Abbreviations CFR Code of Federal Regulations DA Delegated Authority FHA Federal Housing Administration FR Federal Register OMB Office of Management and Budget RHS Rural Housing Service §  Section SFHGLP Single Family Housing Guaranteed Loan Program UMRA Unfunded Mandates Reform Act of 1995 U.S.C. United States Code USDA U.S. Department of Agriculture VA Veterans Affairs Background

The RHS administers the Single-Family Housing Guaranteed Loan Program (SFHGLP) that provides a 90% Loan Note Guarantee to approved lenders in order to reduce the lender's risk of extending loans to low- and moderate-income households in rural areas. The current Agency process requires lenders to submit loan documentation for Agency review and approval at various stages. Lenders submit application and underwriting documentation to the Agency for review before the Agency issues a Conditional Commitment for a guarantee (See 7 CFR 3555.107(f)). After loan closing, lenders submit the closing documentation, certifications, and fees to the Agency for another review before the Agency issues the Loan Note Guarantee (See 7 CFR 3555.107(i) and (j)).

The process can be time-consuming, and given the growing demand for SFHGLP loans, the Agency proposes to change its regulation to streamline the process of approving SFHGLP loans and issuing Loan Note Guarantees.

Under section 201 of the Housing Opportunity Through Modernization Act of 2016 (Pub. L. 114-201), the Congress amended section 502 of the Housing Act of 1949 by adding a new subsection (h) authorizing the Secretary of Agriculture to delegate, in part or in full, the Secretary's guarantee authority to eligible lenders. Therefore, RHS proposes to revise the SFHGLP regulation at 7 CFR part 3555 by adding a section for delegated approval authority to Delegated Lenders. Although subsection (h) of section 502 of the Housing Act of 1949 cites the term “Preferred Lender”, the term “Delegated Lender” will be used for the purpose of this proposal. Currently, the Agency does not delegate approval authority to any lender.

The need for delegated approval authority arises due to issues associated with efficiency for loan approvals. A Delegated Lender would need limited to no Agency involvement in the pre-closing and post-closing Loan Note Guarantee approval process. These changes will accelerate approval processing timeframes to the benefit of applicants, Delegated Lenders, and the Agency. Under the proposed rule, lenders meeting certain criteria may receive delegated lender status that allows the Delegated Lender to approve SFHGLP loans and obtain Loan Note Guarantees with limited to no Agency involvement. Delegated Lenders would not need to submit a request for a Loan Note Guarantee, and the Conditional Commitment request and approval step would be eliminated.

The Department of Housing and Urban Development's Federal Housing Administration's (FHA) and the Department of Veterans Affairs' (VA) insurance and guaranty programs currently have delegated approval authority. FHA's Lender Insurance program, authorized by the National Housing Act section 256 (12 U.S.C. 1715z-21), and VA's Automatic Authority program, authorized by the Servicemen's Readjustment Act of 1944, (Pub. L. 78-346), permit lenders to obtain the insurance or guaranty certificates after underwriting and closing the loans with limited or no involvement of FHA or VA staff. Federal agencies have moved to the delegated process to leverage the processing power and expertise of private-sector lenders and to balance growing programs with decreasing federal administrative resources. The Agency is proposing to mirror the HUD/FHA and VA processes, to the extent feasible, in order to create efficiencies, better serve stakeholders, and reduce the burden on Agency resources.

Under the proposed rule, loan approval and issuance of the Loan Note Guarantee would be delegated to the Delegated Lender. Delegated Lenders would be required to use Agency automated loan underwriting and closing systems to originate, process, close, and service loan applications in accordance with the published regulations and handbook guidance. In this respect, the Delegated Lender will act as the Agency and would require limited to no Agency involvement in the pre-closing loan approval process and post-closing issuance of the Loan Note Guarantee. The Delegated Lender would approve the loan in the Agency's automated system. With delegated authority, Conditional Commitments may not be required, and the provisions of § 3555.107(f) for issuance of the Conditional Commitment may not be applicable. After loan closing, Delegated Lenders would continue to adhere to the proper loan closing procedures under § 3555.107(i) and (j) for issuance of the Loan Note Guarantee. The Agency proposes to remove § 3555.107(i)(5) which provides lenders a self-certification option in lieu of submitting full documentation. Delegated Lenders will retrieve the Loan Note Guarantee from the Agency's automated system, which would have the same force and effect as a Loan Note Guarantee issued directly by the Agency. The Loan Note Guarantee would be supported by the full faith and credit of the United States, as provided in § 3555.108, regardless of whether the Loan Note Guarantee is obtained by a Delegated Lender through the Agency's automated system, or from the Agency directly. Therefore, unless provided otherwise or inapplicable, the Delegated Lender would be responsible for ensuring that both the applicant and the property meet the eligibility requirements and certification for the loan guarantee under subparts C, D, and E of 7 CFR part 3555 and the environmental requirements in § 3555.5.

The Agency proposes to modify the procedures for delegated lenders as follows:

Environmental Reviews —Delegated Lenders would be delegated the authority to perform the functions typically carried out by the Agency in order to comply with the environmental requirement responsibilities in § 3555.5 and 7 CFR part 1970, except in situations with extraordinary circumstances, as defined in 7 CFR 1970.52. Delegated Lenders would be required to be knowledgeable in reviewing and applying categorical exclusions as outlined under § 1970.51 and § 1970.53. While SFHGLP loans are generally considered categorical exclusions for environmental purposes, the Delegated Lender must notify the Agency if there is an extraordinary circumstance. The Agency will then decide the next best course of action. If an environmental assessment or environmental impact statement is necessary and the Delegated Lender prepares such document, the Agency must independently evaluate such document. In addition, Delegated Lenders may seek the assistance of the Agency at any point during the environmental review.

Appraisal Reviews —Agency administrative appraisal reviews under § 3555.107(d)(4) would be inapplicable to loans approved under the proposed model. Delegated Lenders would be responsible for ensuring that appraisal reports meet all requirements under § 3555.107(d).

Application priority processing —The requirements under § 3555.107(a) for prioritizing applications would not apply to Delegated Lenders.

In addition, the proposed rule clarifies a Delegated Lender's responsibilities under the conflict-of interest-provisions at § 3555.8. When a conflict of interest is disclosed by either the borrower or a Rural Development employee as described under § 3555.8, the Delegated Lender is required to document the disclosure in the permanent loan file. Under the proposed rule, a Delegated Lender would still be responsible for documenting any conflict of interest. However, since Delegated Lenders would process pre-closing and post-closing activities with limited to no Agency assistance under the proposed rule, reassignment of the application would not be necessary as described under § 3555.8(d).

This proposed delegated authority model could reduce the pre-closing loan approval processing timeframe by 3 to 4 business days. Currently, approved lenders fully underwrite and approve an application prior to submitting the application to the Agency for a Conditional Commitment. Historically, the average loan processing time for the Agency to review an application and provide a response to the lender is 3 to 4 business days. Under delegated authority, the approved lender will be able to obtain the Conditional Commitment upon completion of their underwriting and approval, eliminating the 3 to 4 business day Agency review time.

In addition, the proposed rule reduces post-closing issuance of the guarantee processing timeframes by an additional 3 to 4 business days. Historically, the Agency has taken on average 3 to 4 business days to process a request for a Loan Note Guarantee. Under delegated authority, the lender will retrieve their own Loan Note Guarantee from the Agency automated systems, eliminating the 3 to 4 business day Agency processing time. Combining the pre-closing loan approval processing timeframe and the post-closing issuance of the guarantee processing timeframe, a total of 6 to 8 business days could be eliminated with delegated authority.

Upon implementation, the Agency would be able to reallocate staff to mission-critical functions, such as portfolio risk management and expanded lender monitoring and oversight. The proposed changes, which align Agency processes with industry standards, create efficiencies and provide faster and better service to low- and moderate-income borrowers, resulting in earlier home move-in dates.

RHS proposes to delegate this type of pre-closing loan approval and post-closing guarantee issuance authority to Delegated Lenders that meet specific requirements for portfolio performance and underwriting capability. The Agency does not propose changing basic lender eligibility requirements, as outlined in 7 CFR 3555.51, “Lender Eligibility,” but rather proposes to add a section to define a Delegated Lender as an entity with delegated authority (DA) approval.

RHS proposes to add § 3555.55, “Delegated Lenders,” to delegate the authority to approve and execute loan guarantees with limited to no involvement of Agency staff. Proposed paragraphs (a) and (b) outline requirements for lenders to qualify for Delegated Lender status, which include meeting the general lender eligibility requirements in § 3555.51, participation in the SFHGLP for at least the previous two years, and higher than average performance standards in delinquency, default, and loss claim rates for that two-year period prior to approval. Delegated Lenders would need to maintain general lender eligibility under § 3555.51 as well as the higher performance metrics in delinquency, loss claim, and default rates to retain delegated lender status, which would be evaluated every two years. The Agency may adjust, modify, or cancel the delegated lender program based on overall program considerations such as budget, program performance, and program integrity. In the event that modifications are made to the performance metrics for new Delegated Lenders, existing Delegated Lenders would retain their status, and the Agency would provide a reasonable timeframe to meet the new performance metrics in order to continue retaining delegated lender status. The Agency would perform a controlled rollout for the delegated authority of Delegated Lenders to foster a smooth implementation. The rollout will be phased-in to allow the Agency some control over the number of loans guaranteed by Delegated Lenders over a period of at least three years after the final rule is published. The top 10 percent performing lenders will be in the first phase of the rollout for participation. The Agency will then evaluate the performance of the process, the efficiency of the process, and necessary adjustments. The Agency will continue to phase in new lenders as the process is refined. The number of lenders approved for delegated lender status will be contingent on the progress of the Agency's systems modifications, budgetary constraints, portfolio performance, and availability of resources required to perform lender oversight and monitoring. Full implementation is expected by the end of the third year.

Proposed paragraphs (a) and (b) outline the conditions under which a lender's delegated status may be removed. As stated in proposed paragraph (a), the Agency would have the right to terminate any lender's delegated status for reasons including, but not limited to, approving loans that do not meet Agency loan program guidelines, entering data into the Agency's automated underwriting system which is not supported by documentation retained by the lender, maintaining a portfolio that does not meet the established delinquency, loss claim, and default rate performance metrics, and an inability to meet the criteria described in § 3555.51, “Lender Eligibility.”

The Agency proposes ongoing monitoring and oversight for Delegated Lenders from two perspectives: (1) Monitoring Performance—regular collection and analysis of loan level data and performance, and (2) Lender Oversight—on-site and off-site reviews and examinations.

Loan level data is collected from lenders each month through the Electronic Status Reporting system. This data is compiled, reviewed, and monitored by the Agency every month to determine portfolio performance as well as risks and trends in delinquency, default, and loss claim rates. This loan level data would be collected and analyzed for Delegated Lenders and provide the Agency with information regarding the performance of Delegated Lenders.

The Agency's Quality Assurance and Lender Oversight Division will institute a regular LO process specifically for Delegated Lenders to ensure adherence to Agency loan program requirements found at 7 CFR 3555 and continuing eligibility for the program. The process will consist of reviews/examinations of multiple elements of the mortgage origination and servicing processes based on the review of a representative sample of loans, financial requirements, and portfolio performance. The Agency will perform these reviews every two years or more frequently, as determined by the Agency, on lenders that originate more than 50 loans and/or service more than 200 loans per year. The Agency would review a stratified random sample of no less than two percent of loan files originated by Delegated Lenders. A report would be provided, and findings and observations would be recorded and reported back to the lender, along with any suggestions for improvement. If necessary, the lender would have the opportunity to use a Corrective Action Plan (CAP) to resolve any deficiencies; they would be counseled, offered training, and given the opportunity to improve. Recurring findings identified through the LO process may result in additional reviews/examinations and may adversely affect their delegated lender status.

To bolster the Agency's efforts to perform robust monitoring and lender oversight across the program (not just for Delegated Lenders), the proposed rule also eliminates the self-certification option at § 3555.107(i)(5). The Agency is unaware of any lenders using the option to self-certify instead of submitting complete loan closing documentation. Furthermore, the Agency has determined that such option would be inappropriate in balancing streamlining of the program with risk mitigation and proposes to eliminate the option so that the Agency would have easier and direct access to loan documents.

The proposed § 3555.55(c)(4) would provide the Agency with the authority to revoke the delegated lender status of those lenders that fail to meet the delegated lender criteria. This revocation is distinct from termination of the program as an approved lender under § 3555.52. However, if the Agency pursues termination of a Delegated Lender's participation under § 3555.52, the Agency need not separately pursue a separate revocation of delegated lender status, as termination from the program would automatically revoke delegated lender status.

Taken together, this proposed rule would continue the Agency's efforts to streamline and improve delivery of the SFHGLP while providing measures to mitigate risk. Agency approval of a lender for Delegated Authority does not create or imply a warranty or endorsement by the Agency of the approved lender, or its employees, nor does it represent a warranty of any service provided by the lender or any employee of the lender.

Stakeholder input is vital to ensure that implementation of the proposed rule would continue to support the Agency's mission, while ensuring that new regulations and policies are reasonable and do not overly burden the Agency's lenders and their customers. Comments must be submitted on or before October 3, 2022 and may be submitted electronically by going to the Federal eRulemaking Portal: http://www.regulations.gov. Details on how to submit comments to the Federal eRulemaking Portal are in the ADDRESSES section of this proposed rule.

The following questions and discussion items are posed to guide stakeholder comments. Where possible, RHS requests that comments include specific suggestions regarding ways to improve the proposal. RHS welcomes pertinent comments that are beyond the scope of these questions.

1. The Agency is proposing a controlled rollout of delegated authority, phasing in Delegated Lenders over a three-year period. The three-year period is intended to ensure the process of adding lenders is done using a controlled method to identify and address any concerns or questions that may arise. Is a three-year rollout period appropriate?

2. The Agency is proposing to define the eligibility criteria for Delegated Lenders to include participation in the SFHGLP for at least the previous two years, 1 as well as higher than average performance standards in delinquency, default, and loss claim rates for the two-year period prior to approval. Are there additional criteria that should be considered?

3. Is it important that Delegated Lenders retain the option to submit loan applications to the Agency for review and approval under the current process, at their discretion?

4. The Agency has identified the following alternatives to the rule:

a. Rather than delegate the complete loan approval process to Delegated Lenders, the Agency could delegate the initial underwriting review and issuance of the Conditional Commitment, leaving the responsibility for issuance of the Loan Note Guarantee with the Agency.

b. The Agency could assign the post-closing issuance of the Loan Note Guarantee to Delegated Lenders, with the initial review, approval, and issuance of the Conditional Commitment remaining an Agency responsibility.

Are there additional alternatives that could be considered? Is there a preference between the process identified in the proposed rule versus the alternatives?

5. The Agency has identified the following benefits to Delegated Lenders, borrowers, and the Agency.

a. A time savings for Delegated Lenders and borrowers, as intervention by the Agency at origination through closing would be limited, resulting in fewer delays experienced through the loan origination process.

b. A cost savings to Delegated Lenders, as several Agency forms would be eliminated from the process.

c. A cost savings to the Agency due to the streamlining of activities, allowing a reallocation of resources to other important initiatives.

Are there additional benefits of implementing this proposed rule that have not been identified?

6. Delegated Lenders will realize a time savings of approximately 3 to 4 business days for Conditional Commitment requests and an additional 3 to 4 business days for Loan Note Guarantee requests. What is the estimated cost savings that will be realized by Delegated Lenders with this reduction in Agency processing time?

7. Consistent with current Agency procedures, the Agency is proposing to review a stratified random sample of two percent of delegated authority loans post-closing to evaluate lender performance. Is two percent a reasonable expectation?

8. Consistent with OMB Circular A-129, the Agency is proposing to review the delegated lender status of participating lenders every two years. Is this a reasonable expectation?

9. The Agency expects to use existing processes and technology systems, with substantial modifications, to implement this proposal. As described in the Regulatory Impact Analysis, the Agency does not anticipate the provisions to results in significant new costs, such as additional training, staff time, or staff hires, for the lender. However, the Agency requests comment on its evaluation of potential costs. In particular, is there any data available regarding the costs of implementing this proposal for the public that the Agency hasn't considered?

10. The Agency's proposal is intended to mirror HUD/FHA and VA processes, to the extent feasible. Are there additional changes that could be made to assist in reconciling these delegated approval processes?

The Housing Opportunity Through Modernization Act of 2016 (Pub. L. 114-201) and Section 510(k) of Title V of the Housing Act of 1949 (42 U.S.C. 1480(k)), as amended, authorizes the Secretary of the Department of Agriculture to promulgate rules and regulations as deemed necessary to carry out the purpose of that title.

Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if a regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. This rule has been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget (OMB).

In accordance with Executive Order 12866, a Regulatory Impact Analysis was completed, outlining the costs and benefits of implementing this program in rural America. For a complete analysis, please see the Regulatory Impact Analysis on http://www.regulations.gov using docket number RHS-21-SFH-0017.

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. Except where specified, all state and local laws and regulations that are in direct conflict with this rule will be preempted. Federal funds carry federal requirements. No person is required to apply for funding under SFHGLP, but if they do apply and are selected for funding, they must comply with the requirements applicable to recipients of SFHGLP federal financial assistance, including all applicable nondiscrimination federal laws and regulations. This rule is not retroactive. It will not affect agreements entered into prior to the effective date of the rule. Before any judicial action may be brought regarding the provisions of this rule, the administrative appeal provisions of 7 CFR part 11 must be exhausted.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for federal agencies to assess the effect of their regulatory actions on state, local, and tribal governments, and the private sector. Under section 202 of the UMRA, the Agency generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “federal mandates” that may result in expenditures to state, local, or tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires the Agency to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the rule.

This proposed rule contains no federal mandates (under the regulatory provisions of Title II of the UMRA) for state, local, and tribal governments, or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

In accordance with the National Environmental Policy Act of 1969, Public Law 91-190, this final rule has been reviewed in accordance with 7 CFR part 1970 (“Environmental Policies and Procedures”). The Agency has determined that (i) this action meets the criteria established in 7 CFR 1970.53(f); (ii) no extraordinary circumstances exist; and (iii) the action is not “connected” to other actions with potentially significant impacts, is not considered a “cumulative action” and is not precluded by 40 CFR 1506.1. Therefore, the Agency has determined that the action does not have a significant effect on the human environment, and therefore, neither an Environmental Assessment nor an Environmental Impact Statement is required.

The policies contained in this rule do not have any substantial direct effect on the states, the relationship between the national government and the states, or the distribution of power and responsibilities among the various levels of government. This rule does not impose substantial direct compliance costs on state and local governments. Therefore, consultation with the states is not required.

Under section 605(b) of the Regulatory Flexibility Act, 5 U.S.C. 605(b), the Agency certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities. The North American Industry Classification System (NAICS) classifies small lenders in the following categories:

This proposed rule affects lenders that utilize the SFHGLP and any potential lenders that may utilize the program in the future. There are approximately 1,864 lenders currently approved to utilize the SFHGLP. The Agency does not maintain data that identifies the number of approved lenders that would be considered small lenders, as defined above. However, it is estimated that less than 3% of approved SFHGLP lenders meet the criteria of a small lender.

The proposed rule is an enhancement to the SFHGLP, providing an opportunity for participating lenders to obtain delegated loan approval authority. Applying to become a Delegated Lender is optional. Small lenders, as described above, will be afforded the same opportunities to become a Delegated Lender as large lenders. Lenders who choose not to pursue delegated authority will continue to operate as they do today.

All lenders are required to maintain a permanent loan file on each individual guaranteed borrower. This will remain a requirement for lenders utilizing delegating authority, as well as those who do not. This is typical for any mortgage loan product and is an action that is completed in a lenders' normal course of business. This requirement is consistent with standard mortgage industry practices and represents no additional burden of recordkeeping placed upon the lender or public.

The qualifying factors involved in becoming a Delegated Lender will be based on a lender's loan performance using the same criteria regardless of the size of the lender. There are no costs assessed to lenders to apply for delegated authority, to continue participation in the program, or to receive Agency training.

The undersigned has determined and certified by signature on this document, that this rule will not have a significant economic impact on a substantial number of small entities, since this rulemaking action does not involve a new or expanded program, nor does it require any more action on the part of a small business than would be required of a large entity.

This program is not subject to the requirements of Executive Order 12372, “Intergovernmental Review of Federal Programs,” as implemented under USDA's regulations at 7 CFR part 3015.

This executive order imposes requirements on RHS in the development of regulatory policies that have tribal implications or preempt tribal laws. RHS has determined that this proposed rule does not have a substantial direct effect on one or more Indian tribe(s) or on either the relationship or the distribution of powers and responsibilities between the Federal Government and Indian tribes. Thus, this proposed rule is not subject to the requirements of Executive Order 13175. If tribal leaders are interested in consulting with RHS on this proposed rule, they are encouraged to contact USDA's Office of Tribal Relations or Rural Development's Native American Coordinator at (720) 544-2911 or AIAN@usda.gov to request such a consultation.

Rural Development has reviewed this proposed rule in accordance with USDA Regulation 4300-4, “Civil Rights Impact Analysis,” to identify any major civil rights impacts the rule might have on program participants on the basis of age, race, color, national origin, sex, disability, or marital or familial status. Based on the review and analysis of the rule and all available data, issuance of this Final Rule is not likely to negatively impact low- and moderate-income populations, minority populations, women, Indian tribes, or persons with disability, by virtue of their age, race, color, national origin, sex, disability, or marital or familial status.

The program affected by this proposed rule is listed in the Assistance Listing (AL) ( formerly Catalog of Federal Domestic Assistance ) Number 10.410, Very Low to Moderate Income Housing Loans (Section 502 Rural Housing Loans).

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), the information collection activities associated with this rule are covered under OMB Control Number 0575-0179. This proposed rule contains no new reporting or recordkeeping requirements that would require approval under the Paperwork Reduction Act of 1995. It is anticipated that Agency forms currently required would be eliminated for Delegated Lenders. As a result, the Agency anticipates a reduction in recordkeeping requirements upon implementation of this rule.

Rural Development is committed to the E-Government Act, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to the maximum extent possible.

In accordance with Federal civil rights laws and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Mission Areas, agencies, staff offices, employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.

In accordance with E.O. 13166, Improving Access to Services for Persons with Limited English Proficiency, program information may be made available in languages other than English. Persons with disabilities who require alternative means of communication to obtain program information ( e.g., Braille, large print, audiotape, American Sign Language) should contact the responsible Mission Area, agency, or staff office; the USDA TARGET Center at (202) 720-2600 (voice and TTY); or the Federal Relay Service at (800) 877-8339.

To file a program discrimination complaint, a complainant should complete a Form AD-3027, USDA Program Discrimination Complaint Form, found online at http://www.ascr.usda.gov/complaint_filing_cust.html, from any USDA office, by calling (866) 632-9992, or by writing a letter addressed to USDA. The letter must contain the complainant's name, address, telephone number, and a written description of the alleged discriminatory action in sufficient detail to inform the Assistant Secretary for Civil Rights (ASCR) about the nature and date of an alleged civil rights violation. The completed AD-3027 form or letter must be submitted to USDA by:

(1) Mail: U.S. Department of Agriculture, Office of the Assistant Secretary for Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250-9410; or

(2) Fax: (833) 256-1665 or (202) 690-7442; or

(3) Email: Program.Intake@usda.gov .

USDA is an equal opportunity provider, employer, and lender.

For the reasons discussed in the preamble, the Agency is proposing to amend 7 CFR part 3555 as follows:

I. Background and Introduction II. Discussion of Proposed Rule III. Public Participation IV. Regulatory Review V. Approval of the Office of the Secretary I. Background and Introduction

The SPR was established by the Energy Policy and Conservation Act (“EPCA”), (Pub. L. 94-163), to store petroleum products to diminish the impact of disruptions on petroleum supplies and to carry out the obligations of the United States under the International Energy Program. (42 U.S.C. 6231 et seq. ) Section 160 of EPCA authorizes the Secretary of Energy to acquire petroleum products for the SPR. Subsequently, the Energy Policy Act of 2005, (Pub. L. 109-58), amended EPCA and directed the Secretary of Energy to develop, with the opportunity for public notice and comment, procedures for the acquisition of petroleum products for the SPR (42 U.S.C. 6240). The principal method for acquiring SPR petroleum products is by purchase, but SPR petroleum may also be acquired via exchange. (42 U.S.C. 6240(a)) On November 8, 2006, and pursuant to EPCA, as amended by the Energy Policy Act of 2005, DOE established procedures for the acquisition of SPR petroleum at 10 CFR part 626. 71 FR 65376 (“2006 final rule”). The 2006 final rule included provisions regarding the direct purchase, exchange, and transfer of royalty oil from the Department of the Interior (“DOI”).

Subsequent to DOE promulgating the 2006 final rule, the Government Accountability Office and the DOI Inspector General published several reports between 2008 and 2009 on the shortcomings of and personnel misconduct related to the royalty-in-kind program, and, as a result, the DOI terminated its royalty-in-kind program in 2010. Then, in 2013, with section 306(a) of the Bipartisan Budget Act of 2013, Congress repealed DOE's authority to conduct SPR acquisitions under the royalty-in-kind program that was incorporated into the 2006 final rule. However, 10 CFR part 626 has not been updated since it was promulgated by DOE in the 2006 final rule, and, thus, does not reflect the intervening changes to the authorizing statutory authority.

Additionally, as DOE has had numerous opportunities to conduct exchanges, mostly in an emergency exchange capacity, DOE is in a position to rewrite these regulations to both provide more clarity and better reflect operational realities.

Lastly, in light of changing petroleum product market dynamics, the Department intends to align the acquisition regulations more closely with the statutory language of 42 U.S.C. 6240 and provide the Secretary with additional flexibility in structuring acquisitions.

The proposed rule would revise 10 CFR part 626 in several respects. First, the proposed rule would update language throughout part 626 to more closely align with the statutory language found in Section 160 of EPCA. This includes updating the definitions for “DOE”, “Exchange”, and “Strategic Petroleum Reserve”, while adding new definitions for “Premium”, “Requestor”, and “Solicitation”. The definition pertaining to “DOI” would also be struck. These changes would provide more clarity and maintain continuity throughout the part while supporting other proposed changes.

Second, because Congress repealed DOE's authority for it in 2013, all references to the royalty-in-kind program would be removed. This includes removal of the procedures for acquisition under the royalty-in-kind program currently at 10 CFR 626.7.

Third, the proposed rule would codify procedures for the exchange of petroleum products at a revised 10 CFR 626.7, as well as add references to “exchange” throughout part 626, as appropriate. These proposed changes are intended to reflect current operational practices of the SPR. Since 1996, in accordance with statutory authority in Sections 159 and 160 of EPCA, DOE has conducted over a dozen emergency exchanges with private industry. In these emergency exchanges, upon request from refiners and verification of the request by DOE, the SPR provides emergency barrels of petroleum product to refiners; in return, the requesting refiners later provide the SPR the original number of barrels plus extra barrels called a “premium.” In addition to the emergency exchanges by request, since 2000, DOE has twice utilized the exchange authority to conduct solicitations for exchange, whereby the general public may bid to contract to accept barrels of SPR petroleum products in the present and return those barrels plus a premium in the future. DOE is proposing to codify these long-standing procedures into the acquisition regulations.

Fourth, the proposed rule would amend 10 CFR 626.5 and 626.6 to increase flexibility for DOE to enter into contracts for the purchase of petroleum products, consistent with the requirements and objectives of section 160 of EPCA. These changes ensure that DOE continues to acquire petroleum products in accordance with the competitive principles of the Federal Acquisition Regulations and the DOE Acquisition Regulations, while providing DOE the flexibility to use either fixed-price or index-priced contracts for future petroleum product acquisitions. DOE is proposing these changes because the current acquisition regulations, including the requirement that DOE acquire oil in accordance with the Federal Acquisition Regulations and the requirement to use a price index to set purchase prices, unnecessarily restrict DOE's flexibility to procure petroleum products using fixed price contracts, notwithstanding the fact that there may be circumstances in which a fixed price acquisition would better meet the statutory objectives of EPCA.

Lastly, the proposed rule would add 10 CFR 626.9 to implement 42 U.S.C. 6240(f). This final proposed change has been included because, while the Department has had the statutory authority to suspend previously announced or contracted acquisitions of petroleum products or divert the injection of petroleum products into the SPR when there is a perceived imminent severe energy supply interruption, to date, this authority has not been incorporated into any existing regulations.

DOE will accept comments, data, and information regarding this NOPR on or before the date provided in the DATES section at the beginning of this proposed rule. Interested parties may submit comments, data, and other information using any of the methods described in the ADDRESSES section at the beginning of this document.

Submitting comments via www.regulations.gov. The www.regulations.gov web page will require you to provide your name and contact information. Your contact information will not be publicly viewable except for your first and last names, organization name (if any), and submitter representative name (if any). If your comment is not processed properly because of technical difficulties, DOE will use this information to contact you. If DOE cannot read your comment due to technical difficulties and cannot contact you for clarification, DOE may not be able to consider your comment.

However, your contact information will be publicly viewable if you include it in the comment itself or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Otherwise, persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.

Do not submit to www.regulations.gov information the disclosure of which is restricted by statute, such as trade secrets and commercial or financial information (hereinafter referred to as Confidential Business Information (“CBI”)). Comments submitted through www.regulations.gov cannot be claimed as CBI. Comments received through the website will waive any CBI claims for the information submitted. For information on submitting CBI, see the Confidential Business Information section below.

DOE processes submissions made through www.regulations.gov before posting. Normally, comments will be posted within a few days of being submitted. However, if large volumes of comments are being processed simultaneously, your comment may not be viewable for up to several weeks. Please keep the comment tracking number that www.regulations.gov provides after you have successfully uploaded your comment.

Submitting comments via email, hand delivery/courier, or postal mail. Comments and documents submitted via email, hand delivery/courier, or postal mail also will be posted to www.regulations.gov. If you do not want your personal contact information to be publicly viewable, do not include it in your comment or any accompanying documents. Instead, provide your contact information in a cover letter. Include your first and last names, email address, telephone number, and optional mailing address. The cover letter will not be publicly viewable as long as it does not include any comments.

Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via postal mail or hand delivery/courier, please provide all items on a CD, if feasible, in which case it is not necessary to submit printed copies. No telefacsimiles (faxes) will be accepted.

Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.

Confidential Business Information. Pursuant to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit via email, postal mail, or hand delivery/courier two well-marked copies: One copy of the document marked “confidential” including all the information believed to be confidential, and one copy of the document marked “non-confidential” that deletes the information believed to be confidential. Submit these documents via email or on a CD, if feasible. DOE will make its own determination about the confidential status of the information and will treat it according to its determination. It is DOE's policy that all comments, including any personal information provided in the comments, may be included in the public docket, without change and as received, except for information deemed to be exempt from public disclosure.

This proposed rule has been determined to not be a significant regulatory action under Executive Order 12866, “Regulatory Planning and Review.” 58 FR 51735 (October 4, 1993). Accordingly, this action was not subject to review under that Executive order by the Office of Information and Regulatory Affairs (“OIRA”) of the Office of Management and Budget (“OMB”).

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires the preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, Proper Consideration of Small Entities in Agency Rulemaking, 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process, 68 FR 7990. The Department has made its procedures and policies available on the Office of General Counsel's website: www.energy.gov/gc/office-general-counsel.

The proposed rule would update the procedures DOE utilizes for the acquisition of petroleum products for the SPR, change definitions, and remove references to the repealed royalty-in-kind program. DOE has reviewed the proposed changes under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. These proposed procedures are procedural and not designed to set the terms or conditions of an acquisition and apply only to entities that are engaged in the sale of petroleum products to the Strategic Petroleum Reserve. Historically, Strategic Petroleum Reserve acquisitions have typically been large volume acquisitions, and usually filled by larger entities operating in the petroleum industry. Therefore, the proposed procedures are unlikely to directly affect small businesses or other small entities. For these reasons, DOE certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities. Accordingly, DOE has not prepared a regulatory flexibility analysis for this rulemaking. DOE's certification and supporting statement of factual basis will be provided to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).

The proposed rule would impose no new information or record keeping requirements. Accordingly, OMB clearance is not required under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ).

Per 10 CFR 1021.410(a), DOE has determined that promulgation of these regulations fall into a class of actions that does not individually or cumulatively have a significant impact on the human environment as set forth under DOE's regulations implementing the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ). Furthermore, this proposed rulemaking is covered under the Categorical Exclusion found in DOE's National Environmental Policy Act regulations at paragraph A6 of appendix A to subpart D, 10 CFR part 1021, which applies to rulemakings that are strictly procedural. Accordingly, neither an EIS nor an EA is required.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 10, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. The Executive order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. DOE examined this proposed rule and determined that it would not preempt State law and would not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of Government. No further action is required by Executive Order 13132.

Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments,” 65 FR 67249, November 9, 2000, applies to agency regulations that have Tribal implications, that is, regulations that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian Tribes, or on the distribution of power and responsibilities between the Federal Government and Indian Tribes. The proposed rule has been analyzed in accordance with the principles and criteria contained in Executive Order 13175. Because this proposed rule would not significantly or uniquely affect the communities of the Indian tribal governments or impose substantial direct compliance costs on them, the funding and consultation requirements of Executive Order 13175 do not apply.

With respect to the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; and (3) provide a clear legal standard for affected conduct, rather than a general standard and promote simplification and burden reduction. Section 3(b) of Executive Order 12988 specifically requires that executive agencies make every reasonable effort to ensure that the regulation: (1) clearly specifies its preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct, while promoting simplification and burden reduction; (4) specifies its retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires executive agencies to review regulations in light of applicable standards in section 3(a) and section 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, the proposed rule would meet the relevant standards of Executive Order 12988.

Title II of the Unfunded Mandates Reform Act of 1995 (“UMRA”) (Pub. L. 104-4) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and tribal governments and the private sector. For a proposed regulatory action likely to result in a rule that may cause the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy (2 U.S.C. 1532(a) and (b)). UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and tribal governments on a proposed “significant intergovernmental mandate” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA (62 FR 12820) (also available at www.energy.gov/gc/office-general-counsel ). DOE examined this proposed rule according to UMRA and its statement of policy and has determined that the proposed rule contains neither an intergovernmental mandate nor a mandate that may result in the expenditure of $100 million or more in any year by State, local, and tribal governments, in the aggregate, or by the private sector. Accordingly, no further assessment or analysis is required under UMRA.

Section 654 of the Treasury and General Government Appropriations Act of 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any proposed rule that may affect family well-being. This proposed rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). DOE has reviewed the proposed rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OIRA and OMB, a Statement of Energy Effects for any proposed significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy, or (3) is designated by the Administrator of OIRA as a significant energy action. For any proposed significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use should the proposal be implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use. This proposed rule would update DOE's acquisition of petroleum product procedures for the SPR to align the regulatory language more closely with existing statutory language and current practice. Accordingly, the proposed rule would also update definitions, as appropriate, for the newly aligned regulatory language. This proposed rule, therefore, does not meet any of the three criteria listed above and would not have a significant adverse effect on the supply, distribution, or use of energy and is therefore not a significant regulatory action. Accordingly, DOE has not prepared a Statement of Energy Effects.

The Secretary of Energy has approved publication of this notice of proposed rulemaking and request for comment.

This document of the Department of Energy was signed on July 21, 2022, by Bradford J. Crabtree, Assistant Secretary for Fossil Energy and Carbon Management, pursuant to delegated authority from the Secretary of Energy. That document with the original signature and date is maintained by DOE. For administrative purposes only, and in compliance with requirements of the Office of the Federal Register, the undersigned DOE Federal Register Liaison Officer has been authorized to sign and submit the document in electronic format for publication, as an official document of the Department of Energy. This administrative process in no way alters the legal effect of this document upon publication in the Federal Register .

For reasons stated in the preamble, DOE proposes to revise part 626 in chapter II of title 10 of the Code of Federal Regulations as set forth below:

On July 19, 2022, the Oregon Symphony notified the Coast Guard that it will be conducting a fireworks display from 9 p.m. to 9:30 p.m. on September 3, 2022. The fireworks are to be launched from a barge in the Willamette River between Marquam Bridge and Hawthorne Bridge, Portland, Oregon. Hazards from firework displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. The Captain of the Port Columbia River (COTP) has determined that potential hazards associated with the fireworks to be used in this display would be a safety concern for anyone within a 300-yard radius of the barge before, during, or after the fireworks display.

The purpose of this rulemaking is to ensure the safety of vessels and the navigable waters within a 300-yard radius of the fireworks barge before, during, and after the scheduled event. The Coast Guard is proposing this rulemaking under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231).

The COTP is proposing to establish a safety zone from 8:30 p.m. to 10 p.m. on September 3, 2022. The safety zone would cover all navigable waters within a 300-yard radius of a barge in the Willamette River located between the Marquam Bridge and Hawthorne Bridge, Portland, OR. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled 9 p.m. to 9:30 p.m. fireworks display. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the size, location, and duration, of the safety zone. The safety zone created by this proposed rule is designed to minimize its impact on navigable waters. This proposed rule will prohibit entry into certain navigable waters of the Willamette River and is not anticipated to exceed two hours in duration. Thus, restrictions on vessel movement within that particular area are expected to be minimal. Moreover, under certain conditions vessels may still transit through the safety zone when permitted by the COTP. The Coast Guard will issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone and the rule allows vessels to seek permission to enter the zone.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132 (Federalism), if it has a substantial direct effect on 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. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

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

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a safety zone lasting 1.5 hours that would prohibit entry within 300 yards of a fireworks barge. Normally such actions are categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A preliminary Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

Submitting comments. We encourage you to submit comments through the Federal Decision Making Portal at https://www.regulations.gov. To do so, go to https://www.regulations.gov, type USCG-2022-0641 in the search box and click “Search.” Next, look for this document in the Search Results column, and click on it. Then click on the Comment option. If you cannot submit your material by using https://www.regulations.gov, call or email the person in the FOR FURTHER INFORMATION CONTACT section of this proposed rule for alternate instructions.

Viewing material in docket. To view documents mentioned in this proposed rule as being available in the docket, find the docket as described in the previous paragraph, and then select “Supporting & Related Material” in the Document Type column. Public comments will also be placed in our online docket and can be viewed by following instructions on the https:// www.regulations.gov Frequently Asked Questions web page. We review all comments received, but we will only post comments that address the topic of the proposed rule. We may choose not to post off-topic, inappropriate, or duplicate comments that we receive.

Personal information. We accept anonymous comments. Comments we post to https://www.regulations.gov will include any personal information you have provided. For more about privacy and submissions to the docket in response to this document, see DHS's eRulemaking System of Records notice (85 FR 14226, March 11, 2020).

For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 165 as follows:

On April 20, 2022, True West LLC with Visit Hood River notified the Coast Guard that the Roy Webster Cross Channel Swim, an annually recurring marine event, will be occurring at Cascade Locks to Stevenson. The event consists of a cross-channel swim from 07:30 to 10:30 a.m. on September 5, 2022. The Captain of the Port Columbia River (COTP) has determined that the potential hazards associated with the swim event would be a safety concern for anyone within the designated area of the safety zone before, during, or after the swim.

The purpose of this rulemaking is to protect personnel, vessels, and the marine environment in these navigable waters before, during, and after the scheduled event. The Coast Guard is proposing this rulemaking under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231).

The COTP is proposing to establish a safety zone from 7 until 11 a.m. on September 5, 2022. The safety zone will cover all navigable waters of the Columbia River between RM 149 and RM 150 near Cascade Locks, Oregon. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled 7:30 a.m. to 10:30 p.m. swim. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB).

This regulatory action determination is based on the size, location, and duration of the safety zone. The safety zone created by this proposed rule is designed to minimize its impact on navigable waters. This proposed rule would prohibit entry into certain navigable waters of the Columbia River and is not anticipated to exceed four hours in duration. Thus, restrictions on vessel movement within that particular area are expected to be minimal. Moreover, under certain conditions, vessels may still transit through the safety zone when permitted by the COTP. The Coast Guard will issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone, and the rule would allow vessels to seek permission to enter the zone.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this proposed rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the proposed rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132 (Federalism), if it has a substantial direct effect on 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. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please call or email the person listed in the FOR FURTHER INFORMATION CONTACT section.

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

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves safety zone lasting 4 hours that would prohibit entry between RM 149 to RM 150 on the Columbia River. Normally such actions are categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A preliminary Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the ADDRESSES section of this preamble. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

Submitting comments. We encourage you to submit comments through the Federal Decision Making Portal at https://www.regulations.gov. To do so, go to https://www.regulations.gov, type USCG-2022-0623 in the search box and click “Search.” Next, look for this document in the Search Results column, and click on it. Then click on the Comment option. If you cannot submit your material by using https://www.regulations.gov, call or email the person in the FOR FURTHER INFORMATION CONTACT section of this proposed rule for alternate instructions.

Viewing material in docket. To view documents mentioned in this proposed rule as being available in the docket, find the docket as described in the previous paragraph, and then select “Supporting & Related Material” in the Document Type column. Public comments will also be placed in our online docket and can be viewed by following instructions on the https://www.regulations.gov Frequently Asked Questions web page. We review all comments received, but we will only post comments that address the topic of the proposed rule. We may choose not to post off-topic, inappropriate, or duplicate comments that we receive.

Personal information. We accept anonymous comments. Comments we post to https://www.regulations.gov will include any personal information you have provided. For more about privacy and submissions to the docket in response to this document, see DHS's eRulemaking System of Records notice (85 FR 14226, March 11, 2020).

For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 165 as follows:

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

Table 1 lists the documents addressed by this proposal with the dates that they were adopted by the local air agency and submitted by the Arizona Department of Environmental Quality (ADEQ).

On December 20, 2021, the submittal for the aerospace operations RACT certification was deemed by operation of law to meet the completeness criteria in 40 CFR part 51 Appendix V. On March 17, 2022, the submittals for the negative declarations and MCAQD Rule 336 were deemed by operation of law to meet the completeness criteria in 40 CFR part 51 Appendix V. The completeness criteria in 40 CFR part 51 Appendix V must be met before formal EPA review.

There are no previous versions of the aerospace operations RACT certification in the MCAQD portion of the Arizona SIP for the 2008 Ozone NAAQS. ADEQ previously submitted a negative declaration for this RACT control techniques guideline (CTG) category, though the EPA disapproved the negative declaration on January 7, 2021 (86 FR 971).

We conditionally approved an earlier version of Rule 336 and RACT demonstration for the Miscellaneous Metal and Plastic Parts Coating (MMPPC) CTG  1 into the SIP on January 7, 2021 (86 FR 971). The MCAQD adopted revisions to the SIP-approved version and negative declarations for subcategories of the CTG on September 1, 2021, and ADEQ submitted them to us on September 17, 2021. In its submittal letter, ADEQ requested that, upon approval of the revised version of Rule 336, the EPA remove the old version of this rule from this SIP. If we take final action to approve the September 1, 2021 version of Rule 336, this version will replace the previously approved version of this rule in the SIP.

Emissions of VOCs contribute to the production of ground-level ozone, smog, and particulate matter (PM), which harm human health and the environment. Section 110(a) of the CAA requires states to submit regulations that control VOC emissions. Sections 182(b)(2) and (f) require that SIPs for ozone nonattainment areas classified as Moderate or above implement RACT for any source covered by a Control Techniques Guidelines (CTG) document and for any major source of VOCs or NO X . The MCAQD is subject to this requirement because it regulates the Maricopa County portion of the Phoenix-Mesa ozone nonattainment area that is currently classified as a Moderate nonattainment area for the 2008 8-hour ozone NAAQS. Therefore, the MCAQD must, at a minimum, adopt RACT-level controls for all sources covered by a CTG document and for all major non-CTG sources of VOCs or NO X within the ozone nonattainment area that it regulates. Any stationary source that emits or has the potential to emit at least 100 tons per year (tpy) of VOCs or NO X is a major stationary source in a Moderate ozone nonattainment area (CAA section 182(b)(2), (f) and 302(j)).

Section III.D of the preamble to the EPA's final rule to implement the 2008 ozone NAAQS  2 discusses RACT requirements. It states in part that RACT SIPs must contain adopted RACT regulations, certifications where appropriate that existing provisions are RACT, and/or negative declarations that no sources in the nonattainment area are covered by a specific CTG. 3 It also provides that states must submit appropriate supporting information for their RACT submissions as described in the EPA's implementation rule for the 1997 ozone NAAQS. 4 On January 7, 2021 (86 FR 971), the EPA partially disapproved MCAQD's negative declarations for RACT categories associated with the following CTG categories:

• “National Emission Standards for Hazardous Air Pollutants for Source Categories: Aerospace Manufacturing and Rework” (59 FR 29216),

• “Control of Volatile Organic Compound Emissions from Coating Operations at Aerospace Manufacturing and Rework Operations” (EPA-453/R-97-004),

• “Control Techniques Guidelines for Miscellaneous Industrial Adhesives” (EPA-453/R-08-005).

The submitted aerospace operations RACT certification provides MCAQD's analyses of its compliance with the CAA section 182 RACT requirements for the 2008 8-hour ozone NAAQS. It addresses the CTG RACT requirements in the “National Emission Standards for Hazardous Air Pollutants for Source Categories: Aerospace Manufacturing and Rework” and “Control of Volatile Organic Compound Emissions from Coating Operations at Aerospace Manufacturing and Rework Operations” CTGs.

MCAQD also adopted and submitted for SIP approval the following rule and negative declarations which address the CTG RACT requirements for the CTG categories for Miscellaneous Industrial Adhesives and MMPPC.

Rule 336 is a local control measure that establishes VOC content limits for surface coating operations and industrial adhesive application in the Maricopa County portion of the Phoenix-Mesa 8-hour ozone nonattainment area. On January 7, 2021 (86 FR 971), the EPA conditionally approved MCAQD Rule 336 and the RACT certification associated with the rule and the CTG categories. The conditional approval was based on a commitment from the State to submit a revised rule that would correct deficiencies in Rule 336 and establish RACT-level controls for sources covered by the CTG source categories:

• Control of Volatile Oranic Emissions from Existing Stationary Sources—Volume II: Surface Coating of Cans, Coils, Paper, Fabrics, Automobiles, and Light-Duty Trucks” EPA-450/2-77-008, May 1977 (cans and fabrics portions only  5 ),

• “Control Technique Guidelines for Miscellaneous Metal and Plastic Parts Coatings,” EPA-450/2-78-15, June 1978, and

• “Control Techniques Guidelines fo Miscellaneous Metal and Plastic Parts Coatings,” EPA-453/R-08-003, September 2008.

The Rule 336 submittal included negative declarations for three subcatgories under the 2008 MMPPC CTG:

• Business Machine Plastic Part Coatings (Table 4 of the 2008 MMPPC CTG),

• Automotive/Transportation Plastic Part Coatings (Table 4 of the 2008 MMPPC CTG),

• Motor Vehicle Materials (Table 6 of the 2008 MMPPC CTG).

Revisions to Rule 336 and the negative declarations adopted on September 1, 2021, corrected the deficiencies. EPA's technical support document (TSD) has more information about the County's rule and the EPA's evaluations thereof.

SIP rules must require RACT for each category of sources covered by a CTG document and for each major source of VOCs or NO X in ozone nonattainment areas classified as Moderate or above (CAA section 182(b)(2)). The MCAQD regulates a Moderate ozone nonattainment area (40 CFR 81.305) so MCAQD's rules must implement RACT.

States should also submit for SIP approval negative declarations for those source categories for which they have not adopted RACT-level regulations (because they have no sources above the CTG-recommended applicability threshold) regardless of whether such negative declarations were made for an earlier SIP. To do so, the submittal should provide reasonable assurance that no sources subject to the CTG requirements currently exist in the portion of the ozone nonattainment area that is regulated by the MCAQD.

The County's analysis must demonstrate that each major source of VOCs or NO X in the ozone nonattainment area is covered by a RACT-level rule. In addition, for each CTG source category, the County must either demonstrate that a RACT-level rule is in place or submit a negative declaration. Guidance and policy documents that we use to evaluate CAA section 182 RACT requirements include the following:

1. “State Implementation Plans; General Preamble for the Implementation of Title I of the Clean Air Act Amendments of 1990,” 57 FR 13498 (April 16, 1992); 57 FR 18070 (April 28, 1992).

2. Memorandum dated May 18, 2006, from William T. Harnett, Director, Air Quality Policy Division, to Regional Air Division Directors, Subject: “RACT Qs & As—Reasonably Available Control Technology (RACT): Questions and Answers.”

3. “Final Rule to Implement the 8-hour Ozone National Ambient Air Quality Standard—Phase 2,” 70 FR 71612 (November 29, 2005).

4. “Implementation of the 2008 National Ambient Air Quality Standards for Ozone: State Implementation Plan Requirements,” 80 FR 12264 (March 6, 2015).

Rules that are submitted for inclusion into the SIP must be enforceable (CAA section 110(a)(2)), must not interfere with applicable requirements concerning attainment and reasonable further progress or other CAA requirements (CAA section 110(l)), and must not modify certain SIP control requirements in nonattainment areas without ensuring equivalent or greater emissions reductions (CAA section 193).

In addition to the documents listed above, guidance and policy documents that we use to evaluate enforceability, stringency, and revision/relaxation requirements include the following:

1. EPA Office of Air Quality Planning and Standards, “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” May 25, 1988 (“the Bluebook,” revised January 11, 1990).

2. EPA Region IX, “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” August 21, 2001 (“the Little Bluebook”).

3. “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume II: Surface Coating of Cans, Coils, Paper, Fabrics, Automobiles, and Light-Duty Trucks” (EPA-450/2-77-008, May 1977).

4. “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume III: Surface Coating of Metal Furniture” (EPA-450/2-77-032, December 1977).

5. “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume V: Surface Coating of Large Appliances” (EPA-450/2-77-034, December 1977).

6. “Control of Volatile Organic Emissions from Existing Stationary Sources—Volume VI: Surface Coating of Miscellaneous Metal Parts and Products” (EPA-450/2-78-15 June 1978).

7. “Control Techniques Guidelines for Miscellaneous Metal and Plastic Parts Coatings” (EPA-453/R-08-003, September 2008).

8. “Control Techniques Guidelines for Metal Furniture Coatings” (EPA-453/R-07-005, September 2007).

9. “Control Techniques Guidelines for Large Appliance Coatings” (EPA 453/R-07-004, September 2007).

10. “Control Techniques Guidelines for Paper, Film, and Foil Coatings” (EPA-453/R-07-003, September 2007).

11. “Control Techniques Guidelines for Miscellaneous Industrial Adhesives” (EPA-453/R-08-005, September 2008).

The submitted rule meets CAA requirements and is consistent with relevant guidance regarding enforceability, RACT, and SIP revisions. The TSD has more information on our evaluation. The submitted negative declarations describe how the MCAQD evaluated whether there were sources emitting VOCs in the CTG subcategories. After review of the emissions inventories list, we agree with the County's assessment determining the negative declarations are correct.

The MCAQD's aerospace operations RACT certification constitutes the County's demonstration that the existing SIP-approved MCAQD Rule 348 “Aerospace Manufacturing and Rework Operations” satisfies CAA section 182 RACT requirements for the 2008 8-hour ozone NAAQS for the CTG category covered by the EPA CTG for Control of Volatile Organic Compound Emissions from Coating Operations at Aerospace and Manufacturing Rework (EPA-453/R-97-004). This conclusion is based on MCAQD's comparison of Rule 348 against the EPA CTG as well as other EPA SIP-approved rules for this category in California, 6 Indiana, 7 and Texas. 8 The VOC limits for various categories in Rule 348 are either equally or more stringent than the CTG, as well as the Indiana and Texas rules. However, the California district rules are more stringent in 16 coating categories and less stringent than Rule 348 in 13 coating categories. Of the 16 coating categories where the California district rules had more stringent VOC limits, MCAQD surveyed affected sources and determined the VOC emissions from those categories were found to be less than 0.5% of each facility's total VOC emissions. Additionally, the County summarized where the rule was consistent with the CTG: VOC control and capture efficiency of at least 85% by weight is an alternative to limiting the VOC limits: solvent cleaning requirements; VOC containment and disposal; exemptions; and definitions. Based on these findings, the EPA concludes that the RACT demonstration satisfies CAA section 182 RACT requirements for the 2008 8-hour ozone NAAQS for the CTG category covered by the EPA CTG for Control of Volatile Organic Compound Emissions from Coating Operations at Aerospace and Manufacturing Rework (EPA-453/R-97-004).

As authorized in section 110(k)(3) of the Act, the EPA proposes to fully approve the submitted rule, negative declarations, and RACT demonstration because they fulfill all relevant requirements. In addition, we propose to convert the partial conditional approval of RACT demonstrations for the 2008 8-hour ozone NAAQS with respect to the VOC source categories covered by Rule 336 and the negative declarations, as found in 40 CFR 52.119 (c)(3), to full approval. We will accept comments from the public on this proposal until September 6, 2022. If we take final action to approve the submitted rule and RACT demonstration, our final action would correct the deficiencies identified in our January 7, 2021 partial approval, partial disapproval, and partial conditional approval of parts of MCAQD's RACT SIP submittal for the 2008 8-hour ozone NAAQS (86 FR 971).

In this rule, the EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference MCAQD Rule 336, “Surface Coating Operations and Industrial Adhesive Application Process,” as described in Section I of this preamble. The EPA has made, and will continue to make, these materials available through https://www.regulations.gov and at the EPA Region IX Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

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

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

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

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

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

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

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

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

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

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

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

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

Table 1 lists the rules proposed for approval with the date they were revised by Maricopa County and the date they were submitted by the Arizona Department of Environmental Quality (ADEQ).

On September 25, 2021, the EPA determined that the submittal for the rules in Table 1 met the completeness criteria in 40 CFR part 51 Appendix V, which must be met before formal EPA review.

We conditionally approved previous versions of Rule 323 and Rule 324 (locally revised on November 2, 2016 and submitted to EPA in 2017  1 ) into the Arizona SIP on July 20, 2020 (85 FR 43692). If we take final action to approve the June 23, 2021 versions of Rule 323 and Rule 324, these versions will replace the previously approved versions of the rules in the SIP.

Emissions of NO X contribute to the production of ground-level ozone, smog and particulate matter (PM), which harm human health and the environment. Emissions of PM, including PM equal to or less than 2.5 microns in diameter (PM 2.5 ) and PM equal to or less than 10 microns in diameter (PM 10 ), contribute to effects that are harmful to human health and the environment, including premature mortality, aggravation of respiratory and cardiovascular disease, decreased lung function, visibility impairment, and damage to vegetation and ecosystems. Section 110(a) of the CAA requires states to submit regulations that control NO X and PM emissions. Any stationary source that emits or has the potential to emit at least 100 tons per year (tpy) of VOCs or NO X is a major stationary source in a Moderate ozone nonattainment area (CAA section 182(b)(2), (f) and 302(j)).

Section III.D of the preamble to the EPA's final rule to implement the 2008 ozone NAAQS  2 discusses RACT requirements. It states, in part, that in order to meet the RACT requirements, SIP revisions implementing these requirements (RACT SIPs) must contain adopted RACT regulations, certifications where appropriate that existing provisions are RACT, and/or negative declarations that no sources in the nonattainment area are covered by a specific control techniques guidelines (CTG). 3 It also provides that states must submit appropriate supporting information for their RACT submissions as described in the EPA's implementation rule for the 1997 ozone NAAQS. 4

Rule 323 regulates combustion equipment at non-power plant facilities and Rule 324 regulates stationary reciprocating internal combustion engines. The EPA's technical support documents (TSDs) have more information about these rules.

Rules in the SIP must be enforceable (see CAA section 110(a)(2)), must not interfere with applicable requirements concerning attainment and reasonable further progress or other CAA requirements (see CAA section 110(l)), and must not modify certain SIP control requirements in nonattainment areas without ensuring equivalent or greater emissions reductions (see CAA section 193).

Generally, SIP rules must require RACT for each major source of NO X in ozone nonattainment areas classified as Moderate or above (see CAA sections 182(b)(2) and 182(f)). The MCAQD regulates a portion of the Phoenix-Mesa ozone nonattainment area which is classified as Moderate for the 2008 8-hour ozone national ambient air quality standard (40 CFR 81.303). Maricopa County's “Analysis of Reasonably Available Control Technology For The 2008 8-Hour Ozone National Ambient Air Quality Standard (NAAQS) State Implementation Plan (RACT SIP),” adopted December 5, 2016, submitted June 22, 2017 (the “2016 RACT SIP”), found that there were major sources of NO X within the Maricopa County portion of the Phoenix-Mesa nonattainment area subject to the County's regulations. Accordingly, these rules must establish RACT levels of control for applicable major sources of NO X .

The EPA's previous rulemaking on the 2017 versions of Rule 323 and Rule 324 found several deficiencies, which precluded full approval of these SIP revisions. Commitments from Maricopa County and ADEQ to resolve the approvability issues allowed the EPA to issue conditional approvals of these revisions to the Arizona SIP as provided under section 110(k)(4) of the CAA. The deficiencies in the 2017 submittal that Maricopa County and ADEQ committed to resolve are listed below. We further explain the deficient provisions in these rules in the TSDs.

a. Emergency fuel use exemptions in Section 104 were not adequately constrained, and had unclear language that could result in unintended emissions.

b. Burner maintenance requirements in section 304.1.a did not meet RACT, as other jurisdictions regulating units in this size category are able to achieve numeric limits or have more stringent tuning requirements.

c. The NO X limits of 42 ppmv for gas fuel-fired operations and 65 ppmv for liquid fuel-fired operations for non-turbine combustion equipment in this rule were not consistent with limits found in other jurisdictions and did not meet RACT.

d. Section 306 allowed for operators to comply with the emission limits in this rule by installing an Emission Control System (ECS), but the effectiveness of such a system in meeting the applicable emission standards was unknown without a compliance determination requirement (which in Section 503 only applies to Sections 301-304, and only for units larger than 100 million Btu/hr).

e. The operations and maintenance plan requirements were only approved by the Control Officer in Section 306.3. This constituted unacceptable director's discretion.

f. Section 503.2 specified that boilers larger than 100 MMBtu/hr must source test triennially, but did not describe a testing frequency for other units.

g. Section 200 did not include a definition for “boiler,” which is used throughout this rule and in the context of definitions for “annual capacity factor,” “steam generating unit,” and others, nor is the term defined in Maricopa's Rule 100 General Provisions and Definitions. Section 200 also did not include a definition for “continuous emissions monitoring system.”

a. The Rule's structure for applicability and emission limits did not clearly outline RACT limits for all applicable IC engines. Engines that were subject to similar Federal requirements in the NSPS and NESHAP could be exempt from this rule's RACT limits.

b. The Rule only applied to engines rated greater than 250 bhp, and to engines greater than 50 bhp only when aggregated at a facility operating engines with a combined bhp rating of greater than 250 bhp.

c. The Rule allowed for excessive flexibility in the treatment of replacement engines. Emergency engines that serve as backups to replace non-emergency engines may do so until the non-emergency engine is repaired, but this time span was unbounded, and such engines may operate above RACT limits. Rule provisions also allowed for engines that are deemed equivalent or identical to replace existing engines to be treated the same as the engine being replaced, but there were no requirements for replacement engines to quantify emissions equivalency or reductions.

d. The Rule did not specify a compliance determination interval for engines, beyond the Control Officer's discretion.

In our July 20, 2020 (85 FR 43692) final rule promulgating our conditional approval of Rules 323 and 324, the EPA also finalized disapproval of the 2017 revision to Rule 322 regulating power plant combustion sources which also must implement RACT for major sources of NO X . Our conditional approvals and disapproval of these rules led to our subsequent disapproval of the County's demonstration for the County's 2008 8-hour ozone RACT SIP on January 7, 2021 (86 FR 971), which initiated offset sanctions to commence 18 months after the effective date of that rulemaking (February 8, 2021), and highway sanctions and a Federal Implementation Plan to be due 24 months after the effective date, under CAA sections 110(k)(3) and 301(a). The MCAQD must resolve the identified deficiencies in all of the associated rules in order for the EPA to determine that that the RACT requirement is met, and to turn off these penalty clocks.

Guidance and policy documents that we used to evaluate enforceability, revision/relaxation and rule stringency requirements for the applicable criteria pollutants include the following:

1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook, revised January 11, 1990).

2. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook).

3. “Alternative Control Techniques Document—NO X Emissions from Stationary Gas Turbines,” EPA 453/R-93-007, January 1993.

4. “Alternative Control Techniques Document—NO X Emissions from Industrial, Commercial & Institutional Boilers,” EPA 453/R-94-022, March 1994.

5. “Alternative Control Techniques Document—NO X Emissions from Stationary Reciprocating Internal Combustion Engines,” EPA 453/R-93-032, July 1993.

6. “De Minimis Values for NO X RACT,” Memorandum from G. T. Helms, Group Leader, Ozone Policy and Strategies Group, U.S. EPA, January 1, 1995.

7. “Cost-Effective Nitrogen Oxides (NO X ) Reasonably Available Control Technology (RACT),” Memorandum from D. Ken Berry, Acting Director, Air Quality Management Division, U.S. EPA, March 16, 1994.

We believe that these revisions to Rules 323 and 324 meet CAA requirements, and address the conditional approval deficiencies we identified in our 2020 rulemaking. Our TSDs contain more information about how the revised rules meet the commitments.

The revisions are otherwise consistent with relevant guidance regarding enforceability, RACT, and SIP revisions. The TSDs have more information on our evaluations on these factors for each rule. On February 8, 2022 (87 FR 7069) we proposed approval for MCAQD Rule 322 to replace the SIP-approved version of that rule, and which would address our previous disapproval. Therefore, we find that all three rules regulating major sources of NO X in Maricopa County meet the applicable CAA requirements and include requirements that are consistent with RACT for NO X sources. Based on this finding, the EPA concludes that the submitted rules satisfy CAA section 182 RACT requirements for the 2008 8-hour ozone NAAQS for major sources of NO X .

As authorized in section 110(k)(3) of the Act, the EPA proposes to fully approve the submitted Rules 323 and 324 because they fulfill all relevant requirements. In addition, we propose to convert the partial conditional approval of RACT demonstrations for the 2008 8-hour ozone NAAQS with respect to Rules 323 and 324 as found in 40 CFR 52.119(c)(2), to full approval. We will accept comments from the public on this proposal until September 6, 2022. If we take final action to approve the submitted rules, our final action would correct the deficiencies identified in our January 7, 2021 partial approval, partial disapproval, and partial conditional approval of the RACT demonstration as they relate to major sources of NO X in MCAQD's RACT SIP submittal for the 2008 8-hour ozone NAAQS (86 FR 971).

In this rule, the EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by reference the rules identified above in sections I.A, I.B. and I.C of this preamble. The EPA has made, and will continue to make, these materials available through https://www.regulations.gov and at the EPA Region IX Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

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

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

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

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

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

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

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

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

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

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

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

Written comments on this proposed supplementary rule should be specific, confined to issues pertinent to this proposed supplementary rule, and explain the reason for any recommended change. Where possible, comments should reference the specific section or paragraph of this proposed supplementary rule the comments are addressing. The BLM will consider comments received before the end of the comment period (see DATES ), including those postmarked before the deadline and delivered to the address listed earlier (see ADDRESSES ). Comments, including your name, street address, phone number, and other personally identifiable information included in the comment will be available for public review during regular business hours (8 a.m. to 4:30 p.m. local time Monday through Friday, except on Federal holidays) in the Missoula Field Office. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. While you can ask in your comment to withhold your personal identifying information from public review, we cannot guarantee we will be able to do so.

The Missoula Field Office completed an RMP covering approximately 167,000 acres of public lands within its boundaries in January 2021. The RMP is available at https://eplanning.blm.gov/eplanning-ui/project/58107. These public lands are in Missoula, Granite, and Powell Counties in western Montana. The Missoula Field Office needs to adopt this proposed supplementary rule to implement decisions in the RMP. The supplementary rule would allow enforcement of these decisions and would protect natural resources and public health and safety.

The BLM included the proposed supplementary rule in the draft RMP and draft environmental impact statement (EIS), which were available for a 60-day public comment period following publication of a notice in the Federal Register (84 FR 22513, May 17, 2019). The BLM again included the draft supplementary rule in the final EIS, which was subject to a 30-day public protest period following publication of a notice in the Federal Register (85 FR 8607, February 14, 2020).

The BLM received no public comments on this proposed supplementary rule during either of these public engagement periods.

This proposed supplementary rule would apply to public lands and BLM facilities managed by the Missoula Field Office.

The proposed rule conforms with management decisions contained in the Missoula RMP (2021). The focus of an RMP is to guide the management of resources for both protection and utilization, and to address issues related to public health and safety. The RMP includes decisions concerning restrictions, prohibitions, and allowable uses to address identified issues or achieve management goals and objectives. For these decisions to be effectively implemented, enforcement is often needed, first to ensure the management decision is properly understood and followed and second to provide for civil and criminal penalties should these restrictions and prohibitions not be followed.

Although many management decisions can be implemented through existing laws and regulations, often unique and site-specific restrictions and prohibitions need to be clearly defined for ease of understanding and clarity as described further below. The BLM's tools to achieve this understanding and clarity are closure and restriction orders, supplementary rules, and special rules.

Specifically, this proposed supplementary rule for the Missoula RMP includes:

• Four restrictions that would apply to all public lands and facilities managed by the BLM Missoula Field Office. These restrictions are intended to promote public safety, reduce user conflicts and safety hazards on public lands, and prevent resource damage. A prohibition on burning treated lumber and wood materials containing nails and screws is needed because such activity not only leaves garbage on public lands but could also lead to vehicle tire damage. Limiting the use of airsoft and paintball guns would reduce the number of false alarms to law enforcement about the use of “guns” in highly visited areas. Creating a rule to limit memorials on public lands would give managers the flexibility to decide the appropriate uses of public lands as well as reduce conflicts and resource damage. The intent of the 72-hour limit on unattended personal property is to curb transient camps from forming, along with any associated garbage that may accumulate.

• The proposed supplementary rule's provisions for the Limestone Cliffs Special Recreation Management Area (SRMA) are needed to protect the unique geological feature of the limestone cliffs, which are an integral part of the SRMA, and to provide for public safety while rock climbing along the cliffs.

• The proposed supplementary rule's provisions in Bear Creek Flats would supplement the existing supplementary rule, finalized in March 2004 (69 FR 10743), for the Blackfoot River, which established consistency with the Montana Department of Fish, Wildlife and Parks' Blackfoot River Recreation Corridor rules. The proposed Bear Creek Flats provisions would not replace the existing rule; rather, they would expand the existing rule to include the Bear Creek Flats acquisition.

• The proposed supplementary rule includes two new restrictions for lands within the Blackfoot SRMA: (1) no jumping off any bridges along the Blackfoot River corridor, which is intended to enhance public safety for all recreational river users; and (2) time restrictions for day-use sites, from 10 p.m. to 5 a.m., thereby prohibiting camping at day-use-only sites.

• The proposed supplementary rule's provisions in the Dupont Acquired Lands area are needed to be consistent with conditions the BLM agreed to when it acquired the area via donation. These conditions are specified in the Dupont Conservation Easement signed in April 1997. Although the BLM has complied with these conditions since the acquisition, this supplementary rule would enable the BLM to enforce the conditions.

• The proposed supplementary rule's provisions for Sperry Grade are necessary to enforce a seasonal closure on human entry to the Sperry Grade area, which would be consistent with the Montana Department of Fish, Wildlife and Parks' closure-to-human-entry rule for the adjacent Blackfoot-Clearwater Game Range. The purpose of the seasonal closure is to protect the elk and elk winter range. When the BLM acquired the Sperry Grade in 1992, the BLM decided, informed by an environmental assessment, that the grade would be managed similarly to the Blackfoot-Clearwater Game Range, including closing it to human entry during the winter. This proposed supplementary rule would make that seasonal closure on the Sperry Grade enforceable.

• The proposed supplementary rule's provisions for Garnet Ghost Town would help reduce threats to the fragile late 19th century buildings and artifacts that comprise the popular tourist area.

The authority for this supplementary rule is set forth at sections 303 and 310 of the Federal Land Policy and Management Act, 43 U.S.C. 1733 and 1740. The BLM is proposing this supplementary rule under the authority of 43 Code of Federal Regulations (CFR) 8365.1-6, which allows BLM State Directors to establish supplementary rules for the protection of persons, property, and public lands and resources. This provision allows the BLM to issue rules of less than national effect by publishing the rules in the Federal Register , without codifying them in the CFR.

This proposed supplementary rule is not a significant regulatory action and is not subject to review by the Office of Management and Budget under Executive Order 12866. The proposed supplementary rule would not have an effect of $100 million or more on the economy and would not adversely affect in a material way productivity, competition, jobs, the environment, public health or safety, or State, local or Tribal governments or communities. The proposed supplementary rule would not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency. The proposed supplementary rule would not materially alter the budgetary effects of entitlements, grants, user fees, or loan programs, or the rights or obligations of their recipients, nor does it raise novel legal or policy issues. The proposed supplementary rule would merely impose limitations on certain activities on certain public lands to protect natural resources and human health and safety.

The BLM analyzed this proposed supplementary rule's requirements in the EIS associated with the Missoula RMP.

The BLM included the proposed supplementary rule in the draft RMP and draft EIS, which were available for a 60-day public comment period. The BLM again included the draft supplementary rule in the final EIS, which was subject to a 30-day public protest period. The BLM received no comments on the proposed rule's requirements during either of the public engagement periods.

Congress enacted the Regulatory Flexibility Act of 1980 (RFA), which requires a regulatory flexibility analysis if a rule would have a significant economic impact, either detrimental or beneficial, on a substantial number of small entities. This proposed supplementary rule would have no effect on business entities of any size. The proposed supplementary rule would merely impose reasonable restrictions on certain activities on certain public lands to protect natural resources and the environment and human health and safety. Therefore, the BLM certifies under the RFA that this proposed supplementary rule would not have a significant economic impact on a substantial number of small entities.

This proposed supplementary rule is not a “major rule” as defined at 5 U.S.C. 804(2). The proposed supplementary rule would merely impose reasonable restrictions on certain recreational activities on certain public lands to protect natural resources, the environment, and human health and safety. The proposed supplementary rule would not:

(1) Have an annual effect on the economy of $100 million or more;

(2) Cause a major increase in costs or prices for consumers, individual industries, geographic regions, or Federal, State, or local agencies; or

(3) Have significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of U.S.-based enterprises to compete with foreign based enterprises in domestic and export markets.

This proposed supplementary rule would not impose an unfunded mandate on State, local, or Tribal governments or the private sector of more than $100 million per year; nor would it have a significant or unique effect on State, local, or Tribal governments or the private sector. The proposed supplementary rule would merely impose reasonable restrictions on certain recreational activities on certain public lands to protect natural resources, the environment, and human health and safety. Therefore, the BLM is not required to prepare a statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq. ).

This proposed supplementary rule would not constitute a government action capable of interfering with constitutionally protected property rights. The proposed supplementary rule would not address property rights in any form and would not cause the impairment of constitutionally protected property rights. Therefore, the BLM has determined that this proposed supplementary rule would not cause a “taking” of private property or require further discussion of takings implications under this Executive order.

This proposed supplementary rule would not have a substantial direct effect on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, the BLM has determined that the proposed supplementary rule would not have sufficient federalism implications to warrant preparation of a federalism assessment.

Under Executive Order 12988, the BLM has determined that this proposed supplementary rule would not unduly burden the judicial system and that it meets the requirements of sections 3(a) and 3(b)(2) of Executive Order 12988.

In accordance with Executive Order 13175, the BLM has found that this proposed supplementary rule does not include policies that have Tribal implications and would have no bearing on trust lands or on lands for which title is held in fee status by Indian Tribes or U.S. Government-owned lands managed by the Bureau of Indian Affairs.

In developing this proposed supplementary rule, the BLM did not conduct or use a study, experiment, or survey requiring peer review under the Information Quality Act (Section 515 of Pub. L. 106-554).

This proposed supplementary rule would not comprise a significant energy action. The proposed supplementary rule would not have an adverse effect on energy supply, production, or consumption and would have no connection with energy policy.

In accordance with Executive Order 13352, the BLM has determined that this proposed supplementary rule would not impede facilitating cooperative conservation; would take appropriate account of and consider the interests of persons with ownership or other legally recognized interests in land or other natural resources; would properly accommodate local participation in the Federal decision-making process; and would provide that the associated programs, projects, and activities are consistent with protecting public health and safety.

This proposed supplementary rule does not contain information collection requirements that the Office of Management and Budget must approve under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3521.

The principal author of this proposed supplementary rule is Erin Carey, Field Manager, BLM Missoula Office.

For the reasons stated in the preamble, and under the authority of 43 U.S.C. 1733(a) and 1740, and 43 CFR 8365.1-6, the State Director proposes a supplementary rule for public lands and facilities in the Missoula Field Office.

As used in this Supplementary Rule, the term:

Airsoft and paintball activities means any recreational activity that involves the use of replica firearms to fire non-lethal, plastic or form pellets, or paint-laden capsules, using compressed gas or electric and/or spring driven pistons. Such activities may include shooting targets or games/combat situations involving multiple people.

Firearms means any weapon capable of firing a projectile, including but not limited to a rifle, shotgun, handgun, BB-gun, pellet gun, or paintball gun.

Public lands means any lands owned by the United States and administered by the Secretary of the Interior through the Bureau of Land Management (BLM) without regard to how the United States acquired ownership. This includes paved or unpaved parking lots or other paved or unpaved areas where vehicles are parked or areas where the public may drive a motorized vehicle, paved or unpaved roads, routes, or trails.

1. You must not burn treated lumber and woody materials containing hardware (such as nails and screws) on public lands unless approved by the authorized officer.

2. You must not:

a. Use airsoft guns and paintball guns across any designated route of travel; across any body of water, including flowing rivers and streams, lakes, and ponds; or within 150 yards of any man-made object, structure, camp, or dwelling, unless such structure is specifically designed and permitted for use in those activities;

b. Use anything other than biodegradable ammunition in airsoft and paintball guns; or

c. Leave behind debris associated with the use of airsoft and paintball guns after completion of those activities in areas where airsoft and paintball guns are allowed.

3. You must not establish or erect a permanent or semi-permanent symbol, shrine, placard, or other structure on public lands without prior written authorization from the BLM.

4. You must not leave personal property unattended for 72 hours or longer without prior authorization from the BLM. After that time, it is deemed abandoned and can be duly removed and disposed of by the BLM, or any person acting on its behalf.

5. Prohibited Acts within the Sperry Grade Area

To be consistent with Montana Fish and Wildlife and Parks management of the Blackfoot-Clearwater Game Range, you must not enter the BLM-administered public lands in the Sperry Grade area from November 11 to May 14 of each year.

6. Prohibited Acts within the Dupont Acquired Lands

a. You must not camp outside of designated sites or areas.

b. You must not light or maintain a warming fire or campfire.

c. You must not operate a motor vehicle within the Dupont Acquired Lands unless for administrative purposes upon approval by the Missoula field manager.

d. You must not collect firewood except for predetermined authorized use established by the Missoula field manager.

e. You must not discharge a firearm or projectile (except for legal game hunting purposes as established by the Montana Department of Fish, Wildlife and Parks) or engage in other recreational shooting including, but not limited to, plinking, target shooting, or shooting varmints.

7. Prohibited Acts within the Bear Creek Flats

a. You must not camp outside of designated sites or areas.

b. You must not light or maintain a fire except in designated areas or government-installed fire rings.

c. You must not collect firewood except for use onsite. You may only burn dead and down wood.

d. You must not discharge a firearm or projectile (except for legal game hunting purposes as established by the Montana Department of Fish, Wildlife and Parks) or engage in other recreational shooting including, but not limited to, plinking, target shooting, or shooting varmints.

8. Prohibited Acts within Garnet Ghost Town

a. You must not use any device for detecting metal, except when allowed by permit.

b. You must not camp unless permitted by an authorized officer.

c. You must not discharge firearms, weapons, fireworks, or any projectile, or engage in other recreational shooting including, but not limited to, plinking, target shooting, or shooting varmints.

d. You must not bring an animal into the area unless the animal is on a leash that is not longer than 6 feet and is secured to an object or under the control of a person or is otherwise physically restrained at all times.

e. You must not light or maintain a fire except in designated fire rings established by the government.

f. You must not smoke in the buildings or within 10 feet of any building.

9. Prohibited Acts within Blackfoot Special Recreation Management Area (SRMA)

a. You must not occupy the following day-use sites between the hours of 10 p.m. and 5 a.m.: Daigles Eddy Day Use Site, Sheep Flats Day Use Site, Thibodeau Rapids Day Use Site, Whitaker Bridge Day Use Site, Red Rock Day Use Site, Belmont Day Use Site, and River Bend Day Use Site.

b. You must not jump from any bridge over the Blackfoot River.

10. Prohibited Acts within Limestone Cliffs Area

a. You must not install new, permanent climbing hardware for new or existing routes unless approved by the authorized officer.

b. You must not discharge a firearm or projectile (except for legal game hunting purposes as established by the Montana Department of Fish and Wildlife and Parks) or engage in other recreational shooting including, but not limited to, plinking, target shooting, or shooting varmints.

c. You must not bring an animal into the area unless the animal is on a leash that is not longer than 6 feet and is secured to an object or under the control of a person or is otherwise physically restrained at all times.

The following persons are exempt from this supplementary rule: any Federal, State, local, or military employees acting within the scope of their official duties; members of any organized rescue or fire fighting force performing an official duty; and persons who are expressly authorized or approved by the BLM.

Any person who violates any part of this supplementary rule may be tried before a U.S. Magistrate and fined in accordance with 18 U.S.C. 3571, imprisoned for no more than 12 months under 43 U.S.C. 1733(a) and 43 CFR 8360.0-7, or both. In accordance with 43 CFR 8365.1-7, State or local officials may also impose penalties for violations of Montana law.

This is a summary of the Commission's Further Notice of Proposed Rulemaking adopted on July 14, 2022, and released on July 15, 2022. A full-text copy of this document may be obtained at the following internet address: https://www.fcc.gov/document/fcc-proposes-updated-rules-eliminate-access-arbitrage-0.

1. The access charge regime was originally designed to compensate carriers for the use of their networks by other carriers. It also helped ensure that people living in rural areas had access to affordable telephone service through a system of implicit subsidies. The key to this system was the charges IXCs were required to pay to LECs for access to their networks—particularly the high charges IXCs had to pay rural LECs to terminate calls to rural customers. In 1996, Congress directed the Commission to eliminate these implicit subsidies—a process the Commission has pursued by steadily moving access charges to a bill-and-keep framework. As part of the ongoing transition to bill-and-keep, the Commission has capped most access charges and moved terminating end-office charges and some tandem switching and transport charges to bill-and-keep.

2. Arbitrage schemes take advantage of relatively high access charges, particularly for the remaining terminating tandem switching and transport services that have not yet transitioned to bill-and-keep. Switched access charges were originally established based on the costs of providing service and normal call volumes. These rates were subsequently capped and are no longer based on actual costs or actual usage and therefore no longer decrease when traffic volumes increase. Some LECs devised business plans to exploit this fact by artificially stimulating terminating call volumes through arrangements with entities that offer high-volume calling services. The resulting high call volumes generate revenues that far exceed the costs that the terminating tandem switching and tandem switched transport charges are designed to cover.

3. “Free” conference calling, chat lines, and certain other services accessed by dialing a domestic telephone number are all types of calling services that can be, and are, used to artificially increase call volumes. The terminating switched access charges, however, were intended to allow LECs to recover the costs of operating their networks, not to allow LECs to subsidize “free” conference calling, chat line, and similar “free” services offered by the LECs' end-user customers. IXCs nonetheless have no choice but to carry traffic to these high-volume calling services and pay the tariffed access charges to the terminating LECs or the Intermediate Access Providers the LECs choose, inefficiently transferring revenues from IXCs to the traffic stimulators that greatly exceed the cost these termination charges are intended to cover. As a result, terminating tandem switching and tandem switched transport charges that these high-volume calls generate are shared by all of the IXC's customers, who collectively fund the “free” services offered by high-volume calling service providers, whether the IXC customers use those services or not.

4. In the 2011 USF/ICC Transformation Order, the Commission adopted rules identifying rate-of-return LECs and competitive LECs engaged in access stimulation and requiring that such LECs lower their tariffed access charges. The 2011 rules defined “access stimulation” as occurring when two conditions are satisfied: (1) the rate-of-return LEC or competitive LEC has entered into an access revenue sharing agreement that, “over the course of the agreement, would directly or indirectly result in a net payment to the other party;” and (2) one of two traffic triggers is met: either an interstate terminating-to-originating traffic ratio of at least 3:1 in a calendar month, or more than a 100 percent growth in interstate originating and/or terminating switched access minutes of use in a month, compared to the same month in the preceding year. At the same time, the Commission began moving terminating, end-office switched access charges to bill-and-keep.

5. Parties engaged in access stimulation adapted to these rules by taking advantage of tandem switching and transport access charges that had not yet transitioned to bill-and-keep, namely, the terminating tandem charges for rate-of-return and competitive LECs. As a result, new access arbitrage schemes forced IXCs to pay high tandem switching and tandem switched transport charges to access-stimulating LECs or to Intermediate Access Providers that may be chosen by those access-stimulating LECs. And although the direct cost to IXCs of access stimulation dropped because of the rules adopted in 2011, the number of access-stimulated minutes did not. Indeed, arbitrageurs openly promoted “opportunities to get paid for generating minutes by dialing telephone numbers owned by access stimulator LECs.”

6. In 2019, the Commission responded to the new access arbitrage schemes that had sprung up after 2011 by broadening the scope and reach of its Access Stimulation Rules. Most significantly, the Commission found that requiring “IXCs to pay the tandem switching and tandem switched transport charges for access-stimulation traffic is an unjust and unreasonable practice” that was prohibited pursuant to section 201(b) of the Communications Act of 1934, as amended (the Act). The Commission then adopted rules making access-stimulating LECs—rather than IXCs—financially responsible for the tandem switching and tandem switched transport service access charges associated with the delivery of traffic from an IXC to an access-stimulating LEC serving end users at its end office or its equivalent. The Commission adopted these changes to reduce carriers' incentives to artificially inflate traffic volumes by routing traffic inefficiently to maximize access charge revenues. The Commission also found that combatting such arbitrage reduces call congestion and service disruptions. The Commission recognized that arbitrage may occur even when there is no revenue sharing agreement, so it modified the definition of access stimulation to include two alternative traffic ratio triggers (one applicable to competitive LECs and one applicable to rate-of-return LECs) that do not require a revenue sharing component.

7. Since these rules took effect, parties have advised Commission staff of new efforts by access stimulators to evade the updated rules by integrating into the call flow IP enabled (IPES) Providers. For example, some parties described concerns that access stimulators are “converting traditional CLEC [(competitive LEC)] phone numbers to IPES numbers in order to claim that the [ Access Arbitrage Order ] is inapplicable” because the traffic is bound for telephone numbers obtained by IPES Providers and not bound for LECs serving end users.

8. USTelecom and its members allege that a substantial and growing portion of traffic that previously terminated through access-stimulating LECs now terminates through IPES Providers. AT&T and Verizon allege that certain LECs are attempting to evade the Commission's Access Stimulation Rules by, for example, having an IPES Provider take the place of the LEC delivering calls to an end user. As a result, IXCs allege, certain LECs claim the Access Stimulation Rules do not apply because the IPES Provider—and not the LEC—is responsible for delivering calls to the end user. In such a scenario, it is alleged that because the call flow does not include an access-stimulating LEC serving end users, such LECs continue to bill IXCs for the termination of access-stimulated traffic. Thus, IXCs and their long-distance customers continue to bear the costs of these calls to high-volume calling services. Inteliquent and Lumen describe a different call flow scheme in which the traffic does not pass through a LEC. In this call flow, an Intermediate Access Provider (tandem service provider) transmits long-distance traffic directly to an IPES Provider. USTelecom explains that some IPES Providers claim that the Access Stimulation Rules do not apply to traffic terminating to “IPES numbers,” and therefore the IPES Providers are not responsible for the costs of tandem switching and transport, “regardless that their traffic patterns qualify as access stimulation under the Commission's rules.”

9. In this Further Notice, we propose to eliminate perceived ambiguity in our rules that the record shows companies are seeking to leverage to force IXCs and their long-distance customers to continue to bear the costs of high-volume calling services by incorporating IPES Providers into the call path. This is an increasingly important issue because IPES Providers are prevalent in today's networks. As a result, we propose that when traffic is delivered to an IPES Provider by a LEC or an Intermediate Access Provider and the terminating-to-originating traffic ratios of the IPES Provider exceed the triggers in the Access Stimulation Rules, the IPES Provider will be deemed to be engaged in access stimulation. In such cases, we propose that the Intermediate Access Provider would be prohibited from imposing tariffed terminating tandem switching and transport access charges on IXCs sending traffic to the IPES Provider or the IPES Provider's end-user customer.

10. The rules we propose will serve the public interest by reducing carriers' incentives and ability to send traffic over the Public Switched Telephone Network (PSTN) solely for the purpose of collecting tariffed tandem switching and transport access charges from IXCs to subsidize high-volume calling services, which the Commission has found to be an unjust and unreasonable practice. Consistent with the Commission's previous efforts to eliminate this conduct, our proposals seek to reduce the routing of artificially high volumes of calls to places where above-cost access charges continue to exist. Our proposals will reduce the ability to apply access charges to those calls, the costs of which are ultimately borne by consumers, most of whom do not even use high-volume calling services.

11. We seek comment on call paths involving Intermediate Access Providers, LECs, and IPES Providers. As an initial matter, we seek comment on whether the following diagram accurately illustrates how calls are delivered to high-volume calling service providers by IPES Providers that receive those calls from LECs. If not, how should the diagram be modified to make it more accurate? We encourage commenters to submit diagrams and explanations in the record to provide a more comprehensive and clearer understanding of the flow of traffic to high-volume calling service providers when an IPES Provider is inserted into the call flow. We strongly encourage parties to submit simple diagrams showing all providers in the call path to illustrate and help clarify the various calling scenarios that our proposals to combat access stimulation should target.

12. We also seek information on the providers' services (tariffed and non-tariffed) and the access charges involved in routing these calls. When traffic is routed from an Intermediate Access Provider to a LEC as in Diagram 1, is that LEC at times the same entity that serves as the Intermediate Access Provider? In what circumstances? Commenters should enumerate each of the services provided by the Intermediate Access Provider, the LEC, and IPES Provider along this call path and which entities are charged for each service. For instance, when the LEC sends calls to the IPES Provider in the call path, is the LEC providing transport or other services? If the LEC delivers these calls to the IPES Provider, is the LEC providing any end-office functionality? When traffic is exchanged between the LEC and the IPES Provider, how is compensation, if any, handled between the two entities? What other services does the LEC charge for? Does the IPES Provider charge any entity in the call path for any services? If so, what services are provided by the IPES Provider, and which entity does the IPES Provider charge? Parties should provide any additional information that will enhance our understanding of how calls are routed and billed for along the hypothetical call path in Diagram 1, so we can better assess whether entities are meeting their financial responsibilities when they route traffic in this manner.

13. The record suggests that there are call flows that do not include a LEC between the Intermediate Access Provider and the IPES Provider (or the end user), as pictured in Diagram 2 below. In this scenario, the Intermediate Access Provider (tandem provider) delivers calls directly to an IPES Provider without an intermediate LEC. We seek comment on the existence of such call flows. Does Diagram 2 below accurately depict such call flows? If not, what adjustments need to be made to the diagram to make it more accurate?

14. IPES Providers are not “LECs” and thus parties may argue that our Access Stimulation Rules do not apply to them, whether traffic they terminate to high-volume calling service providers is received directly from Intermediate Access Providers or from LECs. This argument, however, leaves IXCs, who are captive to the routing decisions of IPES Providers that may choose Intermediate Access Providers solely to receive traffic they then deliver to the high-volume calling service provider, having to bear the cost of those routing decisions. These costs are ultimately passed onto the IXCs' customers. These schemes are similar to those that existed before the Access Arbitrage Order was adopted, where access-stimulating LECs had no incentive to make economical routing decisions because the cost implications of those decisions would be borne by IXCs who would pass the resultant inflated costs on to their customer bases.

15. For example, in response to the Access Arbitrage Order, one competitive LEC, Wide Voice, modified its business to no longer offer service to end users, and instead only functions as a competitive tandem provider and sends call destined for a high-volume calling service to HD Carrier (an IPES provider), which then terminates calls to the end user. The Commission found that Wide Voice's actions resulted in it continuing to unlawfully bill IXCs for tandem services contrary to section 201(b) of the Act. Commenters should describe additional real-world examples of calls being routed from an Intermediate Access Provider directly to an IPES Provider (or indirectly through a LEC) that then terminates those calls to a high-volume calling service provider. Does this routing scheme impose unlawful costs on IXCs? We seek additional detail on this practice and specific proposals as to how best it should be addressed. Parties should explain what charges are being assessed, what entity is billing for what services, and which parties are being charged in these situations. Commenters should likewise describe any other aspects of this call flow that might provide additional opportunities for arbitrage and suggest ways our rules might be revised to foreclose those opportunities.

16. Proposal. We propose to clarify that an Intermediate Access Provider shall not charge an IXC tariffed charges for terminating switched access tandem switching and switched access tandem transport for traffic bound to an IPES Provider whose traffic exceeds the ratios in sections 61.3(bbb)(1)(i) or 61.3(bbb)(1)(ii) of our Access Stimulation Rules. We seek comment on this proposal, including the question of whether it is appropriate to apply to IPES Providers the 3:1 terminating-to-originating traffic ratio plus revenue sharing agreement trigger in section 61.3(bbb)(1)(i), and the 6:1 terminating-to-originating traffic ratio trigger, absent a revenue sharing agreement, in section 61.3(bbb)(1)(ii). Commenters should consider that although we intend to reduce or eliminate arbitrage opportunities, we do not want the financial consequences of our Access Stimulation Rules to apply to LECs or IPES Providers that are not engaged in harmful arbitrage schemes.

17. Under our proposal, the IPES Provider would be responsible for calculating its traffic ratios and for making the required notifications to the Commission and affected carriers, just as LECs are responsible for these activities under the current rules. This proposal is consistent with other reporting requirements imposed on VoIP providers, such as the obligation to report certain information on FCC Forms 477 and 499. Similar to the approach the Commission took in the Access Arbitrage Order, we do not propose a specific format for the notification an access-stimulating IPES Provider would provide to affected carriers and the Commission. After the rules adopted in the Access Arbitrage Order became effective, some carriers satisfactorily notified the Commission that they were stopping their access stimulation activities by filing letters in docket 18-155.

18. Under our proposal, if the IPES Provider's traffic ratios exceed the applicable rule triggers, it would have to notify the Intermediate Access Provider, the Commission, and affected IXCs. The Intermediate Access Provider would then be prohibited from billing IXCs tariffed rates for terminating switched access tandem switching or terminating switched access transport charges. Instead, the Intermediate Access Provider could recover the costs from the IPES Provider, or the IPES Provider's LEC partner. Thus, the entities choosing the call path—the IPES Provider or its partner—should only be willing to generate traffic that creates more value than the costs these tariffed access charges are intended to recover. As a result, they would have an economic incentive to make efficient call routing decisions and little, if any, incentive to artificially stimulate traffic. Do commenters agree with our view that this proposal, reflected in the amended rules, will help “ensure that the entities choosing what network to use . . . have appropriate incentives to make efficient decisions”? If commenters disagree, they should explain what other, or additional, actions we should take to ensure that service providers have the proper incentives.

19. As an alternative to imposing a requirement that the IPES Provider calculate its traffic ratios for purposes of our Access Stimulation Rules, we could require that the Intermediate Access Provider calculate the IPES Provider's traffic ratios. Under this alternative, if the Intermediate Access Provider cannot perform this calculation, or the IPES Provider will not share relevant traffic ratio information with the Intermediate Access Provider, we would create a presumption that the IPES Provider's traffic exceeds the Access Stimulation Rule ratios. In that case, the Intermediate Access Provider would not be able to charge IXCs terminating switched access tandem switching or terminating switched access transport charges. Would such an approach be more effective than the rule modifications described above and proposed? Commenters are encouraged to propose possible rule language to codify this presumption.

20. We propose to use the same framework for determining when an IPES Provider that was engaged in access stimulation no longer is considered to be engaged in access stimulation that we currently use for competitive LECs that have engaged in access stimulation. Thus, for example, if an IPES Provider is engaged in access stimulation because it exceeds the 6:1 traffic ratio in section 61.3(bbb)(1)(ii) of the Commission's rules, we propose that it would no longer be considered to be engaged in access stimulation if its traffic ratio falls below 6:1 for six consecutive months and it does not engage in Access Stimulation as defined in section 61.3(bbb)(1)(i). Additionally, once such an IPES Provider no longer meets those criteria, it would be required to notify the Commission and any affected Intermediate Access Providers and IXCs that it is no longer engaged in access stimulation. We seek comment on these proposals. Do commenters consider the proposals to be over-inclusive or unnecessary? If so, are there ways to moderate the proposals to effect the same objective?

21. Calculations. We propose that IPES Providers would be responsible for calculating traffic ratios. Parties should describe any possible challenges that may affect the ability of an IPES Provider to perform the calculations needed to determine whether it meets the triggers established by the Access Stimulation Rules. Commenters should also explain if any of those challenges are so significant as to make our proposal unworkable. If so, we ask those commenters to propose alternatives that pose fewer challenges but still achieve our goals of removing the incentives for entities to engage in wasteful arbitrage and the imposition of unlawful charges on IXCs and their customers.

22. The Access Stimulation Rules currently require traffic ratios to be calculated on the basis of traffic “in an end office” for the purposes of determining whether the 6:1 and 10:1 traffic ratios are exceeded. We propose rule modifications to apply this same method to the 3:1 traffic ratio and when IPES Providers calculate traffic ratios for purposes of the Access Stimulation Rules. Would there be a benefit to making the Access Stimulation Rules uniform between LEC obligations and IPES Provider obligations? For example, does the inconsistent application of the “in an end office” requirement in the current rules cause confusion or opportunities for arbitrage? We also propose that the traffic ratios in our Access Stimulation Rules all be based on terminating-to-originating traffic measured “in an end office or equivalent.” To apply these requirements to an IPES Provider, what guidance should we provide as to what would be considered “equivalent” to a LEC's end office? For example, when an IPES Provider is inserted in the call flow, should wherever the Intermediate Access Provider sends traffic be considered the “end office or equivalent”? Does the Commission's holding in the VoIP Symmetry Declaratory Ruling that a VoIP provider will be providing end office functionality “equivalent” to a LEC when it provides the physical connection to the end user have any application here?

23. Alternatively, should IPES Providers be required to calculate their traffic ratios based on the traffic the IPES Provider terminates in a specific state or to a specific end user? Is there some other method of calculation that would better aid us in identifying access stimulation for the purposes of our Access Stimulation Rules? Should IPES Providers calculate their traffic ratios in a manner that mirrors the geographic area served by the LEC's end office, or by specific LATAs? Should we require IPES Providers to calculate their traffic ratios based on the traffic they receive from a specific Intermediate Access Provider? Are there other alternatives we should consider? Which approach would best support the effectiveness of our Access Stimulation Rules, ensure that all providers in a call flow have the proper economic incentives to promote efficiency, and eliminate harmful arbitrage opportunities? Commenters should submit any data they have that support a particular approach or that show the relative benefits of one approach versus another.

24. We also seek comment on any challenges related to our alternative proposal of requiring that the Intermediate Access Provider calculate the IPES Providers' traffic ratios. Would an Intermediate Access Provider know, or have access to, the information necessary to determine the terminating-to-originating traffic ratios of IPES Providers to which it delivers and from which it receives traffic? Would tracking the originating and terminating traffic of individual IPES Providers be unduly burdensome for Intermediate Access Providers? What if the Intermediate Access Provider delivers traffic along multiple call paths and needs to calculate the traffic ratios for an IPES Provider for each call path? For example, do providers send originating and terminating traffic on different call paths when they partner with multiple LECs or other IPES Providers? Does an IPES Provider designate different traffic routes in the Local Exchange Routing Guide (LERG), such that it may select one LEC for the purposes of receiving local traffic, but receives long-distance traffic from a different access tandem to avoid having incoming long-distance and local traffic traverse the same LEC's facilities? Are there reasons, other than promoting access arbitrage, for an IPES Provider to use more than one route for terminating traffic? If so, we ask commenters to explain those specific reasons.

25. Implementation. What implementation issues do our proposals raise? How much time would providers need to comply with the proposed rule changes? In the Access Arbitrage Order, the Commission gave carriers 45 days to come into compliance with the newly effective rules. Anticipating that IPES Providers would not need longer to comply than carriers did, we also propose a 45-day period for compliance after the effective date of the revised rules. Is this sufficient? Do interested parties foresee difficulties that would affect the time it will take to comply with the revised rules? Commenters should include suggested timeframes for implementation and an explanation of any challenges or concerns relating to coming into compliance with our proposed rules within a 45-day period. If 45 days are insufficient, how long should the transition period last, what steps would it include, and why is more time necessary now than was needed at the time the Commission adopted the Access Arbitrage Order ? If proposing an alternative timeframe, we remind interested parties to balance any proposed implementation period with the fact that the longer the implementation period lasts, the longer these forms of wasteful access arbitrage continue.

26. Revenue Sharing. The reforms adopted in the 2011 USF/ICC Transformation Order focused on revenue sharing agreements between the terminating LEC and end users or other providers along the call path that provided incentives for improper behavior. In the 2019 Access Arbitrage Order, the Commission adopted rules to identify and address access stimulation arrangements that did not include a revenue sharing component. As we work to further strengthen our rules to combat ongoing arbitrage, we seek comment on whether revenue sharing agreements exist in the call routing scenarios described above. For example, do IPES Providers share revenue with common carriers that transmit traffic to the IPES Providers or their customers? Do Intermediate Access Providers share their revenues with IPES Providers, high-volume calling service providers, or the high-volume calling service providers' end users?

27. Conversely, do high-volume calling service providers (or their end users) share revenue with LECs, Intermediate Access Providers, or IPES Providers? In any alternative call paths commenters describe in response to our questions in this Further Notice, we ask commenters to specify which entities, if any, could be or are sharing revenues with other entities. We are particularly interested in what makes certain call paths—or call path manipulations—attractive to those involved. For example, what entities are sharing revenues right now? What functions do those entities serve in completing calls, and whose revenues are being shared with others? We propose modifying the existing definition of Access Stimulation in section 61.3(bbb) to include IPES Providers with or without access revenue sharing agreements, similar to the approach that currently applies to competitive LECs. Are ongoing revenue sharing arrangements covered effectively by the current Access Stimulation Rules? If not, what additional rule revisions are needed to capture today's revenue sharing arrangements? Is there specific rule language commenters would propose to address revenue sharing arrangements that may not be covered by our current rules?

28. We seek comment on several additional rule change proposals. Are the proposed rule changes below necessary, or helpful, to the goal of eliminating harmful arbitrage? Would they, in concert with the other rule changes proposed in this Further Notice, help to comprehensively address arbitrage of our intercarrier compensation system?

29. End User and End Office Language. AT&T suggests that clarifications to the “end user” and “end office” language in the existing rules will prevent LECs from evading financial responsibility for access-stimulation traffic when an IPES Provider is inserted into the call path. First, AT&T suggests that we clarify the meaning of “end user” in section 61.3(bbb)(1) of our rules, which defines when carriers engage in access stimulation, by adding the italicized language, as follows.

A Competitive Local Exchange Carrier serving end user(s) engages in Access Stimulation when it satisfies either paragraph (bbb)(1)(i) or (ii) of this section; and a rate-of-return local exchange carrier serving end user(s) engages in Access Stimulation when it satisfies either paragraph (bbb)(1)(i) or (iii) of this section. For purposes of this section, a Local Exchange Carrier is serving end users when it provides service to a called or calling party, either directly or through arrangements with one or more VoIP providers or other entities that serve called or calling parties. For purposes of this section, a Local Exchange Carrier is not serving end users when it is an Intermediate Access Provider as defined in paragraph (ccc) of this section, i.e., when it is not the first or last LEC in the routing of a call to a called or calling party.

30. We seek comment on this proposed amendment to our existing rule. Would the proposed language effectively remedy any perceived ambiguity that parties have sought to exploit in our current rules? Would the proposed language lead to any potentially unintended consequences that we should consider? Do commenters propose any revisions to this language? Would this rule modification successfully prevent LECs from avoiding financial responsibility for access-stimulation traffic when IPES Providers are in the call path? Are there considerations that would weigh against such a rule modification or in favor of some other modification(s) to this rule? Are the proposed rule modifications sufficient to address the concerns that AT&T intends to address with this proposed rule change? Alternatively, should we delete the “serving end user(s)” phrase from section 61.3(bbb)(1) of our rules? Would doing so be a simpler approach to address this perceived ambiguity? Or, should we add the phrase “serving end users” to sections 61.3(bbb)(2) and 61.3(bbb)(3)? Would there be a benefit to making the rules consistent? Would there be any detrimental effects from doing so?

31. Secondly, AT&T proposes that we modify section 61.3(bbb)(1)(ii) of our existing rules to remove the reference to traffic calculations “in an end office” and revise how the access-stimulation traffic ratio is computed for LECs that provide numbers or interconnection to IPES Providers, as follows. The italicized language represents what would be added.

A Competitive Local Exchange Carrier has an interstate terminating-to-originating traffic ratio of at least 6:1 in a calendar month. For any Competitive Local Exchange Carrier that provides numbers or interconnection to a VoIP provider, the LEC is engaged in access stimulation for purposes of that VoIP provider's traffic when that VoIP provider has an interstate terminating-to-originating traffic ratio of at least 6:1 in a calendar month.

32. Should we adopt this proposal? Would removing the language “in an end office” better accomplish our goal of providing clarity and understanding of our rules? Does the deletion of “in an end office” recognize, as AT&T suggests, that arbitrage schemes no longer target end office charges? Under this proposed approach, should the LEC be responsible for calculating the traffic ratios of the IPES Provider? If the LEC delivers traffic to multiple IPES Providers, should the LEC calculate a traffic ratio for each individual IPES Provider separately? Alternatively, should we maintain the “in the end office” language in section 61.3(bbb)(1)(ii) and (iii), and add it to section 61.3(bbb)(1)(i)? Would making the rules consistent in this manner reduce the opportunity for continued arbitrage of the ICC system?

33. Treat IPES Providers as LECs for Purposes of the Access Stimulation Rules. We also seek comment on a proposal submitted by Inteliquent and Lumen, suggesting that the Commission could, as an alternative to adopting new rules, “issue a declaratory ruling clarifying that IPES providers are treated as LECs for the purpose of the access stimulation rules.” Inteliquent and Lumen argue that “[t]o the extent an IPES provider's ratio of terminating to originating traffic meets the triggers, it should be deemed to be engaged in access stimulation just like a traditional LEC,” because “the IPES provider both functions like a LEC for the purposes of the access stimulation rules and necessarily has visibility into its own access traffic.” According to Inteliquent, a LEC that provides interconnection to an IPES Provider serves only as a conduit for delivery of local traffic and has no insight into the IPES Provider's long-distance traffic volumes. Therefore, Inteliquent contends, it would be inappropriate to make the LEC responsible for the IPES Provider's traffic volumes. We seek comment on this suggestion. How relevant are other situations in which the Commission has applied certain regulations to VoIP providers? IPES Providers have the ability to obtain direct access to numbers. Could the Commission condition the ability of an IPES Provider to obtain direct access to numbers on an agreement by the provider to voluntarily subject itself to our Access Stimulation Rules? How would doing so affect our efforts to eliminate access arbitrage?

34. What rule changes would be necessary were we to decide to implement the proposal to issue a declaratory ruling to treat IPES Providers as LECs for purposes of the Access Stimulation Rules? For example, would we need to add a definition of “LEC” to our Access Stimulation Rules that would include IPES Providers solely for the purpose of compliance with the Access Stimulation Rules? Are the proposed rules sufficient to address Inteliquent and Lumen's concerns that IPES Providers are being used to avoid the application of the Access Stimulation Rules and to allow the continued unlawful charging of IXCs? If not, what specific language do commenters suggest to help address these concerns or further the Commission's goal of eliminating harmful access arbitrage?

35. As an addition or alternative to their declaratory ruling proposal, Inteliquent and Lumen suggest that “the Commission could declare that it is an inherently unjust and unreasonable practice for a party to attempt to evade the access arbitrage rules by moving LEC end office traffic to an affiliated IPES provider, where the traffic in question otherwise would have caused the LEC to be engaged in access stimulation under the rules.” We seek comment on this idea. What are the relevant considerations of such an approach? Would such an approach be overly broad? Would this approach efficiently capture improper behavior? The Commission has repeatedly resisted an outright ban on access stimulation. Would doing as Inteliquent and Lumen suggest effectively be a ban on access stimulation?

36. Interstate/Intrastate Language. The Commission made clear in the 2019 Access Arbitrage Order that the rules adopted to combat access stimulation were intended to prohibit access-stimulating entities from unlawfully billing IXCs for intrastate terminating switched access tandem switching or terminating switched access transport, bound for access-stimulating LECs, in addition to such interstate traffic. However, that language was not reflected in the text of the rules, only in the text of the Order. We now propose to codify, in sections 69.4(l), and 69.5(b) of our rules that IXCs shall not be billed for interstate or intrastate terminating switched access tandem switching or terminating switched access transport. Would making these amendments facilitate enforcement of our Access Stimulation Rules? Are there other benefits in making these changes? Are any other amendments to these or other sections of our rules needed to fully and accurately capture the text of the Access Arbitrage Order ?

37. IPES Provider Definition. We propose to define an “IPES Provider,” for purposes of our Access Stimulation Rules, as:

IPES Provider means, for purposes of this part and §§ 51.914, 69.4(l) and 69.5(b) of this chapter, a provider offering a service that: (1) enables real-time, two-way voice communications; (2) requires a broadband connection from the user's location or end to end; (3) requires internet Protocol-compatible customer premises equipment (CPE); and (4) permits users to receive calls that originate on the public switched telephone network and to terminate calls to the public switched telephone network or that originate from an internet Protocol service and terminate to an internet Protocol service or an internet Protocol application.

38. Parties have suggested using the term “IPES Provider” when referring to the provider being inserted in the place of the “LEC serving end users” as used in the Access Stimulation Rules. For example, Inteliquent suggests that IPES is “an industry term commonly used for VoIP providers that have received direct access to numbers, and it originates from the company code (OCN) type assigned to these providers by NECA [(National Exchange Carrier Association)].” AT&T suggests that “IPES providers are entities that, among other things, provide or facilitate Over the Top VoIP calling services, including `2-stage' International calling services.” Do commenters agree with either of these definitions? We also seek comment on the definition proposed above, which is limited in its application to the Access Stimulation Rules. USTelecom suggests that our proposed “IPES Provider” definition not require two-way calling or the termination of calls. Do commenters agree that we should modify the proposed definition as USTelecom suggests? Are there other alternative definitions of “IPES Provider” that commenters would suggest we use for purposes of our Access Stimulation Rules? What are the important functions or concepts this definition should capture? Would limiting our definition of “IPES Providers” to providers that have received direct access to numbers, as Inteliquent suggests, limit the effectiveness of the Access Stimulation Rules? Would commenters suggest using an existing definition to describe these IPES Providers who are being inserted into the call path, such as “IP-enabled voice service” provider, as defined in section 615b(8) of the Act?

39. Alternatively, should we refer to these providers as “interconnected VoIP” providers, as defined in section 9.3 of our rules? Are there meaningful distinctions among these terms that would make one defined term better than another for purposes of the Access Stimulation Rules? We propose a definition of “IPES Provider” to be used solely in the context of our Access Stimulation Rules. Despite our attempts to limit the use of this defined term, do we need to be concerned about potential confusion with other, similar, terms defined elsewhere in our rules? Will the proposed definition capture all providers that could be used to try to circumvent the Access Stimulation Rules?

40. Intermediate Access Provider Definition. An Intermediate Access Provider currently is defined in our rules as “any entity that carries or processes traffic at any point between the final Interexchange Carrier in a call path and a local exchange carrier engaged in Access Stimulation.” Pursuant to our current Access Stimulation Rules, neither the Intermediate Access Provider nor the access-stimulating LEC shall bill an IXC for tariffed terminating switched access tandem switching and terminating switched access tandem transport charges for traffic between the Intermediate Access Provider and the access-stimulating LEC. In keeping with our other proposed rule modifications, we propose to amend the definition of Intermediate Access Provider to include any entity that “provides terminating switched access tandem switching and terminating switched access tandem transport services between the final Interexchange Carrier in a call path and: (1) a local exchange carrier engaged in Access Stimulation, as defined in paragraph (bbb) of this section; or (2) a local exchange carrier delivering traffic to an IPES Provider engaged in Access Stimulation, as defined in paragraph (bbb) of this section; or (3) an IPES Provider engaged in Access Stimulation, as defined in paragraph (bbb) of this section, where the Intermediate Access Provider delivers calls directly to the IPES Provider.”

41. We seek comment on this proposed change to our definition of “Intermediate Access Provider.” Inteliquent and Lumen state that “IPES providers designate a Hosting LEC for purposes of receiving local traffic” and that “[t]his designation does not apply to long distance traffic, which is the traffic subject to the Access Arbitrage Order. ” Therefore, we seek input on whether the part of our proposed definition above that includes “a local exchange carrier delivering traffic to an IPES Provider engaged in Access Stimulation” is necessary or how this part of the definition would otherwise be affected by what Inteliquent and Lumen describe in their filing. Do commenters suggest any other modifications to the definition? Are there services, other than terminating switched access tandem switching or terminating switched access tandem transport, that an Intermediate Access Provider might provide? If so, what are these services and who should be financially responsible for them?

42. Conforming Edits to Our Rules. Section 51.914(a)(2) of our rules presently states that a LEC shall designate, “if needed,” the Intermediate Access Provider that will provide certain terminating access services to the LEC. This designation is applicable in cases where an Intermediate Access Provider is different than the end office LEC. We therefore propose changing “if needed” to “if any,” so that the rule denotes a LEC shall designate an Intermediate Access Provider when and “if any” such designation is required. Not only is the “if any” language more accurate, but removing the “if needed” provision prevents any misconception that a LEC may otherwise subjectively decide on its own when such designation is needed. Regarding the designation of an Intermediate Access Provider by an IPES Provider, are there any instances when an IPES Provider is not required to designate an Intermediate Access Provider or when proposed sections 51.914(c)(1) and (d) would not be necessary?

43. Section 69.4(l) of the Commission's rules requires that a LEC engaged in access stimulation “may not bill” IXCs terminating switched access tandem switching or terminating switched access tandem transport charges for access-stimulation traffic. Yet, in the Access Arbitrage Order, the Commission made clear that it is unlawful for a LEC engaged in access stimulation to charge an IXC terminating switched access tandem switching or terminating switched access tandem transport charges. We propose edits to section 69.4(l) of our rules to make this rule consistent with the Commission's intent adopted in the Access Arbitrage Order; that a LEC engaged in access stimulation “shall not bill” IXCs for terminating switched access tandem switching or terminating switched access tandem transport charges on access-stimulation traffic. Similarly, we also propose to correct an error in section 69.5(b)(2) of the Commission's rules that excluded the word “not,” change the word “may” to “shall” to be consistent with other uses in these rules, and make clear that it is “IXCs” and not “local exchange carriers” that are not being charged.

44. We also seek comment on whether any rule changes proposed in this Further Notice introduce new opportunities for unlawful arbitrage. Would our proposed rule modifications accomplish our objectives of sending accurate pricing signals to customers by prohibiting Intermediate Access Providers that deliver traffic to IPES Providers that trigger the Access Stimulation Rules from charging IXCs for such calls? Would adopting our proposed rule changes create unintended consequences? For example, would any of the proposals introduce unnecessary complexity and present practical implementation challenges? If so, we seek comment on what exactly are the perceived complexities and implementation challenges related to the proposals in this Further Notice. Are there other types of access arbitrage happening today that are not described in this Further Notice? For example, are services that allow consumers to make long-distance calls to a domestic number and listen to foreign radio stations unfairly exploiting our access charge regime, as USTelecom suggests? Would these type of services be covered by our proposed rules? Or are they “one-way,” as USTelecom argues? If so, what additional actions, if any, should we take to ensure our proposed rules address these types of services? We ask commenters to provide any other proposed actions, alternatives, and rule additions or modifications we should consider. Are there any other conforming rule changes that commenters consider necessary? Are there any conflicts or inconsistencies between existing rules and those we propose? Finally, we propose several non-substantive edits, to, among other things, enhance readability and ensure compliance with rule drafting guidelines applicable to the Code of Federal Regulations.

45. Applying the Existing Rules to IPES Providers. As an alternative to modifying our rules as proposed, we seek comment on whether it would be preferable for the Commission to issue a Declaratory Ruling interpreting the existing Access Stimulation Rules as applying to traffic routed from the PSTN through a LEC to an IPES Provider, or directly to the IPES Provider or to the end user, as parties have suggested since the rules first became effective. In the Access Arbitrage Order, the Commission explained that the access-stimulation traffic ratios are based on “the actual minutes traversing the LEC switch.” Most relevant to the current discussion, the Commission clarified that “ all traffic should be counted regardless of how it is routed.” Indeed, the Commission emphasized this point several times in the Access Arbitrage Order. These explanations form the basis of arguments that “the Access Arbitrage Order already rejects” claims that traffic routed by LECs through an IPES Provider should not be counted for determining access-stimulation ratios. Is this a reasonable and accurate interpretation of the Commission's decision? Would issuing a declaratory ruling interpreting the Access Stimulation Rules as requested above adequately address any perceived lack of clarity in the existing rules identified in this Further Notice?

46. Traffic to Be Counted. AT&T argues that the Commission should clarify that, when calculating the traffic ratios for the purposes of our Access Stimulation Rules, a LEC “may not include aggregated originating 8YY traffic—particularly traffic that it obtains from VoIP providers—as part of its traffic ratio” because of the potential for arbitrage and fraud associated with the routing of 8YY traffic. The Commission previously identified certain forms of toll free or 8YY aggregation as a form of originating arbitrage and took steps to minimize that arbitrage. AT&T suggests that if a LEC “aggregate[s] 8YY traffic from VoIP providers that have obtained numbering authorization,” the LEC “could begin routing access stimulation traffic from VoIP providers in the hope that, by engaging in both originating 8YY aggregation schemes and terminating access stimulation schemes, it could balance its terminating access stimulation traffic against its longstanding originating 8YY traffic and avoid hitting the Commission's triggers.” We seek greater detail on this issue, as well as comment on the validity of AT&T's concerns. Is this happening in the market now? If so, we ask commenters to propose rule revisions to address this issue. We also seek comment on any other issues regarding the treatment of originating 8YY traffic for purposes of calculating the traffic ratios related to the triggers in our Access Stimulation Rules. Would excluding such traffic alter carriers' ratios sufficiently so as to cause them to trigger our Access Stimulation Rules even though they are not engaging in arbitrage? Should a significant increase in a carrier's 8YY originating traffic be reported and treated as another trigger for our Access Stimulation Rules? Should 8YY traffic be included in those ratios? Why or why not? Should originating 8YY traffic be treated as terminating traffic for purposes of our Access Stimulation Rules?

47. We tentatively conclude that sections 201, 251, 254 and 256 of the Act provide us with the authority needed to adopt the rule changes proposed in this Further Notice. We seek comment on this authority, our ancillary authority in section 4(i) of the Act, and any other statutory authority that may support our proposed actions. We also seek comment on any concerns parties might have about our authority to adopt any of the proposals made in this Further Notice.

48. Section 201 of the Act. Our primary authority to adopt our proposed changes to the Access Stimulation Rules is section 201(b) of the Act. In the Access Arbitrage Order, the Commission determined that the imposition of tariffed tandem switching and tandem switched transport access charges on IXCs for terminating access-stimulation traffic is an unjust and unreasonable practice under section 201(b) of the Act. In our view, providers' attempts to continue to assess tandem switching or tandem switched transport access charges on IXCs for delivering access-stimulation traffic to IPES Providers is unjust and unreasonable pursuant to section 201(b) of the Act, and virtually indistinguishable from practices the Commission has already found to be unjust and unreasonable. We seek comment on this view. Section 201(b) of the Act gives us the authority to “prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this Act.” We seek comment on whether this language provides us with the authority to require IPES Providers to designate the Intermediate Access Provider(s) that will provide terminating switched access tandem switching and transport services, to calculate their traffic ratios, and to notify Intermediate Access Providers, IXCs, and the Commission if the IPES Provider is engaged in Access Stimulation so that Intermediate Access Providers can determine whether they can lawfully charge IXCs for interstate and intrastate tandem services (and IXCs can determine if charges are appropriate). We also seek comment on our tentative conclusion that section 201(b) provides us the authority necessary to prohibit Intermediate Access Providers or other LECs from charging IXCs for access stimulation traffic routed through an IPES Provider, rather than through a LEC.

49. Sections 251, 254, and 256 of the Act. Our authority to take the actions proposed in this Further Notice is also rooted in other sections of the Act on which the Commission relied in the Access Arbitrage Order. First, section 251(b)(5) of the Act applies because our proposed new and modified rules apply, in large part, to exchange access and providers of exchange access that meet the definition of a LEC. Second, section 251(g) of the Act provides us with the authority to address problematic conduct which is occurring while the transition to bill-and-keep is not complete. Third, section 254 of the Act provides the Commission with the authority to eliminate implicit subsidies. Finally, section 256 of the Act requires the Commission to oversee and promote interconnection by providers of telecommunications services that is “efficient.” We seek comment on the applicability of sections 201, 251, 254, and 256 of the Act to give us the authority to take the actions proposed herein.

50. Section 4(i) of the Act. Although we propose to conclude that our direct sources of authority identified above provide the basis to adopt our proposed rules, we also seek comment on whether our ancillary authority in section 4(i) of the Act provides an independent basis to adopt limited rules with respect to IPES Providers. We consider the proposed requirements to be “reasonably ancillary to the Commission's effective performance of [its] . . . responsibilities.” Specifically, IPES Providers interconnected with the PSTN and exchanging IP traffic clearly constitutes “communication by wire or radio.” We seek comment on whether requiring IPES Providers to comply with our proposed limited rules is reasonably ancillary to the Commission's effective performance of its statutory responsibilities under sections 201(b), 251, 254, and 256 as described above.

51. Our intercarrier compensation regime continues to be an important source of funding for certain rural service providers, including providers of tandem switching, to ensure all Americans are connected. Access arbitrage exploits our intercarrier compensation regime to benefit activities and providers that our policies are not intended to benefit. This encourages further exploitation of our rules, threatening the basic goals of connectivity at just and reasonable prices, a cost that alone justifies our action. The excess payments made due to arbitrage also operate as an unnecessary tax on end users, shrinking the efficient use of telecommunications services. Further, because the party that chooses the call path does not pay that tax, it has incentives to engage in wasteful actions. Examples of this waste include:

• the pursuit of access arbitrage opportunities by routing traffic along more expensive call paths;

• artificial stimulation of traffic;

• disputes over questionable demands for payment by access stimulators;

• attempts by IXCs to identify the sources of fraudulent traffic; and

• time and money spent by parties seeking to protect against or reduce access arbitrage opportunities, as in this proceeding.

52. Costs incurred by these activities are not fully paid for by the consumers of high-volume calling services, who often pay nothing for these services. If consumers of these services were charged prices that wholly recovered the costs of arbitrage, then those who value the service less than those prices would decline to purchase the service. This would reduce waste or equivalently create value equal to the difference between the cost-covering prices and these consumers' valuations of the service.

53. We recognize that any action we take to address ongoing access arbitrage may affect the costs and benefits to carriers and their customers and the choices they make, as they provide and receive telecommunications services. Consumers who enjoy high-volume calling services could be adversely affected by regulatory adjustments targeting arbitrage. Are there perceived benefits to access arbitrage or access stimulation? Would addressing access arbitrage as we propose unfairly advantage any competitor or class of competitors? If so, are there alternative means to address the arbitrage issues described here and presented in the record?

54. In the USF/ICC Transformation Order, the Commission considered direct costs imposed on consumers by arbitrage schemes. The Commission also found that access stimulation diverts capital away from more productive uses, such as broadband deployment. There is also evidence that the staggering volume of minutes generated by these schemes can result in call blocking and dropped calls. What has been the effect of the 2019 revisions to the Access Stimulation Rules? Are there additional, more-recent data available to estimate the annual cost of arbitrage schemes to companies, long-distance customers, and consumers in general? Likewise, are there data available to quantify the resources being diverted from more productive uses because of arbitrage schemes? To what degree are consumers indirectly affected by potentially inefficient networking or incorrect pricing signals due to ongoing access stimulation? Has competition been negatively impacted because “access-stimulation revenues subsidize the costs of high-volume calling services, granting providers of those services a competitive advantage over companies that collect such costs directly from their customers?” Are there other costs or benefits to the proposals in this Further Notice that we should consider?

55. The Commission, as part of its continuing effort to advance digital equity for all, including people of color, persons with disabilities, persons who live in rural or Tribal areas, and others who are or have been historically underserved, marginalized, or adversely affected by persistent poverty or inequality, invites comment on any equity-related considerations and benefits (if any) that may be associated with the proposals and issues discussed herein. Specifically, we seek comment on how our proposals may promote or inhibit advances in diversity, equity, inclusion, and accessibility, as well as the scope of the Commission's relevant legal authority.

56. Filing Instructions. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

• Electronic Filers: Comments may be filed electronically using the internet by accessing the ECFS: https://www.fcc.gov/ecfs/.

• Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing.

Filings can be sent by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

• Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701.

• U.S. Postal Service first-class, Express, and Priority mail must be addressed to 45 L Street NE, Washington, DC 20554.

• Effective March 19, 2020, and until further notice, the Commission no longer accepts any hand or messenger delivered filings. This is a temporary measure taken to help protect the health and safety of individuals, and to mitigate the transmission of COVID-19.

○ During the time the Commission's building is closed to the general public and until further notice, if more than one docket or rulemaking number appears in the caption of a proceeding, paper filers need not submit two additional copies for each additional docket or rulemaking number; an original and one copy are sufficient.

○ After COVID-19 restrictions are lifted, the Commission has established that hand-carried documents are to be filed at the Commission's office located at 9050 Junction Drive, Annapolis Junction, MD 20701. This will be the only location where hand-carried paper filings for the Commission will be accepted.

57. People with Disabilities. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to fcc504@fcc.gov or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).

58. Ex Parte Requirements. This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must: (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made; and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda, or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with Rule 1.1206(b). In proceedings governed by Rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format ( e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

59. Paperwork Reduction Act Analysis. This document contains proposed new or modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might further reduce the information collection burden for small business concerns with fewer than 25 employees.

60. Initial Regulatory Flexibility Analysis. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities by the policies and rules proposed in this Further Notice of Proposed Rulemaking. The Commission requests written public comments on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments provided on the first page of the Further Notice. The Commission will send a copy of the Further Notice, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the Further Notice and the IRFA (or summaries thereof) will be published in the Federal Register .

61. For many years the Commission has been fighting efforts to arbitrage its system of intercarrier compensation. In the 2011 USF/ICC Transformation Order, the Commission adopted rules identifying local exchange carriers (LECs) engaged in access stimulation and requiring that such LECs lower their tariffed access charges. In 2019, to address access arbitrage schemes that persisted despite prior Commission action, the Commission adopted the Access Arbitrage Order, in which it revised its Access Stimulation Rules to prohibit LECs and Intermediate Access Providers from charging interexchange carriers (IXCs) for terminating tandem switching and transport services used to deliver calls to access-stimulating LECs. The revised rules were adopted to end the ability of LECs to engage in arbitrage of the intercarrier compensation system by extracting artificially inflated tandem switching and transport charges from IXCs to subsidize “free” high-volume calling services.

62. Since the 2019 rules took effect, the Commission has received information about new ways carriers are manipulating their businesses to continue their arbitrage schemes in the wake of the new rules. In the Further Notice, we seek comment on ways to address perceived loopholes in our rules that companies may be exploiting and to eliminate these new arbitrage schemes and the harms those schemes inflict on consumers. The rules we propose will serve the public interest by reducing carriers' incentives and ability to send traffic over the Public Switched Telephone Network solely for the purpose of collecting tariffed tandem switching and transport access charges from IXCs to subsidize high-volume calling services, which the Commission has found to be an unjust and unreasonable practice.

63. We propose to modify our Access Stimulation Rules to address access arbitrage that takes place when an internet Protocol Enabled Service (IPES) Provider is incorporated into the call flow. We propose that when a LEC or Intermediate Access Provider delivers traffic to an IPES Provider and the terminating-to-originating traffic ratios of the IPES Provider exceed the triggers in the Access Stimulation Rules, the IPES Provider will be deemed to be engaged in access stimulation. In such cases, we propose prohibiting an Intermediate Access Provider from charging an IXC tariffed charges for terminating switched access tandem switching and switched access transport for traffic bound to an IPES Provider whose traffic exceeds the ratios in sections 61.3(bbb)(1)(i) or 61.3(bbb)(1)(ii) of our Access Stimulation Rules. We propose that the IPES Provider be responsible for calculating its traffic ratios and for making the required notifications to the Intermediate Access Provider and the Commission. We likewise propose modifying the definition of Intermediate Access Provider to include entities delivering traffic to an IPES Provider.

64. We propose to use the same framework for determining when an IPES Provider that was engaged in access stimulation no longer is considered to be engaged in access stimulation, that we currently use for competitive LECs that have engaged in access stimulation. The Access Stimulation Rules currently require traffic ratios to be calculated at the end office. We propose rule modifications to apply this manner of traffic calculations to IPES Providers as well and that any final rules that are adopted will be effective 45 days after publication in the Federal Register .

65. The legal basis for any action that may be taken pursuant to the Further Notice is contained in sections 1, 2, 4(i), 201, 251, 254, 256, 303(r), and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201, 251, 254, 256, 303(r), and 403, and section 1.1 of the Commission's rules, 47 CFR 1.1.

66. The RFA directs agencies to provide a description of, and where feasible, an estimate of the number of small entities that may be affected by the proposed rule revisions, if adopted. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small-business concern” under the Small Business Act. A “small-business concern” is one which: (1) is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

67. Small Businesses, Small Organizations, Small Governmental Jurisdictions. Our actions, over time, may affect small entities that are not easily categorized at present. We therefore describe here, at the outset, three broad groups of small entities that could be directly affected herein. First, while there are industry specific size standards for small businesses that are used in the regulatory flexibility analysis, according to data from the SBA's Office of Advocacy, in general a small business is an independent business having fewer than 500 employees. These types of small businesses represent 99.9% of all businesses in the United States, which translates to 32.5 million businesses.

68. Next, the type of small entity described as a “small organization” is generally “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” The Internal Revenue Service (IRS) uses a revenue benchmark of $50,000 or less to delineate its annual electronic filing requirements for small exempt organizations. Nationwide, for tax year 2020, there were approximately 447,689 small exempt organizations in the U.S. reporting revenues of $50,000 or less according to the registration and tax data for exempt organizations available from the IRS.

69. Finally, the small entity described as a “small governmental jurisdiction” is defined generally as “governments of cities, counties, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand.” U.S. Census Bureau data from the 2017 Census of Governments indicate that there were 90,075 local governmental jurisdictions consisting of general purpose governments and special purpose governments in the United States. Of this number there were 36,931 general purpose governments (county, municipal and town or township) with populations of less than 50,000 and 12,040 special purpose governments—independent school districts with enrollment populations of less than 50,000. Accordingly, based on the 2017 U.S. Census of Governments data, we estimate that at least 48,971 entities fall into the category of “small governmental jurisdictions.”

70. Wired Telecommunications Carriers. The U.S. Census Bureau defines this industry as establishments primarily engaged in operating and/or providing access to transmission facilities and infrastructure that they own and/or lease for the transmission of voice, data, text, sound, and video using wired communications networks. Transmission facilities may be based on a single technology or a combination of technologies. Establishments in this industry use the wired telecommunications network facilities that they operate to provide a variety of services, such as wired telephony services, including VoIP services, wired (cable) audio and video programming distribution, and wired broadband internet services. By exception, establishments providing satellite television distribution services using facilities and infrastructure that they operate are included in this industry. Wired Telecommunications Carriers are also referred to as wireline carriers or fixed local service providers.

71. The SBA small business size standard for Wired Telecommunications Carriers classifies firms having 1,500 or fewer employees as small. U.S. Census Bureau data for 2017 show that there were 3,054 firms that operated in this industry for the entire year. Of this number, 2,964 firms operated with fewer than 250 employees. Additionally, based on Commission data in the 2021 Universal Service Monitoring Report, as of December 31, 2020, there were 5,183 providers that reported they were engaged in the provision of fixed local services. Of these providers, the Commission estimates that 4,737 providers have 1,500 or fewer employees. Consequently, using the SBA's small business size standard, most of these providers can be considered small entities.

72. Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to local exchange services. Providers of these services include both incumbent and competitive local exchange service providers. Wired Telecommunications Carriers is the closest industry with a SBA small business size standard. Wired Telecommunications Carriers are also referred to as wireline carriers or fixed local service providers. The SBA small business size standard for Wired Telecommunications Carriers classifies firms having 1,500 or fewer employees as small. U.S. Census Bureau data for 2017 show that there were 3,054 firms that operated in this industry for the entire year. Of this number, 2,964 firms operated with fewer than 250 employees. Additionally, based on Commission data in the 2021 Universal Service Monitoring Report, as of December 31, 2020, there were 5,183 providers that reported they were fixed local exchange service providers. Of these providers, the Commission estimates that 4,737 providers have 1,500 or fewer employees. Consequently, using the SBA's small business size standard, most of these providers can be considered small entities.

73. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the Commission nor the SBA have developed a small business size standard specifically for incumbent local exchange carriers. Wired Telecommunications Carriers is the closest industry with a SBA small business size standard. The SBA small business size standard for Wired Telecommunications Carriers classifies firms having 1,500 or fewer employees as small. U.S. Census Bureau data for 2017 show that there were 3,054 firms in this industry that operated for the entire year. Of this number, 2,964 firms operated with fewer than 250 employees. Additionally, based on Commission data in the 2021 Universal Service Monitoring Report, as of December 31, 2020, there were 1,227 providers that reported they were incumbent local exchange service providers. Of these providers, the Commission estimates that 929 providers have 1,500 or fewer employees. Consequently, using the SBA's small business size standard, the Commission estimates that the majority of incumbent local exchange carriers can be considered small entities.

74. Competitive Local Exchange Carriers (LECs). Neither the Commission nor the SBA has developed a size standard for small businesses specifically applicable to local exchange services. Providers of these services include several types of competitive local exchange service providers. Wired Telecommunications Carriers is the closest industry with a SBA small business size standard. The SBA small business size standard for Wired Telecommunications Carriers classifies firms having 1,500 or fewer employees as small. U.S. Census Bureau data for 2017 show that there were 3,054 firms that operated in this industry for the entire year. Of this number, 2,964 firms operated with fewer than 250 employees. Additionally, based on Commission data in the 2021 Universal Service Monitoring Report, as of December 31, 2020, there were 3,956 providers that reported they were competitive local exchange service providers. Of these providers, the Commission estimates that 3,808 providers have 1,500 or fewer employees. Consequently, using the SBA's small business size standard, most of these providers can be considered small entities.

75. Interexchange Carriers (IXCs). Neither the Commission nor the SBA have developed a small business size standard specifically for Interexchange Carriers. Wired Telecommunications Carriers is the closest industry with a SBA small business size standard. The SBA small business size standard for Wired Telecommunications Carriers classifies firms having 1,500 or fewer employees as small. U.S. Census Bureau data for 2017 show that there were 3,054 firms that operated in this industry for the entire year. Of this number, 2,964 firms operated with fewer than 250 employees. Additionally, based on Commission data in the 2021 Universal Service Monitoring Report, as of December 31, 2020, there were 151 providers that reported they were engaged in the provision of interexchange services. Of these providers, the Commission estimates that 131 providers have 1,500 or fewer employees. Consequently, using the SBA's small business size standard, the Commission estimates that the majority of providers in this industry can be considered small entities.

76. Local Resellers. Neither the Commission nor the SBA have developed a small business size standard specifically for Local Resellers. Telecommunications Resellers is the closest industry with a SBA small business size standard. The Telecommunications Resellers industry comprises establishments engaged in purchasing access and network capacity from owners and operators of telecommunications networks and reselling wired and wireless telecommunications services (except satellite) to businesses and households. Establishments in this industry resell telecommunications; they do not operate transmission facilities and infrastructure. Mobile virtual network operators (MVNOs) are included in this industry. The SBA small business size standard for Telecommunications Resellers classifies a business as small if it has 1,500 or fewer employees. U.S. Census Bureau data for 2017 show that 1,386 firms in this industry provided resale services for the entire year. Of that number, 1,375 firms operated with fewer than 250 employees. Additionally, based on Commission data in the 2021 Universal Service Monitoring Report, as of December 31, 2020, there were 293 providers that reported they were engaged in the provision of local resale services. Of these providers, the Commission estimates that 289 providers have 1,500 or fewer employees. Consequently, using the SBA's small business size standard, most of these providers can be considered small entities.

77. Cable Companies and Systems (Rate Regulation). The Commission has developed its own small business size standard for the purpose of cable rate regulation. Under the Commission's rules, a “small cable company” is one serving 400,000 or fewer subscribers nationwide. Based on industry data, there are about 420 cable companies in the U.S. Of these, only five have more than 400,000 subscribers. In addition, under the Commission's rules, a “small system” is a cable system serving 15,000 or fewer subscribers. Based on industry data, there are about 4,139 cable systems (headends) in the U.S. Of these, about 639 have more than 15,000 subscribers. Accordingly, the Commission estimates that the majority of cable companies and cable systems are small.

78. Cable System Operators (Telecom Act Standard). The Communications Act of 1934, as amended, contains a size standard for a “small cable operator,” which is “a cable operator that, directly or through an affiliate, serves in the aggregate fewer than one percent of all subscribers in the United States and is not affiliated with any entity or entities whose gross annual revenues in the aggregate exceed $250,000,000.” For purposes of the Telecom Act Standard, the Commission determined that a cable system operator that serves fewer than 677,000 subscribers, either directly or through affiliates, will meet the definition of a small cable operator based on the cable subscriber count established in a 2001 Public Notice. Based on industry data, only four cable system operators have more than 677,000 subscribers. Accordingly, the Commission estimates that the majority of cable system operators are small under this size standard. We note however, that the Commission neither requests nor collects information on whether cable system operators are affiliated with entities whose gross annual revenues exceed $250 million. Therefore, we are unable at this time to estimate with greater precision the number of cable system operators that would qualify as small cable operators under the definition in the Communications Act.

79. All Other Telecommunications. This industry is comprised of establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Providers of internet services ( e.g., dial-up ISPs) or voice over internet protocol (VoIP) services, via client-supplied telecommunications connections are also included in this industry. The SBA small business size standard for this industry classifies firms with annual receipts of $35 million or less as small. U.S. Census Bureau data for 2017 show that there were 1,079 firms in this industry that operated for the entire year. Of those firms, 1,039 had revenue of less than $25 million. Based on this data, the Commission estimates that the majority of “All Other Telecommunications” firms can be considered small.

80. In the Further Notice, we propose and seek comment on rule changes that will affect LECs, Intermediate Access Providers, and IPES Providers. We propose to modify our Access Stimulation Rules to address arbitrage which takes place when an IPES Provider is incorporated into the call flow. In the Further Notice, we propose rules to further limit or eliminate the occurrence of access arbitrage, including access stimulation, which could affect potential reporting requirements. The proposed rules also contain recordkeeping, reporting and third-party notification requirements for access-stimulating LECs and IPES Providers, which may impact small entities. Some of the proposed requirements may also involve tariff changes.

81. We propose that when a LEC delivers traffic to an IPES Provider and the terminating-to-originating traffic ratios of the IPES Provider exceed the triggers in the Access Stimulation Rules, the IPES Provider will be deemed to be engaged in access stimulation. We propose that the IPES Provider be responsible for calculating its traffic ratios and for making the required third-party notifications. As such, providers may need to modify their in-house recordkeeping to comply with the proposed rules. Under our proposal, if the IPES Provider's ratios exceed the applicable rule triggers, it would have to notify the Intermediate Access Provider, the Commission, and affected IXCs. The Intermediate Access Provider would then be prohibited from charging IXCs tariffed rates for terminating switched access tandem switching or terminating switched access transport charges.

82. Our proposals may also require affected LECs and Intermediate Access Providers to file tariff revisions to remove any tariff provisions they have filed for terminating tandem switched access or terminating switched access transport charges. Although we decline to opine on whether our proposals may require carriers to file further tariff revisions, affected carriers may nonetheless choose to file additional tariff revisions to add provisions allowing them to charge access-stimulating LECs or access-stimulating IPES Providers, rather than IXCs, for the termination of traffic.

83. As an alternative to imposing a measurement requirement on the IPES Provider, we seek comment on requiring that the Intermediate Access Provider calculate the IPES Provider's traffic ratios for purposes of our Access Stimulation Rules. If adopted, this proposal could impose recordkeeping, reporting, and third-party notification requirements on Intermediate Access Providers. Under this alternative proposal, if the Intermediate Access Provider cannot perform this calculation, or the IPES Provider will not share relevant traffic ratio information with the Intermediate Access Provider, the Intermediate Access Provider would not be able to charge IXCs terminating switched access tandem switching or terminating switched access transport charges.

84. Our proposals may also necessitate that affected carriers make various revisions to their billing systems. For example, Intermediate Access Providers that serve LECs with access-stimulating IPES Providers in the call path (or that deliver traffic directly to an IPES Provider when no LEC is in the call path) will no longer be able to charge IXCs terminating tandem switched access rates and transport charges. As Intermediate Access Providers cease billing IXCs they will likely need to make corresponding adjustments to their billing systems.

85. In the Further Notice, we also seek comment on other actions we could take to further discourage or eliminate access arbitrage activity. Rules which achieve these objectives could potentially affect recordkeeping, reporting, and third-party notification requirements.

86. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance and reporting requirements under the rules for such small entities; (3) the use of performance rather than design standards; and (4) an exemption from coverage of the rule, or any part thereof, for such small entities. We expect to consider all of these factors when we receive substantive comment from the public and potentially affected entities.

87. In this Further Notice, we invite comment on a number of proposals and alternatives to modify our Access Stimulation Rules. The Commission has found these arbitrage practices inefficient and to ultimately increase consumer telecommunications rates. Therefore, in the Further Notice, we propose rules to further limit or eliminate the occurrence of access stimulation in turn promoting the efficient function of the nation's telecommunications network. We believe that if companies are able to operate with greater efficiency this will benefit the communications network as a whole, and its users, by allowing companies to increase their investment in broadband deployment.

88. Thus, we propose to adopt rules to address arbitrage which takes place when an IPES Provider is incorporated into the call flow. We propose that when a LEC delivers traffic to an IPES Provider and the terminating-to-originating traffic ratios of the IPES Provider exceed the triggers in the Access Stimulation Rules, the IPES Provider will be deemed to be engaged in access stimulation. In such cases, we propose that the Intermediate Access Provider would be prohibited from imposing tariffed terminating tandem switching and transport access charges on IXCs sending traffic to an IPES Provider or the IPES Provider's end-user customer. As an alternative to imposing a measurement requirement on the IPES Provider, we could require that the Intermediate Access Provider calculate the IPES Provider's traffic ratios for purposes of our Access Stimulation Rules. Under this alternative proposal, if the Intermediate Access Provider cannot perform this calculation, or the IPES Provider will not share relevant traffic ratio information with the Intermediate Access Provider, we would create a presumption that the IPES Provider's traffic exceeds the Access Stimulation Rule ratios. In that case, the Intermediate Access Provider would not be able to charge IXCs terminating switched access tandem switching or terminating switched access transport charges.

89. We also seek comment on whether IPES Providers should be treated as LECs for the purpose of our Access Stimulation Rules. We received a proposal in the record that the Commission should “issue a declaratory ruling clarifying that IPES Providers are treated as LECs for the purpose of the access stimulation rules.” We seek interested parties' opinion on whether adopting such a proposal would be more or less burdensome on small businesses.

90. In the Further Notice, we also propose to require carriers to comply with any adopted rules within 45 days. We seek comment on this time period and whether interested parties foresee difficulties that would affect the time it will take to comply with the revised rules. We expect that time period will allow even small entities adequate time to amend their tariffs, if needed, and meet the requirements in the proposed rules.

91. Comment is sought on how best to address access arbitrage activities. In the Further Notice, we seek comment on the costs and benefits of these proposals. Providing carriers, especially small carriers, with options will enable them to best assess the financial effects on their operations allowing them to determine how best to respond. We invite comment on how our proposals may affect the costs and benefits to carriers and their customers and the choices they make, as they provide and receive telecommunications services. We invite commenters to quantify both the costs and the benefits of our proposals and of any alternative approaches to reducing access stimulation activities.

92. We expect to consider the economic impact on small entities, as identified in comments filed in response to the Further Notice and this IRFA, in reaching our final conclusions and promulgating rules in this proceeding. The proposals and questions laid out in the Further Notice are designed to ensure the Commission has a complete understanding of the benefits and potential burdens associated with the different proposed actions.

93. None.

94. Contact Person. For further information about this proceeding, please contact Lynne Engledow, FCC Wireline Competition Bureau, Pricing Policy Division, 45 L Street NE, Washington, DC 20554, 202-418-1520, Lynne.Engledow@fcc.gov .

95. Accordingly, it is ordered , pursuant to sections 1, 2, 4(i), 201, 251, 254, 256, 303(r), and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 152, 154(i), 201, 251, 254, 256, 303(r), and 403 and section 1.1 of the Commission's rules, 47 CFR 1.1, this Further Notice of Proposed Rulemaking is adopted.

96. It is further ordered that pursuant to applicable procedures set forth in sections 1.415 and 1.419 of the Commission's Rules, 47 CFR 1.415, 1.419, interested parties may file comments on this Further Notice of Proposed Rulemaking on or before 30 days after publication of this Further Notice of Proposed Rulemaking in the Federal Register , and reply comments on or before 60 days after publication of this Further Notice of Proposed Rulemaking in the Federal Register .

97. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Further Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

For the reasons set forth, the Federal Communications Commission proposes to amend 47 CFR parts 51, 61 and 69 as shown below.