language arts, mathematics, or science; and
• May, in any required grade or subject, include one or more types of assessments listed in new § 200.104(b)(3)(ii).
One commenter stated that, were the Department to consider a conditional approval process, it might risk exceeding the seven-State limitation during the initial demonstration authority period if the Department receives more than seven high-quality applications that meet all of the application requirements and selection criteria. The commenter proposes a contingency plan to rank the applications in the event that the number of applications exceeds the cap.
Several commenters suggested that this requirement means the Department drafted the proposed rule to accommodate specific States or may favor the participation of specific States. One of these commenters recommended the Department commit to granting demonstration authority so that States may pursue assessment innovation without the burden of sanctions or the threat of losing funds.
If the Department grants demonstration authority, even on a conditional basis, to seven States in the first year, there would be no additional opportunities for other States to pursue authority until the initial demonstration period ends. The Department is concerned that providing conditional approval to States that are not ready to implement an innovative assessment system in at least one school may, as a result, take an opportunity away from a State that is close to being ready but waits to submit an application to the Department, even though that second State may ultimately be ready to begin implementing its innovative assessment system sooner than the first State. In addition, because we know there is a tremendous amount of work involved in developing an innovative assessment system, we think that it is possible that a State with conditional approval may subsequently encounter unanticipated delays, challenges, or the need for substantial redesign. If this were to happen, it could negatively affect the Department's ability to evaluate the initial demonstration authority before determining to expand the innovative demonstration authority, as required by section 1204(c)(3) of the ESEA.
We encourage States to consider several options for how they may develop, implement, and scale an innovative assessment. If a State plans to pursue demonstration authority immediately, a State might choose to partner with an LEA or a school that already has an innovative assessment model in place at the local level. The State could choose to partner with that LEA or school using an innovative assessment model to begin piloting this model and using it for accountability and reporting purposes under the ESEA in that LEA or school, with the intention of moving statewide, once the State is granted innovative assessment demonstration authority. Alternatively, a State may choose to start small with a focus on a single grade and content area, like 8th-grade science. If the Department does not receive and grant demonstration authority to seven States in the first year, we anticipate that there will be additional opportunities for States to apply for demonstration authority until seven States have been approved.
Finally, the regulations are not designed to favor the participation of certain States. We will hold all applicants to the same high expectations, outlined in new §§ 200.105 and 200.106 (proposed §§ 200.77 and 200.78), based on external peer review of applications, before granting innovative assessment demonstration authority.
If a State does not wish to use an innovative assessment for accountability and reporting purposes, it does not need demonstration authority to pilot its innovative assessments. Only those States that wish to use the innovative assessment in place of the statewide assessment, including for the purposes of accountability and reporting under title I, part A, in at least one school, require innovative assessment demonstration authority.
We do not agree that parents in general should be added to the list of peer reviewers in new § 200.104(c)(2). The very technical nature of these reviews requires that peer reviewers have the experience and expertise to evaluate an SEA's application, with an emphasis on knowledge of and experience with the development and implementation of innovative assessments and assessment technical requirements such as test design, comparability, and accessibility. Certainly, if a parent meets these requirements, including the level of expertise expected in the development and implementation of innovative assessments, that person would be considered to serve as a peer reviewer for the innovative assessment demonstration authority.
Each State that applies for the demonstration authority will undergo peer review, as identified in the statute and regulations. The peers will review the strength of the State's application and evidence against the application requirements and selection criteria before providing recommendations to the Secretary.
For the many State-funded public school districts serving substantial populations of American Indian/Alaska Native students, and for individual State-funded public schools operated by a tribe (as in the case of some charter schools), such public schools in a State granted the demonstration authority would be eligible to participate in the innovative assessment system. We agree that, in such States, collaboration with tribal communities is essential. Therefore, we strongly encourage interested States to work closely with any tribes located in their State when developing and administering innovative assessments. To prioritize this collaboration, and as previously described, we are requiring, in new § 200.105(a)(2) (proposed § 200.77(a)(2)), State collaboration with representatives of Indian tribes located in the State in the development of the innovative assessment.
The Department believes it would be helpful to establish a definition of “affiliate member of a consortium.” A consortium of States may have both full members and affiliate members, and we believe it is necessary to clarify that a State is not a full member of a consortium unless it is proposing to use the consortium's innovative assessment system. In addition, we agree with commenters that it is necessary to provide detail on how an affiliate member of a consortium becomes a full member with authority to administer the consortium's innovative assessment system under demonstration authority.
We agree with the commenter that it is critical for requirements related to alignment of assessments with academic content standards to be the same for the innovative assessment demonstration authority under part B of title I as they are for statewide assessments under part A of title I; like statewide assessments,
Further, we believe that the statutory and regulatory requirements that ensure valid, reliable, and comparable annual summative determinations, based on the State's academic standards, between the innovative assessment system and the statewide assessment, particularly in new § 200.105(b)(2)–(4), allay the commenter's concern that this flexibility will result in incomparable data and disparate expectations for students in participating and non-participating schools. To that end, we are adding to new § 200.105(b)(3) (proposed § 200.77(b)(3)) to clarify that the innovative assessment system must express student results “consistent with” the “challenging” State academic achievement standards; we are making these changes given that, as proposed, the provision to express results “in terms consistent with” the State's academic achievement standards could have been misinterpreted to only require that the same labels be used to describe student achievement on the innovative assessment as are used to describe student achievement on the statewide assessment—even if those labels carried very different meaning in terms of students' mastery of the challenging State academic achievement standards. We believe that removing “in terms” and adding “challenging” to new § 200.105(b)(3) helps clarify that the academic achievement standards must be consistent and comparable between the innovative and statewide assessment systems. This requirement is also reiterated in new § 200.105(b)(4)(ii), as discussed in response to comments on comparability of the two assessment systems.
Further, we believe that States will be most likely to succeed in scaling their innovative assessment if they can develop rigorous criteria for determining when to add new LEAs or schools, with a plan that includes annual benchmarks, as described in new § 200.106(a)(3)(iii) (proposed § 200.78(a)(3)(iii)), to achieve implementation in demographically diverse settings over time. We are, however, revising new § 200.106(a)(3)(iii) to clarify that the benchmarks are intended to achieve high-quality and consistent implementation across all participating
We firmly believe that the requirements for comparability are necessary to reasonably ensure that States meet the requirement in section 1204(e)(2)(A)(iv) as well as other statutory requirements under section 1204(e)(2)(A)(xi) of the ESEA, such as the requirement “to validly and reliably aggregate data from the innovative assessment system” for purposes of school accountability and data reporting under title I, part A. Thus, these regulations are consistent and specifically intended to ensure compliance with section 1204 of the ESEA.
The Department acknowledges that the requirements for comparability for innovative assessment systems are rigorous in these regulations, but believes they are reasonable because setting clear expectations for comparability will lead to stronger evidence of validity and reliability from States. While the Department appreciates the need to allow States flexibility in designing innovative assessments, this flexibility must be balanced with the imperative that States meet all of the statutory provisions and ensure their innovative assessment systems are valid, reliable, fair, and of high-quality. In addition, by providing multiple paths to demonstrating comparability, including a State-determined method, we believe we are providing sufficient flexibility to States in how they may demonstrate comparability.
However, we also believe that demonstrating comparability between the two assessment systems, as required by section 1204(e)(2)(A)(iv) of the ESEA is a critical safeguard for fairness and equity during the demonstration authority period, when both assessment systems will be in use throughout the State for school accountability and data reporting purposes under title I, part A for a period of five years, or more. If the data from the innovative assessment system are not comparable to the statewide assessment during this time, the integrity and validity of the school accountability system will be jeopardized; schools and students requiring additional supports may go
In response to the additional proposed methodologies that included a suggestion to allow States to administer items from the innovative assessment to students taking the statewide assessment, we are clarifying in new § 200.105(b)(4)(i)(C) and (D) that States may include items “or performance tasks” from the innovative assessment on the statewide assessment, and vice versa, if their inclusion constitutes a significant portion of the assessment and is appropriate for the research design to demonstrate comparability proposed by the State.
We have also added § 200.105(b)(4)(i)(D) to clarify that States may include, as a significant portion of the statewide assessment system in each required grade and subject in which both an innovative and statewide assessment is administered, items or performance tasks from the innovative assessment system that, at a minimum, have been previously pilot tested or field tested for use in the innovative assessment system.
We disagree that an annual demonstration of comparability between the innovative and statewide assessment systems is unnecessary or overly burdensome as States focus on scaling their innovative systems. As provided in section 1601(a) of ESEA, “[t]he Secretary may issue . . . such regulations as are necessary to reasonably ensure that there is compliance” with the statute. Also, the Department has rulemaking authority under section 410 of the GEPA, 20 U.S.C. 1221e–3, and section 414 of the DEOA, 20 U.S.C. 3474. Section 1204(e)(2)(A)(iv) requires that the innovative assessment system generates valid, reliable, and comparable results relative to the statewide assessment during the demonstration authority period. We believe that as an innovative assessment system goes to scale, the regulations related to statewide assessment will remain a valuable reference to monitor effective implementation across the increasing number of LEAs and schools that adopt the innovative assessment. Further, annual information on comparability will enable the Department to better support and work with States to make needed adjustments over time to maintain a high level of comparability between the two assessment systems, which is not only required by the statute, but also critical to maintain fair and valid school accountability determinations and transparent data reporting while both assessment systems are in operation during the demonstration authority period. Finally, these final regulations are consistent and specifically intended to ensure compliance with section 1204 of the ESEA.
For example, the evidence a State will provide to demonstrate that its statewide and innovative assessment systems are comparable may need to change little from one year to next, particularly in any year of the demonstration authority period where the innovative assessment has not expanded to a large number of new schools or where implementation has been relatively stable—in such cases, providing this information will result in minimal work for SEAs and will assure the Department that the SEA continues to comply with the minimal requirements for demonstration authority. However, there are many cases where implementation from one year to the next will not be as stable, leading to variation in the results between the two assessments over time. For instance, comparability could be strengthened in later years if the State makes adjustments to modify its performance tasks to better align with the State's academic content standards or to improve the inter-rater reliability and training of evaluators. However, comparability could decline in later years of the demonstration authority period if the initial participating LEAs had greater prior experience with the innovative assessment system, and newly added LEAs struggle to implement the innovative assessment system with the same fidelity as early adopters. Similarly, if initially participating schools are not demographically representative of the State as a whole, the comparability of the innovative assessment system results to the statewide assessment could change as greater numbers of students take the innovative assessment, including children with disabilities and English learners. Without annual information on comparability between the statewide and innovative assessment systems, the Department would not be able to provide the necessary technical assistance to States that see these fluctuations over time and would not have essential information to ensure compliance with the statutory requirements in section 1204 for the demonstration authority.
We are therefore adding to new § 200.105(b)(5) (proposed § 200.77(b)(5)) to state that the principles of UDL should be incorporated “to the extent practicable” instead of “as appropriate” consistent with section 1111(b)(2)(B)(xiii) of the ESEA.
Section 1204(e)(2)(A)(ix) of the ESEA requires that the innovative assessment system annually measure the progress of “not less than the same percentage” of all students and students in each subgroup in participating schools as were assessed by schools administering the statewide assessments and “as
New § 200.105(b)(6) does not prescribe how each State will factor participation rates into its accountability system for all public schools, as required under section 1111(c)(4)(E)(iii) of the ESEA. This requirement would still apply to all schools in the State, including schools participating in the innovative assessment demonstration authority, because of requirements in section 1204(e)(2)(A)(xi) and (C)(iii) of the ESEA to maintain consistent, valid, and reliable accountability for all schools, but the actions for holding schools accountable for improving school participation rates are determined by the State as described in the statutory requirements for statewide accountability systems. While the commenter is correct that the Secretary may withdraw demonstration authority for a number of reasons, including when a State cannot provide evidence that it is meeting the requirements under new § 200.105, this does not mean low
There is nothing in these regulations that would preclude a State from including additional content to measure a student's mastery of content other than the content for the grade in which the student is enrolled, and we are revising the final regulations to make this clear. A State is able to include such content, whether through a computer-adaptive design or some other innovative design, provided the innovative assessment system meets the statutory and regulatory requirements, including by producing an annual summative determination that describes the student's mastery of the State's grade-level academic content standards based on the State's aligned academic achievement standards.
We disagree with commenters that we should require written or oral translations and alternate formats only to the extent practicable. Parents with disabilities or parents who are limited English proficient have the right to request notification in accessible formats. Whenever practicable, written translations of printed information must be provided to parents with limited English proficiency in a language they understand, and the term “language” includes all languages, including Native American languages. However, if written translations are not practicable for a State or LEA to provide, it is permissible to provide information to limited English proficient parents orally in a language that they understand instead of a written translation. This requirement is consistent with Title VI of the Civil Rights Act of 1964 (Title VI), as amended, and its implementing regulations. Under Title VI, recipients of Federal financial assistance have a responsibility to ensure meaningful access to their programs and activities by persons with limited English proficiency. It is also consistent with Department policy under Title VI and Executive Order 13166 (Improving Access to Services for Persons with Limited English Proficiency).
We decline to further define the term “to the extent practicable” under these regulations, but remind States and LEAs of their Title VI obligation to take reasonable steps to communicate the information required by ESEA to parents with limited English proficiency in a meaningful way.
• Provide for each SEA or consortium's application to include a plan for delivering supports to educators that can be consistently provided at scale;
• Clarify that the SEA's or consortium's application will be evaluated on the extent to which training for LEA and school staff will develop teacher capacity to provide instruction that is informed by the innovative assessment system and to use the system's results; and
• Clarify that SEAs or consortia should describe strategies that will engage teachers and staff in carrying out their responsibilities under the State's chosen innovative assessment model, which may include “designing”, “implementing,” and “validly and reliably” scoring the assessment results—not just in developing and scoring them, in general.
We agree, however, with the commenter that States should establish reasonable safeguards within their assessment systems, including any innovative assessment system. For example, teachers, in general, should not be permitted to score the assessments taken by students for which the teacher is considered the teacher of record or the assessments taken by students in a school in which the teacher is employed, as this could affect the reliability of the scores and create incentives for improper behavior given that the results will be used in the State's accountability system. We believe that States should have flexibility to design and develop a truly innovative assessment system and do not want to restrict innovation by placing extensive restrictions on the development and scoring of these new assessments. We do want to ensure that States are considering proper safeguards (
The regulations in new § 200.107(a) and (b) (proposed § 200.79(a) and (b)) represent another significant set of criteria that the innovative assessment must meet in order to achieve acceptance as a statewide assessment. Additionally, new § 200.108 (proposed § 200.80) provides that the Department may withdraw the innovative assessment authority from a State when it cannot produce a high-quality plan for transition or evidence that the innovative assessment systems meets specific conditions. Given these provisions, we disagree that these regulations collectively presume that an innovative assessment system which achieves statewide implementation status will automatically be deemed final or successful.
Finally, the requirements for peer review of the innovative assessment system in new § 200.107(a)(1) (proposed § 200.79(a)(1)) that is required for transitioning out of the demonstration authority are the same requirements for peer review that apply to all statewide assessments used to meet the requirements under title I, part A, that is, the peer review is conducted after the first administration of a new statewide assessment, which ensures that all necessary evidence will be available for submission to the Department.
Several commenters requested that the Department remove the provision in proposed § 200.80(c)(2) because they opposed a one-year limitation on such waivers and asserted that this timeline was inconsistent with section 1204(j)(3) of the ESEA, which provides the Secretary with the authority to grant a waiver to delay withdrawal of authority in order to provide the State the time necessary to fully implement the innovative assessment system statewide. Commenters asserted that the variation in structure, design, and complexity of innovative assessment systems requires flexibility for States, and that the Department should not apply a standard expectation to all States and innovative assessment systems.
Under Executive Order 12866, OMB must determine whether this regulatory action is significant and, therefore, subject to the requirements of the Executive order and to review by OMB. Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—
(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities in a material way (also referred to as an “economically significant” rule);
(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;
(3) Materially alter the budgetary impacts of entitlement 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 stated in the Executive order.
This final regulatory action is significant and is subject to review by OMB under section 3(f) of Executive Order 12866.
We have also reviewed these regulations under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—
(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);
(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account, among other things and to the extent practicable, the costs of cumulative regulations;
(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);
(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and
(5) Identify and assess available alternatives to direct regulation, including economic incentives such as user fees or marketable permits, to encourage the desired behavior, or provide information that enables the public to make choices.
Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”
We are issuing these final regulations only on a reasoned determination that their benefits justify their costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that these final regulations are consistent with the principles in Executive Order 13563.
We also have determined that this regulatory action would not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.
In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs associated with this regulatory action are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities.
In this regulatory impact analysis we discuss the need for regulatory action and the potential costs and benefits. Elsewhere in this section under
The Department believes that regulatory action is needed to ensure effective implementation of section 1204 of the ESEA, which permits the Secretary to provide an SEA or consortium of SEAs that meets the application requirements with authority to establish, operate, and evaluate a system of innovative assessments. Crucially, and as discussed elsewhere in this document in response to concerns expressed by commenters that the regulations are overly prescriptive or might limit innovation, the Department believes that regulatory action is needed to ensure that these assessments ultimately can meet requirements for academic assessments and be used in statewide accountability systems under section 1111 of the ESEA, including requirements for assessment validity, reliability, technical quality, and alignment to challenging State academic standards. Absent regulatory action, SEAs implementing innovative assessment authority run a greater risk of developing assessments that are inappropriate or inadequate for these purposes, which could hinder State and local efforts to provide all children significant opportunity to receive a fair, equitable, and high-quality education and to close educational achievement gaps consistent with the purpose of title I of the ESEA.
The primary benefit of these regulations is the administration of statewide assessments that more effectively measure student mastery of challenging State academic standards and better inform classroom instruction and student supports, ultimately leading to improved academic outcomes for all students. We believe that this benefit outweighs associated costs to an SEA, which may use funds received under the Grants for State Assessments and Related Activities program and funds reserved for State administration under part A of title I to participate in the demonstration authority. In addition, high-quality, innovative assessment models developed by participating SEAs under the demonstration authority can benefit other SEAs by providing examples of new assessment strategies for those SEAs to consider.
Participation in the innovative assessment demonstration authority is voluntary and limited during the initial demonstration period to seven SEAs. In light of the initial limits on participation, the number and rigor of the statutory application requirements, and the high degree of technical complexity involved in establishing, operating, and evaluating innovative assessment systems, we anticipate that few SEAs will seek to participate. Based on currently available information, we estimate that, initially, up to five SEAs will apply.
For those SEAs that apply and are provided demonstration authority (consistent with the final regulations), implementation costs may vary considerably based on a multitude of factors, including: The number and type(s) of assessments the SEA elects to include in its system; the differences between those assessments and the SEA's current statewide assessments, including with respect to assessment type, use of assessment items, and coverage of State academic content standards; the number of grades and subjects in which the SEA elects to administer those assessments; whether the SEA will implement its system statewide upon receiving demonstration authority and, if not, the SEA's process and timeline for scaling the system up to statewide implementation; and whether the SEA is part of a consortium (and thus may share certain costs with other consortium members). Because of the potential wide variation in innovative assessment systems along factors such as these, we did not provide estimates of the potential cost to implement innovative assessment demonstration authority for the typical SEA participant in the NPRM, stating that we believed such estimates would not be reliable or useful. We continue to believe that is the case, and note that we received no comments from SEAs providing specific anticipated costs that could inform our production of estimates.
That said, we received several comments expressing general concern about the potential cost of implementing innovative assessment demonstration authority, including concerns about additional costs to SEAs of implementing innovative assessments while also administering current State assessments in non-participating LEAs. Although we appreciate these general concerns, we remind the commenters that participation in innovative assessment demonstration authority is voluntary and that no SEA is required to develop and implement innovative assessments under this authority. Moreover, an SEA that chooses to participate has considerable flexibility in determining the number, types, and breadth of innovative assessments to include in its system. In selecting its assessments, such an SEA should accordingly be mindful of development and implementation costs, including the extent to which those costs can be supported with Federal grant funds not needed for other assessment purposes.
The Secretary certifies that these final requirements will not have a significant economic impact on a substantial number of small entities. Under the U.S. Small Business Administration's Size Standards, small entities include small governmental jurisdictions such as cities, towns, or school districts (LEAs) with a population of less than 50,000. Although the majority of LEAs that receive ESEA funds qualify as small entities under this definition, these regulations will not have a significant economic impact on these small LEAs because few SEAs are expected to participate in this voluntary innovative assessment demonstration authority and the costs of participation will be borne largely by SEAs and can be supported with Federal grant funds. We believe the benefits provided under this regulatory action outweigh any associated costs for these small LEAs. In particular, the final regulations will help ensure that the LEAs can implement assessments that measure student mastery of challenging State academic standards more effectively and better inform classroom instruction and student supports, ultimately leading to improved academic outcomes for all students.
The Paperwork Reduction Act of 1995 does not require you to respond to a collection of information unless it displays a valid OMB control number. We display the valid OMB control numbers assigned to the collections of information in these final regulations at the end of the affected sections of the regulations.
Sections 200.104(c), 200.105, and 200.106 of the final regulations contain information collection requirements. The Department will develop an Information Collection Request based upon these final regulations, and will submit a copy of these sections and the information collection instrument to OMB for its review before requiring the submission of any information based upon these regulations.
This program is not subject to Executive Order 12372 and the regulations in 34 CFR part 79.
In the NPRM we requested comments on whether the proposed regulations would require transmission of
Based on the response to the NPRM and on our review, we have determined that these final regulations do not require transmission of information that any other agency or authority of the United States gathers or makes available.
You may also access documents of the Department published in the
Elementary and secondary education, Grant programs—education, Indians—education, Infants and children, Juvenile delinquency, Migrant labor, Private schools, Reporting and recordkeeping requirements.
For the reasons discussed in the preamble, the Department of Education amends part 200 of title 34 of the Code of Federal Regulations as follows:
20 U.S.C 6301–6576, unless otherwise noted.
(a)
(2) An SEA or consortium of SEAs may implement the innovative assessment demonstration authority during its demonstration authority period and, if applicable, extension or waiver period described in § 200.108(a) and (c), after which the Secretary will either approve the system for statewide use consistent with § 200.107 or withdraw the authority consistent with § 200.108(b).
(b)
(1)
(2)
(3)
(i) Produces—
(A) An annual summative determination of each student's mastery of grade-level content standards aligned to the challenging State academic standards under section 1111(b)(1) of the Act; or
(B) In the case of a student with the most significant cognitive disabilities assessed with an alternate assessment aligned with alternate academic achievement standards under section 1111(b)(1)(E) of the Act and aligned with the State's academic content standards for the grade in which the student is enrolled, an annual summative determination relative to such alternate academic achievement standards for each such student; and
(ii) May, in any required grade or subject, include one or more of the following types of assessments:
(A) Cumulative year-end assessments.
(B) Competency-based assessments.
(C) Instructionally embedded assessments.
(D) Interim assessments.
(E) Performance-based assessments.
(F) Another innovative assessment design that meets the requirements under § 200.105(b).
(4)
(5)
(c)
(2) The Secretary uses a peer review process, including a review of the SEA's application to determine that it meets or will meet each of the requirements under § 200.105 and sufficiently addresses each of the selection criteria
(i) Individuals with past experience developing innovative assessment and accountability systems that support all students and subgroups of students described in section 1111(c)(2) of the Act (
(ii) Individuals with experience implementing such innovative assessment and accountability systems (
(3)(i) If points or weights are assigned to the selection criteria under § 200.106, the Secretary will inform applicants in the application package or a notice published in the
(A) The total possible score for all of the selection criteria under § 200.106; and
(B) The assigned weight or the maximum possible score for each criterion or factor under that criterion.
(ii) If no points or weights are assigned to the selection criteria and selected factors under § 200.106, the Secretary will evaluate each criterion equally and, within each criterion, each factor equally.
(d)
(i) No more than seven SEAs in total, including those SEAs participating in consortia; and
(ii) Consortia that include no more than four SEAs.
(2) An SEA that is an affiliate member of a consortium is not included in the application under paragraph (c) of this section or counted toward the limitation in consortia size under paragraph (d)(1)(ii) of this section.
An SEA or consortium of SEAs seeking the innovative assessment demonstration authority must submit to the Secretary, at such time and in such manner as the Secretary may reasonably require, an application that includes the following:
(a)
(1) Experts in the planning, development, implementation, and evaluation of innovative assessment systems, which may include external partners; and
(2) Affected stakeholders in the State, or in each State in the consortium, including—
(i) Those representing the interests of children with disabilities, English learners, and other subgroups of students described in section 1111(c)(2) of the Act;
(ii) Teachers, principals, and other school leaders;
(iii) LEAs;
(iv) Representatives of Indian tribes located in the State;
(v) Students and parents, including parents of children described in paragraph (a)(2)(i) of this section; and
(vi) Civil rights organizations.
(b)
(1) Meet the requirements of section 1111(b)(2)(B) of the Act, except that an innovative assessment—
(i) Need not be the same assessment administered to all public elementary and secondary school students in the State during the demonstration authority period described in § 200.104(b)(2) or extension period described in § 200.108 and prior to statewide use consistent with § 200.107, if the innovative assessment system will be administered initially to all students in participating schools within a participating LEA, provided that the statewide academic assessments under § 200.2(a)(1) and section 1111(b)(2) of the Act are administered to all students in any non-participating LEA or any non-participating school within a participating LEA; and
(ii) Need not be administered annually in each of grades 3–8 and at least once in grades 9–12 in the case of reading/language arts and mathematics assessments, and at least once in grades 3–5, 6–9, and 10–12 in the case of science assessments, so long as the statewide academic assessments under § 200.2(a)(1) and section 1111(b)(2) of the Act are administered in any required grade and subject under § 200.5(a)(1) in which the SEA does not choose to implement an innovative assessment;
(2)(i) Align with the challenging State academic content standards under section 1111(b)(1) of the Act, including the depth and breadth of such standards, for the grade in which a student is enrolled; and
(ii) May measure a student's academic proficiency and growth using items above or below the student's grade level so long as, for purposes of meeting the requirements for reporting and school accountability under sections 1111(c) and 1111(h) of the Act and paragraphs (b)(3) and (b)(7)–(9) of this section, the State measures each student's academic proficiency based on the challenging State academic standards for the grade in which the student is enrolled;
(3) Express student results or competencies consistent with the challenging State academic achievement standards under section 1111(b)(1) of the Act and identify which students are not making sufficient progress toward, and attaining, grade-level proficiency on such standards;
(4)(i) Generate results, including annual summative determinations as defined in paragraph (b)(7) of this section, that are valid, reliable, and comparable for all students and for each subgroup of students described in § 200.2(b)(11)(i)(A)–(I) and sections 1111(b)(2)(B)(xi) and 1111(h)(1)(C)(ii) of the Act, to the results generated by the State academic assessments described in § 200.2(a)(1) and section 1111(b)(2) of the Act for such students. Consistent with the SEA's or consortium's evaluation plan under § 200.106(e), the SEA must plan to annually determine comparability during each year of its demonstration authority period in one of the following ways:
(A) Administering full assessments from both the innovative and statewide assessment systems to all students enrolled in participating schools, such that at least once in any grade span (
(B) Administering full assessments from both the innovative and statewide assessment systems to a demographically representative sample of all students and subgroups of students described in section 1111(c)(2) of the Act, from among those students enrolled in participating schools, such that at least once in any grade span (
(C) Including, as a significant portion of the innovative assessment system in each required grade and subject in which both an innovative and statewide assessment are administered, items or performance tasks from the statewide assessment system that, at a minimum, have been previously pilot tested or field tested for use in the statewide assessment system.
(D) Including, as a significant portion of the statewide assessment system in each required grade and subject in which both an innovative and statewide assessment are administered, items or performance tasks from the innovative assessment system that, at a minimum, have been previously pilot tested or field tested for use in the innovative assessment system.
(E) An alternative method for demonstrating comparability that an SEA can demonstrate will provide for an equally rigorous and statistically valid comparison between student performance on the innovative assessment and the statewide assessment, including for each subgroup of students described in § 200.2(b)(11)(i)(A)–(I) and sections 1111(b)(2)(B)(xi) and 1111(h)(1)(C)(ii) of the Act; and
(ii) Generate results, including annual summative determinations as defined in paragraph (b)(7) of this section, that are valid, reliable, and comparable, for all students and for each subgroup of students described in § 200.2(b)(11)(i)(A)–(I) and sections 1111(b)(2)(B)(xi) and 1111(h)(1)(C)(ii) of the Act, among participating schools and LEAs in the innovative assessment demonstration authority. Consistent with the SEA's or consortium's evaluation plan under § 200.106(e), the SEA must plan to annually determine comparability during each year of its demonstration authority period;
(5)(i) Provide for the participation of all students, including children with disabilities and English learners;
(ii) Be accessible to all students by incorporating the principles of universal design for learning, to the extent practicable, consistent with § 200.2(b)(2)(ii); and
(iii) Provide appropriate accommodations consistent with § 200.6(b) and (f)(1)(i) and section 1111(b)(2)(B)(vii) of the Act;
(6) For purposes of the State accountability system consistent with section 1111(c)(4)(E) of the Act, annually measure in each participating school progress on the Academic Achievement indicator under section 1111(c)(4)(B) of the Act of at least 95 percent of all students, and 95 percent of students in each subgroup of students described in section 1111(c)(2) of the Act, who are required to take such assessments consistent with paragraph (b)(1)(ii) of this section;
(7) Generate an annual summative determination of achievement, using the annual data from the innovative assessment, for each student in a participating school in the demonstration authority that describes—
(i) The student's mastery of the challenging State academic standards under section 1111(b)(1) of the Act for the grade in which the student is enrolled; or
(ii) In the case of a student with the most significant cognitive disabilities assessed with an alternate assessment aligned with alternate academic achievement standards under section 1111(b)(1)(E) of the Act, the student's mastery of those standards;
(8) Provide disaggregated results by each subgroup of students described in § 200.2(b)(11)(i)(A)–(I) and sections 1111(b)(2)(B)(xi) and 1111(h)(1)(C)(ii) of the Act, including timely data for teachers, principals and other school leaders, students, and parents consistent with § 200.8 and section 1111(b)(2)(B)(x) and (xii) and section 1111(h) of the Act, and provide results to parents in a manner consistent with paragraph (b)(4)(i) of this section and § 200.2(e); and
(9) Provide an unbiased, rational, and consistent determination of progress toward the State's long-term goals for academic achievement under section 1111(c)(4)(A) of the Act for all students and each subgroup of students described in section 1111(c)(2) of the Act and a comparable measure of student performance on the Academic Achievement indicator under section 1111(c)(4)(B) of the Act for participating schools relative to non-participating schools so that the SEA may validly and reliably aggregate data from the system for purposes of meeting requirements for—
(i) Accountability under sections 1003 and 1111(c) and (d) of the Act, including how the SEA will identify participating and non-participating schools in a consistent manner for comprehensive and targeted support and improvement under section 1111(c)(4)(D) of the Act; and
(ii) Reporting on State and LEA report cards under section 1111(h) of the Act.
(c)
(d)
(1) Continue use of the statewide academic assessments in reading/language arts, mathematics, and science required under § 200.2(a)(1) and section 1111(b)(2) of the Act—
(i) In all non-participating schools; and
(ii) In all participating schools for which such assessments will be used in addition to innovative assessments for accountability purposes under section 1111(c) of the Act consistent with paragraph (b)(1)(ii) of this section or for evaluation purposes consistent with § 200.106(e) during the demonstration authority period;
(2) Ensure that all students and each subgroup of students described in section 1111(c)(2) of the Act in participating schools are held to the same challenging State academic standards under section 1111(b)(1) of the Act as all other students, except that students with the most significant cognitive disabilities may be assessed with alternate assessments aligned with alternate academic achievement standards consistent with § 200.6 and section 1111(b)(1)(E) and (b)(2)(D) of the Act, and receive the instructional support needed to meet such standards;
(3) Report the following annually to the Secretary, at such time and in such manner as the Secretary may reasonably require:
(i) An update on implementation of the innovative assessment demonstration authority, including—
(A) The SEA's progress against its timeline under § 200.106(c) and any outcomes or results from its evaluation and continuous improvement process under § 200.106(e); and
(B) If the innovative assessment system is not yet implemented statewide consistent with § 200.104(a)(2), a description of the SEA's progress in scaling up the system to additional LEAs or schools consistent with its strategies under § 200.106(a)(3)(i), including updated assurances from participating LEAs consistent with paragraph (e)(2) of this section.
(ii) The performance of students in participating schools at the State, LEA, and school level, for all students and disaggregated for each subgroup of students described in section 1111(c)(2) of the Act, on the innovative assessment, including academic achievement and participation data required to be reported consistent with
(iii) If the innovative assessment system is not yet implemented statewide, school demographic information, including enrollment and student achievement information, for the subgroups of students described in section 1111(c)(2) of the Act, among participating schools and LEAs and for any schools or LEAs that will participate for the first time in the following year, and a description of how the participation of any additional schools or LEAs in that year contributed to progress toward achieving high-quality and consistent implementation across demographically diverse LEAs in the State consistent with the SEA's benchmarks described in § 200.106(a)(3)(iii).
(iv) Feedback from teachers, principals and other school leaders, and other stakeholders consulted under paragraph (a)(2) of this section, including parents and students, from participating schools and LEAs about their satisfaction with the innovative assessment system;
(4) Ensure that each participating LEA informs parents of all students in participating schools about the innovative assessment, including the grades and subjects in which the innovative assessment will be administered, and, consistent with section 1112(e)(2)(B) of the Act, at the beginning of each school year during which an innovative assessment will be implemented. Such information must be—
(i) In an understandable and uniform format;
(ii) To the extent practicable, written in a language that parents can understand or, if it is not practicable to provide written translations to a parent with limited English proficiency, be orally translated for such parent; and
(iii) Upon request by a parent who is an individual with a disability as defined by the Americans with Disabilities Act, provided in an alternative format accessible to that parent; and
(5) Coordinate with and provide information to, as applicable, the Institute of Education Sciences for purposes of the progress report described in section 1204(c) of the Act and ongoing dissemination of information under section 1204(m) of the Act.
(e)
(1) A description of each LEA, and each of its participating schools, that will initially participate, including demographic information and its most recent LEA report card under section 1111(h)(2) of the Act; and
(2) An assurance from each participating LEA, for each year that the LEA is participating, that the LEA will comply with all requirements of this section.
(f)
(1) A description of the governance structure of the consortium, including—
(i) The roles and responsibilities of each member SEA, which may include a description of affiliate members, if applicable, and must include a description of financial responsibilities of member SEAs;
(ii) How the member SEAs will manage and, at their discretion, share intellectual property developed by the consortium as a group; and
(iii) How the member SEAs will consider requests from SEAs to join or leave the consortium and ensure that changes in membership do not affect the consortium's ability to implement the innovative assessment demonstration authority consistent with the requirements and selection criteria in this section and § 200.106.
(2) While the terms of the association with affiliate members are defined by each consortium, consistent with § 200.104(b)(1) and paragraph (f)(1)(i) of this section, for an affiliate member to become a full member of the consortium and to use the consortium's innovative assessment system under the demonstration authority, the consortium must submit a revised application to the Secretary for approval, consistent with the requirements of this section and § 200.106 and subject to the limitation under § 200.104(d).
The Secretary reviews an application by an SEA or consortium of SEAs seeking innovative assessment demonstration authority consistent with § 200.104(c) based on the following selection criteria:
(a)
(1) The rationale for developing or selecting the particular innovative assessment system to be implemented under the demonstration authority, including—
(i) The distinct purpose of each assessment that is part of the innovative assessment system and how the system will advance the design and delivery of large-scale, statewide academic assessments in innovative ways; and
(ii) The extent to which the innovative assessment system as a whole will promote high-quality instruction, mastery of challenging State academic standards, and improved student outcomes, including for each subgroup of students described in section 1111(c)(2) of the Act;
(2) The plan the SEA or consortium, in consultation with any external partners, if applicable, has to—
(i) Develop and use standardized and calibrated tools, rubrics, methods, or other strategies for scoring innovative assessments throughout the demonstration authority period, consistent with relevant nationally recognized professional and technical standards, to ensure inter-rater reliability and comparability of innovative assessment results consistent with § 200.105(b)(4)(ii), which may include evidence of inter-rater reliability; and
(ii) Train evaluators to use such strategies, if applicable; and
(3) If the system will initially be administered in a subset of schools or LEAs in a State—
(i) The strategies the SEA, including each SEA in a consortium, will use to scale the innovative assessment to all schools statewide, with a rationale for selecting those strategies;
(ii) The strength of the SEA's or consortium's criteria that will be used to determine LEAs and schools that will initially participate and when to approve additional LEAs and schools, if applicable, to participate during the requested demonstration authority period; and
(iii) The SEA's plan, including each SEA in a consortium, for how it will ensure that, during the demonstration authority period, the inclusion of additional LEAs and schools continues to reflect high-quality and consistent implementation across demographically diverse LEAs and schools, or contributes to progress toward achieving such implementation across demographically diverse LEAs and schools, including diversity based on enrollment of subgroups of students described in section 1111(c)(2) of the
(b)
(i) The success and track record of efforts to implement innovative assessments or innovative assessment items aligned to the challenging State academic standards under section 1111(b)(1) of the Act in LEAs planning to participate; and
(ii) The SEA's or LEA's development or use of—
(A) Effective supports and appropriate accommodations consistent with § 200.6(b) and (f)(1)(i) and section 1111(b)(2)(B)(vii) of the Act for administering innovative assessments to all students, including English learners and children with disabilities, which must include professional development for school staff on providing such accommodations;
(B) Effective and high-quality supports for school staff to implement innovative assessments and innovative assessment items, including professional development; and
(C) Standardized and calibrated tools, rubrics, methods, or other strategies for scoring innovative assessments, with documented evidence of the validity, reliability, and comparability of annual summative determinations of achievement, consistent with § 200.105(b)(4) and (7).
(2) The extent and depth of SEA, including each SEA in a consortium, and LEA capacity to implement the innovative assessment system considering the availability of technological infrastructure; State and local laws; dedicated and sufficient staff, expertise, and resources; and other relevant factors. An SEA or consortium may also describe how it plans to enhance its capacity by collaborating with external partners that will be participating in or supporting its demonstration authority. In evaluating the extent and depth of capacity, the Secretary considers—
(i) The SEA's analysis of how capacity influenced the success of prior efforts to develop and implement innovative assessments or innovative assessment items; and
(ii) The strategies the SEA is using, or will use, to mitigate risks, including those identified in its analysis, and support successful implementation of the innovative assessment.
(3) The extent and depth of State and local support for the application for demonstration authority in each SEA, including each SEA in a consortium, as demonstrated by signatures from the following:
(i) Superintendents (or equivalent) of LEAs, including participating LEAs in the first year of the demonstration authority period.
(ii) Presidents of local school boards (or equivalent, where applicable), including within participating LEAs in the first year of the demonstration authority.
(iii) Local teacher organizations (including labor organizations, where applicable), including within participating LEAs in the first year of the demonstration authority.
(iv) Other affected stakeholders, such as parent organizations, civil rights organizations, and business organizations.
(c)
(1) The extent to which the timeline reasonably demonstrates that each SEA will implement the system statewide by the end of the requested demonstration authority period, including a description of—
(i) The activities to occur in each year of the requested demonstration authority period;
(ii) The parties responsible for each activity; and
(iii) If applicable, how a consortium's member SEAs will implement activities at different paces and how the consortium will implement interdependent activities, so long as each non-affiliate member SEA begins using the innovative assessment in the same school year consistent with § 200.104(b)(2); and
(2) The adequacy of the project budget for the duration of the requested demonstration authority period, including Federal, State, local, and non-public sources of funds to support and sustain, as applicable, the activities in the timeline under paragraph (c)(1) of this section, including—
(i) How the budget will be sufficient to meet the expected costs at each phase of the SEA's planned expansion of its innovative assessment system; and
(ii) The degree to which funding in the project budget is contingent upon future appropriations at the State or local level or additional commitments from non-public sources of funds.
(d)
(1) The extent to which the SEA or consortium has developed, provided, and will continue to provide training to LEA and school staff, including teachers, principals, and other school leaders, that will familiarize them with the innovative assessment system and develop teacher capacity to implement instruction that is informed by the innovative assessment system and its results;
(2) The strategies the SEA or consortium has developed and will use to familiarize students and parents with the innovative assessment system;
(3) The strategies the SEA will use to ensure that all students and each subgroup of students under section 1111(c)(2) of the Act in participating schools receive the support, including appropriate accommodations consistent with § 200.6(b) and (f)(1)(i) and section 1111(b)(2)(B)(vii) of the Act, needed to meet the challenging State academic standards under section 1111(b)(1) of the Act; and
(4) If the system includes assessment items that are locally developed or locally scored, the strategies and safeguards (
(e)
(1) The strength of the proposed evaluation of the innovative assessment system included in the application, including whether the evaluation will be conducted by an independent, experienced third party, and the likelihood that the evaluation will sufficiently determine the system's validity, reliability, and comparability to the statewide assessment system consistent with the requirements of § 200.105(b)(4) and (9); and
(2) The SEA's or consortium's plan for continuous improvement of the innovative assessment system, including its process for—
(i) Using data, feedback, evaluation results, and other information from participating LEAs and schools to make changes to improve the quality of the innovative assessment; and
(ii) Evaluating and monitoring implementation of the innovative assessment system in participating LEAs and schools annually.
(a)(1) After an SEA has scaled its innovative assessment system to operate statewide in all schools and LEAs in the State, the SEA must submit evidence for peer review under section 1111(a)(4) of the Act and § 200.2(d) to determine whether the system may be used for purposes of both academic assessments and the State accountability system under sections 1111(b)(2), (c), and (d) and 1003 of the Act.
(2) An SEA may only use the innovative assessment system for the purposes described in paragraph (a)(1) of this section if the Secretary determines that the system is of high quality consistent with paragraph (b) of this section.
(b) Through the peer review process of State assessments and accountability systems under section 1111(a)(4) of the Act and § 200.2(d), the Secretary determines that the innovative assessment system is of high quality if—
(1) An innovative assessment developed in any grade or subject under § 200.5(a)(1) and section 1111(b)(2)(B)(v) of the Act—
(i) Meets all of the requirements under section 1111(b)(2) of the Act and § 200.105(b) and (c);
(ii) Provides coherent and timely information about student achievement based on the challenging State academic standards under section 1111(b)(1) of the Act;
(iii) Includes objective measurements of academic achievement, knowledge, and skills; and
(iv) Is valid, reliable, and consistent with relevant, nationally recognized professional and technical standards;
(2) The SEA provides satisfactory evidence that it has examined the statistical relationship between student performance on the innovative assessment in each subject area and student performance on other measures of success, including the measures used for each relevant grade-span within the remaining indicators (
(3) The SEA has solicited information, consistent with the requirements under § 200.105(d)(3)(iv), and taken into account feedback from teachers, principals, other school leaders, parents, and other stakeholders under § 200.105(a)(2) about their satisfaction with the innovative assessment system; and
(4) The SEA has demonstrated that the same innovative assessment system was used to measure—
(i) The achievement of all students and each subgroup of students described in section 1111(c)(2) of the Act, and that appropriate accommodations were provided consistent with § 200.6(b) and (f)(1)(i) under section 1111(b)(2)(B)(vii) of the Act; and
(ii) For purposes of the State accountability system consistent with section 1111(c)(4)(E) of the Act, progress on the Academic Achievement indicator under section 1111(c)(4)(B)(i) of the Act of at least 95 percent of all students, and 95 percent of students in each subgroup of students described in section 1111(c)(2) of the Act.
(c) With respect to the evidence submitted to the Secretary to make the determination described in paragraph (b)(2) of this section, the baseline year for any evaluation is the first year that a participating LEA in the State administered the innovative assessment system under the demonstration authority.
(d) In the case of a consortium of SEAs, evidence may be submitted for the consortium as a whole so long as the evidence demonstrates how each member SEA meets each requirement of paragraph (b) of this section applicable to an SEA.
(a)
(i) Evidence that its innovative assessment system continues to meet the requirements under § 200.105 and the SEA continues to implement the plan described in its application in response to the selection criteria in § 200.106 in all participating schools and LEAs;
(ii) A high-quality plan, including input from stakeholders under § 200.105(a)(2), for transitioning to statewide use of the innovative assessment system by the end of the extension period; and
(iii) A demonstration that the SEA and all LEAs that are not yet fully implementing the innovative assessment system have sufficient capacity to support use of the system statewide by the end of the extension period.
(2) In the case of a consortium of SEAs, the Secretary may extend the demonstration authority period for the consortium as a whole or for an individual member SEA.
(b)
(i) A high-quality plan, including input from stakeholders under § 200.105(a)(2), to transition to full statewide use of the innovative assessment system by the end of its approved demonstration authority period or extension period, as applicable; or
(ii) Evidence that—
(A) The innovative assessment system meets all requirements under § 200.105, including a demonstration that the innovative assessment system has met the requirements under § 200.105(b);
(B) The SEA continues to implement the plan described in its application in response to the selection criteria in § 200.106;
(C) The innovative assessment system includes and is used to assess all students attending participating schools in the demonstration authority, consistent with the requirements under section 1111(b)(2) of the Act to provide for participation in State assessments, including among each subgroup of students described in section 1111(c)(2) of the Act, and for appropriate accommodations consistent with § 200.6(b) and (f)(1)(i) and section 1111(b)(2)(B)(vii) of the Act;
(D) The innovative assessment system provides an unbiased, rational, and consistent determination of progress toward the State's long-term goals and measurements of interim progress for academic achievement under section 1111(c)(4)(A) of the Act for all students and subgroups of students described in section 1111(c)(2) of the Act and a comparable measure of student performance on the Academic Achievement indicator under section 1111(c)(4)(B)(i) of the Act for participating schools relative to non-participating schools; or
(E) The innovative assessment system demonstrates comparability to the statewide assessments under section 1111(b)(2) of the Act in content coverage, difficulty, and quality.
(2)(i) In the case of a consortium of SEAs, the Secretary may withdraw innovative assessment demonstration authority for the consortium as a whole at any time during its demonstration authority period or extension period if the Secretary requests, and no member of the consortium provides, the information under paragraph (b)(1)(i) or (ii) of this section.
(ii) If innovative assessment demonstration authority for one or more SEAs in a consortium is withdrawn, the consortium may continue to implement the authority if it can demonstrate, in an amended application to the Secretary that, as a group, the remaining SEAs continue to meet all requirements and selection criteria in §§ 200.105 and 200.106.
(c)
(2) The Secretary may grant an SEA a one-year waiver to continue the innovative assessment demonstration authority, if the SEA submits, in its request under paragraph (c)(1) of this section, evidence satisfactory to the Secretary that it—
(i) Has met all of the requirements under paragraph (b)(1) of this section and of §§ 200.105 and 200.106; and
(ii) Has a high-quality plan, including input from stakeholders under § 200.105(a)(2), for transition to statewide use of the innovative assessment system, including peer review consistent with § 200.107, in a reasonable period of time.
(3) In the case of a consortium of SEAs, the Secretary may grant a one-year waiver consistent with paragraph (c)(1) of this section for the consortium as a whole or for individual member SEAs, as necessary.
(d)
(1) Return to using, in all LEAs and schools in the State, a statewide assessment that meets the requirements of section 1111(b)(2) of the Act; and
(2) Provide timely notice to all participating LEAs and schools of the withdrawal of authority and the SEA's plan for transition back to use of a statewide assessment.