[Federal Register Volume 78, Number 36 (Friday, February 22, 2013)]
[Notices]
[Pages 12409-12411]
[FR Doc No: 2013-04097]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68938; File No. SR-ICC-2012-23]

Self-Regulatory Organizations; ICE Clear Credit LLC; Order
Approving Proposed Rule Change To Add Rules Related to the Clearing of
iTraxx Europe Index CDS

February 15, 2013.

I. Introduction

    On December 6, 2012, ICE Clear Credit LLC (``ICC'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change (SR-ICC-2012-23) pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder.\2\ The
proposed rule change was published for comment in the Federal Register
on December 26, 2012.\3\ On February 8, 2013, the Commission extended
the time within which to take action of the proposed rule change to
March 26, 2013.\4\ The Commission received no comment letters regarding
the proposal. For the reasons discussed below, the Commission is
granting approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 68481 (Dec. 19, 2012),
77 FR 76109 (Dec. 26, 2012).
    \4\ Securities Exchange Act Release No. 68882 (Feb. 8, 2013), 78
FR 10646 (Feb. 14, 2013).
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II. Description of the Proposed Rule Change

    The purpose of the proposed rule change is to adopt new rules that
will provide the basis for ICC to clear additional credit default swap
contracts. ICC is proposing, as described in further detail below, to
amend Chapters 8, 20, and 26 and Schedule 401 and Schedule 502 of its
rules, as well as make corresponding changes to the applicable ICC
Policies and Procedures to provide for the clearance of iTraxx Europe
Index CDS (``iTraxx Contracts''). The iTraxx Contracts reference the
iTraxx Europe index, the current series of which consists of 125
European corporate reference entities. iTraxx Contracts, consistent
with market convention and widely used standard terms documentation,
can be triggered by credit events for failure to pay, bankruptcy and
restructuring. iTraxx Contracts will be denominated in Euro.
    ICC proposes to amend Chapter 8 of its rules to provide for an
additional Guaranty Fund Contribution by those Clearing Participants
that present Specific Wrong Way Risk (i.e., the risk that arises from
the fact that iTraxx Contracts include, in part, the names of certain
Clearing Participants or Clearing Participant affiliates). In a default
scenario, if the defaulting Clearing Participant has funded a Specific
Wrong Way Risk Contribution, the Specific Wrong Way Risk Contributions
of all contributing Clearing Participants would be used immediately
following the defaulting Clearing Participant's funds to cure deficits
related to the default.
    ICC proposes to amend Chapter 20 of its rules, concerning CDS
generally, to remove definitions that are included in Chapter 26E of
the rules, as well as to include the Specific Wrong Way Risk Guaranty
Fund Contribution, as appropriate, as a portion of Clearing Participant
funds.

    ICC proposes to amend Section 26E of its rules to include certain
additional provisions relevant to the treatment of restructuring credit
events under iTraxx Contracts and standard single-name CDS Contracts
referencing European corporate reference entities (``European SN
Contracts''). In addition, ICC proposes to make conforming changes in
Section 26E of the Rules (the CDS Restructuring Rules), principally to
address the particular restructuring terms that apply to iTraxx
Contracts and European SN Contracts. Specifically, ICC proposes to
modify the notice delivery procedures in Rule 26E-104 to include
``notices to exercise movement option'' under the Modified
Restructuring Maturity Limitation and Conditionally Transferable
Obligation terms under the ISDA Credit Derivatives Definitions (``Mod
Mod R terms''). In addition, the definition of ``Triggered
Restructuring CDS Contract'' has been modified to reflect that under
Mod Mod R terms a CDS contract may be triggered in part following a
restructuring credit event.
    ICC also proposes to add Section 26F to provide for the clearance
of the iTraxx Contracts. Rule 26F-102 (Definitions) sets forth the
definitions used for the iTraxx Contract Rules. An ``Eligible iTraxx
Europe Untranched Index'' is defined as ``each particular series and
version of an iTraxx Europe index or sub-index, as published by the
iTraxx Untranched Publisher, included from time to time in the List of
Eligible iTraxx Untranched Indexes,'' which is a list maintained,
updated and published by the ICC Board of Managers or its designee,
containing certain specified information with respect to each index.
``iTraxx Europe Untranched Terms Supplement'' refers to the market
standard form of documentation used for credit default swaps on the
iTraxx Europe index, which is incorporated by reference into the
contract specifications in Chapter 26F. ICEE has stated that the
remaining definitions are substantially the same as the definitions
found in ICC Section 26A and Section 26C, other than certain conforming
changes.
    Rules 26F-309 (Acceptance of iTraxx Europe Untranched Contracts by
ICE Clear Credit), 26F-315 (Terms of the Cleared iTraxx Europe
Untranched Contract), and 26F-316 (Updating Index Version of Fungible
Contracts After a Credit Event or a Succession Event; Updating Relevant
Untranched Standard Terms Supplement) reflect or incorporate the basic
contract specifications for iTraxx Contracts. In addition to various
non-substantive conforming changes, proposed Rule 26F-317 (Terms of
iTraxx Europe Untranched Contracts) differs from the corresponding Rule
26A-317 for CDX.NA Contracts to reflect the fact that restructuring is
a credit event for the iTraxx Contract.\5\
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    \5\ The provisions dealing with the ``spin-out'' of a single
name CDS following a restructuring credit event for a component of
the iTraxx Europe index are part of the iTraxx Europe Untranched
Standard Terms Supplement (Nov. 2009 edition), which is incorporated
into the contract specifications for cleared iTraxx Europe contracts
through proposed ICC Rule 26F-315(c). Specifically, Section 7.3(b)
of the Supplement addresses the removal of the restructured
reference entity from the index and continuation of that component
as a separate contract. (Proposed ICC Rule 26F-317(h) clarifies the
treatment of the reference obligation for that separate cleared
contract.) This is part of the basic standard terms of the iTraxx
Europe contract and operates the same way in both the cleared and
uncleared contexts (much like other aspects of the market standard
terms supplements and/or ISDA Credit Derivatives Definitions on
which other cleared and uncleared CDS trade).
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    In connection with clearing iTraxx Contracts, ICC will update
Schedule 401 of its Rules (Eligible Collateral & Thresholds), as
applicable, with respect to Initial Margin and Guaranty Fund liquidity
requirements for Non-Client and Client-Related positions for both US
Dollar and Euro denominated products.
    ICC will also update Schedule 502 of its Rules (Cleared Products
List) to include the following iTraxx Contracts: Markit iTraxx Europe
Main Series 18 with a 5-year maturity, maturing on December 20, 2017;
Markit iTraxx Europe Main Series 18 with a 10-year maturity, maturing
on December 20, 2022; Markit iTraxx Europe Main Series 17 with a 5-year
maturity, maturing on June 20, 2017; Markit iTraxx Europe Main Series
17 with a 10-year maturity, maturing on June 20, 2022; Markit iTraxx
Europe Main Series 16 with a 5-year maturity, maturing on December 20,
2016; Markit iTraxx Europe Main Series 16 with a 10-year maturity,
maturing on December 20, 2021; Markit iTraxx Europe Main Series 15 with
a 5-year maturity, maturing on June 20, 2016; Markit iTraxx Europe Main
Series 15 with a 10-year maturity, maturing on June 20, 2021; Markit
iTraxx Europe Main Series 14 with a 5-year maturity, maturing on
December 20, 2015; Markit iTraxx Europe Main Series 14 with a 10-year
maturity, maturing on December 20, 2020; Markit iTraxx Europe Main
Series 13 with a 5-year maturity, maturing on June, 20, 2015; Markit
iTraxx Europe Main Series 13 with a 10-year maturity, maturing on June,
20, 2020; Markit iTraxx Europe Main Series 12 with a 5-year maturity,
maturing on December 20, 2014; Markit iTraxx Europe Main Series 12 with
a 10-year maturity, maturing on December 20, 2019; Markit iTraxx Europe
Main Series 11 with a 5-year maturity, maturing on June 20, 2014;
Markit iTraxx Europe Main Series 11 with a 10-year maturity, maturing
on June 20, 2019; Markit iTraxx Europe Main Series 10 with a 5-year
maturity, maturing on December 20, 2013; Markit iTraxx Europe Main
Series 10 with a 10-year maturity, maturing on December 20, 2018;
Markit iTraxx Europe Main Series 9 with a 5-year maturity, maturing on
June 20, 2013; Markit iTraxx Europe Main Series 9 with a 10-year
maturity, maturing on June 20, 2018; Markit iTraxx Europe Main Series 8
with a 5-year maturity, maturing on December 20, 2012; Markit iTraxx
Europe Main Series 8 with a 10-year maturity, maturing on December 20,
2017; Markit iTraxx Europe Main Series 7 with a 10-year maturity,
maturing June 20, 2017; Markit iTraxx Crossover Series 18 with a 5-year
maturity, maturing on December 20, 2017; Markit iTraxx Crossover Series
17 with a 5-year maturity, maturing on June 20, 2017; Markit iTraxx
Crossover Series 16 with a 5-year maturity, maturing on December 20,
2016; Markit iTraxx Crossover Series 15 with a 5-year maturity,
maturing on June 20, 2016; Markit iTraxx Crossover Series 14 with a 5-
year maturity, maturing on December 20, 2015; Markit iTraxx Crossover
Series 13 with a 5-year maturity, maturing on June, 20, 2015; Markit
iTraxx Crossover Series 12 with a 5-year maturity, maturing on December
20, 2014; Markit iTraxx Crossover Series 11 with a 5-year maturity,
maturing on June 20, 2014; Markit iTraxx Crossover Series 10 with a 5-
year maturity, maturing on December 20, 2013; Markit iTraxx Crossover
Series 9 with a 5-year maturity, maturing on June 20, 2013; Markit
iTraxx HiVol Series 18 with a 5-year maturity, maturing on December 20,
2017; Markit iTraxx HiVol Series 17 with a 5-year maturity, maturing on
June 20, 2017; Markit iTraxx HiVol Series 16 with a 5-year maturity,
maturing on December 20, 2016; Markit iTraxx HiVol Series 15 with a 5-
year maturity, maturing on June 20, 2016; Markit iTraxx HiVol Series 14
with a 5-year maturity, maturing on December 20, 2015; Markit iTraxx
HiVol Series 13 with a 5-year maturity, maturing on June, 20, 2015;
Markit iTraxx HiVol Series 12 with a 5-year maturity, maturing on
December 20, 2014; Markit iTraxx HiVol Series 11 with a 5-year
maturity, maturing on June 20, 2014; Markit iTraxx HiVol Series 10 with
a 5-year maturity, maturing on December 20, 2013; Markit iTraxx HiVol
Series 9 with a 5-year maturity, maturing on June 20, 2013; and Markit
iTraxx HiVol

Series 8 with a 5-year maturity, maturing on December 20, 2012.
    ICC also updated its Policies and Procedures to provide for the
clearance of iTraxx Contracts, specifically the ICC Treasury Operations
Policies & Procedures, ICC Risk Management Framework and ICC End-of-Day
(``EOD'') Price Discovery Policies and Procedures. Consistent with the
changes to Schedule 401 of the ICC Rules, the ICC Treasury Operations
Policies & Procedures have been updated to include Initial Margin and
Guaranty Fund liquidity requirements for Non-Client and Client-Related
positions for both US Dollar and Euro denominated products. In order to
accommodate the return of funds during London banking hours, the ICC
Treasury Operations Policies & Procedures have been updated to require
requests for Euro withdrawals to be submitted by 9:00 a.m. Eastern.
    The ICC Risk Management Framework has been updated to account for
Euro denominated portfolios. Specifically, updates have been made to
the Guaranty Fund, Initial Margin and Mark-to-Market Methodologies to
address: Wrong Way Risk, Foreign Exchange Risk, Liquidity Risk, Time
Zone Risk, and Operational Risk. Additionally, the Portfolio Approach
was updated to include appropriate portfolio benefits between North
American CDS Indices and iTraxx Contracts. ICE Clear Credit will
continue to review risk parameters with Clearing Participants through
existing governance procedures and will notify Clearing Participants of
any changes.\6\
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    \6\ Telephone conversation February 15, 2013 among Michelle
Weiler, Assistant General Counsel, ICE Clear Credit; Marta Chaffee,
Assistant Director, SEC; Gena Lai, Senior Special Counsel, SEC;
Jennifer Ogasawara, Financial Economist, SEC; and Justin Byrne,
Attorney-Advisor, SEC.
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    The ICC EOD Price Discovery Policies and Procedures has been
updated to provide that ICC will use ICE Clear Europe's EOD prices for
iTraxx Contracts and rely on the ICE Clear Europe Firm Trade process to
ensure the accuracy of price submissions. ICC will extend the risk
time-horizon for iTraxx Contracts to account for the half day
difference, on average, between the EOD price discovery process
timings. The extended risk horizon accounts for the fact that European
markets close earlier and new financial information may be reflected
only in the North American instrument prices and not reflected in the
iTraxx Contracts, in general.

III. Discussion

    Section 19(b)(2)(C) of the Act directs the Commission to approve a
proposed rule change of a self-regulatory organization if it finds that
such proposed rule change is consistent with the requirements of the
Act and the rules and regulations thereunder applicable to such
organization.\7\ Section 17A(b)(3)(F) of the Act requires, among other
things, that the rules of a clearing agency be designed to promote the
prompt and accurate clearance and settlement of securities transactions
and, to the extent applicable, derivative agreements, contracts, and
transactions, as well as to assure the safeguarding of securities and
funds in the custody or control of the clearing agency or for which the
clearing agency is responsible.\8\
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    \7\ 15 U.S.C. 78s(b)(2)(C).
    \8\ 15 U.S.C. 78q-1(b)(3)(F).
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    After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a registered clearing agency. The
Commission carefully considered ICC's ability to clear the iTraxx
Contracts in a manner that assures the safeguarding of securities and
funds which are in the custody and control of ICC or for which ICC is
responsible. In addition, the Commission notes that the Commodity
Futures Trading Commission has determined that iTraxx Contracts are to
be subject to mandatory clearing under Section 2(h) of the Commodity
Exchange Act.\9\ ICC's clearance of iTraxx Contracts therefore will
promote the prompt and accurate clearance and settlement of securities
transactions and, to the extent applicable, derivative agreements,
contracts, and transactions.
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    \9\ 7 U.S.C. 2(h); see also Clearing Requirement Determination
Under Section 2(h) of the CEA, Final Rule, 77 FR 74283 (Dec. 13,
2012) at 74291, 74336-74337.
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IV. Conclusion

    On the basis of the foregoing, the Commission finds that the
proposal is consistent with the requirements of the Act and in
particular with the requirements of Section 17A of the Act \10\ and the
rules and regulations thereunder.
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    \10\ 15 U.S.C. 78q-1.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (File No. SR-ICC-2012-23) be,
and hereby is, approved.\12\
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    \11\ 15 U.S.C. 78s(b)(2).
    \12\ In approving this proposed rule change the Commission has
considered the proposed rule's impact of efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).

    For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04097 Filed 2-21-13; 8:45 am]
BILLING CODE 8011-01-P


discretion to determine which class or classes of aircraft engines to
evaluate in making a cause or contribute finding, and whether to focus
on a single class or multiple classes of aircraft engines in satisfying
the requirements of section 231(a)(2)(A).
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    \262\ Consequently, this final action does not restrict the
EPA's future discretion to address GHG emissions from aircraft that
are not included in the scope of this finding, or prejudge how the
Agency would respond to a petition to address those GHG emissions
should one be submitted in the future.
    \263\ U.S. EPA, 2005: Control of Air Pollution from Aircraft and
Aircraft Engines; Emission Standards and Test Procedures; Final
Rule, 70 FR 69664 (November 17, 2005).
    In 2005, we promulgated more stringent NOX emission
standards for newly certified commercial turbofan engines. That
final rule brought the U.S. standards closer to alignment with ICAO
CAEP/4 requirements that became effective in 2004.
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    In response to the commenters who asked the EPA to undertake an
additional cause and contribute finding regarding GHG emissions from
non-covered U.S. aircraft, the Agency will take that request under
advisement and consideration among its other duties and priorities, but
is not prepared at this time to either reject or grant that request. At
this point, given the nearly complete process for ICAO's adoption of an
international standard, which will under the Chicago Convention trigger
the duties of the U.S. and other member states to adopt domestically
standards that are of at least equal stringency, it is most important
for the EPA to prepare for having to meet that nearly certain duty by
expeditious completion of the pre-requisite endangerment and cause or
contribute findings, without possibly delaying final action to consider
the possibility of proposing a broader cause or contribute finding
before taking final action.
b. The Administrator Reasonably Defined U.S. Covered Aircraft
    A commenter stated that they understand that the scope of the
finding corresponds to the aircraft engine GHG emissions that are from
aircraft that match the applicability thresholds (or MTOM thresholds)
for the international aircraft CO2 standard; however, they
requested clarification on the difference between ``U.S. covered
aircraft'' and non-U.S. covered aircraft. This commenter requested
clarification on whether U.S. covered aircraft means aircraft made in
the U.S., registered in the U.S., operated by an entity holding an air
carrier certificate issued by the U.S., operated by an air carrier in
the National Air Space, or operated by anyone in the U.S. (National)
Air Space. The commenter expressed that the EPA must explain the basis
for its definition, and its claimed authority to regulate U.S. covered
aircraft.
    As described earlier in section V.B.4, U.S. covered aircraft for
this cause or contribute finding refers to aircraft that are a subset
of all aircraft that meet the applicability thresholds of the
international aircraft CO2 standard, namely those that fly
domestically with starting and ending points within the U.S. and those
that depart the U.S. for international destinations. U.S. covered
aircraft include aircraft that operate in the U.S., and thus contribute
to GHG emissions in the U.S. This includes emissions from U.S. domestic
flights of these aircraft. In addition, the scope of this finding
reaches GHG emissions from non-military aircraft combusting U.S.
international bunker fuels departing the U.S., regardless of whether
they are a U.S. flagged carrier--also described as emissions from
combustion of U.S. international bunker fuels.\264\ Similar to
statements earlier in section V.B.4, in defining U.S. covered aircraft
for this specific contribution finding, in advance of needing to meet
the expected duties imposed by the ICAO standards, the EPA is focused
on the GHG emissions that the atmosphere receives as a result of
aviation activities occurring inside the U.S. and originating from the
U.S., in order to capture the full contribution of covered aircraft to
U.S. GHG emissions, consistent with the scope of the ICAO international
standard. It is important for the EPA's finding to reach the subset of
aircraft that meet the definition of U.S. covered aircraft, and that
subset

will not necessarily be covered by any other member state with
responsibilities to meet the ICAO standard under the Chicago
Convention. For U.S. covered aircraft, the EPA has chosen to combine
GHG emissions from all flights both domestic and those reflected in
international bunker fuel inventories to determine the contribution of
U.S. covered aircraft GHG emissions to the endangering air pollution.
We additionally note that the IPCC and UNFCCC guidance states that for
an international bunker flight the entire flight's emissions are
calculated and reported (for the country from where the flight
departed), and the GHG emission calculation methodologies are the same
for both domestic and international aviation bunker fuel flights. We
have followed this guidance in our calculation methodologies for this
contribution finding.\265\ Ultimately, GHG emissions inventories from
U.S. covered aircraft with or without GHG emissions from combustion of
U.S. international aviation bunker fuels are sufficient to support the
Administrator's cause or contribute finding in this action, whether we
consider the inventories both together, or just the inventory from
domestic flights of U.S. covered aircraft.
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    \264\ For example, a flight departing Los Angeles and arriving
in Tokyo--regardless of whether it is a U.S. flagged carrier--is
considered a U.S. international bunker flight. A flight from London
to Hong Kong is not.
    \265\ As described earlier, following the IPCC guidelines for
common and consistent accounting and reporting of GHGs, the UNFCCC
requires countries to report both total national GHG emissions and
international bunker fuel emissions (aviation and marine
international bunker fuel emissions), and though these emissions are
reported separately, both are assigned to the reporting country. In
meeting the UNFCCC reporting requirements, the U.S. Inventory
calculates international bunker fuel GHG emissions in a consistent
manner with domestic GHG emissions. In this final contribution
finding, the EPA maintains its approach used in the proposed
findings to include aviation international bunker fuel emissions
attributable to the United States with the national emissions number
from the U.S. Inventory as reported to the UNFCCC. It is the EPA's
view that it is reasonable and appropriate for the analysis in the
contribution finding to reflect the full contribution of U.S.
emissions from certain classes of aircraft engines, including those
from domestic flights of U.S. aircraft and those associated with
international aviation bunker fuel emissions. Consistent with IPCC
guidelines for common and consistent accounting and reporting of
GHGs under the UNFCCC, the ``U.S. international aviation bunker
fuels'' category includes emissions from combustion of fuel used by
aircraft departing from the United States, regardless of whether
they are a U.S. flagged carrier.
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    In response to the comment that EPA must explain its claimed
authority to regulate U.S. covered aircraft, as described earlier, the
endangerment and cause or contribute findings are a prerequisite under
CAA section 231(a)(2)(A) for EPA to adopt standards (that are of at
least equivalent stringency to those set by ICAO). If the Administrator
makes these findings in the affirmative, she must issue standards under
section 231(a)(2)(A).
c. It Is Reasonable for the Administrator To Limit the Contribution
Finding to U.S. Covered Aircraft
    Some commenters stated that the EPA should issue a broader
contribution finding and wait until the standard setting phase to
exercise discretion as to what classes of aircraft engines should be
covered by standards. These commenters stated that the EPA has
authority to set aircraft engine GHG emission standards, following a
cause or contribute finding, that do not impose requirements on every
engine or class of aircraft engine within the scope of that finding.
They also argued that in this instance there does not seem to be a
sufficiently reasoned basis for EPA to exclude the non-covered aircraft
for purposes of making the cause or contribute finding.
    As described earlier in section III, the endangerment and
contribution findings for aircraft GHG emissions under section
231(a)(2)(A) of the CAA are a necessary first step to begin to address
GHG emissions from the aviation sector, the highest-emitting category
of transportation GHG sources that the EPA has not yet addressed. As
presented in more detail in section V.B.4 of this preamble, covered
U.S. aircraft GHG emissions in 2014 represented 10 percent of GHG
emissions from the U.S. transportation sector,\266\ and in 2010, the
latest year with complete global emissions data, U.S. covered aircraft
GHG emissions represented 26 percent of global aircraft GHG
emissions.267 268 U.S. covered aircraft GHG emissions are
projected to increase by 43 percent over the next two decades.\269\
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    \266\ U.S. EPA, 2016: Inventory of U.S. Greenhouse Gas Emissions
and Sinks: 1990-2014, 1,052 pp., U.S. EPA Office of Air and
Radiation, EPA 430-R-16-002, April 2016. Available at: www3.epa.gov/climatechange/ghgemissions/usinventoryreport.html (last accessed
June 14, 2016).
    \267\ Ibid.
    \268\ IPCC, 2014: Climate Change 2014: Mitigation of Climate
Change. Contribution of Working Group III to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Edenhofer,
O., R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K. Seyboth,
A. Adler, I. Baum, S. Brunner, P. Eickemeier, B. Kriemann, J.
Savolainen, S. Schl[ouml]mer, C. von Stechow, T. Zwickel and J.C.
Minx (eds.)]. Cambridge University Press, 599-670 pp.
    \269\ As discussed in section V.B.4.c, fuel burn growth rates
for air carriers and general aviation aircraft operating on jet fuel
are projected to grow by 43 percent from 2010 to 2036, and this
provides a scaling factor for growth in GHG emissions which would
increase at a similar rate as the fuel burn by 2030, 2036, and 2040.
FAA, 2016: FAA Aerospace Forecast Fiscal Years 2016-2036, 94 pp.
Available at https://www.faa.gov/data_research/aviation/aerospace_forecasts/media/FY2016-36_FAA_Aerospace_Forecast.pdf (last
accessed March 29, 2016).
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    Section III of this preamble summarizes the legal framework for
this action under CAA section 231. As discussed there, section
231(a)(2)(A) of the CAA states that ``The Administrator shall, from
time to time, issue proposed emission standards applicable to the
emission of any air pollutant from any class or classes of aircraft
engines which in [her] judgment causes, or contributes to, air
pollution which may reasonably be anticipated to endanger public health
or welfare.'' Before the Administrator may issue standards addressing
emissions of GHGs under section 231, the Administrator must satisfy a
two-step test. First, the Administrator must decide whether, in her
judgment, the air pollution under consideration may reasonably be
anticipated to endanger public health or welfare. Second, the
Administrator must decide whether, in her judgment, emissions of an air
pollutant from the classes of aircraft engines under consideration
cause or contribute to this air pollution.\270\ If the Administrator
answers both questions in the affirmative, she must issue standards
under section 231. While we agree that the EPA has significant
discretion in the standard-setting phase, we disagree with the comment
to the extent that it suggests the standard-setting phase is the only
appropriate place for the EPA to exercise discretion as to the scope of
covered aircraft engine classes in this first instance of findings
regarding aircraft GHG emissions. By using the phrase ``any class or
classes of aircraft engines which in [her] judgment causes, or
contributes to,'' the endangering air pollution, section 231(a)(2)(A)
gives the EPA discretion to determine which class or classes of
aircraft engines to evaluate in making a cause or contribute finding,
and whether to focus on a single class or multiple classes of aircraft
engines in satisfying the requirements of section 231(a)(2)(A). Because
the scope of the first international CO2 standard adopted by
ICAO is limited to aircraft over the specified MTOM levels, and the
U.S. will have a duty to set domestic standards in order to meet its
obligations under the Chicago Convention, it is reasonable in this case
to similarly limit the scope of and issue this first aircraft GHG
contribution

finding and not delay this determination in order to possibly
additionally consider and re-propose our finding to reach a broader
scope. We do not necessarily disagree with the commenters who suggested
that we could issue a broader contribution finding and then narrow the
scope of future standards at that stage, but doing so in this action
would require further analysis and development of an additional
proposed finding, which could impede expeditious final issuance of the
finding we proposed and thereby possibly impede prompt development of
domestic standards that are of at least equivalent stringency as
ICAO's. We expect to proceed with promulgating a domestic
CO2 standard (or GHG standard) of at least equivalent
stringency to the international CO2 standard as soon as it
is practicable, and to begin to take action along this expected path,
we are exercising our discretion in matching the applicability
thresholds of the international CO2 standard. The majority
of the GHG emissions from all classes of aircraft engines would be
covered by these applicability thresholds. We are not making either
positive or negative contribution findings regarding GHG emissions from
engines used in non-covered aircraft at this time, but nothing prevents
us from doing so in the future.
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    \270\ To clarify the distinction between air pollution and air
pollutant, the air pollution is the atmospheric concentrations and
can be thought of as the total, cumulative stock of GHGs in the
atmosphere. The air pollutants, on the other hand, are the emissions
of GHGs and can be thought of as the flow that changes the size of
the total stock.
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2. The Administrator's Cause or Contribute Analysis Is Reasonable
a. It Is Reasonable To Include GHG Emissions From Combustion of
International Aviation Bunker Fuels in the U.S. Aircraft GHG Inventory
    Some commenters stated that the EPA's choice of data for the cause
or contribute analysis was selective and biased. They contended that
emissions resulting from combustion of the international aviation
bunker fuels should not be part of the U.S. covered aircraft GHG
inventory or of the total U.S. aircraft GHG inventory, since the EPA's
own U.S. inventory for UNFCCC reporting purposes does not include
emissions from combustion of these fuels in the national GHG totals and
reports them separately to the UNFCCC, pursuant to UNFCCC inventory
reporting guidelines.\271\ Consequently, they asserted that the total
emissions from domestic commercial aircraft accounts for less than 2
percent (1.7%) of total U.S. aircraft GHG emissions. Because of this,
commenters believe that EPA inappropriately specified that the U.S.
covered aircraft GHG emissions represent 3 percent of the total U.S.
GHG emissions.
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    \271\ EPA GHG Emissions Inventory at A-31 (reporting and
methods) is available at: http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2015-Annex-2-Emissions-Fossil-Fuel-Combustion.pdf (last accessed April 8, 2016).
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    The EPA disagrees with this comment. As stated earlier in this
section, U.S. covered aircraft GHG emissions \272\ (and total U.S.
aircraft GHG emissions) in this cause or contribute finding include
those GHG emissions resulting from combustion of international aviation
bunker fuel because we want to capture the full contribution of GHG
emissions from aircraft that are attributable to covered aircraft
activity in or originating from the U.S. In tracking aircraft GHG
emissions, the EPA is focused on the U.S.'s contributions from this
sector to the atmosphere. Accordingly, the EPA includes GHG emissions
for all aircraft departing from U.S. airports in a calendar year
(domestic and international flights) in determining total U.S. GHG
emissions and total U.S. aircraft GHG emissions. Thus, consistent with
that practice, for assessing GHG emissions from U.S. covered aircraft,
EPA has chosen to combine all flights, both those with domestic takeoff
and landing points, and those with domestic takeoff points and
international landing points. In addition, guidance from the IPCC and
UNFCCC states that for an international bunker fuel-combusting flight
the entire flight's emissions are calculated and reported, and the GHG
emission calculation methodologies are the same for both domestic and
international bunker fuel-combusting flights. The U.S. calculates and
reports emissions resulting from combustion of international bunker
fuels in accordance with this guidance. However, pursuant to UNFCCC
reporting guidelines, emissions from combustion of international bunker
fuels are reported separately from other aircraft emissions in the U.S.
Inventory, in order to meet the reporting commitments under the UNFCCC.
We follow the IPCC and UNFCC guidance in our calculation and reporting
methodologies.\273\
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    \272\ As described earlier in section V.B.4, U.S. covered
aircraft do not include military aircraft that use U.S.
international aviation bunker fuels.
    \273\ As described earlier, following the IPCC guidelines for
common and consistent accounting and reporting of GHGs, the UNFCCC
requires countries to report both total national GHG emissions and
international bunker fuel emissions (aviation and marine
international bunker fuel emissions), and though these emissions are
reported separately, both are assigned to the reporting country. In
meeting the UNFCCC reporting requirements, the U.S. Inventory
calculates international bunker fuel GHG emissions in a consistent
manner with domestic GHG emissions. In this final contribution
finding, the EPA maintains its approach used in the proposed
findings to include aviation international bunker fuel emissions
attributable to the United States with the national emissions number
from the U.S. Inventory as reported to the UNFCCC. It is the EPA's
view that it is reasonable and appropriate for the analysis in the
contribution finding to reflect the full contribution of U.S.
emissions from certain classes of aircraft engines, including those
from domestic flights of U.S. aircraft and those associated with
international aviation bunker fuel emissions. Consistent with IPCC
guidelines for common and consistent accounting and reporting of
GHGs under the UNFCCC, the ``U.S. international aviation bunker
fuels'' category includes emissions from combustion of fuel used by
aircraft departing from the United States, regardless of whether
they are a U.S. flagged carrier.
---------------------------------------------------------------------------

b. The Administrator Does Not Need To Find Significant Contribution, or
Establish a Bright Line
    One comment letter stated that aircraft GHG emissions are extremely
small relative to both domestic and global GHG emissions in the
aggregate, and questioned whether there is a reasoned basis for EPA to
find that GHG emissions from U.S. aircraft cause or contribute to air
pollution that endangers public health and welfare when assessed not
only relative to contributions from other sectors, but also relative to
climate impacts. For example, this commenter indicated the EPA
estimates that total U.S. aircraft GHG emissions accounted for about
0.5 percent of total global GHG emissions in 2010. Thus, the commenter
stated that the total U.S. aircraft GHG emission contributions from the
U.S. aviation sector are extremely small relative to total global GHG
emissions, or negligible as a percentage of total global GHG emissions.
    The EPA disagrees with this comment and has fully explained the
reasoning for this contribution finding in section V.B. In addition,
the Administrator interprets CAA section 231(a)(2)(A) to require some
level of contribution that, while more than de minimis or trivial, does
not need to rise to the level of significance to support a contribution
finding. By its terms, section 231(a)(2)(A) does not contain a modifier
on its use of the term ``contribute,'' which contrasts with some other
provisions of the CAA, such as sections 213(a)(2) and (4), and
110(a)(2)(D)(i)(I), that expressly require a ``significant''
contribution. The Administrator's interpretation is consistent with the
interpretation of parallel language in CAA section 202(a), which was
described in the 2009 Findings,\274\ and is also supported by past
court decisions. For example, the D.C. Circuit's opinion in Catawba
County v. EPA, 571 F.3d 20 (D.C. Cir. 2009),

discusses the concept of contribution in the area designations context
under section 107(d)(1)(A), which, like section 231(a)(2)(A), does not
include the term ``significant'' to modify ``contribute.'' This
decision, along with others, supports the Administrator's
interpretation that CAA section 231(a)(2)(A) does not require a
significant contribution, but rather, in the absence of specific
language regarding the degree of contribution, provides the EPA
discretion such that a positive finding may be based on a determination
that the air pollutant emissions from the relevant class or classes of
aircraft engines merely ``contribute to'' the air pollution which may
reasonably be anticipated to endanger public health or welfare. In
addition, similar to the interpretation of section 202(a) described in
the 2009 Findings, the Administrator is not required under section
231(a)(2)(A) to establish a bright-line, objective test for
contribution, but is to exercise her judgment in determining
contribution.\275\ As explained above, and similar to the approach used
in the 2009 Findings, when exercising her judgment under section
231(a)(2)(A), in this context the Administrator considers both the
cumulative impact and also the totality of the circumstances. It is
reasonable for the Administrator to apply a ```totality-of-the-
circumstances test to implement a statute that confers broad
discretionary authority, even if the test lacks a definite `threshold'
or `clear line of demarcation to define an open-ended term.' '' Id. at
39 (citations omitted).
---------------------------------------------------------------------------

    \274\ 74 FR at 66541-42.
    \275\ 74 FR at 66542.
---------------------------------------------------------------------------

    In Catawba County the D.C. Circuit upheld the EPA's
PM2.5 area designation decisions and analyzed CAA section
107(d), which requires the EPA to designate an area as nonattainment if
it ``contributes to ambient air quality in a nearby area'' not meeting
the national ambient air quality standards. Id. at 35. CAA section
107(d)(1), as mentioned above, like section 231(a)(2)(A), does not use
the term ``significant'' in establishing this duty, or set forth any
other bright-line benchmark that must be met for the EPA to find
``contribution.'' The court noted that it had previously held that the
term ``contributes'' is ambiguous in the context of CAA language. See
EDF v. EPA, 82 F.3d 451, 459 (D.C. Cir. 1996). ``[A]mbiguities in
statutes within an agency's jurisdiction to administer are delegations
of authority to the agency to fill the statutory gap in reasonable
fashion.'' 571 F.3d at 35 (citing Nat'l Cable & Telecomms. Ass'c v.
Brand X Internet Servs, 545 U.S. 967, 980 (2005)).
    The D.C. Circuit then proceeded to consider and reject petitioners'
argument that the verb ``contributes'' in CAA section 107(d)
necessarily connotes a significant causal relationship. Specifically,
the court again noted that the term is ambiguous, leaving it to the EPA
to interpret in a reasonable manner. In the context of this discussion,
the court noted that ``a contribution may simply exacerbate a problem
rather than cause it . . .'' 571 F.3d at 39. This is consistent with
the D.C. Circuit's decision in Bluewater Network v. EPA, 370 F.3d 1
(D.C. Cir. 2004), in which the court, in evaluating EPA's judgment that
emissions from a specific class or category of nonroad engines
contribute to air pollution for which findings of ``significant''
contribution had already been made with respect to nonroad engines'
emissions in the aggregate, noted that the term ``contribute'' in CAA
section 213(a)(3) ``[s]tanding alone, . . . has no inherent connotation
as to the magnitude or importance of the relevant `share' in the
effect; certainly it does not incorporate any `significance'
requirement.'' 370 F.3d at 13. In that context, the court found that
the bare term ``contribute'' invests the Administrator with discretion
to exercise judgment regarding what constitutes a sufficient
contribution for the purpose of making a contribution finding. Id. at
14.
    Finally, in Catawba County, the D.C. Circuit also rejected
``petitioners' argument that the EPA violated the statute by failing to
articulate a quantified amount of contribution that would trigger'' the
regulatory action. 571 F.3d at 39. Although petitioners preferred that
the EPA establish a bright-line test, the court recognized that the
statute did not require that EPA ``quantify a uniform amount of
contribution.'' Id.
    Given this context, it is entirely reasonable for the Administrator
to interpret CAA section 231(a)(2)(A) to require some level of
contribution that, while more than de minimis or trivial, need not be
significant. It is also reasonable for the EPA to find contribution
without establishing a ``bright-line `objective' test of
contribution.'' 571 F.3d at 39. As in the 2009 Endangerment Finding,
when exercising her judgment under CAA section 231(a)(2)(A), the
Administrator not only considers the cumulative impact, but also looks
at the totality of the circumstances (e.g., the air pollutant, the air
pollution, the nature of the endangerment, the type of source category,
the number of sources in the source category, and the number and type
of other source categories that may emit the air pollutant) when
determining whether the emissions justify regulation under the CAA. See
id. (finding it reasonable for an agency to adopt a totality-of-the-
circumstances test under similar circumstances). In the context of GHG
emissions, which come from many different sectors no single one of
which is primarily responsible as their source, and which aggregate
together into a common pollution stock that itself impacts public
health and welfare, it is particularly reasonable to address those
emissions from contributing sectors, even if looked at individually a
sector may not be considered dominant. Therefore, in the specific
context of making a contribution finding regarding GHG emissions from
aircraft engines under CAA section 231, it is reasonable for the EPA to
interpret that provision to not require some level of contribution that
rises to a pre-determined numerical level or percentage- or mass-based
portion of the overall endangering GHG air pollution.
    In addition, the EPA disagrees with the assertion that we do not
have a reasoned basis to make this contribution finding. As described
earlier in section V.B.4, the collective GHG emissions from the classes
of engines used in U.S. covered aircraft (197 Tg CO2eq) clearly
contribute to the endangering GHG air pollution, whether the comparison
is domestic (89 percent of total U.S. aircraft GHG emissions, 10
percent of all U.S. transportation GHG emissions, representing 2.8
percent of total U.S. GHG emissions), global (26 percent of total
global aircraft GHG emissions representing 2.7 percent of total global
transportation GHG emissions and 0.4 percent of all global GHG
emissions), or a combination of domestic and global. Both domestic and
global comparisons, independently and jointly, support the finding.
Moreover, these comparisons also support the finding even if GHG
emissions from combustion of U.S. international aviation bunker fuels
are excluded. Making this cause or contribute finding for engines used
in U.S. covered aircraft will result in the vast majority of total U.S.
aircraft GHG emissions being included in this determination.
    Also, even if the EPA were required to determine that a
contribution met or exceeded a level of significance to make a
contribution finding, for the reasons discussed above, the EPA would
find that the contribution to the U.S. and global stocks of GHG air
pollution from GHG emissions from classes of engines

used in U.S. covered aircraft is significant. As discussed in more
detail above, their GHG emissions are larger than those from the great
majority of emitting countries, they are larger than those of several
major emitting countries, and they constitute one of the largest
remaining unregulated contributing parts of the U.S. GHG emissions
inventory.
    Finally, in response to the suggestion in the comments that a
positive contribution finding is not supportable unless the EPA finds
that GHG emissions from covered aircraft themselves cause climate
impacts, without consideration of the impacts caused by the larger
aggregate stock of GHG air pollution, we stress that the comment
conflates the endangerment and contribution steps of the analysis. In
making the contribution finding, the EPA need not additionally and
separately find whether the contribution alone causes endangerment.
That endangerment finding has already been made with respect to the
stock of GHG air pollution to which covered aircraft GHG emissions
contribute. The only remaining issue at the second step of the analysis
is whether the analyzed GHG source sector in fact emits GHG air
pollutants that contribute to the air pollution that has already been
found to endanger public health and welfare. The covered aircraft, as
we have shown and explained, clearly do emit GHG air pollutants that
measurably contribute to that stock.
c. The Administrator Reasonably Provided Context in Comparing Aircraft
GHG Emissions to Other Sector GHG Emissions
    Some commenters asserted that the EPA did not show important
context in comparing covered aircraft GHG emissions to other mobile
source categories' GHG emissions. The EPA does not describe the very
low level of aircraft emissions in general relative to emissions from
other sources. The commenters assert that, for example, the EPA does
not point out that the growth in emissions from U.S. medium-duty and
heavy-duty trucks since 1990 is 53 percent greater than the GHG
emissions from the U.S. commercial aircraft sector today, and 18
percent higher than the total U.S. aircraft (or entire U.S. aviation
sector) GHG emissions today.
    In the proposed finding and this final finding, the EPA provides
context for covered aircraft GHG emissions relative to other sectors'
GHG emissions, including other categories within the transportation
sector. As described earlier in section V.B.4, from a national
perspective, the EPA provided tables to compare total U.S. aircraft and
U.S. covered aircraft GHG emissions to U.S. transportation and total
U.S. inventory GHG emissions, over an extended timeframe (1990-2014).
We also noted that overall U.S. covered aircraft comprised the third
largest source of GHG emissions in the U.S. transportation sector
behind only the light-duty vehicle sector and medium- and heavy-duty
truck sectors. This is the same ranking as total U.S. aircraft, if U.S.
covered aircraft and total U.S. aircraft are compared to the other
transportation sectors independent of one another. Finally, we note
that the U.S. inventory also shows that while overall U.S. GHG
emissions grew between 1990 and 2014, transportation GHG emissions grew
at a notably higher rate, 16 percent, more rapidly than any other U.S.
sector. U.S. covered aircraft GHG emissions grew by 15 percent in this
time period.\276\ Within the transportation sector, aircraft remain the
single largest source of GHG emissions not yet subject to any GHG
standards.
---------------------------------------------------------------------------

    \276\ Total U.S. aircraft GHG emissions decreased by 3 percent
from 1990 to 2014. U.S. non-covered aircraft GHG emissions decreased
by 56 percent in this same time period.
---------------------------------------------------------------------------

    In our proposal and again in this finding in section V.B.4, the
Administrator also stated her concern that recent projections indicate
that by 2036 GHG emissions both from all aircraft and from U.S. covered
aircraft are likely to increase by 43 percent (from 191 Tg
CO2eq to 272 Tg CO2eq for the years 2010 to
2036).\277\ This was contrasted with projections of GHG emissions
changes in other transportation sectors in the same timeframe. For
example, projections estimate that by 2036 the light-duty vehicle
sector is projected to see a 25 percent reduction in GHG emissions
(from 1,133 Tg CO2eq to 844 Tg CO2eq) from the
2010 baseline, while the freight trucks sector is projected to
experience a 23 percent increase in GHG emissions (from 390 Tg
CO2eq to 478 Tg CO2eq) from the 2010 baseline.
(However, this projected increase does not reflect the impact of GHG
reductions on the freight trucks sector anticipated from the Phase 2
heavy-duty GHG standards that have not yet been promulgated.) In
addition, by 2036 the rail sector is projected to experience a 3
percent reduction in GHG emissions (44 Tg CO2eq to 43 Tg
CO2eq) from the 2010 baseline.\278\ Therefore, in the context of
projected growth it appears that U.S. covered aircraft GHG emissions
through 2036 are estimated to increase by more than 80 Tg
CO2eq.279 280
---------------------------------------------------------------------------

    \277\ As discussed in section V.B.4.c, fuel burn growth rates
for air carriers and general aviation aircraft operating on jet fuel
are projected to grow by 43 percent from 2010 to 2036 and this
provides a scaling factor for growth in GHG emissions which would
increase at a similar rate as the fuel burn by 2030, 2036, and 2040.
    FAA, 2016: FAA Aerospace Forecast Fiscal Years 2016-2036, 94 pp.
Available at https://www.faa.gov/data_research/aviation/aerospace_forecasts/media/FY2016-36_FAA_Aerospace_Forecast.pdf (last
accessed March 29, 2016).
    \278\ U.S. Energy Information Administration (EIA), 2015: Annual
Energy Outlook (AEO) 2015 with projections to 2040, DOE/EIA-0383,
154 pp. For the years 2010 to 2014, the baseline emissions for each
sector are from the 2016 Inventory of U.S. Greenhouse Gas Emissions
and Sinks Report, and after 2014 we utilize projections from the
2015 EIA AEO report. Available at http://www.eia.gov/forecasts/aeo/
(last accessed April 8, 2016).
    \279\ As described earlier in section V.B.3, in 2010, U.S.
covered aircraft were 10 percent of U.S. transportation sector GHG
emissions, and in 2036, U.S. covered aircraft are projected to be 15
percent of U.S. transportation GHG emissions. In 2010, light-duty
vehicles were 58 percent of U.S. transportation GHG emissions, and
in 2036 they are projected to be 46 percent. In 2010, heavy-duty
vehicles were 20 percent of U.S. transportation GHG emissions, and
in 2036, they are projected to be 26 percent (does not reflect the
impact from the Phase 2 heavy-duty GHG standards that have not been
promulgated). In 2010, the rail sector was 2 percent of U.S.
transportation GHG emissions, and in 2036, they are projected to be
the same percentage.
    \280\ Some commenters stated that section 231(a)(2)(A) of the
CAA does not give the EPA the authority to legally base the
contribution finding on future emission projections. As described
earlier in section V.B, the EPA considered future emission
projections as information to further support our assessment of
annual actual emissions (recent emissions from the current fleet)
for the contribution finding.
---------------------------------------------------------------------------

    Also, the EPA provided a global perspective by showing how total
U.S. aircraft and U.S. covered aircraft GHG emissions compare to global
aircraft, global transport, and total global GHG emissions. In
addition, the EPA shows the ranking of the total U.S. aircraft and U.S.
covered GHG emissions relative to other global transportation sectors
and entire country GHG emissions.
    One commenter stated that it is inappropriate and misleading to
compare U.S. aircraft GHG emissions with those of other, individual
countries. They indicated that to fairly compare the U.S. airlines' GHG
emissions contribution, EPA should analyze, as ICAO does, contributions
from other world regions with comparable land masses and levels of
economic activity. (In terms of landmass, the U.S. ranks third
globally, behind only Russia and Canada.) The EPA disagrees with this
comment. The language of CAA section 231(a)(2)(A) is silent regarding
how the Administrator is to make her contribution analysis. While it
requires that the Administrator assess whether emissions of an air
pollutant cause or contribute to air pollution which may reasonable be
anticipated to endanger public health or

welfare, it does not limit how she may undertake that assessment. It
surely is reasonable that the Administrator look at how total U.S.
aircraft GHG emissions and U.S. covered aircraft GHG emissions compare
to U.S. and global GHG emissions on an absolute and relative basis,
including ranking compared to other transportation sectors and entire
country emissions. It is entirely appropriate for the Administrator to
decide that part of understanding how a U.S. source category emitting
GHGs fits into the bigger picture of global climate change is to
determine how that source category fits into the contribution from the
United States as a whole (including U.S. transportation and total U.S.
inventory GHG emissions), where the United States as a country is a
major emitter of GHGs. Knowing how total U.S. aircraft GHG emissions
and U.S. covered aircraft GHG emissions rank compared to entire country
GHG emissions is relevant to understanding what role they play in the
global problem and hence whether they ``contribute'' to the global
problem. Moreover, the Administrator is looking at these emissions
comparisons as appropriate under the applicable science, facts, and
law. Therefore, the EPA appropriately compared and provided sufficient
context for total U.S. aircraft GHG emissions and U.S. covered aircraft
GHG emissions.
d. The Administrator Reasonably Utilized Multiple Databases for Global
GHG Emissions
    Some commenters stated that the mix of data from different years
utilizing emissions data from IPCC, WRI/CAIT, and IEA was confusing and
potentially misleading. The EPA acknowledges that we presented data
from a variety of sources, but the EPA does not agree that the analysis
and presentation was misleading. We note that the global analysis for
this covered aircraft contribution finding is consistent with the
analytical approach originally developed and used in the 2009
Endangerment Finding. As described earlier in section IV.A, in the
proposed finding and this final finding, the Administrator considers
the recent, major scientific assessments of the IPCC, USGCRP, and the
NRC as the primary scientific and technical basis informing her
judgment. Thus, the Administrator is informed by and places
considerable weight upon the IPCC's data on global GHG emissions. She
places less emphasis on the WRI/CAIT and IEA emissions data, which in
comparison have a different aggregation of underlying data but are
available for more recent years (in comparison to the IPCC data). As
described earlier in section V.B.4, the WRI/CAIT data are generally in
line with the IPCC data. For 2010 total global GHG emissions, IPCC data
are 49,000 Tg CO2eq, and WRI/CAIT indicates 42,968 Tg
CO2eq (a 12 percent difference).\281\ Also, for 2010 global
aircraft GHG emissions, IPCC data are 743 Tg CO2eq, and IEA
data indicate 749 Tg CO2eq (a 1 percent difference).\282\
---------------------------------------------------------------------------

    \281\ Comparing their 2010 total global GHG emissions, IPCC data
are 49,000 Tg CO2eq, and WRI/CAIT data, including
forestry and land use inventories, indicates 45,748 Tg
CO2eq (a 7 percent difference).
    \282\ Comparing 2012 WRI/CAIT to 2010 IPCC data, WRI/CAIT data
for total global GHG emissions indicates 44,816 Tg CO2eq
for 2012 (a 9 percent difference), and including forestry and land
use inventories WRI/CAIT data indicates 47,599 Tg CO2eq
for 2012 (a 3 percent difference). Comparing 2012 IEA data to 2010
IPCC data, IEA data for global aircraft GHG emissions indicates 775
Tg CO2eq for 2012 (a 4 percent difference).
---------------------------------------------------------------------------

    The approach of considering the major scientific assessments,
including IPCC's assessment, provides assurance that the
Administrator's judgment is informed by the best available, well-vetted
science that reflects the consensus of the climate science research
community. The major findings of the assessments, including IPCC's
assessment, support the Administrator's findings in this action. While
the EPA uses the IPCC data as the primary data source for this
contribution finding, it has reasonably used additional data sources
from widely used and recognized global datasets to provide context and
information from more recent years. These additional data supplement
and confirm the IPCC data. Ultimately, whether the Agency utilizes the
IPCC data alone or the WRI/CAIT dataset (and IEA data) alone, or both
datasets together, it would have no material effect on the emissions
comparisons discussed in section V.B and the Administrator would make
the same contribution finding.

VI. Statutory Authority and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

    This action is a significant regulatory action because it raises
novel policy issues. Accordingly, it was submitted to the Office of
Management and Budget (OMB) for review. This action finalizes a finding
that GHG emissions from aircraft cause or contribute to air pollution
that may be reasonably anticipated to endanger public health and
welfare. Any changes made in response to OMB recommendations have been
documented in the docket for this action.

B. Paperwork Reduction Act (PRA)

    This action does not impose an information collection burden under
the PRA. The endangerment and cause or contribute findings under CAA
section 231(a)(2)(A) do not contain any information collection
activities.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action will not impose any requirements on small entities. The
endangerment and cause or contribute findings under CAA section
231(a)(2)(A) do not in-and-of-themselves impose any new requirements
but rather set forth the Administrator's determination that GHG
emissions from certain classes of aircraft engines--those used in U.S.
covered aircraft--cause or contribute to air pollution that may be
reasonably anticipated to endanger public health and welfare.
Accordingly, this action affords no opportunity for the EPA to fashion
for small entities less burdensome compliance or reporting requirements
or timetables or exemptions from all or part of the findings.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect
small governments. The action imposes no enforceable duty on any state,
local or tribal governments or the private sector.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    This action does not have tribal implications as specified in
Executive Order 13175. The final endangerment and cause or contribute
findings under CAA section 231(a)(2)(A) do not in-and-of-themselves
impose any new requirements but rather set forth the Administrator's
determination that GHG emissions from certain classes of aircraft
engines--those used in U.S. covered

aircraft--cause or contribute to air pollution that may be reasonably
anticipated to endanger public health and welfare. Thus, Executive
Order 13175 does not apply to this action.

G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks

    This action is not subject to Executive Order 13045 because it is
not economically significant as defined in Executive Order 12866. The
Administrator considered climate change risks to children as part of
the endangerment and cause or contribute findings under CAA section
231(a)(2)(A). This action's discussion of climate change impacts on
public health and welfare is found in section IV of this preamble.
Specific discussion with regard to children is contained in sections
IV.C.1.a of the preamble. A copy of all documents pertaining to the
impacts on children's health from climate change have been placed in
the public docket for this action.

H. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution or Use

    This action is not a ``significant energy action'' because it is
not likely to have a significant adverse effect on the supply,
distribution or use of energy. Further, we have concluded that this
action is not likely to have any adverse energy effects because the
endangerment and cause or contribute findings under section
231(a)(2)(A) do not in-and-of themselves impose any new requirements
but rather set forth the Administrator's determination that GHG
emissions from certain classes of aircraft engines--those used in U.S.
covered aircraft--cause or contribute to air pollution that may be
reasonably anticipated to endanger public health and welfare.

I. National Technology Transfer and Advancement Act (NTTAA)

    This action does not involve technical standards.

J. Executive Order 12898: Federal Actions To Address Environmental
Justice in Minority Populations and Low-Income Populations

    The EPA believes this action will not have potential
disproportionately high and adverse human health or environmental
effects on minority, low-income, or indigenous populations because this
action does not affect the level of protection provided to human health
or the environment. The Administrator considered climate change risks
to minority, low-income, and indigenous populations as part of these
endangerment and cause or contribute findings under CAA section
231(a)(2)(A). This action's discussion of climate change impacts on
public health and welfare is found in section IV.C of the preamble.
Specific discussion with regard to minority, low-income, and indigenous
populations are found in sections IV.C.1.a and IV.C.2.a of this
preamble. A copy of all documents pertaining to the impacts on these
communities from climate change have been placed in the public docket
for this action.

K. Congressional Review Act (CRA)

    The EPA will submit a rule report to each House of the Congress and
to the Comptroller General of the United States. This action is not a
``major rule'' as defined by 5 U.S.C. 804(2).

L. Determination Under Section 307(d)

    Section 307(d)(1)(V) of the CAA provides that the provisions of
section 307(d) apply to ``such other actions as the Administrator may
determine.'' Pursuant to section 307(d)(1)(V), the Administrator
determines that this action is subject to the provisions of section
307(d).

VII. Statutory Provisions and Legal Authority

    Statutory authority for this action comes from 42 U.S.C. 7571, 7601
and 7607.

List of Subjects

40 CFR Part 87

    Environmental protection, Air pollution control, Aircraft, Aircraft
engines.

40 CFR Part 1068

    Environmental protection, Administrative practice and procedure,
Confidential business information, Imports, Motor vehicle pollution,
Penalties, Reporting and recordkeeping requirements, Warranties.

    Dated: July 25, 2016.
Gina McCarthy,
Administrator.
[FR Doc. 2016-18399 Filed 8-12-16; 8:45 am]
 BILLING CODE 6560-50-P