Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Rules and Regulations 34471 

forfeitures. See § 1.411(d)–4, Q&A– 

1(d)(8) (features that are not section 

411(d)(6) protected benefits include 

‘‘[t]he allocation dates for contributions, 

forfeitures, and earnings, the time for 

making contributions (but not the 

conditions for receiving an allocation of 

contributions or forfeitures for a plan 

year after such conditions have been 

satisfied), and the valuation dates for 

account balances’’). 

These regulations are substantively 

the same as the proposed regulations. 

However, the Treasury Department and 

the IRS have determined that the 

distribution requirements referred to in 

the existing definitions of QMACs and 

QNECs in §§ 1.401(k)–6 and 1.401(m)–5 

are more appropriately characterized as 

distribution limitations (consistent with 

the heading of § 1.401(k)–1(d)), and, 

accordingly, these definitions have been 

amended to refer to distribution 

limitations. 

Effective/Applicability Date 

These regulations are effective on July 

20, 2018. 

These regulations apply to plan years 

beginning on or after July 20, 2018. 

However, taxpayers may apply these 

regulations to earlier periods. 

Special Analyses 

This regulation is not subject to 

review under section 6(b) of Executive 

Order 12866 pursuant to the 

Memorandum of Agreement (April 11, 

2018) between the Department of the 

Treasury and the Office of Management 

and Budget regarding review of tax 

regulations. Because the regulation does 

not impose a collection of information 

on small entities, the Regulatory 

Flexibility Act (5 U.S.C. chapter 6) does 

not apply. Pursuant to section 7805(f) of 

the Internal Revenue Code, the notice of 

proposed rulemaking preceding these 

regulations was submitted to the Chief 

Counsel for Advocacy of the Small 

Business Administration for comment 

on its impact on small business. 

Statement of Availability of IRS 

Documents 

IRS Revenue Procedures, Revenue 

Rulings, notices and other guidance 

cited in this preamble are published in 

the Internal Revenue Bulletin (or 

Cumulative Bulletin) and are available 

from the Superintendent of Documents, 

U.S. Government Publishing Office, 

Washington, DC 20402, or by visiting 

the IRS website at http://www.irs.gov. 

Drafting Information 

The principal author of these 

regulations is Angelique Carrington, 

Office of Associate Chief Counsel (Tax 

Exempt and Governmental Entities). 

However, other personnel from the IRS 

and Treasury Department participated 

in the development of these regulations. 

List of Subjects in 26 CFR Part 1 

Income taxes, Reporting and 

recordkeeping requirements. 

Adoption of Amendments to the 

Regulations 

Accordingly, 26 CFR part 1 is 

amended as follows: 

PART 1—INCOME TAXES 

■ Paragraph 1. The authority citation 

for part 1 continues to read in part as 

follows: 

Authority: 26 U.S.C. 401(m)(9) and 26 

U.S.C. 7805. * * * 

■ Par. 2. Section 1.401(k)–1 is amended 

by adding paragraph (g)(5) to read as 

follows: 

§ 1.401(k)–1 Certain cash or deferred 

arrangements. 

* * * * * 

(g) * * * 

(5) Applicability date for definitions 

of qualified matching contributions 

(QMACs) and qualified nonelective 

contributions (QNECs). The revisions to 

the second sentence in the definitions of 

QMACs and QNECs in § 1.401(k)–6 

apply to plan years ending on or after 

July 20, 2018. 

■ Par. 3. Section 1.401(k)–6 is amended 

by revising the second sentence in the 

definitions of Qualified matching 

contributions (QMACs) and Qualified 

nonelective contributions (QNECs) to 

read as follows: 

§ 1.401(k)–6 Definitions. 

* * * * * 

Qualified matching contributions 

(QMACs). * * * Thus, the matching 

contributions must satisfy the 

nonforfeitability requirements of 

§ 1.401(k)–1(c) and be subject to the 

distribution limitations of § 1.401(k)– 

1(d) when they are allocated to 

participants’ accounts. * * * 

Qualified nonelective contributions 

(QNECs). * * * Thus, the nonelective 

contributions must satisfy the 

nonforfeitability requirements of 

§ 1.401(k)–1(c) and be subject to the 

distribution limitations of § 1.401(k)– 

1(d) when they are allocated to 

participants’ accounts. 

* * * * * 

■ Par. 4. Section 1.401(m)–1 is amended 

by adding paragraph (d)(4) to read as 

follows: 

§ 1.401(m)–1 Employee contributions and 

matching contributions. 

* * * * * 

(d) * * * 

(4) Effective date for definitions of 

qualified matching contributions 

(QMACs) and qualified nonelective 

contributions (QNECs). The revisions to 

the definitions of QMACs and QNECs in 

§ 1.401(m)–5 apply to plan years ending 

on or after July 20, 2018. 

■ Par. 5. Section 1.401(m)–5 is 

amended by revising the definitions of 

Qualified matching contributions 

(QMACs) and Qualified nonelective 

contributions (QNECs) to read as 

follows: 

§ 1.401(m)–5 Definitions. 

* * * * * 

Qualified matching contributions 

(QMACs). Qualified matching 

contributions or QMACs means 

qualified matching contributions or 

QMACs as defined in § 1.401(k)–6. 

Qualified nonelective contributions 

(QNECs). Qualified nonelective 

contributions or QNECs means qualified 

nonelective contributions or QNECs as 

defined in § 1.401(k)–6. 

Kirsten Wielobob, 

Deputy Commissioner for Services and 

Enforcement. 

Approved: July 13, 2018. 

David J. Kautter, 

Assistant Secretary of the Treasury (Tax 

Policy). 

[FR Doc. 2018–15495 Filed 7–19–18; 8:45 am] 

BILLING CODE 4830–01–P 

DEPARTMENT OF DEFENSE 

Office of the Secretary 

32 CFR Part 175 

RIN 0790–AJ54 

[Docket ID: DOD–2016–OS–0108] 

Indemnification or Defense, or 

Providing Notice to the Department of 

Defense, Relating to a Third-Party 

Environmental Claim 

AGENCY: Department of Defense (DoD). 

ACTION: Final rule. 

SUMMARY: The DoD is identifying the 

proper address and notification method 

for an entity making a request for 

indemnification or defense, or providing 

notice to DoD, of a third-party claim 

under section 330 of the National 

Defense Authorization Act for Fiscal 

Year 1993, as amended (hereinafter 

‘‘section 330’’), or under section 1502(e) 

of the Floyd D. Spence National Defense 

Authorization Act for Fiscal Year 2001, 

(hereinafter ‘‘section 1502(e)’’). This 

rule also identifies the documentation 


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34472 Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Rules and Regulations 

required to demonstrate proof of any 

claim, loss, or damage for 

indemnification or defense or for 

providing notice to DoD of a third-party 

claim. This rule also provides the 

mailing address for such requests for 

indemnification or defense or notice to 

DoD of a third-party claim to be filed 

with DoD, Office of General Counsel, 

the Deputy General Counsel for 

Environment, Energy, and Installations 

(DGC(EE&I)). This will allow for timely 

review and greater efficiency in 

screening requests for indemnification 

or defense by providing clarity to 

requesters. 

DATES: This final rule is effective on 

August 20, 2018. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Philip Sheuerman, 703–692–2287. 

SUPPLEMENTARY INFORMATION: 

Comments and Responses 

On December 7, 2016 (81 FR 88167– 

88173), the Department of Defense 

published a proposed rule titled 

‘‘Indemnification or Defense, or 

Providing Notice to the Department of 

Defense, Relating to a Third-Party 

Environmental Claim.’’ The proposed 

rule had a 60-day public comment 

period, which ended on February 6, 

2017. One commenter submitted 

comments which are addressed in 11 

responses below. 

Comment #1: One comment argues 

that the rule does not properly 

distinguish between the statute of 

limitations applicable to a request for 

indemnification and any limitations on 

when a request for defense may be 

made. The comment also suggests that 

more detail should be included as to 

what constitutes accrual of the action. 

Response #1: The rule simply 

provides that the request for defense 

must be received by the DGC(EE&I) in 

sufficient time to allow the DoD to 

provide the requested defense 

(§ 175.6(b)). While the rule does identify 

the statutory limitation on making a 

request for indemnification, it does not 

identify a time limit for when a request 

for defense must be made. Since seeking 

defense is separate from making a 

request for indemnification (or 

providing notice of a third-party claim) 

and is entirely at the discretion of the 

requester, there is no direct connection 

between a request for indemnification 

and a request for defense. Section 330 

describes accrual of action such that the 

rule does not address the matter further. 

As with many of the comments 

submitted, it is critical to distinguish 

among a request for indemnification, a 

request for defense, and submittal of 

notice of a third-party claim; these are 

three separate and distinct actions. (For 

purposes of these responses, it is 

understood that the DoD will act 

through the Department of Justice when 

appearing before the courts.) No change 

is made to the rule. 

Comment #2: One comment asserts 

that the requirements relating to notice 

of a third-party claim are unwarranted 

changes to the statutory provisions of 

section 330 and that certain 

unwarranted consequences will occur if 

a recipient of a third-party claim does 

not provide the required 30-day notice 

(see response to comment #4 for change 

to 15 days) of receipt of the third-party 

claim. Among these asserted 

consequences is a denial of 

indemnification or defense. 

Response #2: The rule provides a 

process to give effect to the provisions 

of section 330; in doing so, it does not 

expand or diminish the rights of the 

parties involved. The rule does not 

assign any consequences to not 

requesting defense; as noted in the 

answer to question #1, a request for 

defense is optional and requesting it is 

at the discretion of the recipient of a 

third-party claim. The only 

consequences occur when a recipient of 

a third-party claim fails to provide 

notice to the DGC(EE&I) of receipt of the 

claim in time for the United States to 

choose to intervene. Section 330(c) 

makes it clear that the consequence of 

not allowing the DoD to defend against 

a third-party claim is that a subsequent 

request for indemnification will be 

denied. This rule provides reasonable 

notice and process to avoid such an 

eventuality due to a potential requester 

for indemnification being ignorant of or 

ignoring the statutory rights of the DoD. 

The comment fails to recognize that 

section 330 authorizes the DoD, at the 

option of the DoD, to intervene and 

defend against a third-party claim. To 

give substance to this authority, the 

recipient of a third-party claim must 

provide reasonable notice to the DoD in 

order to allow DoD to act. Otherwise, 

the ability of the DoD to intervene and 

defend would be ineffectual. Failure to 

provide the notice does not 

automatically void any subsequent 

request for indemnification; it only 

affects a subsequent request for 

indemnification if it compromises the 

ability of the DoD to defend against the 

third-party claim. Such a determination 

is made within the discretion of the 

DGC(EE&I), based on the facts of the 

individual matter. To the extent that an 

assertion can be made that the rule 

modifies section 330, it would only be 

to the effect that the rule is more 

generous than section 330 because 

section 330 does not address when a 

failure to allow DoD to defend against 

a third-party claim does no harm to 

DoD. Section 330 simply provides that 

‘‘the person may not be afforded 

indemnification’’ without further 

elucidation. No change is made to the 

rule. 

Comment #3: One comment asserts 

that the rule is a unilateral amendment 

of existing real property transfer 

documents that provide for notice under 

section 330, and, as such, obscures the 

rights of the property recipient. 

Response #3: This rule is entered into 

under the delegated authority of the 

Secretary of Defense relating to the 

implementation of section 330. It is 

separate and distinct from, and in 

addition to, any real property transfer 

document provisions that were not 

entered into under that authority. There 

is no evidence that a request for 

indemnification or defense cannot meet 

both sources of requirements. Because 

DoD is aware of this concern, it notes in 

the preamble to this rule that for those 

situations where notice is to be given in 

accordance with, e.g., deeds, to other 

locations such as a local base closure 

program office, the DoD will continue to 

accept those notices for purposes of 

meeting the statute of limitations for a 

period of 180 days after this rule 

becomes final. Subsequent to that date, 

compliance with this rule will 

constitute the only reliable means to 

ensure compliance with the 

requirements of section 330. No change 

is made to the rule. 

Comment #4: One comment suggests 

that, while there are firm time limits 

imposed on the requester for 

indemnification or defense, there are no 

corresponding time limits imposed on 

the DoD. 

Response #4: The only major time 

limit imposed on the requester relates to 

a notice of third-party claim. (The 

statute of limitations is statutory and is 

simply restated.) It is true as the 

comment notes that, in some situations, 

the 30-day limit on notices of a thirdparty claim may be too long. The DoD 

believes it best to set a firm limit rather 

than one that is variable for each 

situation and, therefore, unpredictable 

for the requester. The DoD does 

recognize, however, the legitimacy of 

the concern over the length of the 

period and has reduced it to 15 days. 

The DoD does not set a time limit on 

itself to respond to the request because 

of the complexities involved in 

gathering information from the DoD 

Component responsible for the former 

facility, the need to thoroughly and 

accurately assess the legal and factual 

issues, and the need for coordination 

with potentially several divisions 


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1Section 1502(e) does not apply to petroleum or 

petroleum derivatives. 

within the Department of Justice and 

U.S. Attorney’s Offices. The rule is 

changed as noted above. 

Comment #5: One comment notes that 

the requirement that each individual file 

a separate request for indemnification or 

defense could be onerous, particularly 

in the situation of a class action lawsuit. 

Response #5: The rule requires a 

request for indemnification or notice of 

third-party claim from each individual 

requester. The requirement does not 

apply to third-party claimants. There 

can be numerous third-party claimants 

against the requester. But each requester 

must represent itself. The DoD cannot 

be expected to discern the individual 

legal interests of multiple parties to a 

request for indemnification or defense. 

No change is made to the rule. 

Comment #6: One comment suggests 

that the requirement to provide notice of 

a third-party claim should allow more 

informal notice so as to expedite 

delivery of notice and promote the 

likelihood of the DoD being able to 

exercise its right to defend against such 

a claim. 

Response #6: The DoD recognizes the 

benefits of earlier notification (and the 

possibility of some required records not 

being available on short notice) and has 

added a paragraph to § 175.5(g) that 

allows a requester to provide telephone 

notification, subject to subsequent 

written confirmation by the DGC(EE&I). 

Telephone numbers have been included 

in §§ 175.5(a) and 175.6(a). The 

inclusion of telephone numbers may 

also assist in delivery of packages by 

commercial delivery services. The rule 

is changed as noted above. 

Comment #7: One comment suggests 

that § 175.5(d) indicates that, for 

example, a lender who does not own or 

control the site could seek 

indemnification or defense even though 

not eligible under section 330. 

Response #7: While it is difficult to 

see how a lender who does not own or 

control the site would have an interest 

in seeking indemnification, let alone 

defense, section 330 does not appear to 

make such a distinction. The rule 

includes ‘‘lender’’ because ‘‘lender’’ is 

one of those entities eligible under 

section 330. No change is made to the 

rule. 

Comment #8: One comment suggests 

that the definition of ‘‘requester’’ in 

§ 175.3 does not fully consider the 

situation of a subrogee (the draft rule 

incorrectly uses ‘‘subrogee’’ when it 

should use ‘‘subrogor’’ to refer to the 

entity from which the subrogee is taking 

its rights and has been corrected 

accordingly). This is particularly the 

case with the requirements to submit a 

notice of a third-party claim. 

Response #8: Since a request for 

indemnification can be made within 

two years of accrual of the action, it is 

entirely feasible for, e.g., an insurance 

company to make a request for 

indemnification as subrogee of its 

insured. However, it is established law 

that a subrogee can only exercise the 

rights the subrogor itself had. 

Consequently, if a subrogor did not 

comply with the requirements of this 

rule and, in doing so, compromised the 

ability of DoD to defend against the 

claim, the subrogor would have no right 

to indemnification and its subrogee, 

which can only take its rights from the 

subrogor, would likewise have no right 

to indemnification. No change is made 

to the rule except correcting the 

reference from ‘‘subrogee’’ to 

‘‘subrogor’’. 

Comment #9: One comment suggests 

that the definition of ‘‘third-party 

claim’’ should discuss whether a 

citizen’s suit under the environmental 

laws would qualify as a third-party 

claim. 

Response #9: This question is a matter 

that has not been addressed by the 

courts and the DoD is not inclined to 

attempt to resolve it in this rule. No 

change is made to the rule. 

Comment #10: One comment inquires 

as to whether the requirement of 

§ 175.5(d)(4) includes all insurance 

policies such as for workers 

compensation, automobile, errors and 

omissions, and directors and officers. 

Response #10: The experience of DoD 

is that it cannot rely on a requester to 

choose which policies or parts of 

policies should be submitted. Doing so 

does not ensure that DoD will receive all 

relevant documentation. If this 

requirement poses a significant burden 

on a requester, the requester should 

discuss the matter with the DGC(EE&I), 

knowing that any resulting delay will be 

charged against the requester. No 

change is made to the rule. 

Comment #11: One comment suggests 

that § 174.15 of title 32, Code of Federal 

Regulations, Revitalizing Base Closure 

Communities and Addressing Impacts 

of Realignment, be rescinded. 

Response #11: Section 174.15 

contains restrictions on when reference 

may be made to section 330 in base 

closure real property disposal 

documents. This restriction has served 

the disposal process well by eliminating 

disputes over, e.g., deed language that 

frequently was inconsistent with the 

actual terms of section 330. The 

comment does, however, indicate that it 

would be useful to change this proposed 

rule by inserting a cross-reference to 

§ 174.15 noting that nothing in this rule 

alters the provisions of § 174.15. That 

change is made in § 175.2 with the 

addition of a new paragraph (c). 

Legal Authority 

This part is finalized under 10 U.S.C. 

113, 5 U.S.C. 301, section 330 of the 

National Defense Authorization Act for 

Fiscal Year 1993, Public Law 102–484, 

October 23, 1992, 106 Stat. 2371, as 

amended, and section 1502(e) of the 

Floyd D. Spence National Defense 

Authorization Act for Fiscal Year 2001, 

Public Law 106–398, October 30, 2000, 

1014 Stat. 1654A–350, as amended. 

Background 

Sections 330 and 1502(e) provide that, 

subject to certain exceptions set forth in 

the statutes, the Secretary of Defense 

shall hold harmless, defend, and 

indemnify in full certain persons and 

entities that acquire ownership or 

control of, in the case of section 330, 

any military installation closed 

pursuant to a base closure law or, in the 

case of section 1502(e), certain portions 

of the former Naval Ammunition 

Support Detachment on the island of 

Vieques, Puerto Rico (hereinafter 

‘‘Detachment’’), from and against any 

suit, claim, demand or action, liability, 

judgment, cost or other fee arising out 

of any claim for personal injury or 

property damage (including death, 

illness, or loss of or damage to property 

or economic loss) that results from, or 

is in any manner predicated upon, the 

release or threatened release of any 

hazardous substance, pollutant or 

contaminant, or petroleum or petroleum 

derivative 1 as a result of DoD activities 

at any military installation (or portion 

thereof) that is closed pursuant to a base 

closure law or the Detachment. 

(Coverage of pollutants and 

contaminants was added to section 330 

by an amendment contained in the 

National Defense Authorization Act for 

Fiscal Year 1994, Public Law 103–160, 

1002.) They also provide that DoD has 

certain rights in defending third-party 

claims. 

The authority to adjudicate requests 

for indemnification and process 

requests for defense under sections 330 

or 1502(e) has been delegated from the 

Secretary of Defense to the DoD General 

Counsel and re-delegated by the General 

Counsel to the DGC(EE&I). Requests for 

indemnification or defense or notice to 

DoD of a third-party claim must be sent 

to the DGC(EE&I) to be considered. 

The DoD recognizes that some real 

property transfer documents, such as 

deeds and agreements, entered into in 

past years provide that notification 


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under sections 330 or 1502(e) be made 

to, e.g., the local BRAC program office. 

Prior to the publication of this final rule, 

DoD has honored such notifications 

made in conformance with those 

transfer documents. Effective 180 days 

after promulgation of this rule, while a 

requester may continue to provide 

notification in accordance with such 

transfer documents, a requester must 

also comply with the notice 

requirements of this rule in order to 

comply with the requirements of 

sections 330 or 1502(e), particularly 

with regard to when the statutes of 

limitation in sections 330(b)(1) and 

1502(e)(2)(A) begin to run. Nothing in 

this rule should be construed as 

requiring amendment of any such 

transfer documents. 

The United States Court of Appeals 

for the Federal Circuit has interpreted 

the definition of a ‘‘claim for personal 

injury or property damages’’ under 

section 330 to include, under certain 

circumstances, notice from a 

governmental enforcement agency to 

conduct a cleanup. Indian Harbor 

Insurance Co. v. United States, 704 F.3d 

949 (Fed. Cir. 2013). Because such 

notices may constitute a claim under 

section 330, a requester should carefully 

evaluate whether failing to provide 

notice to the Secretary would prevent 

the Secretary from settling or defending 

against a claim. 

The timely and proper filing of a 

request for indemnification or defense 

enables the DGC(EE&I) to perform its 

adjudication function for requests, 

maintain oversight of the 

implementation of sections 330 and 

1502(e), and secure the rights of 

requesters under sections 330 and 

1502(e). Proper notice to DoD of a claim 

from a third-party is essential to allow 

DoD to exercise its right to defend 

against such a claim pursuant to 

sections 330(c) or 1502(e). 

Under sections 330(c)(2) and 

1502(e)(3)(B), the requester must allow 

DoD to defend the claim in order to be 

afforded indemnification for that claim. 

This regulation makes clear that failure 

to notify DoD immediately of receipt of 

any claim could prevent DoD from 

settling or defending that claim, and on 

that basis, DoD may deny 

indemnification. Failure to provide 

necessary documents and access will 

also prevent DoD from exercising its 

right to settle and defend the claim and, 

on that basis, DoD may deny 

indemnification. 

In the context of a claim from a 

governmental enforcement agency or 

third party seeking to require a cleanup 

or response action, failure to notify DoD 

may prevent DoD from exercising its 

right to defend against the claim. If the 

requester undertakes a cleanup or 

response action itself prior to providing 

immediate notice to DoD, the 

requestor’s actions may interfere with 

DoD’s ability to defend against a claim, 

which might result in denial of 

indemnification. 

This final rule does not affect claims 

that are made pursuant to other 

authorities such as under a real property 

covenant contained in a deed in 

accordance with section 120(h) of the 

Comprehensive Environmental 

Response, Compensation, and Liability 

Act of 1980 (CERCLA). 

DoD has received approximately 14 

requests for indemnification since 2006. 

This represents an annual average of 

requests for indemnification of slightly 

more than one per year. DoD cannot 

fully estimate the cost of the current 

process upon requesters because the 

only times it has paid such costs are 

when a request for indemnification has 

been litigated and administrative costs 

paid as part of a settlement. That 

settlement cost, however, includes the 

cost of litigation, which is substantially 

greater than the cost of seeking an 

administrative settlement. 

Administrative Requirements 

A. Executive Order 12866, ‘‘Regulatory 

Planning and Review’’ and Executive 

Order 13563, ‘‘Improving Regulation 

and Regulatory Review’’ 

E.O. 12866 defines ‘‘significant 

regulatory action’’ as one that is likely 

to result in a rule that may: (1) Have an 

annual effect on the economy of $100 

million or more or may adversely affect 

in a material way the economy, a sector 

of the economy, productivity, 

competition, jobs, the environment, 

public health or safety, or State, local, 

or tribal governments or communities; 

(2) create serious inconsistency or 

otherwise interfere with an action taken 

or planned by another agency; (3) 

materially alter the budgetary impact of 

entitlements, grants, user fees, or loan 

programs or the rights and obligations of 

recipients thereof; or (4) raise novel 

legal or policy issues arising out of legal 

mandates, the President’s priorities, or 

the principles set forth in E.O. 12866. 

It has been determined that this rule 

is not a significant regulatory action. 

This rule has not been reviewed by 

OMB under the requirements of these 

Executive Orders. 

B. Executive Order 13771, ‘‘Reducing 

Regulation and Controlling Regulatory 

Costs’’ 

This rule is not an E.O. 13771 

regulatory action because this rule is not 

significant under E.O. 12866. 

C. Regulatory Flexibility Act 

The Regulatory Flexibility Act of 

1980, 5 U.S.C. 601, et seq., requires 

Federal agencies to consider ‘‘small 

entities’’ throughout the regulatory 

process. Section 603 of the Regulatory 

Flexibility Act requires an initial 

screening analysis performance to 

determine whether small entities will be 

adversely affected by the regulation. No 

comments were received relating to the 

requirements of the Regulatory 

Flexibility Act. It has been certified that 

this final rule will not add to the current 

burden for small entities to report their 

activities based on a request for 

indemnification or defense under 

sections 330 or 1502(e). 

D. Paperwork Reduction Act 

The Paperwork Reduction Act of 

1995, 44 U.S.C. 3501, authorizes the 

Director of OMB to review certain 

information collection requests by 

Federal agencies. The recordkeeping 

and reporting requirements of this final 

rule do not constitute a ‘‘collection of 

information’’ as defined in 44 U.S.C. 

3502(3), the Paperwork Reduction Act 

of 1995. 

E. Environmental Justice 

Under E.O. 12898 (59 FR 7629 

(February 11, 1994)), Federal Actions to 

Address Environmental Justice in 

Minority Populations and Low-Income 

Populations, Federal agencies are 

required to identify and address 

disproportionately high and adverse 

human health and environmental effects 

of Federal programs, policies, and 

activities on minority and low-income 

populations. 

Sections 330 and 1502(e) are intended 

to reduce specified risks resulting from 

development of former military land by 

aiding and legally protecting the entities 

that take title to land on closed military 

installations for development purposes. 

Because this rule will equally affect, on 

a national basis, requests for 

indemnification associated with the 

development of land, a disparate impact 

on minority and low-income population 

areas is not expected. 

F. Unfunded Mandates 

Title II of the Unfunded Mandates 

Report Act of 1995 (UMRA), Public Law 

104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 


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Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Rules and Regulations 34475 

and Indian tribal governments and the 

private sector. 

The DoD has determined that this rule 

does not contain a Federal mandate that 

may result in expenditures of $100 

million or more for State, local, and 

Indian tribal governments, in the 

aggregate, or the private sector in any 

one year. Thus, this final rule is not 

subject to the requirements of Section 

202 of the UMRA. 

G. Executive Order 13132, ‘‘Federalism’’ 

It has been determined that this rule 

does not have federalism implications. 

This rule does 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. 

List of Subjects in 32 CFR Part 175 

Indemnification, Claim. 

■ Accordingly, 32 CFR part 175 is 

added to read as follows: 

PART 175—INDEMNIFICATION OR 

DEFENSE, OR PROVIDING NOTICE TO 

THE DEPARTMENT OF DEFENSE, 

RELATING TO A THIRD–PARTY 

ENVIRONMENTAL CLAIM 

Sec. 

175.1 Purpose. 

175.2 Applicability. 

175.3 Definitions. 

175.4 Responsibilities. 

175.5 Notice to DoD relating to a third-party 

claim. 

175.6 Filing a request for indemnification 

or defense. 

Authority: 10 U.S.C. 113, 5 U.S.C. 301, 

section 330 of the National Defense 

Authorization Act for Fiscal Year 1993, 

Public Law 102–484, October 23, 1992, 106 

Stat. 2371, as amended, and section 1502(e) 

of the Floyd D. Spence National Defense 

Authorization Act for Fiscal Year 2001, Pub. 

L. 106–398, October 30, 2000, 1014 Stat. 

1654A–350, as amended. 

§ 175.1 Purpose. 

This part describes the process for 

filing a request for indemnification or 

defense, or providing proper notice to 

DoD, of a third-party claim pursuant to 

section 330 of the National Defense 

Authorization Act for Fiscal Year 1993, 

Public Law 102–484, October 23, 1992, 

106 Stat. 2371, as amended (hereafter 

‘‘section 330’’), or section 1502(e) of the 

Floyd D. Spence National Defense 

Authorization Act for Fiscal Year 2001, 

Public Law 106–398, October 30, 2000, 

1014 Stat. 1654A–350, as amended 

(hereafter ‘‘section 1502(e)’’). This 

process identifies the minimum 

information that a request for 

indemnification or defense or notice to 

DoD of a third-party claim for 

indemnification must include, where 

that information must be sent, how to 

make such a request or provide such a 

notice, the time limits that apply to such 

a request or notice, and other 

requirements. 

§ 175.2 Applicability. 

(a) This part applies to— 

(1) The Office of the General Counsel 

of the Department of Defense and the 

Military Departments. 

(2) Any person or entity making a 

request for indemnification or defense, 

or providing notice to DoD, of a thirdparty claim pursuant to section 330 or 

section 1502(e). 

(b) In the case of a property that is 

subject to an earlier agreement 

containing different notification 

requirements, the requirement for notice 

to the Deputy General Counsel in 

sections 175.5 and 175.6 are in addition 

to those notification requirements. 

(c) Nothing in this part alters the 

provisions of § 174.15 of this title. 

§ 175.3 Definitions. 

Commercial delivery service. Federal 

Express or United Parcel Service, or 

other similar service that provides for 

delivery of packages directly from the 

sender to the recipient for a fee, but 

excluding the United States Postal 

Service (USPS). 

Deputy General Counsel. The Deputy 

General Counsel (Environment, Energy, 

and Installations), Department of 

Defense. 

Received. Actual physical receipt by 

the intended recipient. 

Request. Any request for 

indemnification or defense made to the 

Department of Defense (DoD) by a 

requester pursuant to section 330 or 

section 1502(e). 

Requester. A person or entity making 

a request pursuant to section 330 or 

section 1502(e). When the requester is 

acting by way of subrogation, the 

requester is subject to the same 

requirements and limitations as though 

it were the subrogor. 

Section 330. Section 330 of the 

National Defense Authorization Act for 

Fiscal Year 1993, Public Law 102–484, 

October 23, 1992, 106 Stat. 2371, as 

amended. 

Section 1502(e). Section 1502(e) of the 

Floyd D. Spence National Defense 

Authorization Act for Fiscal Year 2001, 

Public Law 106–398, October 30, 2000, 

114 Stat. 1654A–350. (This provision 

applies only to certain portions of the 

former Naval Ammunition Support 

Detachment on the island of Vieques, 

Puerto Rico.) 

Third-party claim. A claim from a 

person or entity (other than the 

requester) to a requester resulting from 

a suit, claim, demand or action, liability, 

judgment, cost or other fee, demanding, 

seeking, or otherwise requiring that the 

requester pay an amount, take an action, 

or incur a liability for alleged personal 

injury or property damage and such 

payment, action, or liability is eligible 

for indemnification or defense pursuant 

to section 330 or section 1502(e). A 

third-party claim may consist of a 

notice, letter, order, compliance 

advisory, compliance agreement, or 

similar direction from a governmental 

regulatory authority exercising its 

authority to regulate the release or 

threatened release of any hazardous 

substance, pollutant or contaminant, or 

petroleum or petroleum derivative if the 

notice, letter, order, compliance 

advisory, compliance agreement, or 

similar notification imposes, directs, or 

demands requirements for 

environmental actions or asserts 

damages related thereto that are eligible 

for indemnification or defense pursuant 

to section 330 or section 1502(e). 

§ 175.4 Responsibilities. 

(a) The General Counsel of the 

Department of Defense has been 

delegated the authorities and 

responsibilities of the Secretary of 

Defense under section 330 and section 

1502(e), with certain limitations as to redelegation. 

(b) The General Counsel has redelegated the authority and 

responsibility to adjudicate requests for 

indemnification or defense and to 

process notices to DoD of a third-party 

claim under section 330 and section 

1502(e) to the Deputy General Counsel 

or, when the position of Deputy General 

Counsel is vacant, the acting Deputy 

General Counsel. The authority to 

acknowledge receipt of a request has 

been delegated to an Associate General 

Counsel under the Deputy General 

Counsel. 

§ 175.5 Notice to DoD relating to a thirdparty claim. 

(a) Where to file a notice to DoD of a 

third-party claim. (1) Notice to DoD of 

receipt of a third-party claim, or intent 

to enter into, agree to, settle, or solicit 

such a claim, must be received by the 

Deputy General Counsel at the following 

address: Deputy General Counsel, 

Environment, Energy, and Installations, 

1600 Defense Pentagon, Room 3B747, 

Washington, DC 20301–1600, (703–693– 

4895) or (703–692–2287). 

(2) Delivering or otherwise filing a 

notice of a third-party claim with any 

other office or location will not 


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34476 Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Rules and Regulations 

constitute proper notice for purposes of 

this part. Requesters should be aware 

that all delivery services, and 

particularly that of the USPS, to the 

Pentagon can be significantly delayed 

for security purposes and they should 

plan accordingly in order to meet any 

required filing deadlines under this 

part; use of a commercial delivery 

service may reduce the delay. 

(b) Individual notices. A notice to 

DoD of a third-party claim must be filed 

separately for each person or entity that 

is filing the notice. Notices may not be 

filed jointly for a group, a class, or for 

multiple persons or entities. 

(c) Means of filing a notice of a thirdparty claim. A notice of a third-party 

claim must be submitted in writing by 

mail through the USPS or by a 

commercial delivery service. While the 

Deputy General Counsel will 

affirmatively acknowledge receipt of a 

notice of a third-party claim, it is 

recommended that a requester, whether 

using the USPS or a commercial 

delivery service, mail its notice by 

registered or certified mail, return 

receipt requested, or equivalent proof of 

delivery. 

(d) Information to be included in a 

notice to DoD of a third-party claim. A 

notice to DoD of a third-party claim 

must include, at a minimum, the 

following information: 

(1) A complete copy of the third-party 

claim, or, if not presented in writing, a 

complete summary of the claim, with 

the names of officers, employees, or 

agents with knowledge of any 

information that may be relevant to the 

claim or any potential defenses. The 

third-party claim may consist of a 

summons and complaint or, in the case 

of a third-party claim from a 

governmental regulatory authority, a 

notice, letter, order, compliance 

advisory, compliance agreement, or 

similar notification. 

(2) A complete copy of all pertinent 

records, including any deed, sales 

agreement, bill of sale, lease, license, 

easement, right-of-way, or transfer 

document for the facility for which the 

third-party claim is made. 

(3) If the requester is not the first 

transferee from DoD, a complete copy of 

all intervening deeds, sales agreements, 

bills of sale, leases, licenses, easements, 

rights-of-way, or other transfer 

documents between the original transfer 

from DoD and the transfer to the current 

owner. If the requester is a lender who 

has made a loan to a person or entity 

who owns, controls, or leases the 

facility for which the request for 

indemnification is made that is secured 

by said facility, complete copies of all 

promissory notes, mortgages, deeds of 

trust, assignments, or other documents 

evidencing such a loan by the requester. 

(4) A complete copy of any insurance 

policies related to such facility. 

(5) If the notice to DoD of a third-party 

claim is being made by a representative, 

agent, or attorney in fact or at law, proof 

of authority to make the notice on behalf 

of the requester. 

(6) Evidence or proof of any claim, 

loss, or damage alleged to be suffered by 

the third-party claimant which the 

requester asserts is covered by section 

330 or by section 1502(e). 

(7) In the case where a requester 

intends to enter into, agree to, settle, or 

solicit a third-party claim, a description 

or copy of the proposed claim, 

settlement, or solicitation, as the case 

may be. 

(8) To the extent that any 

environmental response action has been 

taken, the documentation supporting 

such response action and its costs 

included in the request for 

indemnification. 

(9) To the extent that any 

environmental response action has been 

taken, a statement as to whether the 

remedial action is consistent with the 

National Oil and Hazardous Substances 

Pollution Contingency Plan (part 300 of 

title 42, Code of Federal Regulations) or 

other applicable regulatory 

requirements. 

(10) A complete copy of any claims 

made by the requester to any other 

entity related to the conditions on the 

property which are the subject of the 

claim, and any responses or defenses 

thereto or made to any third-party 

claims, including correspondence, 

litigation filings, consultant reports, and 

other information supporting a claim or 

defense. 

(e) Entry, inspection, and samples. 

The requester must provide DoD a right 

of entry at reasonable times to any 

facility, establishment, place, or 

property under the requester’s control 

which is the subject of or associated 

with the requester’s notice of third-party 

claim and must allow DoD to inspect or 

obtain samples from that facility, 

establishment, place, or property. 

(f) Additional information. The 

Deputy General Counsel will advise a 

requester in writing of any additional 

information that must be provided to 

defend against a claim. Failure to 

provide the additional information in a 

timely manner may result in denial of 

a request for indemnification or defense 

for lack of information to adjudicate the 

claim. 

(g) When to file a notice to DoD of a 

third-party claim. (1) A requester must, 

within 15 days of receiving a third-party 

claim, file with DoD a notice of such 

claim in accordance with this part. 

Failure to timely file such a notice, if it 

in any way compromises the ability of 

DoD to defend against such a claim 

pursuant to section 330(c) or section 

1502(e)(3), will result in denial of any 

subsequent request for indemnification 

or defense resulting from such a claim. 

Requesters who take action in 

compliance with any such third-party 

claim, or any part of such claim, 

without first providing DoD with a 

notice of such claim in accordance with 

this section do so at their own risk. 

(2) A requester must, at least 30 days 

prior to the earlier of entering into, 

agreeing to, settling, or soliciting a thirdparty claim, file a notice to DoD of such 

intent in accordance with this part. 

Failure to file such a notice will 

compromise the ability of DoD to defend 

against such a claim pursuant to section 

330(c) or section 1502(e)(3) and will 

result in denial of any subsequent 

request for indemnification or defense 

resulting from such a claim. 

(3) A requester may, if it believes 

more immediate notice to DoD is 

desirable or less than all the information 

required by paragraph (d) of this section 

is immediately available, contact the 

Deputy General Counsel using the 

phone numbers in paragraph (a)(1) of 

this section. Any such contact does not 

constitute compliance with the 

requirements of paragraph (g)(1) or (2) of 

this section unless and until the Deputy 

General Counsel subsequently provides 

written confirmation that the notice 

constitutes such compliance. Such 

written confirmation may be provided 

by electronic means. 

(h) No implication from DoD action. 

Any actions taken by DoD related to 

defending a claim do not constitute a 

decision by DoD that the requester is 

entitled to indemnification or defense. 

(i) Notice also constituting a request 

for indemnification or defense. Notice of 

receipt of a third-party claim may also 

constitute a request for indemnification 

or defense if that notice complies with 

all applicable requirements for a request 

for indemnification or defense. 

§ 175.6 Filing a request for indemnification 

or defense. 

(a) Where to file a request for 

indemnification or defense. (1) In order 

to notify DoD in accordance with 

section 330(b)(1) or section 

1502(e)(2)(A), a request for 

indemnification or defense pursuant to 

section 330 or section 1502(e) must be 

received by the Deputy General Counsel 

at the following address: Deputy 

General Counsel, Environment, Energy, 

and Installations, 1600 Defense 

Pentagon, Room 3B747, Washington, DC 


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Federal Register / Vol. 83, No. 140 / Friday, July 20, 2018 / Rules and Regulations 34477 

20301–1600, (703–693–4895) or (703– 

692–2287). 

(2) Delivering or otherwise filing a 

request for indemnification or defense 

with any other office or location will not 

constitute proper notice of a request for 

purposes of section 330(b)(1) or section 

1502(e)(2)(A). Requesters should be 

aware that all delivery services, and 

particularly that of the USPS, to the 

Pentagon can be significantly delayed 

for security purposes and they should 

plan accordingly in order to meet any 

required filing deadlines under this 

part; use of a commercial delivery 

service may reduce the delay. 

(b) When to file a request for 

indemnification or defense. A request 

for indemnification must be received by 

the Deputy General Counsel within two 

years after the claim giving rise to the 

request accrues. A request for defense 

must be received by the Deputy General 

Counsel in sufficient time to allow the 

United States to provide the requested 

defense. 

(c) Means of filing a request for 

indemnification or defense. A request 

for indemnification or defense must be 

submitted in writing by mail through 

the USPS or by a commercial delivery 

service. While the Deputy General 

Counsel will affirmatively acknowledge 

receipt of a request for indemnification 

or defense, it is recommended that a 

requester, whether using the USPS or a 

commercial delivery service, mail its 

request by registered or certified mail, 

return receipt requested, or equivalent 

proof of delivery. 

(d) Individual requests. A request for 

indemnification or defense must be filed 

separately for each person or entity that 

is making the request. Requests may not 

be filed jointly for a group, a class, or 

for multiple persons or entities. 

(e) Information to be included in a 

request for indemnification or defense. 

A request for indemnification or defense 

must include, at a minimum, the 

following information: 

(1) A complete copy of the third-party 

claim, or, if not presented in writing, a 

complete summary of the claim, with 

the names of officers, employees, or 

agents with knowledge of any 

information that may be relevant to the 

claim or any potential defenses. 

(2) A complete copy of all pertinent 

records, including any deed, sales 

agreement, bill of sale, lease, license, 

easement, right-of-way, or transfer 

document for the facility for which the 

request for indemnification or defense is 

made. 

(3) If the requester is not the first 

transferee from DoD, a complete copy of 

all intervening deeds, sales agreements, 

bills of sale, leases, licenses, easements, 

rights-of-way, or other transfer 

documents between the original transfer 

from DoD and the transfer to the current 

owner. If the requester is a lender who 

has made a loan to a person or entity 

who owns, controls, or leases the 

facility for which the request for 

indemnification is made that is secured 

by said facility, complete copies of all 

promissory notes, mortgages, deeds of 

trust, assignments, or other documents 

evidencing such a loan by the requester. 

(4) A complete copy of any insurance 

policies related to such facility. 

(5) If the request for indemnification 

or defense is being made by a 

representative, agent, or attorney in fact 

or at law, proof of authority to make the 

request on behalf of the requester. 

(6) Evidence or proof of any claim, 

loss, or damage covered by section 330 

or by section 1502(e). 

(7) In the case of a request for defense, 

a copy of the documents, such as a 

summons and complaint, or 

enforcement order, representing the 

matter against which the United States 

is being asked to defend. 

(8) To the extent that any 

environmental response action has been 

taken, the documentation supporting 

such response action and its costs 

included in the request for 

indemnification. 

(9) To the extent that any 

environmental response action has been 

taken, a statement as to whether the 

remedial action is consistent with the 

National Oil and Hazardous Substances 

Pollution Contingency Plan (part 300 of 

title 42, Code of Federal Regulations) or 

other applicable regulatory 

requirements. 

(10) A complete copy of any claims 

made by the requester to any other 

entity related to the conditions on the 

property which are the subject of the 

claim, and any responses or defenses 

thereto or made to any third-party 

claims, including correspondence, 

litigation filings, consultant reports, and 

other information supporting a claim or 

defense. 

(f) Entry, inspection, and samples. 

The requester must provide DoD a right 

of entry at reasonable times to any 

facility, establishment, place, or 

property under the requester’s control 

which is the subject of or associated 

with the requester’s request for 

indemnification or defense and must 

allow DoD to inspect or obtain samples 

from that facility, establishment, place, 

or property. 

(g) Additional information. The 

Deputy General Counsel will advise a 

requester in writing of any additional 

information that must be provided to 

adjudicate the request for 

indemnification or defense. Failure to 

provide the additional information in a 

timely manner may result in denial of 

the request for indemnification or 

defense. 

(h) Adjudication. The Deputy General 

Counsel will adjudicate a request for 

indemnification or defense and provide 

the requester with DoD’s determination 

of the validity of the request. Such 

determination will be in writing and 

sent to the requester by certified or 

registered mail. 

(i) Reconsideration. Any such 

determination will provide that the 

requester may ask for reconsideration of 

the determination. Such reconsideration 

shall be limited to an assertion by the 

requester of substantial new evidence or 

errors in calculation. The requester may 

seek such reconsideration by filing a 

request to that effect. A request for 

reconsideration must be received by the 

Deputy General Counsel within 30 days 

after receipt of the determination by the 

requester. Such a request must be sent 

to the same address as provided for in 

paragraph (a)(1) of this section and 

provide the substantial new evidence or 

identify the errors in calculation. Such 

reconsideration will not extend to 

determinations concerning the law, 

except as it may have been applied to 

the facts. A request for reconsideration 

will be acted on within 30 days from the 

time it is received. If a request for 

reconsideration is made, the six month 

period referred to in section 330(b)(1) 

and section 1502(e)(2)(A) will 

commence from the date the requester 

receives DoD’s denial of the request for 

reconsideration. 

(j) Finality of adjudication. An 

adjudication of a request for 

indemnification constitutes final 

administrative disposition of such a 

request, except in the case of a request 

for reconsideration under paragraph (i) 

of this section, in which case a denial 

of the request for reconsideration 

constitutes final administrative 

disposition of the request. 

Dated: July 16, 2018. 

Aaron T. Siegel, 

Alternate OSD Federal Register Liaison 

Officer, Department of Defense. 

[FR Doc. 2018–15487 Filed 7–19–18; 8:45 am] 

BILLING CODE 5001–06–P 


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