Comments Invited

The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under ADDRESSES . Include “Docket No. FAA-2023-1400; Project Identifier AD-2022-01374-T” at the beginning of your comments. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. The FAA will consider all comments received by the closing date and may amend this proposal because of those comments.

Except for Confidential Business Information (CBI) as described in the following paragraph, and other information as described in 14 CFR 11.35, the FAA will post all comments received, without change, to regulations.gov, including any personal information you provide. The agency will also post a report summarizing each substantive verbal contact received about this NPRM.

CBI is commercial or financial information that is both customarily and actually treated as private by its owner. Under the Freedom of Information Act (FOIA) (5 U.S.C. 552), CBI is exempt from public disclosure. If your comments responsive to this NPRM contain commercial or financial information that is customarily treated as private, that you actually treat as private, and that is relevant or responsive to this NPRM, it is important that you clearly designate the submitted comments as CBI. Please mark each page of your submission containing CBI as “PROPIN.” The FAA will treat such marked submissions as confidential under the FOIA, and they will not be placed in the public docket of this NPRM. Submissions containing CBI should be sent to Hien T. Nguyen, Aviation Safety Engineer, FAA, 2200 South 216th St., Des Moines, WA 98198; phone: 206-231-3977; email: Hien.T.Nguyen@faa.gov. Any commentary that the FAA receives that is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA has received a report indicating that the loss of a ground through the P6 panel results in the failure in the SPCU. The SPCU provides AC and DC electrical power in the event there is a loss of power provided by primary electrical sources. Currently, there is a single ground strap between the P6 structure and airplane primary structure. This design was carried over to the 737 MAX airplanes from the 737 NG airplanes. The SPCU tray on the 737 MAX airplanes has an inherent bond path through the P6 structure. However, the requirements for redundant grounds to the SPCU tray did not flow down to include redundant grounds through the P6 panel to airplane primary structure. During a bonding analysis, it was determined that separate redundant ground paths from the two ground blocks on the SPCU tray to airplane primary structure are required in order to prevent a single point of failure condition, which could result in a potentially confusing combination of flight deck effects and a combination of lost functionality. This condition, if not addressed, would result in loss of significant flightcrew instrumentation and displays and may lead to loss of continued safe flight and landing (CSFL).

The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop on other products of the same type design.

The FAA reviewed Boeing Alert Requirements Bulletin 737-24A1248 RB, dated May 16, 2022. This service information specifies procedures to install new bonding jumpers from the P6 panel structure to the primary structure to provide a redundant ground path for the SPCU.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in ADDRESSES .

This proposed AD would require accomplishing the actions specified in the service information already described, except for any differences identified as exceptions in the regulatory text of this proposed AD. For information on the procedures and compliance times, see this service information at regulations.gov under Docket No. FAA-2023-1400.

The FAA estimates that this AD, if adopted as proposed, would affect 79 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:

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

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

The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD 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.

For the reasons discussed above, I certify this proposed regulation:

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

(2) Would not affect intrastate aviation in Alaska, and

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

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

Background

This notice of proposed rulemaking (NPRM) contains proposed regulations under sections 1502, 1503, 1552, and 1563 of the Internal Revenue Code of 1986 (Code). These proposed regulations primarily would revise the Income Tax Regulations (26 CFR part 1) under section 1502 (consolidated return regulations). Section 1502 authorizes the Secretary of the Treasury or the Secretary's delegate (Secretary) to prescribe consolidated return regulations for an affiliated group of corporations that join in filing (or that are required to join in filing) a consolidated return (consolidated group) to clearly reflect the Federal income tax liability of the consolidated group and to prevent avoidance of such tax liability. See § 1.1502-1(h) (defining the term “consolidated group”). For purposes of carrying out those objectives, section 1502 also permits the Secretary to prescribe rules that may be different from the provisions of chapter 1 of the Code (chapter 1) that would apply if the corporations composing the consolidated group filed separate returns. Terms used in the consolidated return regulations generally are defined in § 1.1502-1.

The proposed regulations also would revise or propose to remove other regulations under the Code. These regulations are set forth in (i) the Income Tax Regulations (26 CFR part 1), (ii) the Temporary Income Tax Regulations under the Revenue Act of 1978 (26 CFR part 5), (iii) the Regulations on Procedure and Administration (26 CFR part 301), and (iv) the OMB Control Numbers under the Paperwork Reduction Act Regulations (26 CFR part 602).

In this NPRM, the Treasury Department and the IRS have proposed revisions to the consolidated return regulations to (i) eliminate obsolete or otherwise outdated provisions, (ii) modernize the language and improve the clarity of the regulations, and (iii) facilitate taxpayer compliance. As an initial matter, the proposed regulations would update the consolidated return regulations to reflect statutory changes made by legislation enacted during the last 50-plus years and remove consolidated return regulations that have no practical applicability to taxpayers. The proposed regulations also would revise the consolidated return regulations to eliminate obsolete or otherwise incorrect terms and cross-references. Lastly, the proposed regulations generally would remove transition rules for transactions occurring in or before 2009 because the taxable years affected by such transition rules generally are closed and the rules have no practical applicability to taxpayers.

The proposed regulations also would update the consolidated return regulations and the regulations under section 1563 to eliminate antiquated or regressive terminology. For example, the proposed regulations would replace all gender-specific pronouns and other identifiers in the consolidated return regulations with gender-neutral pronouns and identifiers. The proposed regulations also would revise the consolidated regulations to identify (i) American Samoa, (ii) the Commonwealth of the Northern Mariana Islands, (iii) the Commonwealth of Puerto Rico, (iv) Guam, and (v) the U.S. Virgin Islands as “territories” of the United States rather than “possessions.” Each of those jurisdictions has its own government and its own tax system. These revisions are consistent with, and in furtherance of, the Treasury Department's Equity Action Plan, as well as Executive Order 13985 of January 20, 2021, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, 86 FR 7009 (January 25, 2021).

The proposed regulations also withdraw or partially withdraw numerous NPRMs. These NPRMs include: (i) NPRMs that are incorporated, in revised form, into these proposed regulations or that were incorporated into final regulations in revised form; (ii) a NPRM that became obsolete when proposed regulations provided in a subsequent, discrete NPRM were adopted as final regulations; and (iii) NPRMs that cross-referenced temporary regulations (the text of which served as the text for those proposals) that were removed, have expired, or otherwise have become obsolete. Additionally, the proposed regulations propose to withdraw temporary regulations that (i) no longer have practical applicability to taxpayers, or (ii) would be replaced by final regulations proposed by this document.

With regard to each provision of the consolidated return regulations that these proposed regulations would remove, the Treasury Department and the IRS generally have proposed to reserve the affected provision. This approach is intended solely to avoid cascading changes to cross-references throughout the consolidated return regulations, thereby preserving historical citations and reducing potential confusion for taxpayers. Accordingly, the reserving of those provisions does not indicate in any manner that the Treasury Department and the IRS are studying, or intend to study, any of the one or more topics addressed by the reserved provision.

Lastly, the proposed regulations would remove numerous provisions that cross-reference prior-law editions of the Code of Federal Regulations (CFR). Following adoption of the proposed regulations as final regulations, taxpayers may consult the CFR for a particular year to determine the rules applicable to that year.

The Treasury Department and the IRS request comments on whether any aspect of the proposed regulations would effectuate a substantive revision of the consolidated return regulations, as opposed to a mere update or similar modification. Additionally, comments are requested on whether any provision proposed to be removed or revised by this document should be retained in its form as of August 4, 2023. Lastly, the Treasury Department and the IRS request comments identifying any other provision of the consolidated return regulations that should be revised consistent with the scope of the proposed regulations, such as additional provisions of the consolidated return regulations that are obsolete or otherwise outdated.

The proposed regulations would remove provisions of the consolidated return regulations that have been rendered obsolete by enacted legislation.

Sections 1.1502-1(f)(2) and (3) currently reference section 1562 of the Internal Revenue Code of 1954 (1954 Code), which allowed controlled groups of corporations (as defined in section 1563(a) of the 1954 Code) to elect multiple surtax exemptions. Section 1562 of the 1954 Code was repealed by section 401(a)(2) of the Tax Reform Act of 1969, Public Law 91-172, 83 Stat. 487 (December 30, 1969). The proposed regulations would remove from § 1.1502-1(f)(2) and (3) all references to section 1562 of the 1954 Code.

The proposed regulations would remove § 1.1502-11(a)(6), which provides that consolidated taxable income for a consolidated return year is determined by taking into account any “consolidated section 922 deduction.” Section 922 of the 1954 Code (providing a deduction for Western Hemisphere trade corporations) was repealed for taxable years beginning after December 31, 1979, by section 1052(b) of the Tax Reform Act of 1976, Public Law 94-455, 90 Stat. 1520 (October 4, 1976). In 1984, a subsequent section 922 (relating to foreign sales corporations) was added to the 1954 Code by section 801(a) of the Deficit Reduction Act of 1984, Public Law 98-369, 98 Stat. 494 (July 18, 1984), which defined the term “FSC” for purposes of statutory provisions regarding the taxation of foreign sales corporations. This subsequent section 922 of the 1954 Code was redesignated as section 922 of the Code (by section 2(a) of the Tax Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085 (October 22, 1986)) before its repeal by section 2 of the FSC Repeal and Extraterritorial Income Exclusion Act of 2000, Public Law 106-519, 114 Stat. 2423 (November 15, 2000). This repeal applies to transactions after September 30, 2000. See section 5(a) of the FSC Repeal and Extraterritorial Income Exclusion Act of 2000.

The proposed regulations also would revise § 1.1502-11 to make other minor updates. Specifically, the proposed regulations would remove references to rules applicable to taxable years beginning before January 1, 1977, because those rules no longer have practical applicability to taxpayers. In addition, the proposed regulations would remove references to prior law regulations proposed to be withdrawn by this document.

The proposed regulations would remove § 1.1502-12(m), which provides that no deduction under now-repealed section 922 of the 1954 Code is taken into account in determining taxable income of separate corporations (that is, separate taxable income). See part II.A.2 of this Explanation of Provisions (describing the repeal of section 922 of the 1954 Code). The proposed regulations also would revise § 1.1502-12(n) to remove references to section 244 of the Code, which related to a special dividends-received deduction (DRD) for dividends received on certain preferred stock, and former section 247 of the Code, which related to a special DRD for dividends paid on certain preferred stock of public utilities. Sections 244 and 247 of the Code were repealed by section 221(a)(41)(A) of Division A of the Tax Increase Prevention Act of 2014, Public Law 113-295, 128 Stat. 4010 (December 19, 2014). Although section 13821(b)(1) of Public Law 115-97, 131 Stat. 2054 (December 22, 2017), commonly referred to as the “Tax Cuts and Jobs Act” (TCJA), added a new section 247 to the Code, that statutory provision allows deductions for certain contributions to Alaska Native Settlement Trusts and therefore is not applicable with regard to DRDs.

The proposed regulations would revise § 1.1502-13(c)(5) to remove a reference to section 595 of the Code, which provided nonrecognition treatment for foreclosure on property that secured the payment of indebtedness. Section 595 of the Code was repealed by section 1616(b)(8) of the Small Business Jobs Protection Act of 1996, Public Law 104-188, 110 Stat. 1755 (August 20, 1996).

Section 1.1502-24(a) sets forth a rule to determine the amount of the consolidated charitable contributions deduction for a consolidated group. The proposed regulations would revise § 1.1502-24(c) to remove the reference to section 242 of the 1954 Code, which allowed for a deduction for partially tax-exempt interest for C corporations. Section 242 of the 1954 Code was repealed by section 1901(a)(33) of the Tax Reform Act of 1976.

The proposed regulations would revise § 1.1502-26 by removing paragraphs (a)(2) through (6) of that section, which provide rules to calculate a consolidated DRD by taking into account thrift institution members of the group (including such members that compute a deduction based on the “percentage of taxable income method” under section 593(b)(2) of the Code). Section 1616(a) of the Small Business Jobs Protection Act of 1996 added section 593(f) to the Code. Section 593(f) provides that sections 593(a) through (d) of the Code do not apply to any taxable year beginning after December 31, 1995.

As discussed in part II.A.3 of this Explanation of Provisions, (i) section 247 of the Code was repealed by section 221(a)(41)(A) of Division A of the Tax Increase Prevention Act of 2014; and (ii) section 13821(b)(1) of the TCJA added to the Code a new section 247, which allows deductions for certain contributions to Alaska Native Settlement Trusts. Accordingly, the proposed regulations would remove § 1.1502-27, which provides rules under the version of section 247 of the Code repealed by the Tax Increase Prevention Act of 2014. The proposed regulations also would (i) remove § 1.1502-11(a)(8), which solely provides a reference to a consolidated section 247 deduction computed under § 1.1502-27, and (ii) revise §§ 1.1502-24(c) and 1.1502-43(b)(2)(iii), to remove a cross-reference to § 1.1502-27 in each respective section.

The proposed regulations would remove § 1.1502-42, which provides rules for members of a consolidated group that are thrift institutions (that is, any member that is described in section 593(a) of the Code). Section 1.1502-42 became obsolete as a result of the enactment of section 593(f) of the Code by section 1616(a) of the Small Business Jobs Protection Act of 1996, which provides that sections 593(a) through (d) of the Code do not apply to any taxable year beginning after December 31, 1995. The proposed regulations also would remove § 1.1502-12(q), which provides solely that a thrift institution's deduction under section 593(b)(2) of the Code is determined under § 1.1502-42.

The Treasury Department and the IRS published § 5.1502-45 as temporary regulations relating to the application of the at-risk limitations under section 465 of the 1954 Code to corporations that join with their subsidiaries in filing a consolidated return. See TD 7685, published in the Federal Register (45 FR 16484) on March 14, 1980 (at-risk limitation temporary regulations). Prior to the publication of § 5.1502-45, the Treasury Department determined that consolidated groups were actively considering transactions or plans to avoid the at-risk limitations. See preamble to the at-risk limitation temporary regulations, 45 FR 16484. Under the temporary regulations, if a parent meets the stock ownership test for a personal holding company, a subsidiary's loss from an activity to which section 465 of the Code (as redesignated by section 2(a) of the Tax Reform Act of 1986) applies will be allowed as a deduction on a consolidated return only to the extent that the parent is at risk in the activity of a subsidiary, under the principles of section 465 of the Code, as of the close of the subsidiary's taxable year. See id.

Section 5.1502-45(a)(4) refers to section 465(c)(3)(D) of the 1954 Code, which was repealed by section 503(a) of the Tax Reform Act of 1986. The Treasury Department and the IRS understand that no proposed regulations ever were published with regard to § 5.1502-45. Therefore, in addition to addressing the reference to repealed section 465(c)(3)(D) of the 1954 Code, this document proposes the entire text of § 5.1502-45 as proposed § 1.1502-45 and proposes to withdraw § 5.1502-45. The Treasury Department and the IRS request comments on proposed § 1.1502-45.

The proposed regulations would remove or revise regulations under section 1502 and other provisions of the Code that implement statutory provisions that have been substantially revised since those regulations were promulgated.

Section 1.167(c)-1(a)(5) provides a reference to certain provisions of the consolidated return regulations that address depreciation of property received by a member of an affiliated group from another member of the group during a consolidated return period. To implement amendments made by the TCJA to section 168(k) of the Code, the Department of the Treasury and the Internal Revenue Service published final regulations under § 1.1502-68 that provide guidance regarding the additional first-year depreciation deduction under section 168(k). See TD 9916, published in the Federal Register (85 FR 71734) on November 10, 2020. See also sections 12001(b)(13), 13201, and 13204 of the TCJA. Accordingly, the proposed regulations would revise § 1.167(c)-1(a)(5) to include a reference to § 1.1502-68.

The proposed regulations would remove paragraph (g) of § 1.1502-1, which provides rules to determine the occurrence of a consolidated return change of ownership (CRCO). The CRCO rules generally paralleled the ownership change rules of section 382 of the 1954 Code, as that section existed prior to enactment of the Tax Reform Act of 1986. See preamble to the NPRM published in the Federal Register (56 FR 4228, 4232) on February 4, 1991. Following the complete revision of section 382 of the 1954 Code by the Tax Reform Act of 1986, the Treasury Department and the IRS determined that the policies underlying the CRCO rules were subsumed by the single-entity approach to the application of section 382 of the Code to consolidated groups. See section 621(a) of the Tax Reform Act of 1986. See also 56 FR at 4232. Accordingly, the Treasury Department and the IRS replaced the CRCO rules with the consolidated section 382 rules set forth in §§ 1.1502-90 through 1.1502-99. See TD 8679, published in the Federal Register (61 FR 33313) on June 27, 1996.

The proposed regulations would remove § 1.1502-3(e), which applies only to a CRCO that occurred during a consolidated return year for which the due date of the Federal income tax return (without extensions) is on or before March 13, 1998. See § 1.1502-3(e)(3).

The Treasury Department and the IRS published proposed regulations in the Federal Register (57 FR 62251) on December 30, 1992, regarding the computation of the former alternative minimum tax (Former AMT) by consolidated groups and the allocation of related items (consolidated Former AMT proposed regulations). The proposed regulations would incorporate in revised form part of the consolidated Former AMT proposed regulations that proposed to amend the consolidated estimated tax provisions in § 1.1502-5. The Treasury Department and the IRS received no comments on § 1.1502-5 as proposed in the consolidated Former AMT proposed regulations.

The proposed regulations would revise § 1.1502-5 to reflect the amendments to section 6655, which provides penalties for corporations failing to pay estimated income tax, made by section 10301(a) of the Omnibus Budget Reconciliation Act of 1987, Public Law 100-203, 101 Stat. 1330 (December 22, 1987). The proposed regulations also would remove references to section 6154 of the Code, which provided special rules for installment payments of estimated tax by corporations prior to the repeal of section 6154 of the Code by section 10301(b)(1) of the Omnibus Budget Reconciliation Act of 1987, and would add a reference to section 59A, which was added to section 6655(g)(1) by section 14401(d)(4)(A) of the TCJA.

The consolidated Former AMT proposed regulations provided guidance on consolidated estimated taxes under the Former AMT in section 55 of the Code and the environmental tax under former section 59A of the Code. The Former AMT was made inapplicable to corporations by section 12001(a) of the TCJA, and former section 59A of the Code was repealed by section 221(a)(12)(A), Division A, of the Tax Increase Prevention Act of 2014. Current section 59A of the Code (as added by section 14401(a) of the TCJA) imposes the base erosion and anti-abuse tax, commonly referred to as the “BEAT.”

As a result of those amendments to the Code, the proposed regulations would make the following revisions to § 1.1502-5. First, the proposed regulations would not incorporate provisions from the consolidated Former AMT proposed regulations that addressed these issues. However, section 10101 of Public Law 117-169, 136 Stat. 1818 (August 16, 2022), commonly referred to as the Inflation Reduction Act of 2022, amended section 55 of the Code to impose a new corporate alternative minimum tax based on adjusted financial statement income. This new corporate alternative minimum tax is commonly referred to as the corporate alternative minimum tax, or CAMT. Therefore, the proposed regulations would modify the definition of the term “tax” in § 1.1502-5(b)(5) to add a reference to section 55(a). In addition, the proposed regulations would add a reference to section 59A (that is, the BEAT).

The Treasury Department and the IRS are actively working on guidance to implement the CAMT, including guidance on the application of the CAMT to consolidated groups. Accordingly, issues regarding the substantive operation of the CAMT will be addressed in that guidance. However, these proposed regulations would provide guidance regarding the computation of consolidated estimated taxes to take into account the CAMT liability of the consolidated group.

The proposed regulations would revise § 1.1502-9 to account for changes made by final foreign tax credit regulations (TD 9882) published in the Federal Register (84 FR 69022) on December 17, 2019. The final foreign tax credit regulations provide guidance relating to the determination of the foreign tax credit under the Code, implementing statutory changes made by the TCJA. In particular, the proposed regulations would revise § 1.1502-9 to remove references to the fair market value method option for interest expense apportionment, which was repealed by section 14502 of the TCJA. Relatedly, the proposed regulations would (1) update citations set forth in §§ 1.1502-9(a) and 1.1502-9(c)(2)(ii) and (iii), and (2) add a reference to § 1.861-13. In addition, the proposed regulations would update an internal cross-reference in § 1.1502-9(b)(1).

Section 1.1502-12(g) was added to the consolidated return regulations by final regulations (TD 7246) published in the Federal Register (38 FR 758) on January 4, 1973. Section 1.1502-12(g) provides that, in the computation of the deduction under section 167 of the 1954 Code, property does not lose its character as new property as a result of a transfer from one member to another member during a consolidated return year if certain conditions are satisfied. Since the date of those final regulations, extensive changes to the depreciation rules of the Code have made § 1.1502-12(g) obsolete. See, for example, section 201 of the Economic Recovery Tax Act of 1981, Public Law 97-34, 95 Stat. 172 (August 13, 1981) (enacting section 168 of the 1954 Code, which provided the accelerated cost recovery system); section 201(a) of the Tax Reform Act of 1986 (amending section 168 of the Code, as redesignated by section 2(a) of the Tax Reform Act of 1986, to replace generally the accelerated cost recovery system with the modified accelerated cost recovery system).

As a result of the obsolescence of § 1.1502-12(g) due to the above-described enacted legislation, the proposed regulations would remove that provision. Relatedly, the proposed regulations would revise §§ 1.57-1(b)(4)(ii) and 1.167(c)-1(a)(5) to remove cross-references to § 1.1502-12(g). The proposed regulations also would remove the second sentence of § 1.1502-17(a), which refers the reader to § 1.1502-12(g) for the treatment of depreciable property after a transfer within the group.

As noted in part II.A.5 of this Explanation of Provisions, § 1.1502-24(a) sets forth a rule to determine the amount of the consolidated charitable contributions deduction for a group. Section 1.1502-24(a)(2) includes a reference to “five percent” of the adjusted consolidated taxable income of a group, which is based on section 170(b)(2) of the 1954 Code, as that section existed prior to enactment of the Economic Recovery Tax Act of 1981. Section 263(a) of the Economic Recovery Tax Act of 1981 amended section 170(b)(2) of the 1954 Code to increase the deduction limitation for corporations from 5 percent of the taxpayer's total income for a taxable year to 10 percent of that income.

The proposed regulations would revise § 1.1502-24(a)(2) to replace the reference to “five percent” with a reference to the “percentage limitation on the total charitable contribution deduction provided in section 170(b)(2)(A).” The Treasury Department and the IRS have proposed this revision, as opposed to a reference to “10 percent” (as currently set forth in section 170(b)(2)(A) of the Code), to reduce the need to provide future statutory updates to § 1.1502-24. See paragraph 9 of the Proposed Amendments to the Regulations, set forth in the NPRM (REG-101652-10) published in the Federal Register (80 FR 33211) on June 11, 2015.

Section 1.1502-26 provides rules for determining the consolidated DRD for the taxable year of a group. On several occasions since the publication of the original version of § 1.1502-26 in 1966, Congress has enacted legislation that amended the corporate DRD sections of the 1954 Code and the Code—most recently by section 13002 of the TCJA. To update § 1.1502-26 to reflect the corporate DRD provisions of the Code, the proposed regulations would revise § 1.1502-26(a) to replace the reference to the 85-percent DRD (reflecting the rate set forth in section 246(b)(1) of the 1954 Code, prior to the enactment of section 611(a)(3) of the Tax Reform Act of 1986) with a reference to the limitation on the aggregate amount of dividends-received deductions described in section 246(b) of the Code.

In addition, the proposed regulations would strike the reference to section 244 of the Code in § 1.1502-26(a), and the reference to section 247 of the Code in § 1.1502-26(b), both of which were repealed by section 221(a)(41)(A) of Division A of the Tax Increase Prevention Act of 2014. The proposed regulations also would revise the examples in § 1.1502-26(c) to reflect the updates made to § 1.1502-26.

Section 1.1502-34 provides that, for purposes of §§ 1.1502-1 through 1.1502-80, in determining the stock ownership of a member of a group in another corporation (issuing corporation) for purposes of determining the application of now-repealed section 333(b) of the 1954 Code, section 165(g)(3)(A) of the Code, section 332(b)(1) of the Code, section 351(a) of the Code, section 732(f) of the Code, or section 904(f) of the Code, in a consolidated return year, there is included stock owned by all other members of the group in the issuing corporation. Section 1.1502-34 also provides that the special rule for minority shareholders in now-repealed section 337(d) of the 1954 Code does not apply with respect to amounts received by applicable member shareholders in a liquidation of the issuing member.

Numerous statutory amendments have impacted the provisions described in § 1.1502-34. First, section 333 of the 1954 Code was repealed by section 631(e)(3) of the Tax Reform Act of 1986. In addition, section 631(a) of the Tax Reform Act of 1986 struck section 337 of the 1954 Code and replaced that provision with section 337 of the Code, which sets forth a subsection (d) that provides the Secretary with authority to prescribe regulations that are necessary or appropriate to carry out the purposes of General Utilities repeal. Lastly, section 337(c) of the Code was amended by section 10223(a) of title X of the Omnibus Budget Reconciliation Act of 1987 to clarify that, for purposes of section 337 of the Code, “the determination of whether any corporation is an 80-percent distributee shall be made without regard to any consolidated return regulation.”

The proposed regulations would revise § 1.1502-34 to reflect those statutory amendments. Specifically, the proposed regulations would revise § 1.1502-34 to remove references to sections 333 and 337(d) of the 1954 Code. To reduce the need for future updates, the proposed regulations also would replace the reference to “§§ 1.1502-1 through 1.1502-80” with a reference to “the consolidated return regulations,” as defined in proposed § 1.1502-1(g). See part II.D.1 of this Explanation of Provisions.

Section 1.1502-79(d) provides rules addressing the apportionment of carryover and carryback of consolidated unused foreign tax to separate return years. The proposed regulations would update § 1.1502-79 to reflect changes to the foreign tax credit rules enacted since the regulation was issued as part of the 1966 final consolidated return regulations (TD 6894), published in the Federal Register (31 FR 11794) on September 8, 1966.

Specifically, the proposed regulations would revise § 1.1502-79(d) to remove references to the per-country foreign tax credit limitation that was repealed by section 1031(a) of the Tax Reform Act of 1976, update citations from section 904(d) to section 904(c) to reflect amendments to the 1954 Code made by section 1031(a) of the Tax Reform Act of 1976, and update a cross-reference from § 1.1502-4(e) to § 1.1502-4(d) to reflect the revision of § 1.1502-4 made by final regulations (TD 9922) published in the Federal Register (85 FR 71998) on November 12, 2020.

Section 1.1552-1 requires generally that, for purposes of determining the earnings and profits of each member of an affiliated group that is required to be included in a consolidated return for the group filed for a taxable year beginning after December 31, 1953, and ending after August 16, 1954, the tax liability of the group is allocated among the members of the group in accordance with certain elected methods under § 1.1552-1(c). See § 1.1552-1(a). Currently, § 1.1552-1(a)(2)(ii)( i ) contains references to a corporate surtax exemption.

However, section 301(a) of the Revenue Act of 1978, Public Law 95-600, 92 Stat. 2763 (November 6, 1978), struck section 11 of the 1954 Code and replaced that section with a new section 11 of the 1954 Code, which set forth a corporate income tax rather than a corporate surtax. Accordingly, the proposed regulations would revise § 1.1552-1(a)(2)(ii)( i ) to remove the reference to the repealed corporate surtax.

Section 1563(a) and 1.1563-1 define the term “controlled group of corporations” for purposes of sections 1561 through 1563 of the Code as including a “parent-subsidiary controlled group.” Section 1563(a)(1) defines a parent-subsidiary controlled group. In this regard, section 1563(d)(1) provides rules for determining stock ownership for purposes of determining whether a corporation is a member of a parent-subsidiary controlled group of corporations within the meaning of section 1563(a)(1). Section 1.1563-1(a)(2) incorporates these rules in defining a parent-subsidiary controlled group.

Prior to amendment by the Technical and Miscellaneous Revenue Act of 1988, Public Law 100-647, 102 Stat. 3342 (November 10, 1988), section 1563(d)(1) of the Code provided that for purposes of determining whether a corporation is a member of a parent-subsidiary controlled group of corporations, stock owned by a corporation means (A) stock owned directly by such corporation, and (B) stock owned with the application of section 1563(e)(1), which provides constructive ownership rules related to options to acquire stock. Similarly, § 1.1563-1(a)(2)(i)(A) and (B) provide that ownership of stock for purposes of determining a parent-subsidiary controlled group takes into account stock owned “(directly and with the application of § 1.1563-3(b)(1), relating to options).”

Section 1018(s)(3)(A) of the Technical and Miscellaneous Revenue Act of 1988 amended section 1563(d)(1)(B) to expand the application of the constructive ownership rules of section 1563(e) for purposes of section 1563(d)(1) to include the constructive ownership rules of section 1563(e)(2) relating to attribution from partnerships and section 1563(e)(3) relating to attribution from estates or trusts. Accordingly, the proposed regulations would revise § 1.1563-1(a)(2)(i)(A) and (B) to include references to the constructive stock ownership rules in § 1.1563-3(b)(2) that attribute ownership of stock directly or indirectly owned by or for a partnership and the constructive stock ownership rules in § 1.1563-3(b)(3) that attribute ownership of stock directly or indirectly owned by or for an estate or trust, to conform with the statutory amendment to section 1563(d)(1)(B).

The proposed regulations would remove numerous Treasury regulations that are obsolete because they no longer are applicable under their stated effective or applicability dates. In addition, the proposed regulations would revise numerous Treasury regulations that contain references or terms that have no practical applicability to taxpayers because they are, for example, obsoleted or otherwise outdated. Further, the proposed regulations would replace all gender-specific pronouns and other identifiers in the consolidated return regulations with gender-neutral pronouns and identifiers.

Certain consolidated return regulations are designated with an “A” in the citation (for example, § 1.1502-9A). These regulations (Cap A regulations) generally are applicable only to taxable years ending in 1999 or earlier. The Cap A regulations provide rules regarding overall foreign loss recapture (§ 1.1502-9A), built-in deductions (§ 1.1502-15A), consolidated net operating losses (§ 1.1502-21A), consolidated capital gain or loss (§§ 1.1502-22A and 1.1502-41A), consolidated net “section 1231” gain or loss (§ 1.1502-23A), the agent for the group (§ 1.1502-77A), separate return years (§ 1.1502-79A), and the application of section 382 of the Code (§§ 1.1502-90A through 1.1502-99A).

The Cap A regulations have been superseded, in their entirety, by §§ 1.1502-9, 1.1502-15, 1.1502-21 through 1.1502-23, 1.1502-77, 1.1502-79, and 1.1502-90 through 1.1502-99. Therefore, with one exception, the proposed regulations would remove the Cap A regulations.

The proposed regulations would not remove § 1.1502-77A because that section has continuing applicability with regard to IRS examination and audit functions. Specifically, the IRS examination function has ongoing audits in which the years at issue are subject to the agent for the group rules in § 1.1502-77A. Because those rules address threshold issues including which entity may act on behalf of the group, and thus the validity of any filing by the group, § 1.1502-77A continues to have practical applicability for taxpayers.

The proposed regulations also would make conforming revisions to the consolidated return regulations due to the near-total removal of the Cap A regulations. For example, the proposed regulations would revise §§ 1.1502-11, 1.1502-43, and 1.1502-44 to remove all cross-references to the Cap A regulations. The proposed regulations also would revise § 1.382-8 (relating to controlled groups) to remove § 1.382-8(i), which provides references to the Cap A regulations.

The proposed regulations would revise § 1.1502-13 to remove outdated transition rules and references. Specifically, the proposed regulations would (i) revise § 1.1502-13(a)(3)(i) to remove a transition rule for consolidated return years beginning on or after November 7, 2001; (ii) revise § 1.1502-13(f)(5)(ii)(B)( 2 ) to remove cross-references to obsolete temporary regulations that affected certain liquidations where the original Federal income tax return for the year of liquidation was filed on or before November 3, 2009; and (iii) revise § 1.1502-13(f)(6)(v) to remove references to transactions occurring before July 12, 1995.

Section 1.1502-17 provides generally that the method of accounting to be used by each member of the group must be determined in accordance with the provisions of section 446 of the Code as if such member filed a separate return. See § 1.1502-17(a). Section 1.1502-17(e) refers taxpayers to § 1.1502-17 (as contained in the 26 CFR part 1 edition revised as of April 1, 1995) for changes in method of accounting effective for years beginning before July 12, 1995. The proposed regulations would revise § 1.1502-17(e) to strike that language because it has no practical applicability to taxpayers.

Section 1.1502-18 provides that, if a member of a group filing a consolidated return for the taxable year (i) was a member of the group for its immediately preceding taxable year, and (ii) filed a separate return for that preceding year, then the intercompany profit amount of that corporation for that separate return year (that is, the initial inventory amount) is added to the income of that corporation for the consolidated return year or years in which the goods to which the initial inventory amount is attributable are disposed of outside the group or that corporation becomes a non-member. See § 1.1502-18(b). Section 1.1502-18(a) provides that, for purposes of § 1.1502-18 and subject to certain exceptions, the term “intercompany profit amount” for a taxable year means an amount equal to the profits of a corporation arising in transactions with other members of the group with respect to goods that are, at the close of such corporation's taxable year, included in the inventories of any member of the group. See § 1.1502-18(a).

However, paragraphs (a) through (f) of § 1.1502-18 do not apply for taxable years beginning on or after July 12, 1995. See § 1.1502-18(g). Therefore, the special rules set forth in § 1.1502-18 have no practical applicability to taxpayers.

As a result, the proposed regulations would remove § 1.1502-18 and make conforming revisions to other Treasury regulations. With regard to such conforming revisions, the proposed regulations would remove § 1.279-6(d)(4), which provides that members of an affiliated group that file a consolidated return must not apply the provisions of § 1.1502-18 dealing with inventory adjustments in determining earnings and profits for purposes of § 1.279-6. The proposed regulations also would remove § 1.1502-12(e), which requires that, in computing the separate taxable income of a member, inventory adjustments must be made as provided in § 1.1502-18.

Section 1.1502-21(b)(3)(i) and (ii) provide rules for consolidated groups to make irrevocable elections to relinquish certain carryback periods with regard to consolidated net operating losses. Elections under each of § 1.1502-21(b)(3)(i) and (ii) must be made through statements filed pursuant to rules set forth in those provisions. Each provision provides that, if the consolidated return year in which the loss arises begins before January 1, 2003, the statement making the election must be signed by the common parent. The proposed regulations would revise § 1.1502-21(b)(3)(i) and (b)(3)(ii)(B) to remove those special instructions regarding elections for pre-2003 taxable years because those special rules no longer have practical applicability to taxpayers.

The proposed regulations also would remove § 1.1502-21(d), which provides coordination rules for CRCOs that occurred before January 1, 1997. See part II.B.2 of this Explanation of Provisions (describing the replacement of the CRCO rules with the consolidated section 382 rules set forth in §§ 1.1502-90 through 1.1502-99).

Section 1.1502-22 provides generally that determinations under section 1222 (including capital gain and loss) with respect to members during consolidated return years are not made separately; rather, consolidated amounts are determined for the group as a whole. See § 1.1502-22(a). The proposed regulations would remove § 1.1502-22(d), which provides coordination rules for CRCOs that occurred before January 1, 1997. See part II.B.2 of this Explanation of Provisions.

The proposed regulations would revise § 1.1502-24(c) to remove the reference to § 1.1502-25, which provided rules for groups to compute a “consolidated section 922 deduction.” See part II.A.2 of this Explanation of Provisions (describing the repeal of section 922 of the 1954 Code by the Tax Reform Act of 1976). Section 1.1502-25 was removed by final regulations (TD 8474) published in the Federal Register (58 FR 25556) on April 27, 1993, which removed final and temporary regulations relating primarily to provisions of prior law in accordance with the Regulatory Burden Reduction Initiative of the Treasury Department and the IRS.

Section 1.1502-75(h)(2) provides that, if a group wishes to file a consolidated return for a taxable year, then a Form 1122, Authorization and Consent of Subsidiary Corporation To Be Included in a Consolidated Income Tax Return, must be executed by each subsidiary. Section 1.1502-75(h)(2) also provides that, (i) for taxable years beginning after December 31, 2002, the group must attach either executed Forms 1122 or unsigned copies of the completed Forms 1122 to the consolidated return; but (ii) for taxable years beginning before January 1, 2003, the executed Forms 1122 must be attached to the consolidated return for the taxable year. This transition rule for taxable years beginning before January 1, 2003, no longer has practical applicability to taxpayers. Therefore, the proposed regulations would revise § 1.1502-75(h)(2) to provide simply that the group must attach either executed Forms 1122 or unsigned copies of the completed Forms 1122 to the consolidated return.

Section 1.1502-76 sets forth rules for the taxable year of members of a group. The proposed regulations would revise § 1.1502-76(b)(1)(ii)(A)( 2 ) and (b)(2)(v) to remove references to transactions occurring before November 10, 1999, because those references have no practical applicability to taxpayers.

Section 1.1502-80 provides generally that (i) the Code, or other law, is applicable to the group to the extent the consolidated return regulations do not exclude its application; and (ii) to the extent not excluded, other rules operate in addition to, and may be modified by, the regulations. See § 1.1502-80(a)(1). Section 1.1502-80(c)(2) provides a cross-reference to § 1.1502-36 for additional rules relating to worthlessness of subsidiary stock on or after September 17, 2008. The proposed regulations would remove the reference to that date because it no longer has practical applicability to taxpayers.

Section 1.1502-80 also sets forth a special rule that provides that section 357(c) of the Code does not apply to any transaction to which § 1.1502-13 and other specified sections of the consolidated return regulations apply. See § 1.1502-80(d).

A concern arose in response to this rule that, because § 1.1502-80(d) provides that section 357(c) of the Code does not apply to certain intragroup section 351 exchanges, no liabilities can technically be excluded under section 357(c)(3). See preamble to proposed regulations (REG-137519-01) published in the Federal Register (66 FR 57021, 57022) on November 14, 2001 (proposed consolidated section 357(c) regulations). Therefore, in such an intragroup section 351 exchange, the transferor's basis in the stock of the transferee received in the transfer first would be reduced by liabilities assumed by the transferee, including those liabilities described in section 357(c)(3) of the Code that would not have reduced basis had section 357(c) applied. See id. Then, the transferor's basis in the stock of the transferee would be reduced a second time under the principles of § 1.1502-32 at the time the liability does in fact give rise to a deduction on the part of the transferee and is taken into account on the consolidated return. See id. This result ultimately could cause the transferor to recognize an amount of gain on the sale of the stock of the transferee that does not clearly reflect income. See id.

The Treasury Department and the IRS published the proposed consolidated section 357(c) regulations to eliminate potential duplicative stock basis reductions arising from such transactions. Specifically, those proposed regulations were published to clarify that, in certain transfers described in section 351 of the Code between members of a consolidated group, a transferee's assumption of liabilities described in section 357(c)(3)(A) of the Code, other than those also described in section 357(c)(3)(B) of the Code, will not reduce the transferor's basis in the transferee's stock received in the exchange. See Explanation of Provisions to the proposed consolidated section 357(c) regulations, 66 FR 57021.

However, upon reflection, the proposed rule is unnecessary because §§ 1.1502-32 and 1.1502-80 prevent any duplicative stock basis reduction. See § 1.1502-32(a)(2) (providing that a member's basis in its subsidiary's stock “must not be adjusted under this section and other rules of law in a manner that has the effect of duplicating an adjustment.”); § 1.1502-80(a)(2) (“Nothing in these regulations shall be interpreted or applied to require an adjustment, inclusion, or other item to the extent it would have the effect of duplicating any other adjustment, inclusion, or other item required under the Code or other rule of law, including other provisions of these regulations.”). Accordingly, this document withdraws those proposed regulations.

In 1984, Congress enacted legislation to revise the affiliation requirements under section 1504(a) of the 1954 Code to incorporate an 80-percent equity ownership test. See section 60(a) of the Deficit Reduction Act of 1984. However, the applicability of these statutory amendments was delayed until 1992 with respect to the affiliation of a corporation with an Alaska Native Corporation (ANC) established under the Alaska Native Claims Settlement Act, Public Law 92-203, 85 Stat. 688 (December 18, 1971). See section 60(b)(5) of the Deficit Reduction Act of 1984. Moreover, section 1804(e)(4) of the Tax Reform Act of 1986 struck section 60(b)(5) of the Deficit Reduction Act of 1984 and replaced that provision with a provision that, for any taxable year beginning after 1984 and before 1992, relaxed the requirements for affiliation with an ANC or with a wholly owned ANC subsidiary. Accordingly, until 1992, the pre-1984 affiliation requirements contained in section 1504(a) of the 1954 Code governed affiliation with an ANC or with a wholly owned ANC subsidiary, without regard to escrow arrangements, redemption rights, or similar provisions.

The Treasury Department and the IRS published temporary regulations to implement those statutory provisions (ANC temporary regulations). See TD 8130, published in the Federal Register (52 FR 8447) on March 18, 1987. Specifically, § 1.1502-81T makes clear that the statutory ANC affiliation rules resulted in no tax saving, tax benefit, or tax loss to any person, other than the use of the losses and credits of an ANC and its wholly owned subsidiaries. See preamble to the ANC temporary regulations (52 FR 8447).

In particular, the ANC temporary regulations provided that, except as approved by the Secretary, no positive adjustment under § 1.1502-32(b)(1) would be made with respect to the basis of stock of a corporation that is affiliated with an ANC through application of the ANC affiliation rules. Id. In general, such approval by the Secretary took into account the economic effect of the investment by the ANC in the corporation with which it is so affiliated. Id. The proposed regulations propose to withdraw § 1.1502-81T because those special affiliation rules no longer have practical applicability to taxpayers.

The application of sections 382 and 383 of the Code in a consolidated return is addressed in §§ 1.1502-90 through 1.1502-99. In particular, § 1.1502-99 provides effective and applicability dates and transition rules for §§ 1.1502-90 through 1.1502-99. The proposed regulations would revise § 1.1502-99 to remove transition rules for testing periods that include June 25, 1999. Those transition rules have no practical applicability to taxpayers because taxable years subject to those transition rules generally are closed.

Section 1.1552-1(a)(1)(ii) provides that the taxable income of a member is the separate taxable income determined under § 1.1502-12, adjusted for certain items taken into account in the computation of consolidated taxable income. One item, set forth in § 1.1552-1(a)(1)(ii)(B), is the “member's capital gain net income (net capital gain for taxable years beginning before January 1, 1977) (determined without regard to any net capital loss carryover attributable to such member).” The proposed regulations would revise § 1.1552-1(a)(1)(ii)(B) to remove the reference to net capital gain for taxable years beginning before January 1, 1977, because the reference to that date has no practical applicability to taxpayers.

Section 1.1503-2 provides rules to address dual consolidated losses incurred in taxable years beginning on or after October 1, 1992, and before April 18, 2007 (or January 1, 2007, in limited instances). See § 1.1503-2(h) (providing October 1, 1992, applicability date) § 1.1503(d)-8 (providing April 18, 2007, and January 1, 2007, applicability dates). Dual consolidated losses incurred on or after April 18, 2007, or January 1, 2007, are subject to the rules set forth in §§ 1.1503(d)-1 through 1.1503(d)-7. See § 1.1503(d)-8. Therefore, the proposed regulations would remove § 1.1503-2 because that section has no practical applicability to taxpayers. For the same reason, the proposed regulations also would make conforming changes to the effective date provisions set forth in § 1.1503(d)-8 to reflect the removal of § 1.1503-2.

The proposed regulations would make nonsubstantive changes to the consolidated return regulations to removed obsolete or gendered terminology the proposed regulations would replace all gender-specific pronouns and other identifiers in the consolidated return regulations with gender-neutral pronouns and identifiers. See part I of this Explanation of Provisions. The proposed regulations would replace the term “possession” with the defined term “U.S. territory” in §§ 1.1502-4(d)(1) and 1.1503(d)-1(b)(7). See proposed § 1.1502-1(l). The proposed regulations also would replace all gender-specific pronouns and other identifiers in the consolidated return regulations and the regulations under section 1563 of the Code with gender-neutral pronouns and identifiers.

The proposed regulations would make various revisions to the consolidated return regulations that are intended to increase their clarity and usability. These proposed revisions are limited to creating defined terms, updating cross-references, correcting numbering, and other minor, non-substantive edits.

Currently, the regulations under section 1502 of the Code reference the term “consolidated return regulations” in several provisions, although that term is not defined in those regulations. In addition, certain provisions in the regulations published under section 1502 of the Code refer to multiple sections of the regulations. At the time of publication, those provisions were intended to refer to all regulations under section 1502. However, due to the publication of additional regulations under section 1502 of the Code, those references are no longer accurate. To avoid taxpayer confusion, the proposed regulations would add a defined term “consolidated return regulations” to § 1.1502-1 that would not need to be updated to account for future additions to the regulations under section 1502 of the Code. See proposed § 1.1502-1(g).

As part of final regulations (TD 9475) addressing corporate reorganizations and distributions under sections 368(a)(1)(D) and 354(b)(1)(B) of the Code, published in the Federal Register (74 FR 67053) on December 18, 2009, the Treasury Department and the IRS inserted a new Example 4 into the intercompany transaction examples set forth in § 1.1502-13(f)(7). However, those final regulations did not update internal cross-references to certain existing examples in § 1.1502-13(f)(7), which were redesignated as a result of new Example 4. Accordingly, the proposed regulations would revise § 1.1502-13(f)(7) to update those internal cross-references. More generally, the proposed regulations would add paragraph designations to undesignated examples throughout § 1.1502-13.

The proposed regulations would revise § 1.1502-32(b)(4) to remove paragraphs that cross-reference provisions of the loss disallowance regulations under § 1.1502-20 that were removed by final regulations (TD 9424) published in the Federal Register (73 FR 53934) on September 17, 2008 (final unified loss regulations). Section 1.1502-20 provided loss-disallowance rules with regard to the disposition or deconsolidation of subsidiary stock. As provided in the preamble to the final unified loss regulations, the Treasury Department and the IRS do not expect that § 1.1502-20 would affect any transactions occurring on or after September 17, 2008 (the applicability date of those final regulations). See 73 FR 53944. The proposed regulations would replace the removed paragraphs with cross-references to provisions set forth in § 1.1502-32(b)(4), as contained in 26 CFR part 1, revised as of April 1, 2005.

Additionally, the proposed regulations would correct an error in Example 6 of § 1.1502-32(b)(5)(ii), which (1) addressed an intercompany reorganization described in section 368(a)(1)(A) of the Code (and in section 368(a)(1)(D) of the Code), and (2) treats a receipt of $10 of boot as a dividend under section 356(a)(2) of the Code. This treatment of intercompany boot conflicts with § 1.1502-13(f)(3)(ii), which expressly provides that nonqualifying property (that is, money or other property) received as part of such intercompany reorganization (that is, a transaction to which section 354 of the Code would apply but for the fact that nonqualifying property is received) is treated as received by the member shareholder in a separate transaction occurring immediately after the transaction.

The proposed regulations would revise § 1.1502-47(b), (h), and (j) to correct certain typographical errors and update certain cross-references.

The proposed regulations would revise § 1.1502-75(c)(1) to set forth the current procedures for a group to request to discontinue filing consolidated returns. The proposed regulations would remove § 1.1502-75(d)(5), which applies to consolidated return years in which an existing consolidated group obtains a new common parent solely by reason of the enactment of section 833 of the Code as part of the Tax Reform Act of 1986. This provision no longer has practical applicability to taxpayers. In addition, the proposed regulations would update § 1.1502-75(h)(1) to reflect final regulations (TD 9715) that revise rules regarding agency for consolidated groups under § 1.1502-77, which were published in the Federal Register (80 FR 17314) on April 1, 2015. The proposed regulations also would update § 1.1502-75(h)(1) to reflect the elimination of the district director positions by the Commissioner pursuant to section 1001 of the Internal Revenue Service Restructuring and Reform Act of 1998, Public Law 105-206, 112 Stat. 685 (July 22, 1998).

The proposed regulations would revise § 1.1502-76(a) to set forth the current procedures for taxpayers requesting consent of the Commissioner if at least one member of the group is on a 52-53-week taxable year and all members of the group have taxable years ending within the same 7-day period. The proposed regulations also would revise several examples in §§ 1.1502-76(c)(3) and 1.1502-77(g) to reflect changes to the due date for Federal corporate income tax returns set forth in section 6072(a) of the Code, as made by section 2006(a)(2) of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, Public Law 114-41, 129 Stat. 443 (July 31, 2015).

Section 1.1502-79(e)(2) provides a rule to determine the portion of the consolidated excess charitable contributions attributable to a member of a consolidated group. The proposed regulations would make non-substantive changes to enhance the clarity of that provision. In particular, the proposed regulations would separate the current one-sentence rule into three sentences, the first of which provides that the portion of the consolidated excess charitable contributions for any year attributable to a member is an amount equal to the consolidated excess contributions multiplied by a fraction. The second and third sentences set forth the numerator and denominator of that fraction, respectively.

Section 1.1502-100 provides rules to compute the tax liability for a consolidated return year of a group of exempt corporations that files or is required to file a consolidated return for the taxable year. The proposed regulations would revise § 1.1502-100(a)(2) to replace the reference to “§§ 1.1502-1 through 1.1502-80” with a reference to “the consolidated return regulations” ( see the discussion in parts II.B.9 and II.D.1 of this Explanation of Provisions.) The proposed regulations also would revise § 1.1502-100(d) to reflect the changes proposed by this document to § 1.1502-12.

In general, the proposed regulations would revise numerous provisions in the consolidated return regulations to remove cross-references to prior-law versions of the CFR. However, the proposed regulations would retain cross-references in the consolidated return regulations to prior-law CFRs with continuing relevance. In particular, the proposed regulations would retain cross-references relating to intercompany transactions and certain separate return limitation year issues.

The proposed regulations would not modify certain provisions in the consolidated return regulations that have been affected by subsequent legislation. Principally, aside from the nonsubstantive change discussed in part II.B.3 of this Explanation of Provisions, the proposed regulations would not revise § 1.1502-3 (relating to consolidated credits). Section 1.1502-3 provides rules for the former investment tax credit that existed prior to its replacement by the general business credit in section 211 of the Tax Reform Act of 1986. The proposed regulations also would not revise § 1.1502-79(c), which provides rules for the carryover and carryback of unused investment credits to separate return years. Because of extensive changes to the relevant statutory provisions, substantive revisions of §§ 1.1502-3 and 1.1502-79(c) are beyond the scope of these proposed regulations. However, the Treasury Department and the IRS are considering updating §§ 1.1502-3 and 1.1502-79(c) to reflect current law, and the Treasury Department and the IRS request comments on potential revisions to these regulatory provisions.

This document withdraws the portions of two NPRMs that, in revised form, (i) have been incorporated into final regulations, or (ii) are incorporated into these proposed regulations in revised form.

As discussed in part II.B.4 of this Explanation of Provisions, the Treasury Department and the IRS published the consolidated Former AMT proposed regulations on December 30, 1992, regarding the computation of the Former AMT by consolidated groups and the allocation of related items. This document withdraws proposed amendments to § 1.1502-2, regarding the computation of a consolidated group's tax liability, set forth in the consolidated Former AMT proposed regulations. These proposed amendments were incorporated, in revised form, into the base erosion and anti-abuse tax final regulations (TD 9885), published in the Federal Register (84 FR 66968) on December 6, 2019 (BEAT final regulations). However, the proposed amendments to § 1.1502-2 set forth in the consolidated Former AMT proposed regulations were not withdrawn by the BEAT final regulations. Accordingly, this document withdraws the revisions to § 1.1502-2 proposed by the consolidated Former AMT proposed regulations.

The consolidated Former AMT proposed regulations also would provide rules under § 1.1552-1(h) governing the allocation of the environmental tax imposed by section 59A of the Code (as in effect at the time) to members for purposes of computing earnings and profits. Section 59A of the Code was repealed by section 221(a)(12)(A), Division A, of the Tax Increase Prevention Act of 2014. As a result, this document withdraws proposed § 1.1552-1(h), as contained in the consolidated Former AMT proposed regulations.

The Treasury Department and the IRS published a NPRM (REG-101652-10) in the Federal Register (80 FR 33211) on June 11, 2015 (circular basis proposed regulations). The circular basis proposed regulations would provide guidance regarding the absorption of members' losses in a consolidated return year, and provide guidance to eliminate circular adjustments to the basis of a group member. These circular basis proposed regulations would have (i) revised §§ 1.1502-11(a) and 1.1502-24 to remove references to repealed statutes or obsolete regulations, and (ii) removed §§ 1.1502-21A, 1.1502-22A, and 1.1502-23A. Because this document would (i) make the same revisions to §§ 1.1502-11(a) and 1.1502-24, and (ii) remove §§ 1.1502-21A, 1.1502-22A, and 1.1502-23A, this document withdraws the proposed revisions to §§ 1.1502-11(a), 1.1502-21A, 1.1502-22A, 1.1502-23A, and 1.1502-24 set forth in the circular basis proposed regulations.

On March 18, 2004, the Treasury Department and the IRS published in the Federal Register (69 FR 12811) a NPRM (REG-153172-03) under § 1.1502-80(c) (proposed loss limitation rules). The proposed loss limitation rules set forth guidance regarding (i) the deductibility of losses recognized on dispositions of subsidiary stock by members of a consolidated group, (ii) the consequences of treating subsidiary stock as worthless, and (iii) when stock of a member of a consolidated group may be treated as worthless. The proposed loss limitation rules cross-referenced temporary regulations (TD 9118) published in the Federal Register (69 FR 12799) on the same day, the text of which served as the text for those proposals.

On July 18, 2007, the Treasury Department and the IRS published in the Federal Register (72 FR 39313) final regulations (TD 9341), which finalized a version of § 1.1502-80(c) that had been proposed by an NPRM (REG-157711-02) published in the Federal Register (72 FR 2964) on January 23, 2007. Those final regulations removed § 1.1502-80T(c) but did not withdraw the proposed loss limitation rules. Accordingly, this document withdraws the proposed loss limitation rules.

The Treasury Department and the IRS published four NPRMs under § 1.1502-20, which cross-referenced temporary regulations under § 1.1502-20T published in the Federal Register on the same day, the text of which served as the text for those proposals. On September 17, 2008, the Treasury Department and the IRS published final regulations (TD 9424) in the Federal Register (73 FR 53934) that included the final unified loss rule under § 1.1502-36. As a result of these final regulations, the Treasury Department and the IRS removed §§ 1.1502-20 and 1.1502-20T. However, the four NPRMs under § 1.1502-20 were not withdrawn by those final regulations.

Accordingly, this document withdraws the four NPRMs under § 1.1502-20, which consist of the following:

(1) An NPRM (REG-102740-02) published in the Federal Register (67 FR 11070) on March 12, 2002, which cross-referenced the text of temporary regulations (TD 8984) published in the Federal Register (67 FR 11034) on the same day (March 12 unified loss proposed regulations).

(2) An NPRM (REG-102305-02) published in the Federal Register (67 FR 38040) on May 31, 2002, which clarified and revised aspects of the March 12 unified loss proposed regulations and cross-referenced the text of temporary regulations (TD 8998) published in the Federal Register (67 FR 37998) on the same day.

(3) An NPRM (REG-152524-02) published in the Federal Register (68 FR 24404) on May 7, 2003, which cross-referenced the text of temporary regulations (TD 9057) published in the Federal Register (68 FR 24351) on the same day.

(4) An NPRM (REG-135898-04) published in the Federal Register (69 FR 52462) on August 26, 2004, which cross-referenced the text of temporary regulations (TD 9154) published in the Federal Register (69 FR 52419) on the same day.

The Treasury Department and the IRS published three NPRMs under § 1.1502-21, which cross-referenced temporary regulations under § 1.1502-21T published in the Federal Register on the same day, the text of which served as the text for those proposals. These NPRMs also contained proposed regulations under § 1.1502-32 ( see part II.F.3.c of this Explanation of Provisions).

Each of these temporary regulations under § 1.1502-21T has expired or has been removed. However, the Treasury Department and the IRS have not yet withdrawn the three NPRMs under § 1.1502-21.

Accordingly, this document withdraws three NPRMs under § 1.1502-21, which consist of the following:

(1) An NPRM (REG-122564-02) published in the Federal Register (67 FR 38039) on May 31, 2002, which addressed elections for consolidated groups to waive the carryback of certain losses arising in 2001 or 2002 and cross-referenced the text of temporary regulations (TD 8997) published in the Federal Register (67 FR 38000) on the same day.

(2) An NPRM (REG-131478-02) published in the Federal Register (68 FR 12324) on March 14, 2003, which addressed losses treated as expired under § 1.1502-35T(f)(1) on and after March 7, 2002, and on or before March 11, 2006 (including corresponding basis adjustments), and cross-referenced the text of temporary regulations (TD 9048) published in the Federal Register (68 FR 12287) on the same day.

(3) An NPRM (REG-151605-09) published in the Federal Register (75 FR 35710) on June 23, 2010, which addressed elections by consolidated groups to elect to extend a net operating loss carryback period arising in a single taxable year ending after December 31, 2007, and beginning before January 1, 2010, and cross-referenced the text of now-expired temporary regulations (TD 9490) published in the Federal Register (75 FR 35643) on the same day.

The Treasury Department and the IRS published five NPRMs under § 1.1502-32 that cross-referenced temporary regulations under § 1.1502-32T published in the Federal Register on the same day, the text of which served as the text for those proposals. Each of these temporary regulations under § 1.1502-32T has expired or have been removed. However, the Treasury Department and the IRS have not yet withdrawn the corresponding five NPRMs under § 1.1502-32.

Accordingly, this document withdraws the five NPRMs under § 1.1502-32, which consist of the following:

(1) An NPRM (REG-129274-04) published in the Federal Register (69 FR 51208) on August 18, 2004, which addressed elections for consolidated groups to waive the carryback of certain losses arising in 2001 or 2002 and cross-referenced the text of temporary regulations (TD 9155) published in the Federal Register (69 FR 51175) on the same day.

(2) An NPRM (REG-156420-06) published in the Federal Register (72 FR 17814) on April 10, 2007 (proposed anti-avoidance and anti-loss reimportation regulations), which proposed an anti-avoidance rule and revised an anti-loss reimportation rule, and cross-referenced the text of temporary regulations (TD 9322) published in the Federal Register (72 FR 17804) on the same day. The proposed anti-avoidance and anti-loss importation regulations also contained proposed regulations under § 1.1502-35 ( see part II.F.3.d of this Explanation of Provisions).

(3) Each NPRM described in part II.F.3.b of this Explanation of Provisions.

The Treasury Department and the IRS published two NPRMs under § 1.1502-35, which cross-referenced temporary regulations under § 1.1502-35T published in the Federal Register on the same day, the text of which served as the text for those proposals. The temporary regulations under § 1.1502-35T have expired or have been removed. However, the Treasury Department and the IRS have not yet withdrawn the corresponding two NPRMs under § 1.1502-35.

Accordingly, this document withdraws the two NPRMs under § 1.1502-35, which consist of the following:

(1) An NPRM (REG 153172-03) published in the Federal Register (69 FR 12811) on March 18, 2004, which proposed guidance regarding worthless subsidiary stock, and cross-referenced the text of temporary regulations (TD 9118) published in the Federal Register (69 FR 12799) on the same day.

(2) The proposed anti-avoidance and anti-loss reimportation regulations, described in part II.F.3.c of this Explanation of Provisions.

Pursuant to section 1503(a) of the Code, these proposed regulations would apply to consolidated return years for which the due date of the return (without regard to extensions) is after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register .

Executive Orders 13563 and 12866 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility.

Pursuant to the Memorandum of Agreement, Review of Treasury Regulations under Executive Order 12866 (June 9, 2023), tax regulatory actions issued by the IRS are not subject to the requirements of section 6 of Executive Order 12866, as amended. Therefore, a regulatory impact assessment is not required.

These regulations update the regulations under section 1502 of the Code (that is, the consolidated return regulations) by revising and removing outdated and obsolete provisions, such as cross-references to temporary regulations, regulations, and statutes that have been repealed, removed, expired, renumbered, or otherwise have become obsolete. Therefore, the proposed regulations would not impose additional reporting burden beyond what is otherwise required by existing statutes, regulations, and forms. The total burden associated with the proposed regulations, if finalized in their current form, would be $0.

The proposed regulations would not impose a collection of information on small entities. Further, pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that the proposed regulations would not have a significant economic impact on a substantial number of small entities. This certification is based on the fact that the proposed regulations would apply only to corporations that file consolidated Federal income tax returns, and that such corporations tend to be larger businesses. Therefore, the proposed regulations would not create additional obligations for, or impose an economic impact on, small entities.

Pursuant to section 7805(f) of the Code, the proposed regulations have been submitted to the Chief Counsel for the Office of Advocacy of the Small Business Administration for comment on its impact on small business.

Section 202 of the Unfunded Mandates Reform Act of 1995 requires that agencies assess anticipated costs and benefits and take certain other actions before issuing a final rule that includes any Federal mandate that may result in expenditures in any one year by a State, local, or tribal government, in the aggregate, or by the private sector, of $100 million in 1995 dollars, updated annually for inflation. In 2022, that threshold is approximately $190 million. The proposed regulations do not propose any rule that would include any Federal mandate that may result in expenditures by State, local, or tribal governments, or by the private sector in excess of that threshold.

Executive Order 13132 (Federalism) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial, direct compliance costs on State and local governments, and is not required by statute, or preempts State law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. The proposed regulations do not propose rules that would have federalism implications, impose substantial direct compliance costs on State and local governments, or preempt State law within the meaning of the Executive order.

Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the ADDRESSES heading. The Treasury Department and the IRS request comments on all aspects of the proposed regulations, including comments on any consolidated return rules not addressed in these proposed regulations that require revision or removal as a result of amendments to the Code or regulations made after such rules were promulgated. All commenters are strongly encouraged to submit comments electronically. The Treasury Department and the IRS will publish for public availability any comment submitted electronically or on paper to its public docket on https://www.regulations.gov.

A public hearing will be scheduled if requested in writing by any person who timely submits electronic or written comments. Requests for a public hearing are encouraged to be made electronically. If a public hearing is scheduled, a notice of the date and time for the public hearing will be published in the Federal Register . Announcement 2023-16, 2023-20 IRB 854, provides that, following the end of the national emergency concerning the Coronavirus Disease 2019 (COVID-19) pandemic, the IRS no longer will conduct public hearings on notices of proposed rulemaking solely by telephone for proposed regulations published in the Federal Register after May 11, 2023. A telephonic option will remain available for those who prefer to attend or testify at a public hearing by telephone. Any telephonic hearing will be made accessible to people with disabilities.

Announcement 2023-16, 2023-20 IRB 854, is published in the Internal Revenue Bulletin and is available from the Superintendent of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by visiting the IRS website at https://www.irs.gov.

The principal authors of this document are Kelton P. Frye and William W. Burhop of the Office of Associate Chief Counsel (Corporate). Other personnel from the Treasury Department and the IRS participated in its development.

Accordingly, the Treasury Department and the IRS propose to amend 26 CFR parts 1, 5, 301, and 602 as follows:

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I. Background on the Montana Program II. Description of the Proposed Amendment III. Public Comment Procedures IV. Statutory and Executive Order Reviews I. Background on the Montana Program

Subject to OSMRE's oversight Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its approved, State program includes, among other things, State laws and regulations that govern surface coal mining and reclamation operations in accordance with the Act and consistent with the Federal regulations. See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the Montana program on April 1, 1980. You can find background information on the Montana program, including the Secretary's findings, the disposition of comments, and conditions of approval of the Montana program in the April 1, 1980, Federal Register (45 FR 21560). You can also find later actions concerning the Montana program and program amendments at 30 CFR 926.15, 926.16, and 926.30.

On October 28, 1994, December 19, 2000, and December 3, 2007, OSMRE promulgated final rules that adopted or revised certain regulatory definitions and provisions pertaining to review of applications, permit eligibility, application information, applicant, operator, and permittee information, automated information entry and maintenance, permit suspension and rescission, ownership and control findings and challenge procedures, transfer, assignment, or sale of permit rights, and alternative enforcement. Pursuant to 30 CFR 732.17(d), OSMRE notified Montana on October 2, 2009 with a 732 letter, requiring Montana to modify its regulatory program to remain consistent with revised Federal requirements. The 2013 Montana Legislature approved Senate Bill 92, which added language addressing the required changes. Specifically, Senate Bill 92 added language in Section 82-4-227, Montana Code Annotated (MCA), that provided appeal rights pertaining to ownership or control listings in the applicant violator system.

By letter dated July 28, 2021 (FDMS Document ID No. OSM-2021-0006-0001), Montana sent us an amendment to its program under SMCRA (30 U.S.C. 1201 et seq. ) that proposed revisions to existing Administrative Rules of Montana (ARM) that would satisfy the statutory changes in the MCA, including revisions to 17.24.301, 17.24.302, 17.24.303, 17.24.416, 17.24.418. New provisions in the ARM proposed by Montana that would satisfy the statutory changes in the MCA include 17.24.1229, 17.24.1264, 17.24.1265, 17.24.1266, and 17.24.1267. Montana also proposed minor revisions to existing ARM that were unrelated to Senate Bill 92.

OSMRE reviewed the proposed changes to the MCA and ARM, on March 30, 2023, sent Montana an issue letter outlining five areas of concern with their proposed changes to the ARM, including numerous typos and grammatical errors, requiring specific information of the applicant in permit application packages, applying willful or knowing standards for liability regarding characterizing criminal penalties and civil actions, and adding clarifier language to remain as effective and consistent with Federal counterpart rules. By letter dated May 3, 2023, Montana responded and agreed to address all five areas of concern by formally resubmitting the required revisions to the ARM. Montana agreed to making all the necessary typographical and grammatical errors in addition to the other required changes explained above. The full text of the program amendment is available for you to read at the locations listed above under ADDRESSES or at www.regulations.gov.

Under the provisions of 30 CFR 732.17(h), we are seeking your comments on whether the amendment satisfies the applicable program approval criteria of 30 CFR 732.15. If we approve the amendment, it will become part of the State program.

If you submit written or electronic comments on the proposed rule during the 15-day comment period, they should be specific, confined to issues pertinent to the proposed regulations, and explain the reason for any recommended change(s). We appreciate any and all comments, but those most useful and likely to influence decisions on the final regulations will be those that either involve personal experience or include citations to and analyses of SMCRA, its legislative history, its implementing regulations, case law, other pertinent State or Federal laws or regulations, technical literature, or other relevant publications.

We cannot ensure that comments received after the close of the comment period (see DATES ) or sent to an address other than those listed (see ADDRESSES ) will be included in the docket for this rulemaking and considered.

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 us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

If you wish to speak at the public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT by 4:00 p.m., MDT on August 22, 2023. If you are disabled and need reasonable accommodations to attend a public hearing, contact the person listed under FOR FURTHER INFORMATION CONTACT . We will arrange the location and time of the hearing with those persons requesting the hearing. If no one requests an opportunity to speak, we will not hold a hearing.

To assist the transcriber and ensure an accurate record, we request, if possible, that each person who speaks at the public hearing provide us with a written copy of his or her comments. The public hearing will continue on the specified date until everyone scheduled to speak has been given an opportunity to be heard. If you are in the audience and have not been scheduled to speak and wish to do so, you will be allowed to speak after those who have been scheduled. We will end the hearing after everyone scheduled to speak and others present in the audience who wish to speak, have been heard.

If only one person requests an opportunity to speak, we may hold a public meeting rather than a public hearing. If you wish to meet with us to discuss the amendment, please request a meeting by contacting the person listed under FOR FURTHER INFORMATION CONTACT . All such meetings are open to the public and, if possible, we will post notices of meetings at the locations listed under ADDRESSES . We will make a written summary of each meeting a part of the administrative record.

Executive Order 12866 provides that the Office of Information and Regulatory Affairs in the Office of Management and Budget (OMB) will review all significant rules. Pursuant to OMB guidance, dated October 12, 1993, the approval of State program amendments is exempted from OMB review under Executive Order 12866. Executive Order 13563, which reaffirms and supplements Executive Order 12866, retains this exemption.

When a State submits a program amendment to OSMRE for review, our regulations at 30 CFR 732.17(h) require us to publish a notice in the Federal Register indicating receipt of the proposed amendment, its text or a summary of its terms, and an opportunity for public comment. We conclude our review of the proposed amendment after the close of the public comment period and determine whether the amendment should be approved, approved in part, or not approved. At that time, we will also make the determinations and certifications required by the various laws and executive orders governing the rulemaking process and include them in the final rule.

This is a summary of the Commission's Notice of Proposed Rulemaking, document FCC 23-50, adopted on June 8, 2023, released on June 12, 2023, in CG Docket Nos. 23-161, 10-213, and 03-123. Also, this document has a companion document published at 88 FR 50053, August 1, 2023. The full text of document FCC 23-50 is available for public inspection and copying via the Commission's Electronic Comment Filing System (ECFS).

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 and Governmental Affairs Bureau at (202) 418-0530.

Ex Parte Rules. This proceeding shall be treated as a permit-but-disclose proceeding in accordance with the Commission's ex parte rules. 47 CFR 1.1200 et seq. 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 § 1.1206(b) of the Commission's rules. In proceedings governed by § 1.49(f) of the Commission's rules 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.

Since the March 2020 outbreak of the COVID-19 pandemic in the United States, video conferencing has grown from a niche product to a central pillar of our communications infrastructure. In early 2020, after governments, businesses, and schools adopted social distancing requirements, organizations, families, and individuals turned to video conferencing as a work-around. Use of video conferencing increased exponentially, becoming a significant part of the technology solution replacing in-person meetings, conference calls, and traditional classroom instruction.

The new social interaction paradigm occasioned by the pandemic appears to have permanently altered the norms of modern communication in the workplace, healthcare, education, social interaction, civic life, and more. The pandemic amplified and accelerated the reality that much of Americans' lives take place online using an increasing variety of connected devices. For millions of Americans, video conferencing has become a mainstay of their business and personal lives.

With the growing use of video conferencing has come heightened concern about accessibility. Small screens make it difficult for users who are deaf or hard of hearing to identify visual clues, such as when a colleague is about to speak. When automatic captions are provided on video conference platforms, the quality and timeliness of the transcription varies widely. In a 2021 survey of 330 people with vision disabilities, approximately 57% of respondents found telehealth to be inaccessible in some way. Further, users who are blind or have limited vision describe struggles to find and toggle volume controls.

In recent years, various accessibility features have been introduced by a number of video conferencing providers. Depending on the platform, these features may include screen reader and braille display support, a choice of third-party live captioning or synchronous automatic captioning, multi-pinning features, and spotlighting a speaker so that all participants know who is speaking. Some services also offer keyboard accessibility features, high-contrast visual elements, customizable notifications, verbosity controls, and other accessibility innovations.

However, the accessibility of video conferencing services remains limited for many users. In its February 2022 recommendations to the Commission, the Disability Advisory Committee highlighted the inconsistent performance of video conferencing providers in making their platforms accessible to people who are deaf, hard of hearing, or deafblind. Commenters also point out that users with disabilities often are not in a position to dictate what video conferencing service the host of the conference should use. For example, a patient who is deaf may not be able to obtain healthcare because the doctor's telehealth conferencing platform does not enable an effective connection to a sign language interpreter or VRS. A student who is blind may be unable to fully participate in a remote class discussion if information provided through a share-screen feature is not accessible to screen readers. In these and other scenarios, a person with a disability often has no opportunity to request a different, accessible video conferencing system.

Under the Twenty-First Century Communications and Video Accessibility Act of 2010 (CVAA), Public Law 111-260, providers of advanced communications services (ACS) and manufacturers of equipment used for ACS must make such services and equipment accessible to and usable by people with disabilities, unless these requirements are not achievable. 47 U.S.C. 617(a)(1), (b)(1). Service providers and manufacturers may comply with these provisions either by building accessibility features into their services and equipment or by using third-party applications, peripheral devices, software, hardware, or customer premises equipment (CPE) that are available to individuals with disabilities at nominal cost. 47 U.S.C. 617(a)(2), (b)(2). If accessibility is not achievable through either of these means, then manufacturers and service providers must make their products and services compatible with existing peripheral devices or specialized CPE commonly used by people with disabilities to achieve access, subject to the achievability standard. 47 U.S.C. 617(c). The Communications Act of 1934, as amended (the Act), defines advanced communications services as: (1) interconnected Voice over internet Protocol (VoIP) service; (2) non-interconnected VoIP service; (3) electronic messaging service; (4) interoperable video conferencing service; and (5) any audio or video communications service used by inmates for the purpose of communicating with individuals outside the correctional institution where the inmate is held, regardless of technology used. 47 U.S.C. 153(1). Interoperable video conferencing service, in turn, is defined as a service that provides real-time video communications, including audio, to enable users to share information of the user's choosing. 47 U.S.C. 153(27).

In the Report and Order in document FCC 23-50, the Commission revisits its previously stated views regarding the interpretation of the statutory term interoperable video conferencing service. The Commission concludes that part 14 of its rules applies to all services and equipment that meet the statutory definition of interoperable video conferencing service, i.e., all services and equipment that provide real-time video communications, including audio, to enable users to share information of the user's choosing.

TRS and Video Conferencing. Enacted in 1990, Title IV of the Americans With Disabilities Act, codified as section 225 of the Act, directs the Commission to ensure that interstate and intrastate telecommunications relay services are available, to the extent possible and in the most efficient manner, to eligible users in the United States. 47 U.S.C. 225(b)(1). TRS are defined as telephone transmission services enabling such persons to communicate by wire or radio in a manner that is functionally equivalent to the ability of a person without hearing or speech disabilities to communicate using voice communication services. 47 U.S.C. 225(a)(3).

There are currently three forms of internet-based TRS: Video Relay Service (VRS) allows people with hearing or speech disabilities who use sign language to communicate with voice telephone users through video equipment; Internet Protocol Relay Service (IP Relay) allows an individual with a hearing or speech disability to communicate with voice telephone users by transmitting text via the internet; and Internet Protocol Captioned Telephone Service (IP CTS) permits a person with hearing loss to have a telephone conversation while reading captions of what the other party is saying on an internet-connected device.

TRS Fund. The provision of internet-based TRS is supported by the TRS Fund. In addition, the TRS Fund supports interstate use of certain non-internet-based relay services, which are provided through state TRS programs. Entities required to make contributions to the TRS Fund include providers of telecommunications service, interconnected VoIP service, and non-interconnected VoIP service.

Disability Advisory Committee Report on TRS and Video Conferencing. The structure of the Commission's TRS program reflects the fact that, historically, most people have used wireline or wireless telephone networks to communicate remotely by voice. Thus, North American Numbering Plan (NANP) telephone numbers are used to route calls between TRS users and hearing people, and the provision of TRS, to date, has typically included a voice-only telephone call, with originating and terminating NANP numbers. To address concerns about the inaccessibility of video conferencing platforms, the Commission requested the Disability Advisory Committee to study the use of TRS on IVCS platforms. In a report delivered in February 2022, the committee states:

Such a dial-in connection is often unavailable. Further, when a dial-in connection to a video conference is available, a TRS user may encounter multiple difficulties. For example, the user must use two separately connected devices—one to participate in the video portion of the conference and the other to communicate with the TRS provider's communications assistant (CA), who is only connected to the video conference via an audio-only dial-in connection. As a result, the user must navigate multiple user interfaces, which can cause confusion, fatigue, and other barriers to full participation in a video conference. If multiple TRS users join the conference, with each user having a double presence as the user's video image and a CA's voice-only icon, the result can increase the overall cognitive load for video conference hosts and participants to process discussion and facilitate shared dialogue. Further, the CA's audio-only connection may result in poor audio quality, causing errors in interpretation or captioning. The committee also explains that it is not clear whether the Commission's rules allow other methods of linking a TRS CA to a video conference. Since the committee's recommendations were published, one VRS provider has reported that it now offers a means of integrating its provision of VRS with one video conferencing platform.

For these reasons, the Disability Advisory Committee recommends that the FCC resolve these issues by: facilitating a technical mechanism for TRS providers to natively interconnect TRS services, including video, audio, captioning, and text-based relay to video conferencing platforms; ensuring that users can seamlessly initiate TRS from the provider of their choice on any video conferencing platform; addressing the integration of CAs and the overall accessibility challenges of videoconferencing platforms; and clarifying the legal ability of TRS providers to seek compensation for service provided for video conferences from the TRS fund.

The Commission proposes to amend its rules to improve the accessibility of video conferencing, whether used for work, education, healthcare, entertainment, or other activities. The proposals in this document are applicable to those services that fit the statutory definition of interoperable video conferencing service. See 47 U.S.C. 153(27). In this document, when the Commission refers to video conferencing or video conferences, it means video conferencing or video conferences that involve the use of an interoperable video conferencing service, as defined.

First, to address the integration of TRS CAs and the overall accessibility challenges of videoconferencing platforms, the Commission proposes to adopt additional performance objectives for the accessibility of interoperable video conferencing services. Specifically, the Commission proposes that such performance objectives include the provision of speech-to-text ( e.g., captioning of all voice communications in a video conference) and text-to-speech; and enable the use of sign language interpreting. The Commission seeks comment on whether additional amendments are needed to ensure that video conferencing is accessible. The Commission also seeks comment on whether technical standards are available or could be fashioned for use as safe harbors, whereby certain performance objectives for IVCS can be satisfied by providing access to relevant forms of TRS.

Second, the Commission proposes to amend part 64 of its rules to provide that the TRS Fund can be used to support the provision of TRS for video conferencing users—whether or not the video conferencing platform can be accessed via a NANP telephone call. In addition, the Commission proposes certain modifications to its rules to specify the conditions under which the TRS Fund will support the provision of TRS with video conferencing.

Performance Objectives. Section 716 of the Act directs the Commission to adopt performance objectives to ensure the accessibility, usability, and compatibility of ACS. 47 U.S.C. 617(e)(1)(A). To implement this requirement, the Commission in 2011 adopted general performance objectives specifying that input, control, and mechanical functions are locatable, identifiable, and operable by people with disabilities and that all information necessary to operate and use the product is available to people with disabilities. For example, ACS must be operable without hearing, which is defined to mean that it must provide at least one mode that does not require user auditory perception. 47 CFR 14.21(b). These performance objectives provide a definition of accessible for purposes of the Part 14 rules. Other performance objectives define usable and compatible. 47 CFR 14.21(c), (d). These general performance objectives are applicable to IVCS as well as other types of ACS.

The Commission believes that the performance objectives in part 14 of its rules have encouraged innovative and effective approaches to achieve accessibility for covered equipment and services. However, given the seismic shift in how society communicates, and based on this proceeding's record and the Disability Advisory Committee Report, the Commission seeks comment on whether to amend the rules to define more specific objectives for making IVCS accessible. The Commission notes that some IVCS providers have added accessibility features to their products in response to consumer need during the COVID-19 pandemic. The Commission seeks comment on the effectiveness of these features in providing accessibility, the extent of their availability, their ease of use, and how they could be improved. The Commission also seeks comment on what other features may be necessary to make IVCS accessible and how the current performance objectives could be modified or supplemented to ensure that such features are provided if achievable.

Disability Advisory Committee Recommendations. As the Disability Advisory Committee explained, without the ability to have other participants' audio communications converted to text or sign language, as appropriate, and to have their own text or sign language communications converted to speech, a person who is deaf or hard of hearing or has a speech disability may not be able to effectively participate in a video conference. The Committee recommends that the Commission ensure, at a minimum, that video conferencing platforms: include built-in closed captioning functionality that is available to all users, including to users with free accounts if the platform provides such accounts; fully integrate support for TRS CAs, including video, audio, captioning, and text communication; and allow users, including CAs, to control the activation and customize the appearance of captions and video interpreters, including caption activation, size, color, background, layout, and positioning, pinning and multi-pinning, side-by-side views, hiding non-video participants, including American Sign Language (ASL) interpreters, Certified Deaf Interpreters, and other interpreters, and cued language transliterators, and exercise this control on their own clients without reliance on video conference hosts.

The Commission proposes to amend the performance objectives in part 14 of its rules to address these recommendations and promote innovative future solutions for making IVCS accessible. Consistent with section 716 of the Act, the proposals would permit IVCS providers to choose whether to satisfy their accessibility obligations by including certain features as native applications or by using third party applications, peripheral devices, software, hardware, or CPE that is available to the consumer at nominal cost and that individuals with disabilities can access. 47 U.S.C. 617(b)(2)(B). Nominal cost means that any fee for third-party software or hardware accessibility solutions shall be small enough so as to generally not be a factor in the consumer's decision to acquire a product or service that the consumer otherwise desires. Implementing the Provisions of the Communications Act of 1934, as Enacted by the Twenty-First Century Communications and Video Accessibility Act of 2010, published at 76 FR 82353, December 30, 2011. IVCS providers must maintain records of their efforts to ensure that their services and products are accessible, 47 CFR 14.31(a), and the Commission's rules do not provide an exemption from this requirement for service providers who rely on third-party applications or equipment to achieve accessibility.

Captions. The Commission proposes to adopt, as a performance objective specific to IVCS, the provision of captions for the audio communications in video conferences. For people who are deaf or hard of hearing, a lack of captions can make meaningful interaction impossible. Some video conferencing platforms offer captions, which are typically provided via automatic speech recognition (ASR). However, according to the Disability Advisory Committee, captions are not available on all platforms, or on all video conferences for platforms that do provide them, and where they are available they may be of insufficient quality to ensure functional equivalence.

Automatic captioning, when available, sometimes produces incomplete or delayed transcriptions, while the delays inherent in live captioning can lead to cognitive overload as users try to follow poorly synchronized visual and textual conversations. In addition, because voice conversations go quickly and it may be difficult to immediately identify who is speaking, video conferences may cause some people who are deaf or hard of hearing to lose vital portions of voice communications. Finally, some research indicates that ASR technology may show algorithmic bias in the accuracy with which it transcribes voices, particularly in the transcription of certain speakers.

The Commission proposes to amend § 14.21 of its rules to make clear that captioning is an essential component of accessibility in the context of IVCS. Section 14.21(b)(2)(iv) of the Commission's rules currently specifies that accessibility includes providing auditory information through at least one mode in visual form and, where appropriate, in tactile form. 47 CFR 14.21(b)(2)(iv). As noted above, however, the record indicates that not every IVCS offers captioning, and that where captioning is offered, the quality is often uneven. Therefore, the Commission proposes to amend § 14.21(b)(2)(iv) of its rules to read (with proposed new text shown in bold):

The Commission seeks comment on this proposal. Does this language provide an appropriate level of specificity, given, on the one hand, the need for effective guidance on what accessibility requires, and on the other, the need to allow flexibility in implementation and innovative solutions, and to avoid mandatory technical standards? The Commission has a pending proceeding on quantifying minimum standards for the quality of captions provided by TRS Fund-supported captioned telephone services and establishing methods of measuring caption quality. Pending completion of that proceeding, this proposed performance objective states that caption quality should be generally comparable to that offered by TRS Fund-supported services. In the future, with the adoption of metrics for captioned telephone services by the Commission, such metrics could serve as a safe-harbor technical standard for IVCS as well.

Is this level of quality sufficient to provide a functionally equivalent experience for all users, including users of color or users with accents? Alternatively, the Commission invites comment on the extent to which current performance objectives, such as § 14.21(b)(2)(i) of its rules, already require that IVCS provide an appropriate level of caption quality. How can the FCC promote improvements in ASR technology to address any existing algorithmic bias?

In some instances, the host of a video conference may prefer (or have a legal obligation) to use another captioning service—be it live captioning or ASR—rather than the IVCS provider's captioning feature. According to the Disability Advisory Committee:

To address this concern, the Commission seeks comment on whether to specify that IVCS enable the use of alternative captioning methods, such as Communication Access Realtime Translation (CART). CART is the instant translation of the spoken word into English text using a stenotype machine, computer, and realtime software. Similarly, should IVCS be compatible with TRS Fund-supported captioning, so that such captioning can be displayed in a video conference if requested by a TRS user? Is there a commonly used technology that would enable the display of, e.g., CART or IP CTS captioning to all participants in a video conference? Would the adoption of such a performance objective be consistent with section 716(b)(2) of the Act, 47 U.S.C. 617(b)(2), which allows covered service providers to meet their accessibility obligations either natively or by using third party applications or equipment?

Text-to-Speech. To ensure that IVCS is operable by people with disabilities who need to communicate by text, the Commission proposes to amend 47 CFR 14.21(b)(1)(ix), which specifies that ACS be operable in at least one mode that does not require user speech, to read (with proposed new text shown in bold):

The Commission seeks comment on this proposal. Would text-to-speech and captions, along with compatibility with refreshable braille displays or other peripheral devices, make IVCS accessible for people who are deafblind and for people with speech disabilities who cannot or do not use Speech-to-Speech relay service (STS)? STS is a form of TRS that allows individuals with speech disabilities to communicate with voice telephone users through the use of specially trained CAs who understand the speech patterns of persons with speech disabilities and can repeat the words spoken by that person. 47 CFR 64.601(41). STS is currently provided only through state-certified relay service programs. Should the Commission also specify that IVCS support the use of IP Relay, and would such a specific performance objective be consistent with the flexible compliance approach permitted by section 716(b)(2) of the Act? Is there an effective means for users to connect with and use IP Relay in video conferences?

Sign Language Interpreting. The Commission also proposes to adopt, as a performance objective, that IVCS enable the provision of sign language interpreting, such as through a third-party interpreting service or a VRS provider. According to the Disability Advisory Committee, many video conferencing platforms do not provide sufficient accessibility features to ensure that interpreters can be integrated properly in a video conference. Further, at present, video conferencing platforms generally are not configured to allow the connection of VRS CAs to a video conference, except through a voice-only dial-in connection. The need to connect a VRS CA through a dial-up connection poses multiple difficulties for the user, including the need to use two separately connected devices, splitting attention between the two in a way that appears to fall short of functionally equivalent participation in a video conference. However, some companies are developing ways to enable VRS CAs to have a video presence on a video conferencing platform, enabling a solution to these problems. A VRS provider, Sorenson Communications, has made available to its customers an application that allows its CAs to participate in a Zoom conference call.

To provide guidance on how to make video conferencing accessible to people who use sign language, the Commission proposes to add a new performance objective to § 14.21 of its rules to specify that accessibility for IVCS includes enabling an effective video connection for sign language interpreters, including VRS CAs, so that they can be pinned and viewed by those who use such services. The Commission seeks comment on this proposal and its costs and benefits, and also seeks comment on the following language for this proposed performance objective:

To ensure that providers of video remote interpreting (VRI) and VRS can connect with an IVCS provider's platform, should the Commission also specify in this performance objective that IVCS providers make technical specifications available on their websites, indicating how to make use of the relevant capabilities? Are there other forms of visual communication that this rule should cover for use on video conferences? For example, Cued English uses hand shapes, hand placements, and non-manual signals on the mouth to provide a transliteration of spoken English for some individuals with hearing disabilities. How would requiring the ability to connect interpreters or transliterators for additional forms of visual communication (if procured, e.g., by the host or organizer of a video conference) affect the costs and benefits of this proposed rule?

The Commission also seeks comment on whether additional performance objectives should be specified for IVCS to address other accessibility concerns. For example, are the current performance objectives in part 14 of the Commission's rules sufficient to ensure that people with disabilities other than hearing and speech disabilities can effectively participate in video conferences?

User Interface Controls. The Disability Advisory Committee and some commenters raise a concern that video conferencing platforms do not provide certain user interface controls needed for accessibility. To address these concerns, the committee recommends that the Commission ensure that such platforms:

Section 14.21(b) of the Commission's rules generally requires that the control functions necessary for a user to operate a covered service or product be accessible. The Commission invites comment on the extent to which the existing performance objectives already require control functions that would address the committee's recommendation. If not, would adding a performance objective such as the following effectively and appropriately address those concerns?

Should the Commission identify additional kinds of user interface controls that are necessary for accessibility? Commenters are invited to recommend language for performance objectives that would provide appropriate guidance in this area.

Costs and benefits. The Commission seeks comment on the costs and benefits of the above proposals. What benefits would result, and what costs would IVCS providers and other affected entities incur to: enable captioning of video conferences; provide text-to-speech capabilities; enable a video connection for sign language interpreters and VRS CAs; improve user interface controls; and address other possible performance objectives discussed above or in responsive comments?

How should the Commission quantify such incremental costs? How should it compare those costs with the benefits to IVCS users? Are there cost savings the Commission should consider—such as costs that could be incurred by video conference hosts or participants to provide captioning in the absence of platform-provided captioning? Further, IVCS providers may view accessibility not only as a public obligation, but also as a market opportunity. The Commission seeks comment on this view.

In addition to describing and (where possible) quantifying the benefits that would result from meeting all the performance objectives proposed above, the Commission invites comment on the extent to which particular performance objectives are achievable, either at present or in the foreseeable future. The Commission stresses that each of the amendments proposed above, if adopted, would remain subject to the general condition that a provider or manufacturer need not meet the objective if it is not achievable to do so. Therefore, the Commission may adopt new or modified performance objectives even if they are not immediately achievable for every provider. However, the Commission can better assess the likely benefits of these proposals if there is evidence as to whether or not a performance objective is likely to be achievable, for at least some covered entities, within the foreseeable future.

Legal Authority. The Commission believes the Act provides legal authority for the above proposals. Section 716 of the Act requires providers of ACS and manufacturers of equipment used with ACS, including interoperable video conferencing service, to make their services and equipment accessible to and usable by individuals with disabilities, unless that is not achievable. The Act directs the Commission, in broad terms, to adopt implementing regulations that, among other things, include performance objectives to ensure the accessibility, usability, and compatibility of advanced communications services and determine the obligations under this section of manufacturers, service providers, and providers of applications or services accessed over service provider networks. 47 U.S.C. 617(a)(1), (b)(1). Further, whenever that requirement is not achievable, a service provider shall ensure that its service is compatible with existing peripheral devices or specialized customer premises equipment commonly used by individuals with disabilities to achieve access, unless this requirement too is not achievable. 47 U.S.C. 617(c). A manufacturer of equipment used for IVCS is similarly required to make its products accessible to and usable by people with disabilities, unless it is not achievable to do so. The Commission believes its proposals fall within this broad grant of authority and are consistent with other provisions of section 716 of the Act, including the allowance for flexible implementation through either native or third-party applications, the prohibition on mandating technical standards, and the condition that compliance is not required if it is not achievable. 47 U.S.C. 617(a)(1), (b)(1), (e)(1)(D). The Commission seeks comment on this analysis.

The Commission also seeks comment on whether there are other sources of authority supporting the above proposals. For example, in 2007 the Commission found that it had authority, ancillary to section 225 of the Act, to require interconnected providers of VoIP service to provide access to TRS. Could the Commission also find that it has authority ancillary to section 225, or other provisions of the Act, to require video conferencing service providers to provide TRS access to interoperable video conferences? If so, what would be the bases for such a finding?

Safe Harbor Technical Standards. Section 716 of the Act provides that the Commission shall not adopt mandatory technical standards for ACS accessibility. However, the Commission may adopt technical standards as a safe harbor for such compliance if necessary to facilitate the manufacturer's and service providers' compliance. 47 U.S.C. 617(e)(1)(D). The Commission therefore seeks comment on whether technical standards are available (or in development)— e.g., WebRTC or portions thereof—that could serve as safe harbors for IVCS compliance with one or more applicable performance objectives, including the additional performance objectives proposed above, whereby a performance objective can be satisfied if an IVCS complies with the technical standard. WebRTC, short for Web Real-Time Communications, is an open-source internet standard that allows for real-time video communications through a user's internet browser, foregoing the need for plug-ins or standalone third-party software. On January 26, 2021, the World Wide Web Consortium and the internet Engineering Task Force announced WebRTC as an official standard. Although designed as a tool for internet browsers, WebRTC applications are now also being developed for mobile and Internet of Things devices.

Any commenter who proposes that a technical standard be recognized as a safe harbor is invited to discuss the costs and benefits of the proposal, and how the Commission would verify compliance with the standard. In general, are there costs or benefits to innovation of recognizing certain technical standards as safe harbors? Given the pace of technological innovation, how often should a safe harbor be updated, or should it be designated to expire after a date certain?

The Commission also seeks comment on how it can assist with or promote the development of safe harbor technical standards in this area. For example, there are numerous IVCS providers, each with a specific technology configuration, and there are multiple VRS providers as well. Would substantial costs be saved if all companies adhered to a common technical standard for integrating interpreters and VRS CAs into video conferences? How could the Commission facilitate the development of a useful standard?

Responding to the Disability Advisory Committee's recommendations, the Commission proposes to amend its rules to clarify that the integrated provision of TRS to enable functionally equivalent participation in video conferences can be supported by the Interstate TRS Fund. Just as the TRS Fund has long been used to support the provision of TRS with audio-only teleconferencing, the Commission believes it is necessary and appropriate, as a general matter, that the TRS Fund be used to support the provision of TRS with video conferencing.

The Commission tentatively concludes that section 225 of the Act authorizes the Commission to support the integrated provision of TRS in video conferences, without any need for either the TRS user or the CA to place a dial-up, voice-only call to the video conferencing platform. By integrated provision of TRS in a video conference, the Commission means an arrangement whereby communication between the CA (or automated equivalent) and video conference participants, whether by voice, text, or sign-language video, takes place on the video conferencing platform (where it can be available to all participants), rather than through a separate dial-up connection. The Act defines telecommunications relay services as: telephone transmission services that provide the ability for an individual who is deaf, hard of hearing, deaf-blind, or who has a speech disability to engage in communication by wire or radio with one or more individuals, in a manner that is functionally equivalent to the ability of a hearing individual who does not have a speech disability to communicate using voice communication services by wire or radio. 47 U.S.C. 225(a)(3) (emphasis added). Applying this definition, the Commission tentatively concludes that when the provision of a relay service is integrated with a video conferencing platform (without using a dial-up, voice-only connection), the provision of such service to an eligible TRS user is a telephone transmission service that enables communication by wire or radio in a manner that is functionally equivalent to the ability of a hearing individual who does not have a speech disability to communicate using voice communication services by wire or radio.

As indicated above, section 225 of the Act defines TRS in terms of its purpose—to enable people with hearing or speech disabilities to communicate by wire or radio in a manner that is functionally equivalent to how people without such disabilities use voice communication services. Both radio communication and wire communication are broadly defined in the Act as the transmission of writing, signs, signals, pictures and sounds of all kinds, including all instrumentalities, facilities, apparatus, and services (among other things, the receipt, forwarding, and delivery of communications) incidental to such transmission. 47 U.S.C. 153(40), (59). These definitions include wire or radio communication using internet Protocol. Further, the Commission believes that interoperable video conferencing service, which is defined to include audio communication, is appropriately characterized as a voice communication service for purposes of section 225 of the Act.

While telephone transmission service is not defined in the Act, the Commission has given this term a similarly broad interpretation. As the Commission explained in 2002, the use of this phrase to define TRS is constrained only by the requirement that such service provide a specific functionality, namely the ability to communicate by wire or radio in a manner functionally equivalent to voice communication. Further, section 225 of the Act directs the Commission to ensure that regulations prescribed to implement that section encourage, consistent with section 7(a) of the Act, the use of existing technology and do not discourage or impair the development of improved technology. 47 U.S.C. 225(d)(2). In its prior decisions authorizing new forms of TRS, the Commission has found that internet-based relay services are not limited to a specific technical configuration. For example, when finding IP CTS to be a compensable form of TRS, the Commission emphasized that the service could be initiated, set up, and provided in numerous ways, including using specific telephone equipment or IP-enabled devices, and various combinations of the public switched telephone network and IP-enabled networks. Similarly, when the Commission approved compensation for VRS, it noted that the service was under development using a number of equipment configurations. Further, the Commission has not interpreted telephone transmission service as requiring the use of telephone numbers. For example, VRS users were not assigned NANP numbers until 2008.

The Commission seeks comment on the foregoing tentative conclusion and interpretation of its authority under section 225 of the Act. Among other things, comment is sought on whether anything in section 225 or elsewhere in the Act indicates that the Commission's authority in this context is limited to making TRS available only with voice services that rely on the use of NANP telephone numbers. How could such a restrictive interpretation be squared with the broad language of the statutory definition of TRS?

Below, the Commission seeks comment on how to modify the Commission's TRS rules to facilitate such integration, ensure the appropriate use of VRS with video conferencing, and prevent waste, fraud, and abuse. First, the Commission proposes and seeks comment on measures that specifically address the integration of VRS with video conferencing. Then, it seeks comment on whether additional rule amendments are needed to specifically address the integration of other types of TRS with video conferencing. Finally, the Commission proposes to amend certain generally applicable TRS rules to address the integrated provision of TRS regardless of type.

The Commission tentatively concludes that the integrated provision of VRS with video conferencing is often necessary to enable sign-language users to communicate in a functionally equivalent manner. By integrated provision of VRS in a video conference, the Commission means an arrangement whereby a CA is included as a participant in the video conference and all communication between the CA and the participants takes place on the video conferencing platform rather than through a separate connection. First, the only alternative for connecting a VRS CA to a video conference—using a dial-up, voice-only connection—is often unavailable. Assuming the video conferencing platform allows a dial-up connection, it is usually the video conference organizer or host who determines whether a dial-up option is provided. Similarly, the conference organizer or host may or may not hire a sign language interpreter to provide communication assistance for a video conference. Second, the need to connect a VRS CA through a dial-up connection poses multiple difficulties for the user. For example, the VRS user must navigate between two separately connected devices and user interfaces—one to participate in the video portion of the conference and the other to communicate with the VRS CA—and this can cause confusion, fatigue, and other barriers to effective communication. In addition, the CA who, unlike other participants, is limited to an audio connection, is unable to read documents or other text that may be displayed, interpret facial expressions, or attend to other visual cues on which video conference participants often rely for effective communication. The Commission seeks comment on this tentative conclusion.

The active development and deployment of technological solutions for the integrated provision of VRS in a video conference has crystallized a number of issues regarding the application of the TRS rules to such integration. Therefore, the Commission proposes to amend its rules, as set forth below, to facilitate such integration, ensure the appropriate use of VRS with video conferencing, and prevent waste, fraud, and abuse.

In addition, the Commission invites the submission of comments describing in detail any ongoing efforts by VRS providers and IVCS providers to enable the integration of VRS with IVCS, and how far their development has progressed. Comment is sought on the extent to which the integration methods and technologies currently being developed or deployed are usable (or can be made usable) with more than one video conferencing platform or more than one VRS provider. What steps can the Commission take to encourage or assist with the development of standardized or open-architecture solutions, so that IVCS providers, TRS providers, and the TRS Fund do not needlessly incur duplicative costs to support multiple solutions unique to each video conferencing platform and VRS provider? What changes in the TRS interoperability rule, or other Commission rules, would promote wider availability of effective technical solutions in this area? To the extent that technological solutions are feasible, should the Commission not only authorize, but also require VRS providers to provide VRS with IVCS on an integrated basis?

User Validation and Call Detail. To collect compensation from the TRS Fund, a VRS provider must validate that the person using a video connection to place or receive a VRS call is a registered VRS user. Ordinarily, a person's status as an eligible user is verified by means of the NANP telephone number from which or to which a call is placed. By contrast, video conference participants typically enter a video conference via the internet ( e.g., by clicking the link provided by the host of the video conference) without dialing from a line associated with a telephone number. As discussed earlier, while some video conferencing platforms may allow a participant to connect via a voice-only, dial-up connection, the availability of such a connection for a particular video conference is up to the conference host or organizer. Further, VRS users may connect to a video conference without first contacting their VRS provider. The Commission seeks comment on how VRS providers can most efficiently and effectively confirm a video conference participant's eligibility for VRS when the user has not joined the video conference by placing a call from a NANP telephone number.

For example, should the Commission amend its rules to specify that, to validate the integrated provision of VRS in a video conference, information may be entered in a video conferencing application by a registered user and transmitted by the IVCS provider to a VRS provider, along with a request to provide a CA? If so, what information should be provided? Would a user's NANP telephone number suffice—even though it is not actually being used to connect with the video conference? Or should the Commission require a log-in ID and password? Should the Commission allow the provision of integrated VRS in video conferences pursuant to an enterprise registration, and if so, would the telephone number associated with an enterprise videophone suffice for validating such use? Are there other methods of validation that should be permitted in the video conferencing context?

The Commission also seeks comment on how the rules should address video conferences that are initiated informally, without an advance invitation, by one person dialing the telephone number, entering an email address, pressing an icon or otherwise contacting one or more other parties using a service such as GoogleMeet or FaceTime. Are there currently available or in development any technologies for integrating a CA with this type of video conference? Do the existing TRS rules and procedures suffice to verify, for these kinds of video conferences, that the caller or called party is a registered VRS user? Would this scenario require any changes to the TRS rules?

In addition, the VRS provider will need to be able to collect and provide an appropriate call detail record to submit to the TRS Fund administrator. Because the rules may apply differently to video conferences in a number of respects, the Commission proposes to require that call detail records submitted by VRS providers identify, as such, video conferences in which VRS is provided on an integrated basis. What other information should the Commission require VRS providers to collect and submit to the TRS Fund administrator to identify, for billing purposes, the integrated provision of VRS in a video conference? What routing information is available for the TRS Fund administrator to verify the presence of the VRS user and the CA or CAs in a video conference? Are originating and terminating Uniform Resource Locators (URLs) needed, and if so, how can they be collected? Alternatively, is it sufficient to provide the user's phone number or log-in, in lieu of the originating URL? How would VRS providers comply with the requirement to employ an automated record keeping system to capture call record data? How would VRS providers and the TRS Fund administrator identify non-compensable international calls? How would VRS providers verify that, based on the parties involved, the provision of TRS in a video conference is eligible for TRS Fund compensation? For example, a video conference involving only VRS users does not require a CA to relay the conversation and so would not be eligible for TRS Fund compensation. In addition, comment is sought generally on what measures VRS providers should be required to take to prevent misuse of VRS or waste, fraud, and abuse of the TRS Fund in the context of video conferencing.

CA-Related Issues. There may be a number of situations in which more than one VRS CA participates in a video conference. This could occur, for example, if two or more participants send service requests to different providers. The Commission seeks comment on whether the TRS rules should apply differently in this respect to a video conference than to a teleconference. In a multi-party teleconference involving at least one hearing user, our rules do not restrict the number of different TRS providers whose services may be used by various parties to the call. Given that any VRS provided on an integrated basis will be available to all participants, are any restrictions warranted on the number of different providers who may provide VRS in a single video conference?

The Commission also seeks comment on whether to amend the rules to authorize a single VRS provider to assign multiple CAs for a video conference in certain circumstances (and to receive additional compensation from the TRS Fund for minutes involving multiple CAs). First, two or more VRS users may each request service from the same VRS provider on the same video conference. In an analogous teleconference where two or more users have connected through VRS, compensation would be paid for multiple calls—with each user's connection through a CA being treated as a separate call. However, in a video conference with integrated VRS, unlike a teleconference, it is possible for all participants to be served by one CA. In such cases, should the TRS Fund support the provision of a separate CA for each user, or, to prevent waste (and potential confusion among video conference participants), the number of CAs provided be limited, and if so, based on what criteria?

Second, in certain kinds of video conferences, it may be desirable for two CAs to participate in the call, working as a team—even if only one participant has requested VRS. Under the current TRS Fund compensation scheme, additional compensation is not paid to support multiple CAs in a teleconference if only one participant has connected through VRS. However, video conferences may often involve dynamic interaction among multiple participants. According to one ASL interpreting service, a team of two interpreters may be recommended based on the dynamics of the interactions and number of participants involved, for example, for highly interactive meetings, or legal requests, with multiple Deaf participants.

Should the Commission's rules be amended to allow a VRS provider to earn additional compensation for providing more than one CA in certain video conferencing scenarios, and if so, how should those situations be defined? For example, are there professional interpreter guidelines or best practices on which the Commission could rely that define when multiple ASL interpreters should be present at a meeting? The Registry of Interpreters for the Deaf, Inc., states that factors to be considered in deciding whether to provide team interpreting include: the length and complexity of the assignment; unique needs of the persons being served; physical and emotional dynamics of the setting; and avoidance of repetitive stress injuries for interpreters. To what extent are guidelines for community interpreting applicable in the VRS context? For example, length of an assignment may be a less relevant factor for VRS because interpreters can be more efficiently substituted for one another when they do not need to be physically present at a meeting. Are there any situations where the TRS Fund should support more than two CAs from a single VRS provider?

The Commission proposes that, in the ordinary case, if the VRS user who requested service leaves a video conference, or is disconnected, before the session ends, then the billable period has ended and the CA should leave the video conference. In the context of an ordinary VRS call or conference call, if the TRS user is voluntarily or involuntarily disconnected from the call, he or she must initiate another call with a new CA. The Commission seeks comment on this proposal and on what, if any, exceptions should be allowed. For example, if other registered VRS users are participating in the same video conference, who were being assisted by the same CA, should the initial CA be permitted to stay on the video conference for a limited period to ensure continuity of service, and if so, for how long? Are other flexible alternatives available to ensure seamless VRS for other eligible users or ensure a smooth transition between CAs, while minimizing any risk of waste, fraud, or abuse? Are there any other issues that may arise when multiple VRS users and other participants are present in the same IVCS call, and how should they be resolved?

VRS CAs generally must stay on a call for a minimum of 10 minutes, after which they may be replaced by another CA. 47 CFR 64.604(a)(1)(v). The Commission seeks comment on whether to adjust this timeframe for the provision of VRS in video conferences. If so, what timeframe would be reasonable?

In addition, to ensure a seamless takeover between CAs from the same VRS provider during a video conference, is it desirable for a replacement CA to join the video conference and observe or acquire background information for some period of time before taking over from the first CA? If so, what would be a reasonable transition period? Is there a standard timeframe that VRS providers should adhere to, or should it be left to the discretion of the CAs or the VRS user? Are there professional guidelines or best practices that shed light on this question? Should a VRS provider be compensated for each CA's time while both the initial and replacement CAs are on the call? How can the Commission encourage uninterrupted VRS call takeovers during video conferences, while not unduly burdening the TRS Fund and Fund contributors?

Privacy Screen Rule. The Commission proposes to modify its rules to allow flexibility for VRS users and CAs to turn off video while participating in a video conference. The current rules prohibit a VRS CA from enabling a visual privacy screen or similar feature during a VRS call and require the CA to disconnect a VRS call if the caller or called party enables a visual privacy screen or similar feature for more than five minutes or is otherwise unresponsive or unengaged for more than five minutes. 47 CFR 64.604(a)(6). A visual privacy screen is defined as a screen or any other feature that is designed to prevent one party or both parties on the video leg of a VRS call from viewing the other party during a call. 47 CFR 64.601(a)(52). The Commission adopted this rule in 2011 as one of numerous measures aimed at halting the epidemic of fraud and abuse then plaguing the VRS program. The rule's stated purpose was to stop illicit schemes that result in calls running without any communication between the parties for the sole purpose of fraudulently billing the Fund.

In a multi-party video conference, however, a participant may turn off his or her video camera for various reasons that may not indicate lack of engagement with the discussion. For example, in some video conferences, the host may request that all participants turn off their videos unless speaking, to make it easier for participants who are deaf to view a sign language interpreter. Or, an interpreter may stop his or her video when a second interpreter is present and is interpreting a particular person's voice or signing. Further, on a video conference where one or more participants are speaking at length, participants who are deaf (like other participants) may choose to turn off their videos until it is their turn to speak.

The Commission proposes to allow VRS CAs to continue providing relay services integrated with a multi-party video conference when the VRS user who requested service has turned off his or her video connection for more than five minutes, as long as at least one other party is continuing to speak and the VRS user is still connected to the video conference. Under the proposed amendment, if five minutes elapse in which no party on a multi-party video conference is responsive or engaged in conversation, the VRS CA shall follow the current procedure, i.e., announce that VRS will be terminated and leave the video conference. The Commission proposes to define multi-party video conference as a video conference with three or more participants, excluding VRS CAs and any other participant providing an accommodation for a participant. It also proposes to allow VRS CAs to turn off their video connections when taking turns relaying conversation with another VRS CA on a multi-party video conference. The Commission seeks comment on these proposals. Are there other steps that should be taken to ensure that modifying this rule does not lead to misuse of TRS or fraudulent billing to the TRS Fund? More generally, are there other precautions the Commission should take to prevent the inappropriate or excessive provision of TRS in video conferences, with the intention of increasing a TRS provider's compensable minutes?

The Commission seeks comment generally on the need to facilitate the integration of non-VRS types of TRS with video conferencing and on the existence and progress of any efforts to develop technology to enable such integration. To the extent that such integration is needed and feasible, should the Commission adopt service-specific rule changes, e.g., amendments analogous to those proposed above for VRS, to address the integration of other types of TRS with video conferencing? What rule changes would facilitate the integrated provision of each type of TRS with video conferencing, ensure the appropriate use of these TRS Fund-supported services in that context, and prevent waste, fraud, and abuse?

IP Relay. The Commission seeks comment on the extent to which the integrated provision of IP Relay in video conferences would facilitate functionally equivalent communication. Would such integrated provision of IP Relay enhance functionally equivalent communication in video conferences for those segments of the TRS-eligible population served by IP Relay, such as persons who are deafblind and persons with speech disabilities? As the Commission has noted, IP Relay can be enhanced with adaptive technologies such as refreshable Braille displays and screen readers, making it particularly useful for consumers who are deafblind. Have methods and technologies been developed to enable such integrated provision of IP Relay? Could the needs of these communities be served more efficiently or effectively if IVCS providers make available text-to-speech and speech-to-text (captioning) functionality, pursuant to part 14 of the Commission's rules? Alternatively, would IP Relay be needed for certain populations to effectively participate in a video conversation in a way that is functionally equivalent?

If the integrated provision of IP Relay with video conferencing is achievable, what service-specific amendments to the rules would facilitate such integration, ensure the appropriate provision of IP Relay in this context, and prevent waste, fraud, and abuse? How can the Commission ensure that only registered IP Relay users can use IP Relay in a video conference? Would the same sign-on procedure and request for a CA work in the context of IP Relay as for VRS? Are there CA-related issues for IP Relay similar to those proposed above for VRS?

IP CTS. The Commission seeks comment on the extent to which the integrated provision of IP CTS in video conferences would facilitate functionally equivalent communication for IP CTS users. Have methods and technologies been developed to enable such integrated provision of IP CTS? The Commission notes that IVCS providers are permitted to meet the part 14 performance objective of providing auditory information in visual form either by implementing a captioning solution on the platform itself or by using third-party solutions available to consumers at nominal cost. See 47 CFR 14.20(a)(3), 14.21(b)(2)(iv). Some IVCS providers currently offer captioning. To the extent that technology is developed for integrating IP CTS with video conferencing, are IVCS providers likely to implement such technology, either to comply with part 14 or to provide an additional captioning option for users? If the integrated provision of IP CTS with video conferencing is achievable, what rule changes would ensure appropriate use of such services in that context, while preventing waste, fraud, and abuse?

Non-Internet-Based TRS. The Commission seeks comment on whether and how the Commission should amend its rules to facilitate the provision in video conferences of non-internet-based TRS—Text Telephone (TTY)-based TRS, Captioned Telephone Service (CTS), and Speech-to-Speech Relay (STS). For TTY-based TRS, a user calls a relay center and types the number to be called. The CA makes the telephone call and then relays the call between the parties by speaking what a text user types, and typing what a voice telephone user speaks. For STS, a CA (who is specially trained in understanding a variety of speech disorders) repeats what the caller says in a manner that makes the caller's words clear and understandable to the called party. CTS is similar to IP CTS, with captions being provided over the telephone network instead of the internet.

These services, offered through state TRS programs, are intended for use on an ordinary telephone line. While users of these services may be able to participate in an IVCS call over a dial-up connection (where available), it is unclear whether or how these forms of TRS could be integrated with video conferencing platforms. Further, given the availability of IP CTS and IP Relay, which provide the functionality of CTS and TTY-based TRS for users with internet access, it seems unlikely that there would be significant demand for integrated provision of these services in internet-based video conferences. The Commission seeks comment on this assumption. STS, however, has no internet-based equivalent. For STS, would enabling the CA, as well as the user, to participate in the video portion of a video conference permit more effective communication for the STS user? If so, have methods and technologies been developed to enable such integrated provision of STS? What service-specific rule changes would facilitate such provision of STS, ensure appropriate use of STS in that context, and prevent waste, fraud, and abuse?

The Commission seeks comment on proposed rule amendments that would be applicable both to VRS and to any other form of TRS that is integrated with video conferencing.

Confidentiality. The Commission proposes to amend its TRS confidentiality rule to address the video conferencing context. Specifically, the Commission proposes to amend the rule to expressly prohibit CAs from disclosing non-relayed content that is communicated in a video conference, or maintaining records of such content beyond the duration of the video conference. It also proposes to amend the confidentiality rule to codify the current practice that the rule expressly applies to TRS providers as well as CAs, so that the rule explicitly covers TRS calls (including but not limited to video conferences) where TRS is provided via ASR or other automatic processes, without the involvement of a CA. The rule currently provides that CAs are prohibited from disclosing the content of any relayed conversation regardless of content, and from keeping records of the content of any conversation beyond the duration of a call, even if to do so would be inconsistent with state or local law. 47 CFR 64.604(a)(2)(i). Some features of video conferences are not explicitly addressed by this rule. For example, a CA may become aware of sidebar conversations between two or more video conference participants (whether in speech or sign language) that the CA concludes are not intended to be communicated to other participants. Or the CA may review chat conversations or PowerPoints and other presentation material that the CA is not asked to relay to participants. Therefore, such content would not be included in relayed conversation.

The proposed rule would protect this content from disclosure and would require TRS providers and CAs to destroy any notes or records of such content upon termination of the call. For example, if a CA keeps notes during a call of, e.g., party names, specialized vocabulary, such notes must be destroyed at the end of the call. The Commission seeks comment on this proposal. Are additional amendments to the Commission's confidentiality rule necessary to protect the privacy of participants? For example, should the Commission also restrict CAs from disclosing the identities or other personal information regarding the participants in a video conference? Should any of the proposed restrictions on non-relayed content be applicable to other types of calls?

Exclusivity. Consistent with the Disability Advisory Committee's recommendation, the Commission proposes to prohibit exclusivity arrangements between TRS providers and IVCS providers. In general, an exclusivity arrangement is an express or implied agreement between a TRS provider and an IVCS provider that has the purpose or effect of preventing other providers from offering similar services to consumers. Such exclusivity arrangements may deprive consumers of the opportunity to rely on their chosen provider when using video conferencing services, contrary to the Commission's policy. Similarly, such exclusivity arrangements also may deprive conference hosts of the opportunity to select their preferred IVCS provider. What are the costs and benefits of exclusivity arrangements between TRS providers and IVCS providers? What types of arrangements should be prohibited as de facto exclusivity agreements? Are there any arrangements of this kind that should be allowed, e.g., because they would provide net economic benefits in this context? Should the Commission also prohibit exclusivity arrangements between TRS providers and manufacturers or suppliers of video conferencing equipment or software? Should the Commission require that all contracts between TRS providers and IVCS service providers (or suppliers of video conferencing equipment or software) be available for inspection?

TRS vs. Other Accessibility Measures. Video conferencing can function as a substitute for in-person meetings as well as teleconferences. Historically, the Commission has prohibited the use of TRS for in-person meetings. Further, many employers, educational institutions, health care providers, government agencies, and other entities currently provide ASL interpreting, captioning and other accommodations—either voluntarily or to fulfill obligations under the Americans with Disabilities Act (ADA), Public Law 101-336, or other laws—to ensure that persons with hearing and speech disabilities can fully participate in meetings, classes, and other activities. In these contexts, dedicated ASL interpreters, captioners, and others may be trained and gain experience in a specific subject matter and may have the opportunity to prepare in advance for a scheduled meeting or class. The Commission seeks comment on the extent to which such accommodations, as well as accessibility features that may be available on a video conferencing platform, may be more effective than TRS in making video conferences accessible. Would the universal availability of TRS in video conferences reduce the incentives of video conference organizers and hosts to provide more effective forms of accessibility? For example, is there a risk that the availability of integrated VRS in a video conference will dissuade organizers or hosts from voluntarily offering more effective ASL interpreting services, and if so, what steps should the Commission take to mitigate that risk? More generally, how can the Commission ensure that the use of TRS in video conferences does not detract from the effective implementation of ADA and other legal requirements?

Further, as stewards of the TRS Fund, the Commission has an obligation to prevent waste and ensure that TRS is available in the most efficient manner. When a non-TRS accessibility solution has been made available by a video conference organizer or an IVCS provider, are there steps the Commission should take to prevent unnecessary and potentially confusing provision of a redundant TRS solution? For example, if a video conference organizer employs or contracts for an ASL interpreting or captioning service, whether in fulfillment of legal obligations or voluntarily, should TRS Fund compensation be denied for the integrated provision of VRS in that video conference? How would such a restriction be effectuated as a practical matter? For instance, should the Commission require a VRS provider that offers integrated VRS to ensure that when VRS is requested for a video conference, the organizer or host is prompted to confirm whether or not ASL interpretation is being separately provided? To limit unnecessary requests for VRS, should the Commission require IVCS providers to make available a symbol that call organizers can activate in a call invitation or notice to indicate that ASL interpreters will be supplied on the call?

As a related matter, the Commission tentatively concludes that TRS providers must decline requests to reserve a TRS CA in advance of a scheduled video conference. The provision of ASL interpreting, captioning, and other assistance by prior reservation is a different kind of service, which is available from other sources, such as VRI services. The Commission has long held that the role of TRS is to be available for calls consumers choose to make, when they choose to make them, i.e., to be the dial tone for a call that requires assistance for effective communication. For this reason, the Commission requires TRS providers to handle service requests in the order in which they are received, in accordance with speed-of-answer standards. As a consequence, the Commission has found that the practice of permitting TRS users to reserve in advance a time at which a CA will handle a call is inconsistent with the nature of TRS and the functional equivalency mandate. Allowing TRS CAs to be reserved in advance for certain kinds of calls, such as video conferences, would raise the risk that service to other users would be degraded. The Commission seeks comment on this tentative conclusion.

Costs and Benefits. The Commission seeks comment on the costs and benefits of each of the proposed rule amendments and other possible changes discussed above, including: authorizing the integrated provision of VRS and other types of TRS with video conferences; specifying modified methods of VRS user validation and call detail recording for video conferences; addressing the use of multiple VRS CAs, service to multiple VRS users, and call takeover in video conferences; changes to the privacy screen rule; changes to the TRS confidentiality rules; prohibiting exclusivity agreements between TRS providers and IVCS providers, equipment manufacturers, and software suppliers; and preventing disincentives for and duplication of the provision of accommodations by video conference organizers and providers.

The Commission also seeks comment on the specific costs that providers of each type of TRS (as opposed to IVCS providers and other parties) would incur to provide service in video conferences on an integrated basis. For example, the Commission seeks estimates of the research and development costs incurred by TRS providers to develop, and engineering costs to build, test, maintain, and update, those aspects of integration solutions in which a TRS provider is involved. It also seeks estimates of the costs TRS providers would incur to adapt their TRS operations (for example, by adjusting call routing protocols) to the integrated provision of TRS in video conferences, in accordance with the proposed rules. To what extent could there be offsetting cost savings? The Commission also requests that interested parties identify which costs would be appropriately identified as start-up or one-time costs, and which costs would be recurring.

How is demand for VRS and other forms of TRS likely to change as a result of integrating TRS with video conferencing? What is the projected impact of such increased use on costs and revenues for TRS providers? To what extent could increases in TRS minutes of use due to integration of TRS with video conferencing off-set increased costs to provide such service?

TRS Fund Compensation. In general, the Commission anticipates that allowable costs incurred by TRS providers to provide service that is integrated with video conferencing will be recovered pursuant to the Commission's current processes. That is, such costs will be reported annually by providers along with other allowable costs and will be recovered pursuant to compensation formulas determined in the relevant compensation proceedings for each form of TRS. However, comment is sought on any changes in cost categories that may be needed to reflect the costs of integration with IVCS platforms. Will the provision of TRS on video conferencing platforms require changes to the forms on which TRS providers annually report cost and demand to the TRS Fund administrator? Are additional limits on allowable costs needed to protect against waste, fraud, and abuse in the TRS program?

At least one VRS provider indicates it is already able to provide VRS with one IVCS provider on an integrated basis. Absent a mandate, any additional costs incurred by VRS providers to provide such service, if significantly higher than costs reported to the TRS Fund administrator and reflected in applicable compensation formulas, would not be recoverable under the Commission's current guidelines for exogenous cost recovery. For example, one of the criteria for recovery of exogenous costs for VRS and IP CTS provides that the additional costs must result from new TRS service requirements or other causes beyond the provider's control. To encourage VRS providers to develop methods and technologies for providing VRS integrated with video conferencing, should the Commission provide a mechanism for additional cost recovery from the TRS Fund?

Section 64.604(c)(14) of the Commission's rules authorizes additional TRS Fund compensation for the involvement of multiple CAs in handling specified types of calls between two or more TRS users. The Commission proposes to amend this provision to state generally that compensation may be paid for the use of multiple CAs to handle TRS calls between users of different types of TRS where more than one CA is needed to handle the call. Adopted in 2014, § 64.604(c)(14) of the Commission's rules currently states that compensation is authorized for the provision of multiple CAs to handle TRS calls between two or more users of captioned telephone service—CTS or IP CTS—and for calls between a captioned telephone service user and a user of TTY-based TRS or VRS.

The Commission adopted this provision in 2014 to codify certain existing practices brought to its attention, whereby compensation was paid for the use of multiple CAs to handle certain types of calls. Subsequently, the Commission amended the definition of telecommunications relay services to reflect the statutory definition of that term as amended by the CVAA. The amended definition provides that TRS enable functionally equivalent communication between an individual who is deaf, hard of hearing, deaf-blind, or who has a speech disability and one or more individuals. 47 CFR 64.601(a)(43); see also 47 U.S.C. 225(a)(3). Before enactment of the CVAA, TRS was defined as enabling functionally equivalent communication between an individual who has a hearing impairment or speech impairment and an individual who does not have a hearing impairment or speech impairment. 47 U.S.C. 225(a)(3) (2009). In proposing the 2014 amendment, the Commission explained that the revised definition would allow compensation from the TRS Fund for relay calls involving two or more persons using different forms of relay services, including calls whose handling may require more than one CA. However, in adopting the amended definition of TRS, the Commission did not modify the multiple-CA rule to reflect its stated intent regarding compensation for calls handled by multiple CAs. As a result, some categories of calls that qualify as TRS under the amended statutory definition and that may warrant multiple CAs, are not currently addressed by the multiple-CA rule. For example, the current rule does not address when the use of two CAs is appropriate for calls between users of IP Relay and other forms of TRS.

The Commission proposes to amend the multiple-CA rule to broaden its scope, to more fully reflect the Commission's stated intent in adopting the amended definition of TRS. Under the proposed amendment, the rule would state that compensation may be paid for more than one CA to handle, among other categories, calls between users of different types of relay services where more than one CA is warranted. Comment is sought on this proposal.

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. The term equity is used here consistent with Executive Order 13985 as the consistent and systematic fair, just, and impartial treatment of all individuals, including individuals who belong to underserved communities that have been denied such treatment, such as Black, Latino, and Indigenous and Native American persons, Asian Americans and Pacific Islanders and other persons of color; members of religious minorities; lesbian, gay, bisexual, transgender, and queer (LGBTQ+) persons; persons with disabilities; persons who live in rural areas; and persons otherwise adversely affected by persistent poverty or inequality. Specifically, the Commission seeks comment on how our proposals may promote or inhibit advances in diversity, equity, inclusion, and accessibility.

As required by the Regulatory Flexibility Act of 1980, as amended (RFA), 5 U.S.C. 603, the Commission has prepared this Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on a substantial number of small entities by the policies and rules proposed in this document. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadline for comments provided in this document.

Need for, and Objective of, Proposed Rules. The Commission proposes to amend its rules to improve the accessibility of IVCS, a form of ACS. First, the Commission proposes to amend part 14 of its rules, which governs accessibility of ACS. The Commission proposes to add performance objectives that specifically enable the accessibility of IVCS. The Commission proposes that such performance objectives include the provision of speech-to-text (captioning) capabilities; text-to-speech capabilities; and enabling of ASL interpreting. The Commission seeks comment on whether additional amendments are needed to ensure that video conferencing is accessible. The Commission also seeks comment on whether technical standards are available or could be fashioned for use as safe harbors.

Second, the Commission proposes to amend part 64 of its rules, governing TRS, to provide that the Interstate TRS Fund can be used to support the integrated provision of relay service in video conferences—whether or not the video conferencing platform can be accessed via a dial-up telephone call. In addition, the Commission proposes to modify its rules to facilitate such integration, ensure the appropriate use of VRS with video conferencing, and prevent waste, fraud, and abuse.

Legal Basis. The authority for this proposed rulemaking is contained in sections 1, 2, 3, (4)(i), (4)(j), 225, and 716 of the Act, 47 U.S.C. 151, 152, 153, 154(i), 154(j), 225, 617.

Small Entities Impacted. The proposed rules will affect the obligations of providers of IVCS and providers of TRS. These services can be included within the broad economic category of All Other Telecommunications.

Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements. The proposed changes for which comment is sought in this document, if adopted, would impose new or modified reporting, recordkeeping or other compliance obligations on certain small entities that provide IVCS or TRS.

The Commission's existing rules require that each manufacturer of equipment (including software) used to provide ACS and each provider of such services not otherwise exempt maintain, in the ordinary course of business and for a reasonable period, records documenting the efforts taken by such manufacturer or service provider to implement sections 255 and 716 of the Act, including: information about the manufacturer's or provider's efforts to consult with individuals with disabilities; descriptions of the accessibility features of its products and services; and information about the compatibility of such products and services with peripheral devices or specialized customer premise equipment commonly used by individuals with disabilities to achieve access.

The Commission's existing rules require that an officer of each manufacturer of equipment (including software) used to provide ACS and an officer of each provider of such services submit to the Commission an annual certificate that records are being kept in accordance with the above recordkeeping requirements, unless such manufacturer or provider has been exempted from compliance with section 716 under applicable rules.

Because of the diverse manufacturers of equipment used to provide ACS and diverse providers of ACS that may be subject to section 716 of the Act, the multiple general and entity-specific factors used in determining, whether for a given manufacturer (or service provider) accessibility for a particular item of ACS equipment (or a particular service) is achievable, and the various provisions of section 716 of the Act and the proposed rules on when and to what extent accessibility must be incorporated into a given item of ACS equipment or service, it is difficult to estimate the costs of compliance for those small entities that may not be covered by a waiver, should the Commission choose to apply any such waivers. Accordingly, the Commission seeks comment on the costs of compliance with these proposed rules.

The proposed amendments to the Commission's rules governing TRS are designed to facilitate the use of TRS CAs in video conferences, ensure the appropriate use of TRS with video conferencing, and prevent waste, fraud, and abuse. These modifications would only apply to the extent that users of a specific small entity TRS provider participate in video conference calls. Otherwise, the TRS compliance requirements would remain unchanged.

Steps Taken to Minimize Significant Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant, specifically small business, alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; the clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; the use of performance rather than design standards; and an exemption from coverage of the rule, or any part thereof, for such small entities.

The Commission seeks comment from all interested parties. Small entities are encouraged to bring to the Commission's attention any specific concerns they may have with the proposals outlined in this document. The Commission expects to consider the economic impact on small entities, as identified in comments filed, in reaching its final conclusions and taking action in this proceeding.

Federal Rules Which Duplicate, Overlap, or Conflict With, the Commission's Proposals. None.

This document may contain new or modified information collection(s) subject to the Paperwork Reduction Act of 1995, Public Law 104-13 (PRA). If the Commission adopts any new or modified information collection requirements, they will be submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the PRA, 44 U.S.C. 3507(d). OMB, the general public, and other federal agencies are invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, the Commission seeks specific comment on how it might further reduce the information collection burden for small business concerns with fewer than 25 employees. 44 U.S.C. 3506(c)(4).

For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 CFR parts 14 and 64 as follows:

The additions read as follows:

The revisions and additions read as follows:

I. Background

DoD, GSA, and NASA are proposing to amend the FAR to implement section 111 of the Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018 (Pub. L. 115-425), enacted January 8, 2019. Section 111 amends 49 U.S.C. 40118 to require that domestic carriers who contract with the Federal Government to provide air transportation must submit an annual report to the Administrator of General Services, the Secretary of Transportation, the Secretary of Labor, the Administrator of the Transportation Security Administration, and the Commissioner of U.S. Customs and Border Protection. The FAR will require the following information in the report:

• The number of personnel trained in the detection and reporting of potential human trafficking (as described in 22 U.S.C. 7102 in the paragraphs titled “Severe forms of trafficking in persons” and “Sex trafficking”), including the training required under 49 U.S.C. 44734(a)(4);

• The number of notifications of potential human trafficking victims received from contractor personnel, subcontractors, or passengers; and

• Whether the contractor notified the Global Human Trafficking Hotline, another comparable hotline, or law enforcement at the relevant airport of the potential human trafficking victim for each such notification of potential human trafficking, and if the contractor made a notification, the date the notification was made and the method of notification ( e.g., text to Hotline, call to law enforcement).

Section 111 does not apply to contracts awarded by the Department of Defense.

The proposed rule reflects the new reporting requirements conveyed in section 111 and updates the statutory citations for 49 U.S.C. 40118, Government-financed air transportation, throughout the FAR, removing obsolete references to section 5 of the International Air Transportation Fair Competitive Practices Act of 1974.

A summary of the proposed changes follows.

In 12.503(b)(4), 47.101, and 47.402, references to Government-financed air transportation are revised to clarify the statutory title of 49 U.S.C. 40118. References to the Fly America Act are maintained to avoid confusion throughout the contracting workforce.

In 22.1703, Policy, a cross-reference to 47.405(b) is added to point to the prescription for a new contract clause that includes reporting requirements concerning training to prevent human trafficking for domestic carrier air transportation.

New section 47.400, Scope of Subpart, is added to introduce the statute implemented in the section, for consistency with the standard structure of the FAR.

The definition of “U.S.-flag air carrier” in FAR 47.401 is revised to reflect the terminology used in 49 U.S.C. 41102, and referenced in 49 U.S.C. 40118. Conforming changes are made to the definition of “U.S.-flag air carrier” in FAR clause 52.247-63, Preference for U.S.-Flag Air Carriers.

FAR 47.405 is amended to include a prescription for the new clause at FAR 52.247-XX, Reporting Requirement for U.S.-Flag Air Carriers Regarding Training to Prevent Human Trafficking. The new clause will be required for solicitations and contracts, including those below the simplified acquisition threshold (SAT) and those for commercial services, that are with a U.S.-flag carrier for the transportation by air of passengers. As a result, a conforming change in the reference to 47.405 is made at 12.503, Applicability of certain laws to Executive agency contracts for the acquisition of commercial products and commercial services.

New FAR clause 52.247-XX, Reporting Requirement for U.S.-Flag Air Carriers Regarding Training to Prevent Human Trafficking, contains the reporting requirements described in section 111 and provides instructions to contractors on when and how to submit the annual report, in addition to clarifications on the type of “personnel” for whom training data is to be included in the report. It applies to acquisitions below the SAT and to commercial services (see section III of this preamble). As a result, the clause is added to 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders—Commercial Products and Commercial Services and 52.213-4, Terms and Conditions—Simplified Acquisitions (Other than Commercial Products and Commercial Services).

FAR clause 52.247-63, Preference for U.S. Flag Air Carriers, is amended to revise the definition of “U.S.-flag air carrier” as described in section II.A. of this preamble. In addition, obsolete references to requirements in Section 5 of the International Air Transportation Fair Competitive Practices Act of 1974 are replaced with current requirements in 49 U.S.C. 40118, Government-financed air transportation.

This rule proposes a new clause at FAR 52.247-XX, Reporting Requirement for U.S.-Flag Air Carriers Regarding Training to Prevent Human Trafficking, to implement the requirements of section 111 of the Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018 (Pub. L. 115-425). The clause is prescribed at FAR 47.405(b) for use in solicitations and contracts with a U.S.-flag air carrier for the transportation by air of passengers. This clause is not applicable to solicitations issued or contracts awarded by the Department of Defense. The Federal Acquisition Regulatory Council (FAR Council) plans at the final rule stage to make the following determinations with respect to the rule's application to contracts at or below the simplified acquisition threshold (SAT) and for the acquisition of commercial services, but not commercial products or COTS items. Discussion of these determinations is set forth below.

41 U.S.C. 1905 governs the applicability of laws to acquisitions at or below the SAT. Section 1905 generally limits the applicability of new laws when agencies are making acquisitions at or below the SAT, but provides that such acquisitions will not be exempt from a provision of law under certain circumstances, including when the FAR Council makes a written determination and finding that it would not be in the best interest of the Federal Government to exempt contracts and subcontracts in amounts not greater than the SAT from the provision of law. The FAR Council intends to make a determination to apply this statute to acquisitions at or below the SAT.

41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial products and commercial services, and is intended to limit the applicability of laws to contracts for the acquisition of commercial products and commercial services. Section 1906 provides that if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt commercial contracts, the provision of law will apply to contracts for the acquisition of commercial products and commercial services.

41 U.S.C. 1907 states that acquisitions of COTS items will be exempt from certain provisions of law unless the Administrator for Federal Procurement Policy makes a written determination and finds that it would not be in the best interest of the Federal Government to exempt contracts for the procurement of COTS items.

The FAR Council intends to make a determination to apply this statute to acquisitions for commercial services. Considering that air transportation, such as passenger air travel, is a commercial service, there is no need to apply section 111 to the acquisition of commercial products.

Considering that air transportation does not meet the definition of a COTS item ( i.e., it is a service, not a product), section 111 cannot apply to acquisitions of such items regardless of the requirements at 41 U.S.C. 1907. Therefore, the Administrator for Federal Procurement Policy does not intend to make a determination to apply this statute to acquisitions for COTS items.

Section 111 of the Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018, 49 U.S.C. 40118(g), requires that domestic carriers who contract with the Federal Government to provide air transportation provide an annual report to the Administrator of General Services, the Secretary of Transportation, the Secretary of Labor, the Administrator of the Transportation Security Administration, and the Commissioner of U.S. Customs and Border Protection, with the following information:

• The number of personnel trained in the detection and reporting of potential human trafficking (as described in 22 U.S.C. 7102 in the paragraphs titled “Severe forms of trafficking in persons” and “Sex trafficking”), including the training required under 49 U.S.C. 44734(a)(4);

• The number of notifications of potential human trafficking victims received from contractor personnel, subcontractors, or passengers; and

• Whether the contractor notified the Global Human Trafficking Hotline, another comparable hotline, or law enforcement at the relevant airport of the potential human trafficking victim for each such notification of potential human trafficking, and if the contractor made a notification, the date the notification was made and the method of notification ( e.g., text to Hotline, call to law enforcement).

The purpose of the Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018 is to combat human trafficking. Section 111 of the Act is meant to further that objective. The purpose of this rule is to implement section 111.

The law is silent on the applicability of these requirements to acquisitions at or below the SAT and does not independently provide for criminal or civil penalties; nor does it include terms making express reference to 41 U.S.C. 1905 and its application to acquisitions at or below the SAT. Therefore, it does not apply to acquisitions at or below the SAT unless the FAR Council makes a written determination as provided at 41 U.S.C. 1905.

Application of the law to contracts at or below the SAT will further the important public policy objective of prohibiting the trafficking of persons. According to the Federal Procurement Data System, approximately seventy percent (70%) of the contracts for air transportation (as identified either by the Product Service Codes of V111 (Air Freight), V121 (Air Charter), V211 (Air Passenger), and V221 (Passenger air charter) or by North American Industry Classification System codes in the 4811XX and 4822XX fields (Scheduled Air Transportation and Nonscheduled Air Transportation industries)) were at or below the SAT during fiscal years 2021 and 2022. Failure to apply section 111 to contracts at or below the SAT would exclude a significant number of acquisitions, which would undermine the important public policy objective of prohibiting human trafficking.

For this reason, it is in the best interest of the Federal Government to apply the requirements of the rule to contracts at or below the SAT.

The law is silent on the applicability of these requirements to acquisitions of commercial products and commercial services and does not independently provide for criminal or civil penalties; nor does it include terms making express reference to 41 U.S.C. 1906 and its application to acquisitions of commercial products and commercial services. Therefore, it does not apply to acquisitions of commercial products and commercial services unless the FAR Council makes a written determination as provided at 41 U.S.C. 1906.

Considering that air transportation, such as passenger air travel, is a commercial service, failing to apply section 111 to the acquisition of commercial services would essentially be failing to implement section 111 in its entirety. For this reason, it is in the best interest of the Federal Government to apply the requirements of the rule to contracts for commercial services.

The law is silent on the applicability of this requirement to acquisitions of COTS items and does not independently provide for criminal or civil penalties; nor does it include terms making express reference to 41 U.S.C. 1907 and its application to acquisitions of COTS items. Therefore, it does not apply to acquisitions of COTS items unless the Administrator for Federal Procurement Policy makes a written determination as provided at 41 U.S.C. 1907.

However, considering that air transportation does not meet the definition of a COTS item ( i.e., it is a service, not a product), section 111 cannot apply to acquisitions of such items regardless of the requirements at 41 U.S.C. 1907. Therefore, no determination needs to be made regarding the application to acquisitions of COTS items.

This proposed rule contains a reporting requirement for domestic carriers who contract with the Federal Government (except for DoD) for air transportation of passengers to provide an annual report to five agencies on the number of personnel trained in the detection of human trafficking, the number of notifications of human trafficking the contractor received, and actions the contractor took with regards to those notifications.

This proposed rule is not creating a training requirement nor does this contract clause create a mandatory reporting requirement to hot lines and law enforcement; the training requirement already existed prior to section 111 ( e.g., 49 U.S.C. 44734(a)(4)) and applies to all U.S.-flag air carriers, regardless of whether they are contractors of the Federal Government. This proposed rule simply requires data related to the training that has occurred and notifications that have been made.

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

DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601-612, because this rule will impact domestic air carriers ( i.e., U.S.-flag air carriers as described in 49 U.S.C. 41102), including small business domestic air carrier. The estimated number of total small entities to which this rule could apply is 196 though it is likely much lower since it is unknown how many are considered U.S.-flag air carriers in accordance with 49 U.S.C. 41102 and actually impacted by this rule. However, an Initial Regulatory Flexibility Analysis (IRFA) has been performed and is summarized as follows:

The Regulatory Secretariat Division has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the SBA. A copy of the IRFA may be obtained from the Regulatory Secretariat Division. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit comments separately and should cite 5 U.S.C. 610 (FAR case 2019-017), in correspondence.

The Paperwork Reduction Act (44 U.S.C. 3501-3521) applies because the proposed rule contains information collection requirements. Accordingly, the Regulatory Secretariat Division has submitted a request for approval of a new information collection requirement concerning FAR case 2019-017, Training to Prevent Human Trafficking for Certain Air Carriers, to the Office of Management and Budget. The burden associated with this information collection will be added to OMB Control No. 9000-0061, FAR Part 47 Transportation Requirements, when FAR case 2019-017 is finalized.

Public reporting burden for this collection of information is estimated to average 5 hours per response, which includes the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. The annual reporting burden is estimated as follows:

Respondents: 180.

Responses per respondent: 1.

Total annual responses: 180.

Preparation hours per response: 5.

Total response burden hours: 900.

Submit comments on this collection of information no later than October 6, 2023 through https://www.regulations.gov and follow the instructions on the site. All items submitted must cite OMB Control No. 9000-0061. Comments received generally will be posted without change to https://www.regulations.gov, including any personal and/or business confidential information provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission to verify posting. If there are difficulties submitting comments, contact the GSA Regulatory Secretariat Division at 202-501-4755 or GSARegSec@gsa.gov.

Public comments are particularly invited on:

• The necessity of this collection of information for the proper performance of the functions of Federal Government acquisitions, including whether the information will have practical utility;

• The accuracy of the estimate of the burden of this collection of information;

• Ways to enhance the quality, utility, and clarity of the information to be collected; and

• Ways to minimize the burden of the collection of information on respondents, including the use of automated collection techniques or other forms of information technology.

Requesters may obtain a copy of the supporting statement from the General Services Administration, Regulatory Secretariat Division by calling 202-501-4755 or emailing GSARegSec@gsa.gov. Please cite OMB Control Number 9000-0061 in all correspondence.

Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 1, 12, 22, 47, and 52 as set forth below:

The revisions read as follows: