FHFA invites comments on all aspects of the proposed rule, and will take all comments into consideration before issuing a final rule. Commenters do not need to answer each of the specific questions asked below. Copies of all comments received will be posted on the FHFA website at http://www.fhfa.gov, and will include any personal information you provide, such as your name, address, email address, and telephone number. In addition, copies of all comments received will be available for examination by the public through the electronic rulemaking docket for this proposed rule, also located on the FHFA website.

The Federal Housing Enterprises Financial Safety and Soundness Act of 1992, as amended (Safety and Soundness Act), provides that the Director of FHFA has a duty to ensure that the operations and activities of the Enterprises foster liquid, efficient, competitive, and resilient national housing finance markets. 1 To achieve these goals, the Enterprises purchase residential mortgages that fall within the conforming loan limits established pursuant to 12 U.S.C. 1717 and 12 U.S.C. 1454, and issue guaranteed mortgage-backed securities backed by those loans.

In addition, the Safety and Soundness Act provides generally that the Enterprises “have an affirmative obligation to facilitate the financing of affordable housing for low- and moderate-income families.”  2 Section 1129 of the Housing and Economic Recovery Act of 2008 (HERA) amended section 1335 of the Safety and Soundness Act to establish a duty for the Enterprises to serve three specified underserved markets (Duty to Serve) in order to increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for certain categories of borrowers in those markets. 3 Specifically, the Enterprises are required to provide leadership in developing loan products and flexible underwriting guidelines to facilitate a secondary market for mortgages on housing for very low-, low-, and moderate-income families for the manufactured housing, affordable housing preservation, and rural housing markets. 4 FHFA's Duty to Serve Regulation, 5 which implements these Duty to Serve statutory requirements, is discussed further below.

The eleven Banks are wholesale financial institutions organized under the Federal Home Loan Bank Act to support housing finance and further affordable housing and community development. 6 The Banks are cooperatives and carry out their mission primarily by providing products and services to their member institutions. Bank members and eligible housing associates (nonmember mortgagee borrowers such as state housing finance agencies) may obtain access to secured loans, known as advances. 7 These must be fully secured by eligible collateral at the time of issuance or renewal, which may include, among other forms of collateral, residential mortgages and mortgage-backed securities. 8 In addition, the Banks issue standby letters of credit on behalf of members and housing associates, which may be secured by residential mortgages and mortgage-backed securities.

Most Banks also offer Acquired Member Assets (AMA) programs, under which they acquire eligible mortgages from participating members and housing associates, subject to parameters set forth in FHFA's AMA regulation. 9 The Banks are also authorized to invest in mortgage-backed securities and other mortgage-related investments meeting applicable requirements. 10 Finally, the Banks may serve as pass-through entities for mortgage loans acquired by another purchaser.

The current PTFC Regulation prohibits the Enterprises and Banks from purchasing, investing in, or otherwise dealing in any mortgages encumbered by PTFCs or related securities, and prohibits the Banks from accepting such mortgages or securities as collateral for advances, unless such PTFCs are “excepted transfer fee covenants.”  11 Under the PTFC Regulation, “PTFCs” mean obligations that purport to “run with the land” in the records of title to real property or to bind current owners of, and successors in title to, such real property, and that obligate a transferee or transferor to pay a private transfer fee upon transfer of the property. 12 A “private transfer fee” is defined in the PTFC Regulation as a transfer fee, including a charge or payment, imposed by a covenant, and required to be paid in connection with or as a result of a transfer of title to real estate, and payable on a continuing basis each time a property is transferred (except for transfers specifically excepted) for a period of time or indefinitely. 13

In adopting the PTFC Regulation, FHFA was concerned that private transfer fees would: (1) be used to fund purely private continuous streams of income for select market participants, either directly or through securitized investment vehicles; (2) not benefit homeowners or the properties involved; and (3) interfere with accurate determination of property values. Therefore, FHFA concluded that mortgages on properties with PTFCs might impair the safety and soundness of the Enterprises and the Banks that purchase, invest in, or otherwise deal in, or in the case of the Banks, that accept as collateral, such mortgages. 14

The prohibition in the PTFC Regulation does not apply where the PTFC is an “excepted transfer fee covenant,” which is defined as a covenant that requires payment to a “covered association” and that limits the use of such payment to purposes that provide a “direct benefit” to the real property. 15 A “covered association” is defined as “a nonprofit mandatory membership organization comprising owners of homes, condominiums, cooperatives, manufactured homes, or any interest in real property, created pursuant to a declaration, covenant or other applicable law; or an organization described in section 501(c)(3) or section 501(c)(4) of the Internal Revenue Code.”  16 The PTFC Regulation defines a “direct benefit” as meaning that the proceeds of a PTFC “are used exclusively to support maintenance and improvements to encumbered properties, and acquisition, improvement, administration, and maintenance of property owned by the covered association of which the owners of the burdened property are members and used primarily for their benefit.”  17 This may include “cultural, educational, charitable, recreational, environmental, conservation, or other similar activities that (1) are conducted in or protect the burdened community or adjacent or contiguous property, or (2) are conducted on other property that is used primarily by residents of the burdened community.”  18

Approximately four years after the adoption of the PTFC Regulation, FHFA adopted the Duty to Serve Regulation, which applies only to the Enterprises. 19 Under the Duty to Serve Regulation, each Enterprise is required to prepare an Underserved Markets Plan (Plan), which is subject to Non-Objection by FHFA, and which describes the specific activities and objectives the Enterprise will undertake over a three-year period to fulfill its Duty to Serve in each underserved market. 20 The regulation identifies specific types of activities that are eligible to receive Duty to Serve credit and that an Enterprise may include in its Plan under each underserved market. 21 An Enterprise may also include additional activities in its Plan, subject to FHFA determination of whether they are eligible to receive Duty to Serve credit. 22

Under the Duty to Serve Regulation, one of the activities eligible for Duty to Serve credit under the affordable housing preservation market is Enterprise support for shared equity programs for affordable homeownership preservation in the form of resale restriction programs administered by community land trusts, other nonprofit organizations, or state or local governments or instrumentalities (collectively, Resale Restriction Programs). 23 The Duty to Serve Regulation further specifies the following criteria for an eligible Resale Restriction Program:

(a) Provides homeownership opportunities to very low-, low-, or moderate-income households (100 percent or less of area median income (AMI));

(b) Utilizes a ground lease, deed restriction, subordinate loan, or similar legal mechanism that includes provisions stating that the program will keep the home affordable for subsequent very low-, low-, or moderate-income families, the affordability term is at least 30 years after recordation, a resale formula applies that limits the homeowner's proceeds upon resale, and the program administrator or its assignee has a preemptive option to purchase the homeownership unit from the homeowner at resale; and

(c) Supports homebuyers and homeowners to promote sustainable homeownership, including reviewing and pre-approving refinances and home equity lines of credit. 24

The preamble to the 2015 proposed Duty to Serve rule noted that many shared equity loan programs allow the sponsors to charge modest fees that cover the cost of operating the program. 25 However, the preamble to the final Duty to Serve rule did not reiterate this discussion of fees and did not include a reference to fees in the regulatory text. The final Duty to Serve rule also did not refer to or amend the PTFC Regulation specifically to provide an exception to the restriction on PTFCs for loans that meet Resale Restriction Program requirements in the Duty to Serve Regulation.

Between 2018 (the first year of Duty to Serve program implementation) and 2022, the Enterprises, collectively, purchased 595 shared equity loans for Duty to Serve credit. Both Enterprises' 2022-2024 Duty to Serve Plans include plans to purchase shared equity loans under Resale Restriction Programs in 2023 and 2024.

The loans purchased by the Enterprises under many of the Resale Restriction Programs are on properties encumbered by PTFCs that fall within the PTFC Regulation's prohibition because they bind current owners and successors to pay a fee to the program administrator (often a community land trust) on a continuing basis each time the property is transferred. The loans do not meet the definition of an “excepted transfer fee covenant” in the PTFC Regulation because they are used by the program administrator to pay for its operating costs, including costs of enforcing the long-term affordability requirements, but they are not limited to costs and activities that are specific to the “burdened community” in which the subject property is located, nor are they otherwise required to be used for the purpose of providing a “direct benefit” to the property (as these quoted terms are defined in the PTFC Regulation). 26

During the Enterprises' efforts to implement the shared equity loan objectives in their Duty to Serve Plans, the Enterprises reviewed model organizational documents that were proposed to be used as templates by Resale Restriction Programs. In preparing to establish approved templates, the Enterprises determined that, while Resale Restriction Programs using the templates would meet the criteria for Resale Restriction Programs in the Duty to Serve Regulation (except for the 100 percent of AMI limit), the programs' possible inclusion of private transfer fee payment requirements could cause any loans issued under the terms of the model organizational documents to be ineligible for purchase by the Enterprises pursuant to the PTFC Regulation.

In response to the Enterprises' identification of PTFCs in shared equity loans under Resale Restriction Programs that otherwise could be purchased and qualify for Duty to Serve credit, FHFA reviewed these types of loans and determined that the private transfer fees in these programs are not the types of fees that prompted the concern underlying the PTFC Regulation. Unlike fees paid to the select market participants that concerned FHFA when the PTFC Regulation was adopted, the fees in Resale Restriction Programs reimburse the program administrators, which are typically community land trusts, nonprofits, or local governments, for their ongoing operating expenses related to the purchase and sale of affordable homes under the program. They are not used as a method to provide a continuous income stream to the program administrators with no continuing affordable housing-related services provided. For example, fees in Resale Restriction Programs may be used to pay for: maintaining a list of, and qualifying, prospective program-eligible homebuyers; providing seller representation and outreach to prospective buyers; ensuring that repairs are incorporated into the sale transaction; providing potential homebuyers with homeownership counseling or similar education; exercising the program administrator's option to purchase the home if the homeowner defaults on the first lien or the affordability restriction; enforcing the long-term affordability requirements (such as calculating the maximum resale price according to the resale formula); and executing legal documents with subsequent homebuyers.

Accordingly, FHFA issued a temporary prospective waiver of the private transfer fee restrictions in § 1228.2 of the PTFC Regulation for Enterprise purchases or securitizations of shared equity loans on properties with PTFCs that meet the Duty to Serve shared equity loan program criteria for Resale Restriction Programs in the Duty to Serve Regulation other than the Duty to Serve 100 percent of AMI limit, 27 through the remaining term of the Enterprises' 2022-2024 Duty to Serve Plans, i.e., through December 31, 2024. The waiver did not include an income limit, based on input from the Enterprises and other practitioners familiar with shared equity programs who indicated that these programs typically set income limits up to 140 percent of AMI (which is above the Duty to Serve 100 percent of AMI limit), especially in communities where housing costs are high relative to incomes. Limiting eligibility for the waiver to loans that meet the Duty to Serve 100 percent of AMI limit would require lenders and shared equity program administrators to use a differentiated approach with borrowers above and below this income threshold. Further, it would require lenders to review each loan to ensure eligibility for purchase by the Enterprises and the Banks. This would undermine the objective of standardizing the shared equity homeownership market and increasing the number of Enterprise shared equity loan purchases under the Duty to Serve program.

The waiver also included a retrospective component that waived the restrictions in the PTFC Regulation for shared equity loans on properties with private transfer fees purchased or securitized by the Enterprises with note dates prior to July 1, 2023, regardless of whether the loans met the Duty to Serve shared equity loan program criteria for Resale Restriction Program loans.

Finally, the waiver provided notice of FHFA's intention to promptly engage in notice-and-comment rulemaking to propose amending the PTFC Regulation to codify the waiver provisions. This proposed rule implements that intent. Specifically, the proposed rule would amend the definition of “excepted transfer fee covenant” in § 1228.1 of the PTFC Regulation to add as an exception a PTFC that encumbers a property for which a shared equity loan meets the requirements of a Duty to Serve Resale Restriction Program (§ 1282.34(d)(4)(i)(A) and (d)(4)(ii) of this chapter) other than the 100 percent of AMI limit.

The current PTFC Regulation also prohibits the Banks from purchasing, investing in, or otherwise dealing in mortgages on properties encumbered by PTFCs, and related securities, and prohibits the Banks from accepting such mortgages or securities as collateral for advances, subject to the exceptions in the regulation. 28 The Banks have indicated that, to their knowledge, they have not purchased, or accepted as collateral, shared equity loans. The same considerations discussed above for the Enterprises (regarding differences in the uses of fees payable at resale to administrators of Resale Restriction Programs and the fees that FHFA was concerned about when the PTFC Regulation was adopted) also apply to the Banks. However, because the waiver for the Enterprises derived from their activities under the Duty to Serve regulation (which does not apply to the Banks), the waiver did not address activities of the Banks with respect to shared equity loans. Because the Banks might decide in the future to purchase, invest in, or otherwise deal in shared equity loans or related securities under Resale Restriction Programs, or accept them as collateral, to facilitate increased liquidity for affordable homeownership, FHFA believes the exception provided in the proposed rule for the Enterprises should also apply for the Banks.

Accordingly, the definition of “excepted transfer fee covenant” in § 1228.1 of the PTFC Regulation would continue to apply to both the Enterprises and the Banks, as amended by the proposed rule to add as an exception a PTFC that encumbers a property for which a shared equity loan meets the requirements of a Duty to Serve Resale Restriction Program (§ 1282.34(d)(4)(i)(A) and (d)(4)(ii) of that chapter) other than the 100 percent of AMI limit.

The proposed rule would remove the prospective application and effective date in current § 1228.3 of the PTFC Regulation. Current § 1228.3 includes a grandfather provision for mortgages on certain properties encumbered by PTFCs if those PTFCs were created pursuant to an agreement entered into before the effective date of the PTFC regulation. The regulated entities have been operating under the terms of the current regulation since July 16, 2012, and the Enterprises subsequently have been operating under the terms of the regulatory waiver since July 1, 2023. If this proposed PTFC rule is adopted as a final rule, the prospective application date ( i.e., the effective date) of the final rule would be 60 days after the date of its publication in the Federal Register . This date will precede December 31, 2024, which is the conclusion of the 2022-2024 Duty to Serve Plan cycle and the date on which the temporary prospective component of the waiver will expire.

Proposed § 1228.3 would include the retrospective component of the waiver by allowing the Enterprises to retain in their portfolios any of the 595 shared equity loans on properties with private transfer fees that were purchased or securitized by the Enterprises with note dates prior to the effective date of the waiver (July 1, 2023), regardless of whether the loans met the Duty to Serve shared equity loan program criteria for resale restriction programs in § 1282.34(d)(4)(i)(A) and (d)(4)(ii) of this chapter.

FHFA specifically requests comments on the following questions (please identify the question answered by the number assigned below):

1. Should the proposed rule apply to the Banks in addition to the Enterprises? Do differences between the Banks and the Enterprises warrant additional or other revisions to the proposed rule as it relates to the Banks?

2. Should all of the Duty to Serve Resale Restriction Program criteria, including the 100 percent of AMI limit, apply to the determination of whether a mortgage loan that is subject to PTFCs, or a related security, is eligible for purchase, investment, otherwise dealing in, or acceptance as collateral by the Banks and Enterprises? If not, which of those specific criteria should apply?

3. Should criteria other than the Duty to Serve Resale Restriction Program criteria, such as an income limit different from 100 percent of AMI, apply to the determination of eligibility?

4. Should criteria in addition to the Duty to Serve Resale Restriction Program criteria apply to the determination of eligibility?

The proposed rule does not contain any information collection requirement. Thus, it would not require approval of the Office of Management and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 3501 et seq. ). Therefore, FHFA has not submitted any information to OMB for review.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include an initial regulatory flexibility analysis describing the regulation's impact on small entities. FHFA need not undertake such an analysis if the agency has certified that the regulation will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). FHFA has considered the impact of the proposed rule under the Regulatory Flexibility Act and FHFA certifies that the proposed rule, if adopted as a final rule, will not have a significant economic impact on a substantial number of small entities because the proposed rule is applicable only to the regulated entities, which are not small entities for purposes of the Regulatory Flexibility Act.

When promulgating regulations relating to the Banks, section 1313(f) of the Safety and Soundness Act requires the Director of FHFA to consider the differences between the Banks and the Enterprises with respect to the Banks' cooperative ownership structure; mission of providing liquidity to members and housing associates; affordable housing and community development mission; capital structure; and joint and several liability. In preparing this proposed rule, FHFA considered the differences between the Banks and the Enterprises as they relate to the above factors, and determined that the proposed rule is appropriate as it would have no impact on four of the five factors and could have a modest, positive impact on the fifth factor—the mission of providing liquidity to members and housing associates. FHFA requests comments regarding whether differences related to those factors should result in any additional or other revisions to the proposed rule.

For the reasons stated in the Preamble, and under the authority of 12 U.S.C. 4526, FHFA proposes to amend part 1228 of chapter XII of title 12 of the Code of Federal Regulations as follows:

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-2023-1887; Project Identifier MCAI-2023-00543-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 Dat Le, Aviation Safety Engineer, FAA, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone (516) 228-7317; email dat.v.le@faa.gov. Any commentary that the FAA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

The FAA issued AD 2020-24-12, Amendment 39-21342 (85 FR 76949, December 1, 2020) (AD 2020-24-12), for certain Airbus SAS Model A350-941 airplanes. AD 2020-24-12 was prompted by an MCAI originated by EASA, which is the Technical Agent for the Member States of the European Union. EASA issued AD 2020-0123, dated May 29, 2020 (EASA AD 2020-0123), to correct an unsafe condition.

AD 2020-24-12 requires replacing certain CWB fasteners with fasteners having improved friction efficiency. The FAA issued AD 2020-24-12 to address CWB fastener rotation. This condition, if not corrected, could lead to cracking of the fastener head sealant cover, followed by fuel vapor leakage inside the cabin, possibly resulting in injury to airplane occupants.

Since the FAA issued AD 2020-24-12, EASA superseded AD 2020-0123 and issued EASA AD 2023-0068, dated March 30, 2023 (EASA AD 2023-0068) (also referred to as the MCAI), to correct an unsafe condition for certain Airbus SAS Model A350-941 airplanes. The MCAI states that during flight and fatigue testing it was discovered that some fasteners can rotate inside their CWB fastener holes. Further investigation identified insufficient friction for the application. After EASA issued AD 2020-0123, it was determined that additional work is necessary to ensure the correct application of the fuel vapor barrier structure paint on the outside of the CWB. CWB fastener rotation, if not corrected, can lead to a crack of the fastener head sealant cover, followed by fuel vapor leakage inside the cabin, possibly resulting in injury to airplane occupants.

The FAA is proposing this AD to address the unsafe condition on these products. You may examine the MCAI in the AD docket at regulations.gov under Docket No. FAA-2023-1887.

Although this proposed AD does not explicitly restate the requirements of AD 2020-24-12, this proposed AD would retain all of the requirements of AD 2020-24-12. Those requirements are referenced in EASA AD 2023-0068, which, in turn, is referenced in paragraph (g) of this proposed AD.

EASA AD 2023-0068 specifies procedures for replacing the affected CWB fasteners with fasteners having improved friction efficiency, and for doing additional work on previously modified airplanes to ensure the correct application of the fuel vapor barrier structure paint from outside the CWB. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

This product has been approved by the aviation authority of another country and is approved for operation in the United States. Pursuant to the FAA's bilateral agreement with this State of Design Authority, it has notified the FAA of the unsafe condition described in the MCAI referenced above. The FAA is issuing this NPRM after determining that the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would retain all requirements of AD 2020-24-12. This proposed AD would also require accomplishing the applicable actions specified in EASA AD 2023-0068 described previously, except for any differences identified as exceptions in the regulatory text of this proposed AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA developed a process to use some civil aviation authority (CAA) ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has been coordinating this process with manufacturers and CAAs. As a result, the FAA proposes to incorporate EASA AD 2023-0068 by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2023-0068 in its entirety through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in EASA AD 2023-0068 does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in EASA AD 2023-0068. Service information required by EASA AD 2023-0068 for compliance will be available at regulations.gov under Docket No. FAA-2023-1887 after the FAA final rule is published.

The FAA estimates that this AD, if adopted as proposed, would affect 13 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:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would modify the airway structure as necessary to preserve the safe and efficient flow of air traffic within the National Airspace System.

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should submit only one time if comments are filed electronically, or commenters should send only one copy of written comments if comments are filed in writing.

The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it receives on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The FAA may change this proposal in light of the comments it receives.

Privacy: In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/privacy .

An electronic copy of this document may be downloaded through the internet at www.regulations.gov . Recently published rulemaking documents can also be accessed through the FAA's web page at www.faa.gov/air_traffic/publications/airspace_amendments/ .

You may review the public docket containing the proposal, any comments received and any final disposition in person in the Dockets Operations office (see ADDRESSES section for address, phone number, and hours of operations). An informal docket may also be examined during normal business hours at the office of the Western Service Center, Federal Aviation 2200 South 216th St., Des Moines, WA 98198.

Alaskan VOR Federal airways are published in paragraph 6010(b) of FAA Order JO 7400.11, Airspace Designations and Reporting Points, which is incorporated by reference in 14 CFR 71.1 on an annual basis. This document proposes to amend the current version of that order, FAA Order JO 7400.11H, dated August 11, 2023, and effective September 15, 2023. These updates would be published in the next update to FAA Order JO 7400.11. That order is publicly available as listed in the ADDRESSES section of this document.

FAA Order JO 7400.11H lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

In 2003, Congress enacted the Vision 100-Century of Aviation Reauthorization Act (Pub. L. 108-176), which established a joint planning and development office in the FAA to manage the work related to the Next Generation Air Transportation System (NextGen). Today, NextGen is an ongoing FAA-led modernization of the nation's air transportation system to make flying safer, more efficient, and more predictable.

In support of NextGen, this proposal is part of an ongoing, large, and comprehensive T-route modernization project in the state of Alaska. The project mission statement states: “To modernize Alaska's Air Traffic Service route structure using satellite-based navigation development of new T-routes and optimization of existing T-routes will enhance safety, increase efficiency and access, and will provide en route continuity that is not subject to the restrictions associated with ground-based airway navigation.”

As part of this initiative, the Aniak NDB is scheduled to be decommissioned. As a result, a portion of Alaskan V-508 will become unusable. This airspace action proposes to amend the Alaskan V-508 by revoking the portion of the airway that relies on the Aniak NDB. The FAA published a final rule for Docket No. FAA-2022-0245 in the Federal Register (88 FR 50018; August 1, 2023) effective October 5, 2023, establishing Area Navigation (RNAV) T-route, T-380. This RNAV route was established, in part, to provide alternative to VOR Federal Airway V-508. The portion of Alaskan V-508 that is proposed to be revoked is paralleled by T-380.

The FAA proposes to amend 14 CFR part 71 by amending Alaskan VOR Federal airway V-508. The proposed airspace actions are described below.

V-508: The Alaskan Federal Airway V-508 extends between the Middleton Island, AK, VOR/DME, Kenai, AK, VOR/DME, Sparrevohn, AK, VOR/DME and the Aniak, AK, NDB. The FAA proposes to revoke the portion of the Alaskan Federal Airway V-508 that extends between the Sparrevohn, AK, VOR/DME and the Aniak, AK, NDB. As amended, Alaskan Federal Airway V-508 would extend between the Middleton Island, AK, VOR/DME; Kenai, AK, VOR/DME; to Sparrevohn, AK, VOR/DME.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore: (1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

The Commercial Space Launch Act of 1984, as codified and amended at 51 U.S.C.—Commercial Space Transportation, ch. 509, Commercial Space Launch Activities, 51 U.S.C. 50901-50923 (the Act), authorizes the Department of Transportation and thus the FAA, through delegations, to oversee, license, and regulate commercial launch and reentry activities, and the operation of launch and reentry sites as carried out by United States (U.S.) citizens or within the United States. Section 50905 directs the FAA to exercise this responsibility consistent with public health and safety, safety of property, and the national security and foreign policy interests of the United States. Pursuant to § 50903, the FAA is also responsible for encouraging, facilitating, and promoting commercial space launches by the private sector.

Disposal (storage) orbit —an orbit intended for post-mission long-term storage where atmospheric effects and solar radiation will not move the disposed object into a protected orbit for at least 100 years.

ISS —International Space Station.

NASA —National Aeronautics and Space Administration.

Spacecraft —vehicles, payloads, and other manmade objects that are designed to for placement or operation in outer space. For example, spacecraft include satellites, inhabitable space stations, inhabitable capsules, and cargo vehicles.

Transfer orbit— a temporary orbit on which an object travels to move from one orbit to another.

Upper stage —a segment of a launch vehicle that reaches orbit.

This proposed rule would require an operator licensed or permitted under this chapter to perform a launch or reentry with a planned altitude greater than 150 kilometers (km) to limit or dispose of debris at the end of a launch or reentry to maintain a sustainable space environment. The FAA proposes to require that operators licensed or permitted under parts 415, 417, 431, 435, 437, or 450, to perform a launch or reentry with a planned altitude greater than 150 km submit an Orbital Debris Assessment Plan (ODAP)—including physical evidence, test results, and analyses to demonstrate removal activities—prior to each operation. This notice proposes that if debris—including spent upper stages and other components—is released during launch or reentry, during on-orbit aspects of launch or reentry, or during disposal operations, any pieces greater than 5 mm in size must be removed from highly-used regions within 25 years. The FAA proposes to allow operators to meet this criterion by performing one of five disposal options. Operators may choose to dispose of the debris within 30 days of mission completion through (1) controlled disposal; (2) maneuver to a disposal orbit; or (3) Earth-escape orbit. Alternatively, an operator could elect to (4) retrieve the debris within 5 years of mission completion; or (5) perform atmospheric uncontrolled disposal or natural decay within 25 years, if the debris disposal meets the risk criteria.

The FAA notes that many launches, as they are currently conducted, would already be in compliance with the operational requirements of the proposed regulation. The FAA also proposes to amend the reporting requirements governing debris creation. The FAA would require the reporting of a non-nominal launch or a debris-creating anomaly to the FAA.

Orbital debris is made up of fragmented material (resulting from anti-satellite tests, upper stage explosions, accidental collisions, etc.), nonfunctional spacecraft, rocket bodies, and mission-related items (explosive bolts, vehicle shrouds, etc.), 1 but excludes naturally-occurring debris such as meteoroids. As more and more spacefaring nations launch objects into Earth orbit, space is becoming increasingly crowded with orbital debris. 2 If left unchecked, orbital debris can diminish the usefulness of certain orbits and present a hazard to operations on-orbit. Current international modeling indicates that even if there were no further space launches, collisions between objects already in space will eventually become the major source of debris. 3 This threat could soon escalate dramatically with the deployment of large constellations of small satellites in the already-congested Low Earth Orbit (LEO) region.

As of 2021, the number of orbital objects sized 10 centimeters (cm) or greater is estimated to be over 23,000. Recent debris projections estimate a total of half a million objects sized between 1 and 10 cm on orbit, and over 100 million objects larger than 1 mm. 4

Each Earth orbit has a specific usefulness and needs to be protected from accumulated orbital debris. LEO is commonly used for Earth observation, communications, and scientific experiments. LEO is also the region where most human spaceflight activities take place. Medium Earth Orbit (MEO) contains space navigation satellites and some communications missions covering the North and South poles. Space objects in Geostationary Earth Orbit (GEO) typically support communications and weather missions. A transfer orbit is a temporary orbit that a launch vehicle uses to move from one orbit into another. A common transfer orbit is the GEO transfer orbit used to place spacecraft into GEO. The upper stage often remains in the GEO transfer orbit with an apogee near the GEO region and the perigee in LEO. Spacecraft typically occupy LEO, MEO, or GEO, but can operate in other less congested orbits. The areas outside LEO, MEO, and GEO have been known as acceptable disposal orbits for upper stages and discarded satellites because they are not frequently used by active satellites. Figure 1 illustrates the various levels of Earth orbit including disposal orbit regions.

Debris in space travels at hypervelocities. On average, collisions in LEO occur at a closure rate, or combined velocity at impact, over 10 km per second. 5 This is more than 11 times faster than a bullet. At those speeds, an impact to a typical operational spacecraft by debris 5 mm and larger will most likely cause damage to critical systems that ends the mission of the spacecraft. 6 As seen in Figure 2, the main threat to operational spacecraft (abbreviated to “S/C” in Figure 2) in LEO is the debris in the range of 5 mm to 1 cm, primarily due to the sheer number of objects in this range. However, large objects greater than 1 meter, including discarded upper stages, are the main driver for debris growth.

In addition to causing catastrophic breakups, orbital debris impacts on functioning satellites or spacecraft can also degrade performance, pit or crack windows, mar surfaces of solar panels, damage optics, and degrade surface coatings. 8 9 In 1984, a piece of orbital debris damaged the windshield of the Space Shuttle Challenger. A 4 mm diameter crater was made by a fleck of white paint approximately 0.2 mm in diameter, traveling 3-6 km/sec. 10

As of 2021, approximately 95 percent of the total mass of human-generated objects in orbit is rocket bodies ( i.e. upper stages)  11 and spacecraft. The remainder is mission-related debris and fragmentation debris. 12 The more mass an object has, the more debris it will create in the event of an explosion or collision.

The U.S. Government, for launches it conducts, has taken steps to mitigate orbital debris generation. Similarly, other countries are taking steps to mitigate debris generation during operations they oversee. This proposed rule would align U.S. commercial orbital debris mitigation practices for U.S. commercial launch operations with orbital debris mitigation practices accepted by the U.S. Government and certain other countries. For example, the European Space Agency (ESA) is implementing a Zero Debris Approach to stop the growth of orbital debris from their operations by 2030. ESA's policy acknowledges that if the status quo of orbital debris generation continues, future on-orbit operations will be hindered unless actions like remediation (active debris removal) are enacted. 13

If no mitigation measures are implemented, the projected growth of orbital debris is expected to rapidly increase, as Figure 3 shows. The growth rate, as estimated in 2011, assumed a steady launch rate based on annual launch rates and did not address the increase in satellite constellations. SpaceX alone has launched over 1,500 satellites in its Starlink constellation as of August 2021. Several more companies have launched their own small satellite constellations. These small satellites are expected to have relatively short lifetimes, on the order of 5 years. Even though many operators are following current best practices, those practices allow multiple generations of spent satellites to co-exist on-orbit. The graph in Figure 3 is based on trackable debris. Current technology tracks objects 10 cm and larger, though debris between 5 mm and 10 cm pose risks. The shaded areas around the solid lines are the 1-sigma uncertainty from 100 Monte Carlo runs of the growth model.

A launch vehicle is made up of a first stage and usually one or more upper stages. When a vehicle is launched into space, the first stage typically propels the vehicle through the bulk of the atmosphere, but does not reach orbit. The first stage falls back to Earth shortly after launch. The upper stage then ignites to put the payload into LEO or a transfer orbit. Typically, the upper stage deploys the payload in LEO, if that is the final payload destination; otherwise, it usually deploys the payload in the transfer orbit for payload destinations higher than LEO.

Historically, the largest contributor to orbital debris was the explosion of upper stages. 15 Defunct upper stages with charged batteries or partially fueled tanks would often experience catastrophic failures attributed to stored energy. Current regulations adequately address this issue by requiring launch operators to ensure that stored energy is removed from all launch vehicle stages or components. 16 However, now the greatest risk regarding the growth of orbital debris population is collision between objects including upper stages on orbit. The strength of upper stage structures, along with their mass and size, pose a risk of catastrophic collisions that would create substantial amounts of orbital debris. The threat of fracturing such a large object can be mitigated by removing it from populated orbits. With this proposed rule, the FAA intends to ensure upper stages are properly disposed of at the end of launch to limit the growing orbital debris population.

The impact of even one collision has a significant effect on the growth of orbital debris. Figure 4, generated by the NASA Orbital Debris Program Office, 17 shows the predicted growth rate of orbital debris in LEO, as estimated in 2022. This growth rate is based on the population of objects greater than or equal to 10 cm, which is primarily fragmented material. This figure portrays the growth of the orbital debris environment. The figure highlights collisions and intentional destruction of spacecraft as the largest contributors to the debris environment. The figure also highlights the recent and rapid growth of operational spacecraft as large constellations continue to proliferate.

The Iridium 33/Cosmos 2251 collision and the Chinese Fengyun-1C anti-satellite test have been the worst debris creating events ever recorded. These two events contributed approximately 5,900 catalogued objects to the environment. Launch vehicle upper stages are significantly more massive than any of the objects involved in these events and a catastrophic collision involving an upper stage would produce many more times the debris created in these events.

Debris imposes a cost on active satellites. Maneuvering an active spacecraft to avoid collision with space debris will mitigate the immediate threat of collision, but doing so uses up valuable resources. It takes time and effort to plan a maneuver; and, in some cases, the fuel expended on the maneuver will lead to a shortened mission life for the spacecraft. Most importantly, only active spacecraft are capable of maneuvering, whereas upper stages have no maneuverability after the end-of-launch. Removing upper stages from congested orbits would lessen the likelihood of debris-on-debris collisions and would reduce the probability of active satellites maneuvering to avoid a collision.

The first accidental hypervelocity collision between two intact spacecraft occurred in February 2009. The operational U.S. Iridium 33 communications satellite and the defunct Russian Cosmos 2251 communications satellite collided at a speed of 11.7 km/sec (26,172.2 mph), above northern Siberia. 18 The collision destroyed both satellites and produced more than 2,300 pieces of trackable debris.

The Chinese anti-satellite test and the Iridium/Cosmos collision were not the only orbital debris events to occur. In July 1996, a collision occurred between a French Cerise satellite and a briefcase-sized piece of debris left in orbit from an exploded Ariane third stage. The impact tore off a 4.2 m section of the Cerise's gravity-gradient stabilization boom. 19

An example of orbital debris colliding with other orbital debris occurred on January 17, 2005, when a 31-year-old U.S. rocket body and a Thor-Burner 2A collided with a fragment from an exploded third stage of a Chinese CZ-4 launch vehicle. The collision occurred at an altitude of 885 km above the South Polar Region. 20

If the amount of debris is not curtailed, the risk of future collisions between spacecraft and orbital debris will increase at a greater rate which will create more debris and degrade the usefulness of popular orbits. Fragments generated from one breakup can be large enough to catastrophically break up another target mass of the same size, continuing the cycle to create more debris. This cycle is referred to as the “Kessler Syndrome.”  21

Figure 5 shows the projected accidental collision activity in LEO as determined using 100 Monte Carlo runs in NASA's LEGEND model from 2010. An average of 8 to 9 collisions were expected to occur over the next 40 years (approximately 1 collision every 5 years). 22 The uppermost line shows the increasing number of collisions based on a non-mitigation scenario. The middle line shows the effects if 90 percent of all launchers worldwide  23 followed the proposed orbital debris mitigation standards. However, this model did not account for the large constellations that have now started to populate LEO.

Figure 6 shows the updated collision expectation taking into account large constellations. With an addition of 8,300 spacecraft in constellations, the number of on-orbit collisions are expected to range from 1 every 2.2 years, up to more than 1 collision per year. The variance depends on the post-mission disposal (PMD) rate of the spacecraft in constellations, which is the probability that the spacecraft will be removed from LEO after its mission is complete. This study assumed that the constellations were refreshed with new satellites every 20 years, so the large constellations were renewed and remained on orbit, just swapping out individual satellites. After 200 years, for a PMD rate of 90 percent, a total of 260 catastrophic collisions are estimated to have occurred in LEO. With the accumulation of large constellations in LEO, it is imperative that large mass upper stages are removed from orbit so as to prevent collisions between upper stages and constellation spacecraft that could create large amounts of debris in already crowded orbital regions.

Orbital debris also poses a high risk to safety for the International Space Station (ISS). The ISS is a high-value asset occupied by a constant human presence; therefore, it requires more protection than that provided by its protective shielding. Through shielding, the U.S. modules of the ISS are protected against impacts from debris ranging from 1 mm to 1 cm in size. During the first 8 years of ISS operations between 1999 and 2007, 6 successful maneuvers were conducted to avoid debris. However, since the Chinese anti-satellite test and the Iridium/Cosmos collision, the ISS has on average made an evasive maneuver twice a year due to debris from those events. Each maneuver costs millions of dollars in fuel usage and to perform the risk calculations to determine whether to move the station or shelter the crew. 26 Collision events and their risk to the ISS, and other on-orbit human activity, highlight the need to remove upper stages and prevent more debris creation.

Orbital debris mitigation is crucial to stem the increase of accumulation of large objects in orbit. Projections indicate that orbital debris in the LEO environment will increase approximately 75 percent in the next 200 years, even if 90 percent of spacecraft and upper stages reenter the Earth's atmosphere within 25 years of the end of the mission. 27 This projection was done before the proliferation of large constellations and the increased launch rate seen in the past few years. Launch and reentry operators' compliance with the U.S. Government Orbital Debris Mitigation Standard Practices (USGODMSP)  28 and any action to remove a number of large objects from orbit would help prevent this increase. 29 This proposed rule reflects the best practices agreed to in the USGODMSP and is reflective of international consensus for orbital debris mitigation. Currently, research efforts are underway to develop the technology necessary to economically remove the critical debris pieces; however, there are no operational systems and the costs are expected to be high, approximately $30 million to $50 million per large object  30 (large objects are objects weighing roughly over 5,000 kilograms). These large objects are primarily rocket body upper stages. A recent paper  31 introduced at the 2020 International Astronautical Congress identified the 50 most dangerous pieces of orbital debris. The paper identified 39 of the 50 objects as upper stages capable of producing large amounts of space debris were they to collide.

With this proposal, the FAA also seeks to mitigate the risk to the public posed by uncontrolled disposals. Uncontrolled disposals of large upper stages, such as the Chinese Long March stage that reentered on May 9, 2021, and the Falcon 9 upper stage that reentered as an uncontrolled atmospheric disposal over the Pacific Northwest in March 2021, pose a significant risk to people on the ground due to their mass and the uncertainty of where they will land. Such disposals occur frequently, from upper stages, defunct spacecraft, and other debris. Per NASA, “During the past 50 years an average of one cataloged, or tracked, piece of debris fell back to Earth each day.”  32 Large upper stages carry the most risk to people on the ground; risk that is above the common acceptable risk limit of 1 × 10 − 4 . This is the same risk limit codified in 14 CFR 450.101 for purposeful reentries, in International Standard (ISO) 24113, and in the USGODMSP, and the risk limit has been in common practice in the launch safety industry for more than 20 years. Although there are currently no documented cases of reentering debris causing casualties, uncontrolled disposal of large upper stages presents a significant safety risk to persons and property on the ground, or aircraft in flight. That risk can be mitigated by the operator performing a controlled disposal into an unpopulated area shortly after the end of launch, and providing advance notice to aircraft and vessels in the area. Uncontrolled disposals would not be permitted under the proposed orbital debris mitigation rule unless the operator can demonstrate that the effective casualty area, in total spread over the entire projected path, for the sum of all surviving debris will be less than 7 square meters or the expected average number of casualties will be less than 1 × 10 − 4 .

There have been many national and international efforts to protect against the effects of orbital debris. Early spaceflight operated under the theory that, because space was large, collisions were unlikely. Recent events discussed previously have demonstrated that to continue to operate under this theory is dangerous.

On February 11, 1988, President Reagan issued a Presidential Directive  33 on national space policy which included a requirement to limit the accumulation of orbital debris. This directive was the foundation for a coordinated effort among U.S. agencies and other nations to increase the understanding of the hazards caused by orbital debris and to establish effective techniques to manage the orbital debris environment. The National Security Council produced a Report on Orbital Debris  34 in 1989 outlining the problem and recommended more study of the orbital debris situation. An updated Interagency Report on Orbital Debris  35 by the new National Science and Technology Council was released in 1995, directing government agencies to develop a coordinated orbital debris work plan, to consult with U.S. industry, and to continue efforts to achieve international consensus on dealing with the orbital debris problem.

In response, NASA and the Department of Defense, coordinating with other space-related Federal agencies, developed a draft set of USGODMSP, derived in large measure from NASA Safety Standard 1740.14. 36 These standard practices, applicable to launches by the U.S. Government, were adopted by the U.S. Government in February 2001 and mandated by the National Space Policy of 2006. 37 The Department of Defense and its service and defense agencies issued their own detailed orbital debris mitigation requirements to meet the USGODMSP standard.

U.S. regulatory agencies, particularly the FAA, the National Oceanic and Atmospheric Administration (NOAA), and the Federal Communications Commission (FCC), have also addressed orbital debris mitigation by establishing requirements for space activities that they regulate. In a final rule published September 19, 2000, 38 the FAA adopted some, but not all, debris mitigation practices that were widely accepted by NASA and the commercial space industry at the time, such as the removal of stored energy sources that could generate debris. 39 The only collision mitigation measure the FAA established was to require avoiding any unplanned contact between the launch vehicle and the payload after payload separation. 40 At that time, the FAA aimed to align with then-current international practice without negatively affecting U.S. launch competition in the international market.

Since then, there has been considerable progress in addressing requirements to reduce orbital debris. Most notably, the FCC adopted a comprehensive set of regulations that apply to U.S. satellites and to satellites that provide communications services to the United States. 41 The FCC regulations closely reflect the USGODMSP.

The international community is also adopting practices that reduce orbital debris generation. The Inter-Agency Space Debris Coordination Committee (IADC), in which NASA represents the U.S., issued Space Debris Mitigation Guidelines in 2002. The IADC coordinates activities related to orbital debris issues and is comprised of representatives from space agencies around the world. Member States are encouraged to use the consensus-based IADC guidelines. These include implementing a mitigation plan for each launch that details how the operator will limit debris from normal operations, minimize the potential of unplanned breakup, and dispose of spacecraft and stages post-mission. 42 The USGODMSP, which apply to U.S. Government launches, are consistent with, and in parts surpass, the IADC guidelines. The FAA's current regulations do not meet all the USGODMSP or the IADC guidelines. The FAA currently only requires passivation at the end of launch and prevention of collisions between the payload and upper stage. The current FAA regulations do not otherwise address debris mitigations or post-mission disposal, and do not restrict uncontrolled reentries based on the risk posed to public safety.

In 2010, the National Space Policy specifically encouraged the development and adoption of industry standards for the purpose of minimizing debris and preserving the space environment for the responsible, peaceful, and safe use of all users. 43 Subsequent policies have retained similar language.

In 2011, the National Research Council recommended incorporating orbital debris mitigation practices into regulations:

In response, NASA engaged with relevant agencies: NOAA, regarding implementing orbital debris mitigation standard practices as part of NOAA's commercial remote sensing licensing program; FCC, regarding licensing of communications spacecraft; and the FAA, regarding launch vehicles.

In 2019, in response to the National Space Council's Space Policy Directive 3, 46 the U.S. Government released an updated version of the USGODMSP  47 to address the effects of large constellations and small satellites. The updates consist of a quantitative limit on debris released during normal operations, a probability limit on accidental explosions, probability limits on accidental collisions with large and small debris, and a reliability threshold for successful post-mission disposal. The new standard practices updated disposal options and incorporated new sections to clarify and address operating practices for large constellations, rendezvous and proximity operations, small satellites, satellite servicing, and other classes of space operations.

For this proposed rulemaking, the FAA considered the orbital debris requirements of NASA, FCC, NOAA, and the IADC, in an effort to align commercial standards and government standards and to address the persistent risks associated with heavy upper stages abandoned in orbit. The FAA focused on NASA because it has the most detailed orbital debris requirements and guidance, and is an internationally recognized leader in orbital debris and space exploration whose expertise in space and mission planning is a benchmark for the FAA's rulemaking efforts. The effort to establish common standards is consistent with the U.S. Space Transportation Policy, which states the Secretary of Transportation shall execute exclusive authority, consistent with existing statutes and executive orders, to address orbital debris mitigation practices for U.S.-licensed commercial launches, to include launch vehicle components such as upper stages, through its licensing procedures. 48

The FAA believes the proposed regulations would not hinder U.S. companies from competing in the international launch market because regulations of foreign countries are also expected to comply with IADC guidelines, and some countries' regulations are stricter than the requirements proposed in this rule. For example, the French space agency, Centre National d'Études Spatiales (CNES), issued technical regulations in 2009 that extend beyond the requirements of the IADC guidelines and spell out the acceptable reentry risk from orbital debris for those with French space operation licenses. The IADC guidelines are a consensus document originally based on the USGODMSP. Due to the consensus nature of the IADC guidelines, an agreed-upon document between 13 different space agencies, the guidelines are not as thorough and specific as the USGODMSP. Several of the IADC's 13 participating space agencies are currently working to implement regulations that align with the IADC guidelines; however, not all IADC participants have launch capability.

The FAA proposes several new requirements for limiting the lifetime of debris in LEO and in GEO. First, the FAA proposes to amend the definition of “disposal” in § 401.7 to include each of the disposal options proposed for part 453. The existing definition describes controlled atmospheric disposal, and would exclude the other four options proposed in §§ 453.14 through 453.18 for the disposal of spent upper stages and launch or reentry vehicle components. The FAA therefore proposes to define “disposal” as the execution or attempt to execute “controlled atmospheric disposal, heliocentric disposal, uncontrolled atmospheric disposal, disposal orbit, or direct retrieval of launch vehicle stages or components of launch or reentry vehicles under part 453 of this chapter.”

The FAA also proposes to add definitions to § 401.7 for “Low Earth Orbit (LEO),” “Medium Earth Orbit (MEO),” “Geostationary Earth Orbit (GEO),” “the geosynchronous region,” and “orbital debris.” “LEO” would be defined as any Earth orbit with both apogee and perigee below 2,000 km altitude. “MEO” would be defined as any Earth orbit in which an object's apogee and perigee both remain between LEO and GEO. “GEO” would be defined as any Earth orbit where the orbiting object orbits at the same angular velocity as the Earth and the object appears stationary from the ground. The altitude of this zero-inclination, zero-eccentricity orbit is 35,786 km. “The geosynchronous region” would be defined as the band of orbital space surrounding GEO. It is bound by altitude limits of 35,786 km +/- 200 km altitude and +/- 15 degrees latitude.

The IADC defines Space Debris as “all man-made objects including fragments and elements thereof, in Earth orbit or re-entering the atmosphere, that are non-functional.”  49 The FAA agrees with the IADC definition of space debris and refines the debris issue further by establishing the size of debris applicable for regulation. “Orbital debris” would be defined as all human-generated debris in Earth orbit that is greater than 5 mm in any dimension. This includes, but is not limited to, payloads that can no longer serve a useful purpose, rocket bodies and other hardware ( e.g., bolt fragments and covers) left in orbit as a result of normal launch and operational activities, and fragmentation debris produced by failure or collision. The FAA proposes to expressly exclude released gases and liquids from the definition of orbital debris. The release of gases and liquids is often deliberate for the purpose of maneuvering or to evacuate excess gases and liquids at the end of launch. The FAA does not believe addressing the release of gases and liquids is necessary at this time because the risk is low. One of the debris mitigation actions at the end of launch is the release of pressurized gases and propellants because the risks of accidental explosion outweigh the risks of released gases and liquids. Based upon this understanding, the FAA finds that it is unnecessary to regulate released gases and liquids at this time.

The FAA proposes 5 mm as the threshold size because an object of that size, traveling at 10 km per second, a speed typical of objects on orbit, can incapacitate a functioning satellite, which in turn may contribute to the creation of more debris. Most active satellites on orbit are protected against small pieces of debris and micrometeoroids less than 5 mm in size with shielding or thermal blankets. However, pieces as small as 5 mm can do significant damage to satellite operations. The kinetic energy that a 5 mm cube of titanium (4.43 g/cm 3 density) has, while traveling 10 km per second in LEO, is 27,700 Joules. Comparably, the energy of a .30-06 rifle bullet (11.7 grams) when exiting a gun muzzle is only 3,700 Joules.

Spacecraft vary in design and material composition, so it is hard to identify an exact threshold size of debris that could significantly damage a spacecraft. Nevertheless, the National Research Council found in its 2011 report on orbital debris that typical spacecraft are not well shielded from small debris, and that objects 5 mm and larger can cause substantial damage. 50 For this reason, the FAA proposes to use 5 mm as the size threshold for orbital debris. However, the FAA requests comments on further lowering the size threshold to below 5 mm.

The FAA recognizes that a launch operator cannot prevent the release of all small debris fragments, such as paint flakes and solid rocket motor (SRM) slag. SRMs—used to boost satellites into higher orbits—are potentially a significant source of numerous pieces of aluminum oxide slag up to 5 cm in diameter. Likewise, flaking paint is a debris hazard, albeit of very small size. Debris of this size usually will not disable a spacecraft, but it does pose a hazard to spacewalkers, and over time it causes erosion damage and more debris. The FAA is not, however, proposing to regulate debris smaller than 5 mm, paint flakes, or solid rocket motor slag of any size, due to the current impracticality of tracking and mitigating the propagation of such small items. At this time, the only practical mitigation for debris smaller than 5 mm is to harden spacecraft to make them less susceptible to small debris.

Proposed § 453.1 would provide the scope of part 453: the requirements of a launch or reentry operator for orbital debris mitigation, including collision avoidance analysis, prior to launch or reentry operations licensed or permitted under this chapter with a planned altitude greater than 150 km. The FAA proposes to require in § 453.1(b) that for each licensed or permitted launch or reentry with a planned altitude greater than 150 km, an operator must submit (1) an ODAP containing the information required by this part, not less than 60 days before the licensed or permitted launch or reentry, unless the Administrator agrees to a different time frame in accordance with § 404.15; and (2) a Collision Avoidance Analysis Worksheet in accordance with § 453.11(f). The submittals must be emailed to the address provided in proposed § 453.1(c) or otherwise submitted as agreed to by the Administrator in the license or permit. The FAA proposes to require that operators submit their ODAP no later than 60 days prior to the launch or reentry subject to part 453 to be consistent with the timeframes in part 450 and in the legacy regulations. The FAA proposes no change to the timeline for submitting the Collision Avoidance Analysis Worksheet, which is currently required by § 450.169 and would be moved to § 453.11(f).

Proposed § 453.3 would state that part 453 applies to launches and reentries licensed or permitted under this chapter with a stage or other component with a planned altitude greater than 150 km. Few satellites operate below the altitude of 150 km, hence mitigation of orbital debris below 150 km is not necessary.

Current §§ 417.129 and 450.171 do not address the planned release of debris during normal operations, such as the deliberate planned release of payload spacers, retaining rings, or tension rods. To reduce the amount of debris in orbit, the FAA proposes to require that launch operators ensure that no vehicle stages or components release orbital debris during normal operations that will remain in orbit for more than 25 years. Proposed § 453.5(a) would require a launch operator to ensure that no vehicle stages or components that reach Earth orbit release orbital debris into LEO that would remain in orbit for more than 25 years. The 25-year rule is a common standard recommended by the IADC and a requirement for U.S. Government launches under the USGODMSP.

For the lowest region of LEO—orbits with perigee altitudes below 600 km—debris typically has an orbital lifetime of less than 25 years, and smaller pieces of debris here may reasonably be expected to burn up on reentry into Earth's atmosphere within the allowable time limit. This proposed requirement would have a greater impact on operations releasing debris above 700 km, where debris may remain on-orbit for hundreds of years. The most efficient and practical approach to comply with the proposed requirements would be to avoid creating any debris in the upper portions of LEO and higher altitudes. For example, if a launch operator cannot demonstrate that it will remove all debris larger than 5 mm from orbit within 25 years, as required by § 453.5, then the launch operator must prevent such objects from separating from the launch vehicle. A launch operator could do so by redesigning the separation system (a common source of debris) or by using lanyards or other means to prevent debris release.

Given that most current launch vehicles have been designed to minimize or eliminate normal operations debris release, the FAA anticipates that this proposed requirement would impose no more than a minimal burden on operators for compliance. Operators usually meet this requirement because they want to minimize the release of debris and the possibility of damage to their deployed payloads. Since commercial launches are deploying increasing numbers of payloads, which could result in additional debris release, the FAA finds it appropriate to require that all operators limit their release of debris.

The FAA also proposes to require in § 453.5(a) that the total object-time product for all debris planned to be released into LEO shall not exceed 100 object-years per licensed or permitted launch. Object-time is a unit of measure used by NASA. It means the number of objects multiplied by the unit of time, typically years. A higher object-time means more objects on orbit for a higher cumulative amount of time. Limiting the object-time reduces the number of objects in orbit. The more objects released, the less time they can spend in orbit to meet the object-time requirement. For example, if an operator plans to release 5 debris objects, none of those objects can remain in Earth orbit longer than 25 years, and the total orbital lifetime of all 5 debris objects cannot exceed 100 years. The regulation would specify that the total object-time product in LEO is the sum of the orbit dwell time in LEO for all planned released objects, excluding the upper stage and any released payloads. The requirement would target debris released into LEO since, as discussed above, this small spatial area is heavily used and currently contains the most debris. This requirement is consistent with the USGODMSP guidelines and is necessary to limit the number of released objects per launch. The FAA supports the USGODMPS object-time standard and notes the standard is particularly relevant to space launch activities that use payload deployment devices.

The FAA notes that the 100 object-years limit would apply to debris that the operator plans to release during launch activities, and would not include debris released due to non-nominal conditions or launch or reentry activity outside the 3-sigma trajectory provided for collision avoidance. However, an operator would be required to immediately notify the FAA and provide the information required by § 453.20 at the detection of a debris-creating event or any launch or reentry outside the 3-sigma trajectory provided for collision avoidance.

The FAA solicits comments on its proposal to limit the total object-time product of all debris released by a single launch into LEO to 100 object-years. Although, as noted above, this standard derives from the USGODMSP, the FAA recognizes that this standard is new, and the commercial space industry has not had an opportunity to weigh in on the effectiveness or operational implications of this requirement. As a result, FAA seeks insight into stakeholders' opinions on limiting the total object-time product of all debris released by a single launch into LEO to 100 object-years, and whether a smaller object-time should be imposed.

The FAA would also require that debris released into the geosynchronous region be removed within 25 years after release. Proposed § 453.5(b) would require a launch operator to ensure that any orbital debris released into the geosynchronous region enters an orbit with an apogee that would not remain within the geosynchronous region within 25 years of the release. Operators would need to submit analysis showing that the debris will stay below the geosynchronous region 25 years after release, and that it will not enter the operational geosynchronous region again. Released debris can only move into lower orbits. Debris released above GEO would eventually return to the GEO protected region.

The FAA solicits public comments on its proposal to require that debris be removed within 25 years, as opposed to a shorter deadline. While the FAA recognizes the current IADC and USGODMSP guidelines, which limit post-mission lifetimes in LEO to 25 years, the FAA recognizes that increases in the numbers and kinds of activities in Earth orbit may render the 25-year timeframe inadequate to prevent the growth of orbital debris. Given that the entire mission lifetime of upper stages and their components is quite short, and spent upper stages pose a significant risk of debris propagation the longer they are in orbit, it may be appropriate to have a shorter disposal timeline of 5 years or another time period less than 25 years. Shortening the removal deadline would decrease the risk of orbital debris causing damage to spacecraft, which could create more debris, shorten another spacecraft's mission, or endanger the lives of human spaceflight participants. The FAA requests comments on the degree to which a shorter timeline for removal from LEO or GEO within 5 years or another period shorter than 25 years would further encourage the minimization of released debris, as well as the relative impact of a shorter timeframe on operational capabilities.

Proposed § 453.5(c) would specify the information that must be included in an ODAP to demonstrate compliance with § 453.5(a) and (b). Specifically, the ODAP must include (1) a demonstration through environmental qualification and acceptance testing that the system is designed to limit the release of orbital debris; and (2) a statistical analysis, including inputs and assumptions, demonstrating that any orbital debris released will be disposed of within 25 years and satisfy the 100 object-year requirement. The environmental qualification and acceptance testing could include vibration, shock, vacuum, or any other appropriate testing to demonstrate that debris will not be released from the upper stage. Operators should provide the FAA specific verifiable analysis or test results that demonstrate the mitigation measures the launch operator would take to prevent release of debris greater than 5 mm in size or to ensure that it departs LEO or GEO within 25 years. Results of hardware and software tests, if performed on the separation system, would fulfill the requirement to demonstrate the effectiveness of debris prevention measures. The testing should apply to the entire lifetime of the system. If debris will be released, an orbital lifetime analysis using the methods described in ISO 27852  51 or NASA's Debris Assessment Software (DAS) or similar software would be acceptable. The inputs and assumptions referenced in § 453.5(c)(2) would include the initial orbit, the altitude of the release, and information about the debris objects planned to be released, such as their mass, area, and estimated orbital lifetime. The FAA seeks public comments on the proposed demonstration through specific analysis and testing of debris release prevention.

The current FAA regulations in parts 415, 417, 431, 435, and 450 require that launch operators prevent the unplanned physical contact between a launch vehicle and each payload after payload separation. The FAA proposes to move these current requirements for safety at the end of launch to § 453.9(a). The FAA proposes to add a requirement in § 453.9(b) to limit the probability of collision with orbital objects greater than 10 cm to less than 1 in 1,000 over the orbital lifetime of the upper stage. This proposal matches the standard in USGODMSP and is necessary to lower the risk of debris impacts with the upper stage and its components. The probability of collision during orbital lifetime can be reduced by removing the upper stage and components from orbit, as discussed in the next section, and by operating the upper stage in an orbit with a low density of orbital objects.

Proposed § 453.9(c) would require launch operators to include in their ODAP for each launch or reentry a procedure for preventing vehicle and payload collision after payload separation. The end-of-life activities, including any propellant depletion burns and compressed gas releases, could increase or decrease the probability of subsequent collisions; therefore, the launch operator should explain in the ODAP how these activities will affect potential collision risks. The ODAP must also include the results of a probability of collision analysis between the upper stage and its components and orbital objects. The analysis must use commonly accepted engineering and probability assessment methods, such as those available in NASA's DAS tool.

In the current debris environment, the greatest risk to operational orbits is collision between objects having considerable mass. Spent upper stages are large, strong structures that contribute to the debris threat because their size increases the chance of a collision, and because their mass provides an ample source of fragmentation debris in the event of a collision. As noted above, the amount of orbital debris is projected to rapidly increase based on the current population of objects greater than 10 cm. 52

Disposal, either through reentry or another form of disposal, is necessary to mitigate the propagation of orbital debris because it removes upper stages and other vehicle components from the most populated orbits. If proper disposal is not implemented, spacecraft operators would need to employ increased shielding of payloads, along with additional on-orbit collision avoidance, in order to continue to utilize the most populated orbits. However, neither of these options would mitigate the volume of dormant upper stages in orbit, and therefore, the growth of orbital debris. The only option in the future for these upper stages would be remediation—dedicated missions to remove them from orbit. This kind of remediation is forecasted to be expensive and has not yet been shown to be a viable operation. Research and development is still on-going into debris removal techniques. 53

Given that disposal is at this time the only viable means of mitigating the threat of orbital debris in populated orbits, the FAA is proposing to require in § 453.13 that launch operators dispose of all launch vehicle stages or jettisoned components using one of five methods: (1) controlled atmospheric disposal, (2) Heliocentric, Earth-escape disposal, (3) direct retrieval, (4) uncontrolled atmospheric disposal, or (5) maneuver to a disposal orbit. The proposed requirements for each disposal method are set forth in §§ 453.14 through 453.18, respectively. A launch or reentry subject to part 453 must identify the chosen disposal method in the ODAP and satisfy the regulatory requirements applicable to that disposal method. Table 1 provides a list of disposal options derived from the USGODMSP. Options that promptly remove the upper stage and its components from orbit are the preferred disposal options according to the USGODMSP, as they significantly reduce both long term collision and debris generation risks. Delayed disposals through either direct retrieval or uncontrolled atmospheric disposal impose some risks to other on-orbit spacecraft until removal. Disposal orbits may become overly populated in the future which would preclude the future use of them for disposal. The FAA notes that while the USGODMSP identifies disposal methods in order of preference in the following table, the proposed rules do not allocate preference or distinguish between disposal methods in order to provide flexibility to operators to perform any of these valid methods of debris disposal. However, the FAA expects that as space continues to become more congested, orbital debris requirements will tighten in response, such that delayed disposal options that pose some additional risk to on-orbit spacecraft ( i.e. uncontrolled atmospheric disposal, highly eccentric long-term disposal, or use of a disposal orbit) may be restricted or eliminated. FAA requests comments on whether the prompt and safest disposal options (controlled atmospheric, heliocentric, and direct retrieval) should be the preferred disposal methods based upon expected growing orbital congestion. Additionally, the FAA seeks comment on whether it should impose a requirement to use the prompt disposal options unless shown to be impracticable.

Upper stage-controlled reentry is the most effective method of orbital debris prevention and the safest reentry method. Controlled reentry eliminates the upper stage as a piece of orbital debris and therefore mitigates the risk of future debris creation through collision because the reentry would occur shortly after the end of launch. The FAA proposes to allow operators to perform controlled disposal by reentering Earth's atmosphere if they meet the requirements of § 453.14. The requirements of § 453.14 would only apply if the operator elects controlled disposal for its disposal method, as required by § 453.13.

A controlled disposal means a planned burn of the upper stage engine to aim for a low-risk area on the surface of the Earth. The FAA acknowledges that the upper stage is not “controlled” during the entire atmospheric disposal. Variations in the engine burn, the atmospheric density, and other factors beyond the operator's control can affect the actual disposal location. Therefore, those uncertainties must be accounted for in the disposal risk assessment or in the determination of the disposal ellipse in a broad ocean area, in accordance with § 453.14(d).

In order to perform controlled disposal, proposed § 453.14(b) would require a launch operator to ensure the return of the upper stage and each of its components to the Earth's surface within 30 days after mission completion in a controlled manner that ensures the effective casualty area of any surviving debris is less than 7 square meters, targets a broad ocean area, or meets the risk criteria set forth in § 450.101(d)(1)(iii)(A) through (C). This proposal would effectively require launch and reentry operators to consider disposal risks in their vehicle and mission designs—for instance, by designing components that demise when heated by atmospheric reentry or by reentering in remote locations.

The FAA's proposal to allow operators to target a broad ocean area or meet the risk criteria set forth in § 450.101(d)(1)(iii)(A) through (C) is substantively equivalent to the current text of § 450.101(d), which requires that all disposals—currently defined as controlled atmospheric disposal in § 401.7—either target a broad ocean area or meet the risk criteria in § 450.101(b). As discussed later in this preamble, the FAA proposes to amend § 450.101(d) to specify the risk criteria applicable to atmospheric disposals, rather than relying on the reentry risk criteria in § 450.101(b), since disposal is distinct from reentry. The FAA therefore proposes to extend the safety criteria applicable to licenses under part 450 to all launches or reentries covered by part 453, including experimental permits. The FAA is proposing that all launches or reentries authorized by the FAA that exceed 150 km be required to meet the risk criteria in § 450.101(d)(1)(iii)(A) through (C), target a broad ocean area, or have an effective casualty area less than 7 square meters for the following reasons.

Disposal into a broad ocean area would reduce the risk of casualties to near zero. The FAA considers an area 370 km (200 nm) from land to be “broad ocean area,” as used in § 450.101(d) and proposed part 453. Two hundred nautical miles is also the recognized limit of exclusive economic zones (EEZ), which are zones prescribed by the United Nations Convention on the Law of the Sea  54 over which the owning State has exclusive exploitation rights over all natural resources. Deorbiting beyond an EEZ further reduces the chance of disrupting economic operations such as commercial fishing.

For massive objects reentering the atmosphere, a controlled disposal into the broad ocean area may be necessary for safety because it would ensure that the casualty expectation of reentry could be kept below 1 in 10,000. Because the broad ocean area has a population density of nearly zero, objects that survive reentry in this area can be fairly large without inordinate risk of human casualties. Alternatively, the operator could show that the 1 × 10 − 4 collective risk and 1 × 10 − 6 individual risk limits are met for the controlled disposal in another area. The expectation of casualty alternative might allow for controlled disposal into areas near islands or coast lines with low populations. The operator could also choose to demonstrate that the cumulative effective casualty area of surviving debris will be less than 7 square meters. That small casualty area ensures that the expectation of casualty will be met without requiring a full expectation of casualty calculation.

The effective casualty area for inert debris is the region associated with a fragment's impact location where it is assumed a person would become a casualty. Debris from atmospheric reentry of an upper stage is usually made up of multiple pieces, as the upper stage breaks up due to heating and friction. The total effective casualty area is determined by adding up the casualty area of each of those pieces.

An expectation of casualty calculation requires determination of the effective casualty area along with analysis of the expected trajectory and exposed populations to determine how many people could become a casualty due to the uncontrolled disposal of the upper stage. Due to uncertainty and growth in population, that calculation can be difficult to complete for disposals that are expected on long timeframes like 25 years. As a result, FAA is proposing to allow an operator to demonstrate that the effective casualty area of surviving debris will be less than 7 square meters.

The FAA proposes to require in § 453.14(c) that operators performing controlled disposal notify the public of any region of land, sea, or air that contains, with 97 percent probability of containment, all debris resulting from normal flight events capable of causing a casualty. The FAA currently imposes this requirement on operators performing disposal operations under a part 450 license, and would extend the part 450 requirement to proposed § 453.14(c). The FAA finds that all operations required to comply with part 453 should provide this degree of notification to the public. These measures could include arrangements with the FAA or U.S. Coast Guard to provide Notice to Air Mission (NOTAM) and Notice to Mariners (NOTMAR).

The FAA proposes that an operator would be required to implement a controlled reentry within 30 days after the completion of the mission, which is also how long a launch operator must have insurance coverage under § 440.11. The FAA further proposes to require that operators accomplish any actions necessary to end a launch and commence controlled disposal within the insurance coverage timeframe. As discussed later in this preamble, the FAA proposes to apply the 30-day deadline to the Earth-escape and orbit disposal options as well.

Additionally, the FAA finds that 30 days would almost always provide sufficient time to assess the possible consequences of a launch anomaly, such as delivery to a wrong orbit or failure of a payload to separate from the vehicle's upper stage. Current technologies and practices are adequate to require the following within 30 days (1) perform final maneuvers to direct controlled disposal, (2) relocate to a lower orbit where the upper stage will decay within 25 years, or (3) relocate to a disposal orbit.

Another reason for the proposed requirement to implement a disposal option within 30 days is the short time frame an upper stage would have to maneuver. Typically, most upper stages have limited electrical power supplied by flight batteries, and, by design, must maneuver expeditiously after payload separation. In order to mitigate the possibility of an explosion occurring, the FAA requires a launch operator to power down its batteries at the end of launch. Accordingly, an affirmative act such as controlled reentry, placement to ensure reentry within 25 years, or maneuvering to a disposal orbit would have to occur within that time frame. Upper stages in orbits with an expected lifetime below 25 years would have no additional required actions to meet the post-mission 25-year rule. However, these upper stages may be required to move to disposal orbits if they cannot be safely deorbited due to excessive risk in uncontrolled reentries.

The FAA proposes to require in § 453.14(d) that operators submit a description of the controlled disposal in the ODAP prior to each launch or reentry pursuant to § 453.1(b). The ODAP must include verification through hardware and software testing or analysis that the system has at least a 90 percent probability of successfully executing the controlled atmospheric disposal as planned. The FAA proposes to require a probability of success of at least 90 percent. The FAA is adopting a 90 percent probability of success criteria that is consistent with the IADC Guidelines, ISO Standard 16126  55 and USGODMSP guidelines. ISO Standards represent a consensus international standard for specialized space activities. The testing and analysis can include engine re-light qualification tests or reliability analysis or similar. The ODAP must also include a description of how the system will achieve controlled atmospheric disposal under nominal and off-nominal conditions, such as a partial burn failure or off-trajectory scenario. Lastly, unless the operator is targeting a broad ocean area, the ODAP must include the calculated total collective and individual casualty expectations for the proposed operation or the effective casualty area of any surviving debris, pursuant to § 453.14(d)(3).

The FAA proposes to allow operators to perform heliocentric, Earth-escape disposal if they meet the performance-based requirements of § 453.15. The requirements of proposed § 453.15 would only apply if the operator elects heliocentric, Earth-escape disposal as its disposal method under § 453.13. Proposed § 453.15(b) would require that the operator ensure, within 30 days after mission completion, that the upper stage and each of its components is placed in a hyperbolic trajectory that no longer orbits Earth. This option would remove the upper stage from orbit completely and also result in zero risk to the people of Earth. The upper stage and its components would travel into an orbit around the Sun rather than remain as debris in Earth orbit. The FAA recognizes that this disposal option is prohibitively costly for operators not already planning inter-planetary missions, as the energy needed to fully escape Earth orbit is greater than the energy needed for other disposal options. Operators without the available fuel will not be able to execute this option.

Operators who elect to perform heliocentric, Earth-escape disposal would be required under proposed § 453.15(c) to include a description of the Earth-escape disposal in the ODAP submitted prior to each launch or reentry. The description must include (1) verification through hardware and software testing or analysis that the system has at least a 90 percent probability of successfully executing the planned heliocentric, Earth-escape disposal, and (2) a description of how the system will achieve a controlled disposal under nominal and off-nominal conditions, such as a partial burn failure or off-trajectory scenario. The testing and analysis could include engine re-light qualification tests, reliability analyses, or similar tests.

Another means by which an operator could dispose of the upper stage of a vehicle, or any other orbital debris released, would be direct retrieval, also called Active Debris Removal or remediation, in which an operator retrieves the upper stage and removes it from orbit via a controlled disposal or maneuver into a disposal orbit. Direct retrieval would require the launch of a device or spacecraft that attaches to or otherwise affects the upper stage and causes it to deorbit in a controlled manner or move to a disposal orbit. Current research and economic feasibility studies performed by commercial operators and international space agencies suggest this option could be commercially viable within a few years. 56 Demonstrations of this capability have already been conducted. 57 For this reason, the FAA proposes to include as § 453.16 the option for operators to perform direct retrieval if they meet the requirements of § 453.16. The requirements of § 453.16 would only apply if the operator elects direct retrieval as its disposal method under § 453.13.

Proposed § 453.16 would require that operators retrieve the upper stage by either removing it from orbit in a controlled manner or maneuvering it to a disposal orbit no more than 5 years after completion of the mission. The FAA proposes to allow operators up to 5 years from mission completion to perform the direct retrieval as a means of balancing the burden on operators to carry out the subsequent retrieval mission against the compelling need to remove the spent upper stage and its components from orbit. A 5-year timeline is consistent with USGODMSP recommendations and would require operators to demonstrate that they are capable of performing the direct retrieval based on actual technical capabilities, rather than hypothetical future capabilities. Operators will have 5 years to perform the direct retrieval, however, removal should occur as soon as possible to reduce the risk of creating more debris. Under proposed § 453.16(b), if the result of the direct retrieval is a controlled disposal of the upper stage into a planned disposal area, then the retrieval would be required to meet the disposal safety requirements in § 453.14(b) and (c). Conversely, if the result of the direct retrieval is a maneuver into a disposal orbit, then the retrieval would need to meet the disposal orbit lifetimes and analysis requirements of § 453.18.

Under proposed § 453.16(c), an operator would be required to describe its plan for direct retrieval in its ODAP, and demonstrate a probability of successful disposal of at least 90 percent. The description must include verification through hardware and software testing or analysis that the system has at least a 90 percent probability of successfully executing the planned direct retrieval. If the planned retrieval will result in a controlled disposal, then the operator must include in its ODAP (i) a description of how the system will achieve a disposal under nominal and off-nominal conditions; and (ii) the total collective and individual casualty expectations for the proposed operation or the effective casualty area of any surviving debris, if the operator will not dispose of the debris into a broad ocean area. The operator should identify the intended disposal location so that the FAA can discern whether the operator will target a broad ocean area or verify the expectation of casualty from disposal into that location. Alternatively, if the operator intends to retrieve and maneuver the debris to a disposal orbit, under proposed § 453.16(c)(3), the operator would need to include in their ODAP (i) a description of how the system will achieve and maintain the planned disposal orbit for the required time limit as specified in § 453.18(b) through (d); and (ii) a statistical analysis demonstrating that the probability of collision with operational spacecraft and debris is within the lifetime limit of § 453.18(e). The testing and analysis performed in accordance with § 453.16(c) should include qualification tests, reliability analyses, or similar tests.

The FAA proposes to allow launch or reentry operators to perform uncontrolled atmospheric disposal to meet the requirement of § 453.13 by using one of two methods. Under proposed § 453.17, an operator could either dispose of debris from LEO through natural decay by leaving the upper stage and its components in an orbit where the debris will gradually lower until it falls to Earth, or from MEO or higher orbit by maneuvering the debris to a highly elliptical orbit for long-term atmospheric disposal. The requirements of proposed § 453.17 would only apply if the operator elects to perform uncontrolled atmospheric disposal to meet the disposal requirement of § 453.13.

In order to dispose of debris from LEO—an orbit below 2,000 km—an operator would be required in § 453.17(b)(1) to leave an upper stage and its components in an orbit where, accounting for the mean projections for solar activity and atmospheric drag, the orbital lifetime is as short as practicable, but does not exceed 25 years after launch. Instead of reentering immediately, the orbit of the upper stage and its components would gradually lower over months or years until the debris falls to Earth. The disposal would be considered uncontrolled in the sense that the operator would not initiate the disposal at a particular time, and the disposal could occur anywhere on Earth under its orbital path.

The 25-year rule, which the FAA also proposes to implement in § 453.5, is a common standard recommended by the IADC and a requirement for U.S. Government launches under the USGODMSP. The IADC's Support to the IADC Space Debris Mitigation Guidelines, Oct 2004 Working Group Report states that a 25-year post-mission lifetime appears to be a good compromise between an immediate (or very short lifetime) de-orbit policy which is very effective but much more expensive to implement, and a 50 or 100 year lifetime de-orbit policy which is less costly to implement but can lead to higher collision risks in the long-term. 58 Greater depth of technical analysis is available in the IADC working group report.

While the FAA concurs with the current IADC and USGODMSP guidelines, which limit post-mission lifetimes in LEO to 25 years, the FAA recognizes that increases in the numbers and kinds of activities in Earth orbit may necessitate reevaluation of the adequacy of a 25-year post-mission lifetime in the future. The FAA seeks public comment on whether a shorter deadline should be imposed. The FAA notes that upper stages of launch vehicles become debris as soon as the payloads are released; upper stages in orbits with perigee altitudes below 350 km typically have orbital lifetimes less than 5 years. Given that the entire mission lifetime of upper stages and their components is quite short, and spent upper stages pose a significant risk of debris propagation the longer they are in orbit, it may be appropriate to have a shorter disposal timeline of 5 years. A shorter deadline of 5 years that removes the highest-mass objects from orbit would vastly reduce the risk of creating more debris and would make U.S. commercial space a leader in orbital debris mitigation.

Uncertainties in modeling should be accounted for in evaluation of the orbital lifetime of an object. The use of publicly available software such as NASA's DAS and the French Space Agency's STELA (Semi-analytic Tool for End of Life Analysis) regularly update model inputs for atmospheric density, which is responsible for the largest uncertainty, could be used to estimate orbital lifetime prior to launch.

In addition to meeting the 25-year requirement of § 453.17(b)(1), the FAA would require in § 453.17(b)(2) that operators performing uncontrolled atmospheric disposal from LEO satisfy either an expected casualty (E C ) of 1 × 10 − 4 , or an equivalent effective casualty area of 7 square meters. The FAA proposes to delay the effective date of § 453.17(b)(2) until 1 year after the effective date of the rule, so as to avoid interference with current planned launches and provide operators additional time to come into compliance with the requirement. The FAA proposes to regulate uncontrolled atmospheric disposal in this manner due to the inherent risks posed to people and property on Earth whenever upper stages reenter the Earth's atmosphere in either a controlled or uncontrolled manner. Upper stages are designed to be robust systems capable of withstanding the stresses and temperatures of launch. Therefore, most upper stages are composed of heat-resistant material that does not burn-up upon reentry and can be expected to survive reentry to impact the ground. Although tracking and analysis can be done to help narrow down where an uncontrolled reentry may occur, and the appropriate civil authorities can be notified, there are no means to stop or move the impact location of reentering debris. Furthermore, the science of predicting impact points for uncontrolled disposals is limited. Re-entry Assessment is difficult. It is virtually impossible to precisely predict where and when space debris will impact. This is due to limitations in the U.S. tracking system as well as environmental factors that impact on the debris. 59

National U.S. policy guidelines cited above, as well as those of NASA, 60 Department of Defense, 61 and the FCC, 62 along with a growing international consensus, recommend that the risk to the public on the ground not exceed 1 E C in 10,000 events or 1 × 10 − 4 . This applies to reentries of orbital debris, whether they are a deliberate controlled disposal or an uncontrolled disposal through natural decay. The E C should be calculated to one-significant figure unless an uncertainty analysis justifies a more precise estimate of risk.

The E C can vary greatly due to factors outside of the launch vehicle designer's control. Growing world populations and various orbital inclination choices have direct correlations to the E C rating for reentries. The FAA realizes that the E C prediction can be difficult to calculate; therefore, the FAA sought an alternative method in addition to E C .

As alternatives to a launch operator's calculating and satisfying of an E C of 1 × 10 − 4 , the FAA is also proposing to allow an operator to demonstrate that it can limit the casualty area during disposal by natural decay. Some companies may find the debris casualty area determination to be a more simplified analysis, and this analysis relies only on vehicle design and operation. Both analyses, E C and debris casualty area, would be adequate to protect the public from disposal risk. Therefore, the FAA proposes disposal to be acceptable if a size limit is satisfied or if the E C limit is met.

The FAA would permit uncontrolled reentry as an acceptable form of disposal if the surviving debris casualty area measured 7 square meters or less. This proposed casualty area matches that stated in the USGODMSP, guideline 4-1(e). 63 The casualty area is derived from the acceptance of a risk criteria of 1 × 10 − 4 . Applying the 1 × 10 − 4 expectation of casualty to uncontrolled disposal, NASA calculated the risk to account for the 2019 population of the world that could be affected and the size of the debris that could impact the ground. On average, analysis showed that a casualty area of 7 square meters of surviving debris would produce a 1 × 10 − 4 expectation of casualty. The debris casualty area takes into account that the force of impact of the debris is at least 11 ft-lb, the threshold for injury on an unsheltered person. 64 Specifying an acceptable casualty area as an alternative to a risk criterion eliminates the uncertainty inherent in risk calculations, including such variables as population counts and event probability assumptions.

The total effective casualty area is determined by adding up the casualty area of each piece of debris that impacts Earth. The upper stage will not land intact, but is expected to breakup in the atmosphere during reentry. The total casualty area of all pieces added together would be required to be less than 7 square meters.

The second option for performing an uncontrolled atmospheric disposal under proposed § 453.17 would be to maneuver the debris to a highly elliptical orbit for long-term atmospheric disposal. Under proposed § 453.17(c), an operator would maneuver the upper stage and its components from semi-synchronous Molniya orbits, synchronous Tundra orbits, and other elliptical orbits, to a long-term disposal orbit where orbital resonances will increase the eccentricity for long‐term atmospheric disposal of the upper stage. This proposal of up to a 200-year disposal matches the USGODMSP guidelines to allow the upper stage to be maneuvered to a disposal where orbital resonances keep increasing the eccentricity and eventually decrease the perigee for an uncontrolled atmospheric disposal. During the development of the USGODMSP, the FAA, NASA, and the Department of Defense reviewed various timeframes for highly elliptical orbit disposals. Objects in highly elliptical orbits are affected by gravitational forces from the Earth, the Moon, and the Sun. These forces, over time, alter the object's orbit and eventually cause the object to reenter Earth's atmosphere. The FAA foresees that very few commercial operations would fall within this scenario, because it is rarely used by commercial operators.

If an operator maneuvers the debris to a highly elliptical orbit in accordance with § 453.17(c), the orbital lifetime must be as short as practicable, but must not exceed 200 years after mission completion. The responsible behavior is to remove debris objects from orbit as soon as practical. Highly elliptical objects have very high apogees; therefore, atmospheric drag only affects them during a small portion of their orbit. Drag is a major factor in atmospheric disposal, so these disposals take a long time to occur. These objects spend a smaller portion of time within congested orbits, so over a 200-year timeframe, the time in congested orbits equals that of objects that are in LEO for 25 years. The probability of collision with operational spacecraft and debris 10 cm and larger should also be limited to less than 0.001 for the entire lifetime. The FAA proposes to delay the effective date of the risk requirement so as not to interfere with current planned launches. The FAA finds that delaying the effective date of this requirement by 1 year will allow operators sufficient time to implement disposal options that meet the risk criteria, without jeopardizing public safety. After 1 year, the launch operator must show that when the upper stage reenters, the risk will meet the criteria of 1 × 10 − 4 or that the effective casualty area will be less than 7 square meters.

Proposed § 453.17(d) would identify the information that an operator must include in its ODAP prior to each launch or reentry in order to perform uncontrolled atmospheric disposal in accordance with this section. The ODAP must include (1) verification through hardware and software testing or analysis that the system has at least a 90 percent probability of successfully executing the planned disposal option; (2) an estimate of the E C or the effective casualty area for any surviving debris; and (3) a statistical analysis demonstrating compliance with the requirements of § 453.17(b) or (c) to dispose of the debris within the prescribed time limit. The testing and analysis could include an analysis using NASA's DAS or similar material that demonstrates compliance with the 25-year rule in the case of natural decay from LEO, or the 200-year rule for highly elliptical orbits. Alternatively, an analysis should be provided showing that the upper stage can meet the casualty area limit or expectation of casualty limit.

The FAA proposes to give launch or reentry operators the option in § 453.18 of disposing of debris by maneuvering it to a disposal orbit. In this scenario, the operator would move the upper stage and its components into a less-populated disposal orbit. Disposal or storage orbits are orbits intended for post-mission long-term storage, where atmospheric effects and solar radiation will not move disposed objects into a protected orbit for at least 100 years. Disposal orbits protect LEO, a narrow band in MEO bounded by 20,182 km plus or minus 300 km, and the GEO region. The band in MEO is used by Global Positioning System (GPS) spacecraft and other global positioning constellations. On-orbit disposal is not a permanent solution, and some of these storage orbits may be used for future space operations. Even spacecraft orbiting beyond GEO will eventually degrade and reenter populated orbits. While use of disposal orbits fails to remove debris from orbit and therefore reduce the chance of debris-making collisions, on-orbit disposal remains an effective alternative to atmospheric disposal in today's environment and is preferable to clogging LEO and intersecting GEO with spent upper stages. This option is consistent with the USGODMSP. In addition, for some operators, all other methods of disposal would be costly. The FAA therefore proposes to allow operators to maneuver orbital debris to a disposal orbit in order to meet the disposal requirement of § 453.13. Disposal orbits still impose some risk for future space programs and interplanetary missions. The FAA seeks comments on whether disposal orbit options should be phased out. And, if so, what an appropriate timeframe for phasing out should be.

The requirements of § 453.18 would only apply if the operator elects to maneuver to a disposal orbit as its disposal method under § 453.13. To comply with § 453.18, the operator would move the upper stage and its components into a less-populated orbit within 30 days after mission completion. To prevent interference with active spacecraft for a significant length of time, the FAA proposes as disposal orbits those identified in the USGODMSP. If an operator elects to use a disposal orbit between LEO and GEO, then the operator would be required to place the upper stage and its components into either (1) an eccentric orbit where the perigee altitude remains above 2,000 km, the apogee altitude remains below the geosynchronous region for at least 100 years, and the time spent by the upper stage between 20,182 plus or minus 300 km is limited to 25 years or less over 200 years;  65 or (2) a near-circular disposal orbit that avoids altitudes 20,182 plus or minus 300 km, the geosynchronous region, and altitudes less than 2,000 km, for at least 100 years. Under proposed § 453.18(c)(1)(iii), an orbit that remains completely within the region bounded by 20,182 km plus or minus 300 km would not qualify as a disposal orbit. The orbital lifetime of any debris placed within this region would therefore be limited to 25 years or less over 200 years. If an operator elects to use a disposal orbit above GEO, the FAA proposes to require in § 453.18(d) that the operator place the upper stage and its components into an orbit with a perigee altitude above 36,100 km for a period of at least 100 years after disposal.

In addition to implementing the disposal orbits identified by the USGODMSP, the FAA proposes to require in § 453.18(e) that operators limit the probability of collisions with operational spacecraft and debris 10 cm and larger to less than 0.001 for 100 years after disposal. This requirement would be consistent with USGODMSP recommendations, as well as the requirement in proposed § 453.9(b) to limit the probability of collision between launched objects after the end of launch.

Proposed § 453.18(f) would prescribe the information that an operator must include in its ODAP to maneuver debris to a disposal orbit in accordance with § 453.18. Under proposed § 453.18(f), the ODAP must include: (1) verification through hardware and software testing or analysis that the system has at least a 90 percent probability of successfully executing the planned maneuver to the disposal orbit; (2) a description of how the system will achieve and maintain the planned disposal orbit for the required time limit; and (3) statistical analysis demonstrating compliance with the probability of collision lifetime limit with operational spacecraft and debris. ISO Standard 16126  66 provides an acceptable method for conducting the post-mission disposal probability of success analysis of § 453.18(f)(1). The testing and analysis can include engine re-light qualification tests or reliability analysis or similar.

The FAA proposes minor changes to its current requirement that a launch operator prevent fragmentation or explosion of its upper stage. 67 Currently, under §§ 417.129(c) and 450.171(a)(3), a launch operator must ensure the removal of stored energy from an upper stage by depleting residual fuel and leaving fuel lines open. 68

Proposed § 453.7(a) would require that, except for energy sources that are safety critical on-orbit or during reentry, a launch operator must ensure: (1) the integrated probability of debris-generating explosions or other fragmentation from the conversion of energy sources ( i.e. chemical, pressure, kinetic) of each upper stage is less than 0.001 (1 in 1,000) during operations; and (2) stored energy is removed by depleting residual propellants, venting any pressurized system, leaving all batteries in a permanent discharge state, and removing any remaining source of stored energy. The proposed rule would replace §§ 417.129(c) and 450.171(a)(3), and would not contain a specific requirement to leave valves open. After promulgation of its original debris requirements, the FAA has found on several occasions, through the licensing process, that leaving the valves open long enough for all fuels and oxidizers to vent and then permitting them to close, has provided a level of safety equivalent to leaving the valves open. Either approach removes the source of explosion risk—namely, the fuels and oxidizers. The FAA proposes a probability limit of 0.001, which matches the limit in the USGODMSP, in order to provide operators a quantitative requirement.

Proposed § 453.7(b) would identify the information that an operator would need to include in its ODAP to demonstrate compliance with § 453.7(a), specifically: (1) analysis, using commonly accepted engineering and probability assessment methods, showing how the operation meets paragraph (a)(1); and (2) test results or analysis, with 95 percent confidence levels, 69 of the planned end-of-mission passivation procedure that verifies dissipation of all energy sources to levels that will prevent explosion of any launch vehicle component. The test results or analysis submitted in accordance with § 453.7(b)(2) would be required to show that all residual propellants contained in the system can be purged or passivated to an acceptable level at the end of the launch, all pressurized systems can be purged or passivated, and all energy storage systems have sufficient structural design to prevent rupture and subsequent explosion. This proposal marks a departure from current requirements, which only ask for a demonstration, without specifying that the demonstration be made with analysis and verification. The FAA now considers the latter necessary because operators have historically only stated that they would comply without providing the test or analysis to show how they would comply. The FAA seeks to clarify in regulation that asserting compliance is not a demonstration of compliance that satisfies this requirement. The FAA seeks feedback on the proposed analysis and testing requirements.

The FAA proposes minor changes to its current requirements that a launch operator prevent unplanned physical contact between the launch vehicle and payload. Currently §§ 417.129(a) and 450.171(a)(1) require a launch operator to ensure that there is no unplanned physical contact between the launch vehicle and its components and the payload. Proposed § 453.9(a) would require a launch operator to prevent unplanned physical contact between a launch vehicle or any of its components and each payload after payload separation, and would replace the requirements in §§ 417.129 and 450.171.

The FAA proposes to add a requirement in § 453.9(b) to take into account the probability of collision with orbital objects 10 cm and larger when designing the mission profile of an upper stage. The operator should ensure that the probability of collision is less than 0.001 (1 in 1,000) after the end of launch. Upper stages are the highest mass of orbital debris by far. It is important to prevent breakups of massive upper stages due to collisions with large debris. The proposed requirement also matches ODMSP Objective 3-1.

Proposed § 453.9(c)(1) would specify the information that an operator must include in its ODAP to demonstrate compliance with § 453.9: (1) the operator's procedure for preventing vehicle and payload collision after payload separation, including any propellant depletion burns and compressed gas releases that minimize the probability of subsequent collisions; and (2) the results of a probability of collision analysis, using commonly accepted engineering and probability assessment methods, meeting paragraph (b) of this section. This marks a departure from current requirements, which only require a demonstration, without specifying that the demonstration must consist of a written procedure. The FAA has received non-actionable demonstrations in previous applications and now proposes requiring complete procedures in the ODAP. The FAA now considers the latter necessary for purposes of clarification as to what the FAA seeks. The analysis should use commonly accepted engineering and probability assessment methods.

The FAA proposes to move the collision avoidance analysis requirements from § 450.169, which are currently applicable to all orbital launches and reentries authorized by the FAA that exceed 150 km to § 453.11. The FAA would replace the current text in § 450.169 with a reference to § 453.11, and replace all references to § 450.169 outside of part 450 with a reference to new § 453.11, which would be called “Collision Avoidance with Orbital Objects.” Proposed § 453.11 is substantially similar to the existing requirements in § 450.169, but would differ from the existing regulation in the following respects.

First, the FAA would omit from proposed § 453.11 the exclusion provided in § 450.169(d), which states that collision avoidance analysis is not required if the maximum planned altitude for any launched object is less than 150 km. This exclusion is necessary under current § 450.169 because part 450 is not limited to launch or reentry activity above 150 km. Since the FAA would relocate the collision avoidance analysis requirements to part 453, which would only apply to launch or reentry activity that exceeds 150 km, the exclusion found in § 450.169(d) is no longer necessary. As such, the FAA would exclude the phrase “except as provided in paragraph (d),” which appears in § 450.169(a) from proposed § 453.11(a).

The text of proposed § 453.11(a)(1) would match current § 450.169(a)(1).

The FAA proposes to refer to “active payloads” in § 453.11(a)(2), instead of “objects that are neither orbital debris nor inhabitable” as used in current § 450.169(a)(2). The updated language clearly states the intent of this section and is consistent with U.S. Space Force terminology and current practice. Active payloads do not include inhabitable objects like the ISS, which require more stringent screening.

In § 453.11(a)(2), the FAA proposes to retain the probability of collision and spherical separation distance options from § 450.169(a)(2)(i) and (ii), but add a third option for operators to screen against active payloads: ellipsoidal screening. The FAA would accept an ellipsoidal separation distance of 25 km in-track and 7 km cross-and-radial-track ellipsoidal separation from active payloads for collision avoidance analyses. The FAA looked at collision risk associated with the radial component greater than 7 km and found that it posed a risk less than 1 × 10 − 5 . These ellipsoidal distances also match current practice identified by the Range Commanders Council. Operators would therefore have three options for screening against active payloads: probability of collision (§ 453.11(a)(2)(i)), ellipsoidal screening (§ 453.11(a)(2)(ii)), and spherical screening (§ 453.11(a)(2)(iii)).

The FAA proposes to add a requirement in § 453.11(a)(3) to perform launch and reentry collision avoidance analysis against small objects with a radar cross section greater than 0.04 m 2 . Currently, § 450.169(a)(3) only requires operators to screen against large objects with radar cross section greater than 1 m 2 and medium objects with radar cross section 0.1 m 2 to 1 m 2 . However, small objects, including CubeSat-sized objects, can cause vehicle breakups and orbital debris if a collision were to occur between the object and a launching or reentering vehicle. The FAA did not include small debris in its recent Streamlined Launch and Reentry License Requirements rulemaking, as the FAA was still investigating the implications of the increase of small objects in the debris catalog due to the addition of the Department of Defense Space Fence. It is current practice at the Federal ranges to screen against all objects in the debris catalog, including small objects with a radar cross section greater than 0.04 m 2 . Therefore, the FAA proposes to add launch and reentry collision avoidance analysis screening against those small objects. The FAA would retain under § 453.11(a)(3) the screening options provided in § 450.169(a)(3): an operator would be required to ensure either (i) that the probability of collision between the launching or reentering objects and any known orbital debris does not exceed 1 × 10 − 5 ; or (ii) that the launching or reentering objects maintain a spherical separation distance of 2.5 km. Window closures that meet these requirements will ensure that launch and reentry vehicles do not collide with known objects during launch or reentry operations. Note that probability of collision is different than probability of casualty used elsewhere for public risk. Probability of collision is only the odds that two objects will occupy the same location at the same time. Probability of casualty factors in the odds of collision plus the vulnerability of a person. Thus, there are separate risk measures.

The FAA proposes to move the screening time requirements of § 450.169(b) to § 453.11(b), with several modifications. First, to enhance clarity the FAA would refer to “150 kilometers altitude” in § 453.11(b)(1) and (2), instead of “150 km,” which appears in § 450.169(b)(1) and (2). The text of proposed § 453.11(b)(3) would match current § 450.169(b)(3). Second, to accommodate the additional disposal options proposed in part 453, the FAA proposes to specify appropriate screening times for controlled atmospheric disposal and maneuver to a storage orbit, rather than refer to “disposal” generally, as done in current § 450.169(b)(4). Under proposed § 453.11(b)(4), an operator performing controlled atmospheric disposal would need to screen during descent from initial disposal burn to 150 km altitude. To maneuver to a disposal orbit, under § 453.11(b)(5), an operator would need to screen during initial disposal operation until removal from LEO or GEO.

The FAA proposes to move § 450.169(c) to § 453.11(c) without any changes. Since the FAA would not include the exclusion in § 450.169(d) because it is redundant of proposed part 453, the Analysis requirements found in § 450.169(e) would appear under paragraph (d) of proposed § 453.11.

The FAA proposes to move the language currently found in § 450.169(e) to § 453.11(d), with two revisions. First, to enhance clarity, the FAA proposes to revise the first sentence of § 453.11(d) to use the active voice (“An operator must obtain a collision avoidance analysis . . .”). Second, the FAA proposes to identify in § 453.11(d)(2) the uncertainties that should be included in the vehicle trajectory and covariance calculation used in the collision avoidance analysis. Specifically, the FAA proposes to require that collision avoidance analyses account for uncertainties, “including launch or reentry vehicle performance and timing, atmospheric changes, variations in drag, and any other factors that affect position and timing of the launch or reentry vehicle.” It is important for a scientific and complete analysis to include these uncertainties because at the velocities of the objects in orbit, small variations or uncertainties can affect the collision prediction. By revising this provision, the FAA emphasizes the use of uncertainty at the beginning of collision analysis, whereas the previous language in § 450.169(e)(2) directed that uncertainties be used to modify the final analysis results.

The FAA proposes to move § 450.169(f) to § 453.11(e) without any substantive changes.

The FAA proposes to move part 450 Appendix A, the Collision Avoidance Analysis Worksheet, to § 453.11(f), with several revisions. First, the FAA proposes in § 453.11(f)(1) to update the launch and reentry information that must be included in the Collision Avoidance Analysis Worksheet. The FAA proposes to combine the “Segment Number” and “Orbiting objects to evaluate,” currently found in paragraphs (a)(5) and (a)(7) of Appendix A, into one requirement, § 453.11(f)(1)(v). These current requirements are redundant, and the updated requirement uses plain language to describe the objects that should be evaluated in the analysis: all free-flying launch vehicle stages, payloads, and components that reach orbit. The FAA also proposes to more clearly convey in § 453.11(f)(1)(vi) the orbital parameters of each free-flying launch vehicle stage, payload, or component achieving orbit that must be identified. The FAA would also refer to both launch and reentry in § 453.11(f)(1)(ii) and (iv), unlike the existing Appendix A, which inconsistently addresses launch and reentry. This is a correction, as all parts of the Collision Avoidance Analysis Worksheet are applicable to both launch and reentry.

The FAA proposes to add a requirement in § 453.20 that would require a launch or reentry operator to submit certain information to the FAA and, if applicable, to other requesting Federal agencies, at the detection of any launch or reentry activity outside the 3-sigma trajectory provided for collision avoidance or any debris-creating event. Orbital safety is implemented through the pre-launch or reentry assessment of planned trajectories. If either an operator or Federal tracking capabilities detect activity outside the 3-sigma planned trajectory or a debris-generating event, the operator should contact the FAA to provide as much information as possible on the characteristics (size and mass), last known orbital or trajectory information, and other details determined necessary by the FAA to locate and categorize orbital objects. This should be done by phone or email as soon as the event is detected. The United States Strategic Command (USSTRATCOM) would be the Federal agency most likely to detect an event covered by § 453.20(a) and request information from the operator. This information may provide critical warning time to inhabited and active payloads on orbit, and allow USSTRATCOM to update its models and recalculate projected orbits. If a launch does not go as planned, and the vehicle ends up in a different orbit than expected, the original Collision Avoidance Analysis Worksheet would be moot. The FAA would need to reassess the collision probability against the new trajectory.

Specifically, proposed § 453.20(a) would require an operator to immediately submit the information identified in § 453.20(b) to the FAA and, if applicable, a requesting Federal agency, at the detection of any launch or reentry activity outside the 3-sigma trajectory provided for collision avoidance or any debris-creating event. If an operator identifies such an event, or is notified by a Federal agency (such as U.S. Space Force and NASA), then the operator would need to report to the FAA and, if applicable, the requesting Federal agency: (1) the size and mass of the affected objects; (2) the last known orbital or trajectory information; and (3) any other details determined necessary by the FAA to locate and categorize orbital objects, such as the vehicle orientation, whether it is tumbling, or the operator's ability to control the object.

The FAA's proposal to consolidate existing requirements for orbital debris mitigation and end-of-launch safety under part 453 necessitates the following revisions to current regulations.

Under part 404, the FAA proposes to replace the reference to § 450.169 in Table A404.1 with a reference to § 453.11.

Under part 415, the FAA proposes to revise § 415.2(b) to reference part 450 as well as part 453. The proposed revision would make clear that operations licensed under part 415 must comply with the critical asset protection requirements in § 450.101(a)(4) and (b)(4) and, for launches with a planned altitude greater than 150 km, the launch collision avoidance requirements in § 453.11. The FAA also proposes to revise § 415.35(d) to require that launch vehicles be operated “in a manner that ensures that flight risks meet the criteria of paragraph (a) of this section and in accordance with collision avoidance requirements in § 453.11 and critical asset protection requirements in § 450.101(a)(4) and (b)(4).”

The FAA also proposes to revise § 415.39 by revising the heading to read, “Demonstration of Orbital Debris Mitigation,” instead of “Safety at End of Launch,” and by replacing the reference to § 417.129 with a reference to the sections of proposed part 453 under which those end of launch requirements would appear: §§ 453.7 and 453.9. Similarly, the FAA proposes to revise § 415.133 by revising the heading to read, “Orbital Debris Mitigation,” and by replacing the reference to § 417.129 with a reference to the sections of proposed part 453 under which those end of launch requirements would appear: §§ 453.7 and 453.9. These revisions would direct readers to the Code of Federal Regulations (CFR) part under which the FAA's safety at end of launch requirements would be relocated under this proposal, and affirm that any FAA-licensed launches exceeding 150 km would be required to comply with part 453. Lastly, the FAA would revise Appendix B to part 415 to reflect the revised heading of § 415.133 (Orbital Debris Mitigation).

Under part 417, the FAA proposes to revise § 417.113(c)(1) to reference the collision avoidance analysis requirements of proposed § 453.11, instead of § 450.169. The FAA proposes to replace the requirements in § 417.129 for safety at end of launch with a reference to the sections of proposed part 453 under which those end of launch requirements would appear: §§ 453.7 and 453.9. This revision would direct readers to the CFR part under which the FAA's safety at end of launch requirements would be relocated under this proposal, and affirm that any FAA-licensed launches exceeding 150 km would be required to comply with part 453. As discussed above, the FAA proposes changes to the end of launch requirements under part 453, consistent with USGODMSP guidelines.

The FAA proposes to revise §§ 431.2(b) and 435.2(b) to reference part 450 and part 453. The proposed revisions would make clear that operations licensed under part 431 and 435 must comply with the critical asset protection requirements in § 450.101(a)(4) and (b)(4) and, for launches with a planned altitude greater than 150 km, the launch collision avoidance requirements in § 453.11. The FAA proposes to revise § 431.43(a)(1) to reference § 453.11 instead of § 450.169. The FAA also proposes to replace the reference to § 450.169 in § 431.43(c)(3) with a reference to the sections of proposed part 453 under which those end of launch requirements will appear: §§ 453.7 and 453.9. As discussed above, the FAA proposes to change the end of launch requirements consistent with USGODMSP guidelines. This revision would direct readers to the CFR part under which the FAA's safety at end of launch requirements would be relocated under this proposal, and affirm that any FAA-licensed launches or reentries exceeding 150 km would be required to comply with part 453.

Under part 437, the FAA proposes to replace the reference to § 450.169 in § 437.65 with a reference to § 453.11. The FAA also proposes to remove the word, “maximum” from § 437.65 because it is an unnecessary modifier to the phrase, “permitted flight with a planned altitude greater than 150 km.”

Under part 450, the FAA proposes to revise § 450.101(d), titled Disposal Safety Criteria, to specify the risk criteria applicable to controlled and uncontrolled atmospheric disposals. As discussed earlier in this preamble, the current definition of “disposal” in § 401.7 includes only controlled atmospheric disposal. As a result, the disposal safety criteria currently identified in § 450.101(d) only apply to controlled atmospheric disposal. Since the FAA is proposing to amend the “disposal” definition to include all five disposal options proposed in §§ 453.14 through 453.18, and the disposal risk criteria currently identified in § 450.101(d) would not apply to all five disposal methods, the FAA must therefore revise § 450.101(d) to identify the risk criteria applicable to each disposal method. Additionally, § 450.101(d) currently refers to the reentry risk criteria in (b), which may create confusion since reentry is distinct from disposal.

The risk criteria outlined in § 450.101 would only apply to disposals that result in orbital debris returning to Earth's surface or atmosphere—that is, controlled or uncontrolled atmospheric disposal. There is no need to calculate collective or individual risks to the public, or aircraft risk if an operator elects to maneuver orbital debris to a disposal orbit or a hyperbolic trajectory that no longer orbits Earth (Earth-escape disposal). Thus, the FAA proposes to revise § 450.101(d) to limit the applicability of the risk criteria to controlled atmospheric disposal performed in accordance with § 453.14, direct retrieval resulting in controlled atmospheric disposal per § 453.16(b)(1), and uncontrolled atmospheric disposal performed in accordance with § 453.17. The risk criteria applicable to controlled atmospheric disposal would appear in paragraph (d)(1), while the risk criteria applicable to uncontrolled atmospheric disposal would appear in paragraph (d)(2).

With respect to controlled atmospheric disposal, the FAA's proposed revision to § 450.101(d) is substantively equivalent to the current regulation. Operators performing controlled atmospheric disposal will still have the option of targeting a broad ocean area or meeting the same collective, individual, and aircraft risk criteria required for reentries under § 450.101(b). The FAA proposes to add a third alternative for compliance as § 450.101(d)(1)(i): ensuring that the effective casualty area of any surviving debris is less than 7 square meters. This revision renders the disposal risk criteria in § 450.101(d)(1) consistent with the safety criteria for controlled atmospheric disposal under proposed § 453.14.

The risk criteria applicable to uncontrolled atmospheric disposal will similarly match the criteria proposed in § 453.17. As noted in this section of this preamble discussing proposed § 453.17, the FAA will not require operators to calculate individual or aircraft risk as would an operator performing controlled atmospheric disposal because the science of predicting impact points for uncontrolled disposals is limited. Due to limitations in the U.S. tracking system and environmental factors that impact debris, it is virtually impossible to precisely predict when and where debris disposed through natural decay will impact. Instead, consistent with the USGODMSP, the FAA would require that operators performing uncontrolled atmospheric disposal ensure that either (i) the effective casualty area for any surviving debris will be less than 7 square meters; or (ii) the risk to the public on the ground will not exceed 1 E C in 10,000 events or 1 × 10 − 4 .

The FAA also proposes to revise § 450.101(e) to reflect the scope of proposed part 453. Specifically, the FAA would require in § 450.101(e)(1) that operators prevent collisions between a launch or reentry vehicle stage or component with a planned altitude greater than 150 km and people, property, and debris on orbit, in accordance with the requirements in § 453.11. Similarly, the FAA would require in § 450.101(e)(2) that operators perform debris mitigation in accordance with part 453 for any launch or reentry vehicle stage or component with a planned altitude greater than 150 km. The FAA also proposes to replace the reference to § 450.169 in § 450.165(a)(3) with a reference to § 453.11, and in § 450.213 with a reference to § 453.11(f). As discussed above, the FAA proposes to move the collision avoidance analysis requirements set forth in §§ 450.169 to 453.11, and replace the current language of § 450.169 with a reference to § 453.11.

The FAA also proposes to revise the equivalent level of safety requirements in § 450.37 to allow operators the option to seek an equivalent level of safety for collision avoidance analysis requirements (which would be located under § 453.11) and all other orbital debris mitigation requirements under part 453. Previously, § 450.37 did not include an equivalent level of safety for collision avoidance analysis. Upon further consideration, the FAA decided that an equivalent level of safety is appropriate. The FAA has found a need for flexibility in the current regulation, which does not allow an equivalent level of safety for collision avoidance analysis, to accommodate deployments of large numbers of satellites and for new launch operators. The FAA has found that collision avoidance is a difficult task for new launch operators, and options need to be available to get the operators to meet compliance. The FAA believes operators might be capable of proposing alternatives to the collision avoidance analysis requirements such as active debris avoidance that provide a level of safety equivalent to FAA regulations. The FAA also proposes to amend the flight safety analysis scope requirements of § 450.113 regarding disposal. The current regulation requires an operator to perform and document a flight safety analysis for all phases of flight, including for “disposal,” from the initiation of the deorbit through final impact. As discussed earlier in this preamble, the FAA is proposing to expand the definition of “disposal” in § 401.7 to include all 5 disposal options proposed in §§ 453.14 through 453.18. The FAA does not believe it would be necessary or feasible to prepare a flight safety analysis for each of the 5 disposal methods proposed in part 453. The FAA will continue to only require a flight safety analysis for controlled atmospheric disposals. The FAA therefore proposes to replace the word “disposals” in § 450.113(a)(3) with “controlled atmospheric disposal performed in accordance with § 453.14 or direct retrieval resulting in controlled atmospheric disposal under § 453.16(b)(1).” Additionally, in order to reflect the safety criteria alternatives proposed in § 453.14(b), the FAA proposes to specify in § 450.113(c) that an operator would not need to prepare a flight safety analysis if the Administrator agrees that the disposal will target a broad ocean area or have an effective casualty area less than 7 square meters.

Lastly, the FAA proposes to replace the current requirements of § 450.171 for safety at end of launch with a reference to the sections of part 453 under which those requirements will now be found: §§ 453.7 and 453.9. As discussed above, the FAA is proposing changes to the requirements for safety at end of launch to include all orbital debris mitigation requirements. As such this revision will expand the scope of § 450.171, but as discussed earlier, should present no more than a minimal burden on operators for compliance.

Federal agencies consider impacts of regulatory actions under a variety of executive orders and other requirements. First, Executive Order 12866 and Executive Order 13563, as amended by Executive Order 14094 (“Modernizing Regulatory Review”), direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify the costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year. The current threshold after adjustment for inflation is $165,000,000, using the most current (2021) Implicit Price Deflator for the Gross Domestic Product. The FAA has provided a detailed Regulatory Impact Analysis (RIA) in the docket for this rulemaking. This portion of the preamble summarizes the FAA's analysis of the economic impacts of this rule.

In conducting these analyses, the FAA has determined that this rule: would result in benefits that justify costs; is a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, as amended by Executive Order 14094 (“Modernizing Regulatory Review”); would not have a significant economic impact on a substantial number of small entities; would not create unnecessary obstacles to the foreign commerce of the United States; and would not impose an unfunded mandate on State, local, or tribal governments, or on the private sector.

To limit the growth of orbital debris, the FAA is proposing to require that upper stages of commercial launch vehicles and other components be removed from orbit within 25 years after launch using an acceptable means of disposal. This document provides the FAA's analysis of the impact of this regulatory change.

Assumptions:

• All monetary values are expressed in 2020 dollars.

• A 15-year analysis period is used based on the available forecast and cost information.

• Present values using 3 percent and 7 percent discount rate as prescribed by OMB in Circular A-4.

Entities Potentially Affected by this Rulemaking:

• Licensed and permitted operators for launches and reentries with a planned altitude above 150 km.

• All space users.

• Commercial space transportation suppliers.

• Satellite operators and owners.

• The Federal Aviation Administration and other government agencies.

• The general public.

Currently, the FAA has no regulations requiring post-mission disposal of upper stages. In this rulemaking, the FAA considers the U.S. Government Orbital Debris Mitigation Standard Practices (USGODMSP) and policies of NASA, Federal Communications Commission (FCC), National Oceanic and Atmospheric Administration (NOAA), and the Inter-agency Space Debris Coordination Committee (IADC) in an effort to establish common standards as the commercial space industry evolves and utilization of space grows.

This proposed rule would prevent an estimated 427 used upper stages from becoming large orbital debris over the next 15 years. Furthermore, this proposed rule would likely result in cost savings resulting from avoiding orbital remediation costs in the long run. The proposed rule would reduce risks to human spaceflight and space property, and internalize the externality to benefit the satellite industry. In addition, the proposed mitigation requirements are in line with the public demand for a sustainable space environment and the commercial space industry's interest in driving down orbital debris awareness costs. Therefore, this rulemaking would improve public safety and eventually save the industry money in the long run.

The FAA assesses scenarios of compliance costs using low, central, and high scenarios, which vary by the number of controlled disposals per year. Cost of present values and annualized costs for the lower case, central case and higher case are presented in the following table.

The central estimate of the present value of total costs over 15 years is $24 million at a 7 percent discount rate or $31 million at a 3 percent discount rate. The annualized costs at a 7 percent discount rate would be $2.6 million or $2.6 million at a 3 percent discount rate. Without post-mission disposal, the upper stages contribute to the majority of orbital debris due to their mass. Moreover, prevention of large orbital debris would reduce risks to human spaceflight and space property.

The following table is the summary of the total costs for central estimate, the FAA's preferred estimate.

The following table summarizes benefits and costs.

The FAA encourages the public interest parties to read a full context of the regulatory impact analysis (RIA) of this proposed rule in the docket for this rulemaking.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation.” To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.

Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

Currently, there are five FAA-licensed United States commercial space launch orbital vehicle manufacturers and operators under the Small Business Administration small-entity criteria of 1,200 employees. Two of the five small entities are either a suborbital launcher whose space vehicles would not reach high space altitude to become orbital debris against the 25-year rule or not an active launcher, but listed as a launch license holder. The other three of the five are considered to be rocket builders, whose products as low-cost suborbital rockets would not be affected by this proposed rule. Therefore, as provided in section 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities.

The FAA invites interested parties to submit data and information regarding the potential economic impact that would result from the proposal.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this proposed rule and determined that it would respond to a domestic safety objective and would not be considered an unnecessary obstacle to trade.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of 100 million or more (in 1995 dollars) in any 1 year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $155 million in lieu of $100 million. This proposed rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. According to the 1995 amendments to the Paperwork Reduction Act (5 CFR 1320.8(b)(2)(vi)), an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement unless it displays a currently valid OMB control number.

This action contains the following proposed amendments to the existing information collection requirements previously approved under OMB Control Number 2120-0608. As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the FAA has submitted these proposed information collection amendments to OMB for its review.

Summary: Under §§ 453.5 through 453.18, the proposed rule would require applicants to submit an ODAP that includes several analyses, descriptions, and demonstrations. The analyses would detail the release of debris during normal operations, how that debris release could be mitigated, and how any debris released will meet the 25-year rule and 100 object-year rule. An analysis detailing the end-of-mission passivation procedure and its probability of success would also be required, as well as a procedure for collision avoidance after payload separation and an analysis of the lifetime probability of collision. For post-mission disposal, analysis and description of the disposal method and its probability of success are proposed along with the calculated risk, effective casualty area, or the broad ocean location of any disposals into Earth's atmosphere.

Use: The information would be used by the FAA's Office of Commercial Space to evaluate the operator's application.

Respondents (including number of): There are approximately 13 FAA-licensed or permitted launches and reentries per year that would be affected by this proposed regulation.

Frequency: Operators would need to submit a mission-specific ODAP at least 60 days before each launch or reentry with a planned altitude above 150 km. In 2021, the FAA issued 24 space launch and reentry licenses held by 11 license holders. Many operators will be able to re-use the ODAP or parts of the ODAP for multiple operations, as some information will not change operation to operation. The FAA uses 25 ODAP per year for the calculation of the frequency.

Annual Burden Estimate: Changes in §§ 453.5 through 453.18 would result in some paperwork burden cost by requiring engineer time for analyses and documentations of mission disposal, normal operations debris release, explosion mitigation, and collision mitigation in an ODAP. The FAA estimates an aerospace engineer would spend approximately 10 hours per launch at the mean hourly wage rate of $81.28. 70 To determine reporting requirement cost, the FAA calculates the annual launch number potentially for orbital debris creation. The annual impacted launch number was estimated to be 25 by dividing the total forecasted launches subtracting sub-orbital launches (or natural decay) by 15 years. Based on impacted 25 launches, the paperwork burden would be $341,376 over 15-year analysis period.

In order to comply with § 453.20, launch operators would need to notify the FAA or, if appropriate, a requesting Federal agency, by phone call or email at the detection of a debris-creating event or any launch or reentry activity outside the 3-sigma trajectory provided for collision avoidance. The FAA estimated the time required to report by phone or email would be about 0.25 hours per launch or approximately 95 hours (0.25 × 25 × 15) over a 15-year period, assuming operators would have an event to report under proposed § 453.20 after every launch. It would cost $8,677 (see table 2, column 3) over the entire 15-year period based on the average wage rate of $81.28 for aerospace engineers.

The compliance costs for § 453.11, launch and reentry collision avoidance analysis and the associated worksheet, are unchanged from the previous part 450 burden determination.

Combing all the reporting costs, the undiscounted total reporting requirement cost would be $350,053 ($341,376 + $8,677) over the 15-year period. The FAA believes the paperwork burden is insignificant.

The agency is soliciting comments to—

(1) Evaluate whether the proposed information requirement is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;

(2) Evaluate the accuracy of the agency's estimate of the burden;

(3) Enhance the quality, utility, and clarity of the information to be collected; and

(4) Minimize the burden of collecting information on those who are to respond, including by using appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

Individuals and organizations may send comments on the information collection requirement to the address listed in the ADDRESSES section at the beginning of this preamble by December 26, 2023. Comments also should be submitted to the Office of Management and Budget, Office of Information and Regulatory Affairs, Attention: Desk Officer for FAA, New Executive Building, Room 10202, 725 17 Street NW, Washington, DC 20053.

FAA Order 1050.1F identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined this rulemaking action qualifies for the categorical exclusion identified in paragraph 5-6.6f for regulations and involves no extraordinary circumstances.

The FAA has analyzed this proposed rule under the principles and criteria of Executive Order 13132, Federalism. The agency has determined that this action would not have a substantial direct effect on the States, or the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government, and, therefore, would not have Federalism implications.

The FAA analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). The agency has determined that it would not be a “significant energy action” under the executive order and would not be likely to have a significant adverse effect on the supply, distribution, or use of energy.

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. The agency also invites comments relating to the economic, environmental, energy, or Federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking, or a memorandum submitted by outside parties to memorialize communications with the FAA. Before acting on this proposal, the FAA will consider all comments it receives on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed to the extent practicable. The agency may change this proposal in light of the comments it receives.

Proprietary or Confidential Business Information: Commenters should not file proprietary or confidential business information in the docket. Such information must be sent or delivered directly to the person identified in the FOR FURTHER INFORMATION CONTACT section of this document, and marked as proprietary or confidential. If submitting information on a disk or CD ROM, mark the outside of the disk or CD ROM, and identify electronically within the disk or CD ROM the specific information that is proprietary or confidential.

Under 14 CFR 11.35(b), if the FAA is aware of proprietary information filed with a comment, the agency does not place it in the docket. It is held in a separate file to which the public does not have access, and the FAA places a note in the docket that it has received it. If the FAA receives a request to examine or copy this information, it treats it as any other request under the Freedom of Information Act (5 U.S.C. 552). The FAA processes such a request under Department of Transportation procedures found in 49 CFR part 7.

An electronic copy of rulemaking documents may be obtained from the internet by—

1. Searching the Federal eRulemaking Portal ( www.regulations.gov );

2. Visiting the FAA's Regulations and Policies web page at www.faa.gov/regulations_policies; or,

3. Accessing the Government Printing Office's web page at www.GovInfo.gov.

Copies may also be obtained by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW, Washington, DC 20591, or by calling (202) 267-9677. Commenters must identify the docket or notice number of this rulemaking.

All documents the FAA considered in developing this proposed rule, including economic analyses and technical reports, may be accessed from the internet through the Federal eRulemaking Portal referenced in item (1) above.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend chapter III of title 14, Code of Federal Regulations as follows:

The revisions and additions read as follows:

Pursuant to Section 18(a)(1)(B) of the Federal Trade Commission Act, 15 U.S.C. 57a(1)(B), and FTC Rule 1.31(f), 16 CFR 1.31(f), notice is hereby given that the above-captioned petition has been filed with the Secretary of the Commission and has been placed on the public record for a period of thirty (30) days. Any person may submit comments in support of or in opposition to the petition. All timely and responsive comments submitted in connection with this petition will become part of the public record.

The Commission will not consider the petition's merits until after the comment period closes. It may grant or deny the petition in whole or in part, and it may deem the petition insufficient to warrant commencement of a rulemaking proceeding. The purpose of this document is to facilitate public comment on the petition to aid the Commission in determining what, if any, action to take regarding the request contained in the petition. This document is not intended to start, stop, cancel, or otherwise affect rulemaking proceedings in any way.

Because your comment will be placed on the publicly accessible website at https://www.regulations.gov, you are solely responsible for making sure your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else's Social Security number; date of birth; driver's license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, your comment should not include any “trade secret or any commercial or financial information which . . . is privileged or confidential”—as provided by Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2).

Section 104(b) of the CPSIA, part of the Danny Keysar Child Product Safety Notification Act, requires the Commission to (1) examine and assess the effectiveness of voluntary consumer product safety standards for durable infant or toddler products, in consultation with representatives of consumer groups, juvenile product manufacturers, and independent child product engineers and experts, and (2) promulgate consumer product safety standards for durable infant and toddler products. 15 U.S.C. 2056a(b)(1). The Commission must continue to promulgate standards for all categories of durable infant or toddler products “until the Commission has promulgated standards for all such product categories.” 15 U.S.C. 2056a(b)(2).

The Commission is issuing this notice of proposed rulemaking (NPR) to establish a consumer product safety rule for nursing pillows to further implement section 104 of the CPSIA. 1 The briefing package prepared by Commission staff defines “nursing pillows” as “any product intended, marketed, or designed to position and support an infant close to a caregiver's body while breastfeeding or bottle feeding. These products rest upon, wrap around, or are worn by a caregiver in a seated or reclined position.”  2 Nursing pillows provide support to caregivers by raising infants to the desired height for feeding, thereby reducing muscular strain and abdominal pressure on the caregiver and providing a buffering surface between the infant and the caregiver. When infants fall asleep or are left unattended on nursing pillows, however, they are at risk for death or serious injury by suffocation.

As required by section 104(b)(1)(A) of the CPSIA, CPSC consulted with manufacturers, retailers, trade organizations, laboratories, consumer advocacy groups, consultants, and the public to develop this rule, including through participation in the juvenile products subcommittee meetings of ASTM. CPSC formally began the consultation process for this rulemaking in December 2021, via a letter from CPSC staff requesting that ASTM form a working group to develop a voluntary standard to reduce the risk of death and injury from hazards associated with infant pillow products, including nursing pillows. 3 CPSC staff provided ASTM incident data associated with both nursing pillows and infant support cushions. In response, ASTM formed the following subcommittees to develop two separate voluntary standards:

• the F15.16 Infant Feeding Supports subcommittee, 4 intended to develop a standard for nursing pillows, which the subcommittee refers to as infant feeding supports; and

• the F15.21 Infant Loungers subcommittee, with a remit including nursing pillows that are also intended for lounging.

CPSC staff has been actively participating in both ASTM subcommittees to develop voluntary standards that address hazards associated with these products.

Currently, no voluntary or mandatory safety standard for nursing pillows exists to address the hazards of infants sleeping on or in these products. Pursuant to section 104 of the CPSIA, 15 U.S.C. 2056a, the Commission proposes to issue a mandatory standard for nursing pillows. Nursing pillows are sometimes used on elevated surfaces or inside an infant sleep product, which can lead to death or serious injury by suffocation, entrapment, or falls. CPSC staff identified 154 infant fatalities and 88 nonfatal incidents from January 1, 2010, to December 31, 2022, involving nursing pillows. Of the 154 fatalities, an infant was sleeping in or on the nursing pillow in 142 cases. In 1992, CPSC adopted a ban on certain types of hazardous “infant pillows” that contain loosely filled granular materials that conform to an infant's face or body, codified at 16 CFR 1500.18(a)(16) (Infant Pillow Ban). Certain nursing pillows are exempt from the Infant Pillow Ban while others do not fall within its scope, such as pillows with a non-granular fill. Many products are currently marketed for both nursing and “lounging,” despite the suffocation hazard posed of by propping up very young infants. In 2020, the most recent year for which CPSC has complete data, nursing pillows are associated with 38 fatalities and 14 injuries.

To address the risk of death and injury associated with nursing pillows, and as required in section 104 of the CPSIA, the Commission is issuing this proposed rule to establish mandatory performance and labeling requirements for nursing pillows. The proposed rule is intended to address the hazards associated with infants in nursing pillows. Accordingly, the proposed rule addresses:

(1) suffocation hazards associated with nursing pillows, by requiring nursing pillows to be sufficiently firm that the product is unlikely to conform to an infant's face and occlude its airways;

(2) entrapment hazards posed when the product restricts an infant's head movements, via performance standards requiring testing to assess this hazard;

(3) suffocation and fall risks due to infant restraints that could suggest to consumers that infants can safely be left unattended in or on the product; and

(4) the risks of suffocation, entrapment, or fall when an infant is left unattended in the product by requiring labeling and instructional literature to better communicate risks.

Section VI of this preamble, and Tabs B and C in Staff's NPR Briefing Package, provide a detailed explanation of proposed performance and labeling requirements.

Nursing pillows are a durable infant or toddler product under section 104(f) of the CPSIA. Section 104(f)(1) defines the term “durable infant or toddler product” as “a durable product intended for use, or that may be reasonably expected to be used, by children under the age of 5 years.” 15 U.S.C. 2056a(f)(1). Section 104(f)(2) of the CPSIA provides a non-exhaustive list of product categories within the definition of “durable infant or toddler products.” Although nursing pillows are not specifically listed in section 104(f)(2), they are “durable infant or toddler products” because (as explained in Part VIII below) they are durable products reasonably expected to be used by infants under the age of 5 years for support while they are being fed.

Section 104(d) of the CPSIA requires manufacturers of durable infant or toddler products to establish a product registration program and comply with CPSC's rule for product registration cards, 16 CFR part 1130. Any product defined in part 1130 as a “durable infant or toddler product” must comply with the product registration requirements, as well as testing and certification requirements for children's products, that are codified in 16 CFR parts 1107 and 1109. Because nursing pillows are durable infant products that will be subject to the proposed consumer product safety standard, the Commission proposes to amend part 1130 to include nursing pillows in the list of durable infant or toddler products that must comply with these product registration requirements. See 16 CFR 1130.2(a).

The testing and certification requirements of section 14(a) of the Consumer Product Safety Act (CPSA), 15 U.S.C. 2063(a), apply to standards promulgated under section 104 of the CPSIA. Section 14(a)(3) of the CPSA requires the Commission to publish an NOR for the accreditation of third party conformity assessment bodies (test laboratories) to assess conformity with a children's product safety rule to which a children's product is subject. The proposed rule would be a children's product safety rule that requires the issuance of a NOR.

Nursing pillows are infant products intended to position and support an infant during breastfeeding—also referred to as nursing—or bottle feeding. These products generally rest upon or are “worn” by the caregiver while seated or partially reclined. Nursing pillows are most commonly C-, U-, or crescent- (or horseshoe-) shaped—to fit closely around the caregiver's torso. However, other designs exist, including a V-shaped or boomerang-shaped product, a round pod with a recessed center to support the infant, a stack of multiple petal-shaped pillows attached to a central tubular pillow, and E-shaped products for twins. Most nursing pillows are filled with synthetic batting or foam, but products filled with cotton, wool, or dried grains are available. See Tab E of Staff's NPR Briefing Package.

In addition to providing a support surface for infants, nursing pillows raise the infant to the desired height for feeding, thereby reducing muscular strain on the caregiver, and provide a buffering surface between the infant and the caregiver, reducing pressure on the caregiver's abdomen. This latter function is especially helpful where the caregiver has abdominal stitches from a caesarean section. Some products include a strap or belt, sometimes with a buckle, to secure the product to the caregiver's body, and a few have restraints that attach the infant to the product. Many products come with removable fabric covers, and some products have small infant head support bolsters or fabric toys attached. 5

Nursing pillows are not covered by an existing voluntary safety standard. However, CPSC staff has been working with ASTM's F15.16 Infant Feeding Supports subcommittee to develop requirements intended to address the primary hazards associated with nursing pillows. On March 20, 2023, ASTM's F15.16 subcommittee issued a preliminary draft of the ASTM Infant Feeding Supports voluntary standard (ASTM draft standard). 6 The ASTM draft standard (which is not an approved standard and remains subject to change) defines an infant feeding support as a “product that is intended to position and support an infant (the occupant) close to a caregiver's body, and to reduce strain and pressure on the caregiver's body, while breastfeeding or bottle feeding.” Although not part of the formal definition, the ASTM draft standard includes clarifying text that states: “These products are commonly U-shaped in appearance, and generally rest upon, wrap around, or are worn by a caregiver in a seated or reclined position. These products are commonly known as nursing pillows.” Thus, the ASTM draft standard for infant feeding supports would include nursing pillows within the scope of covered products.

As discussed in Staff's NPR Briefing Package at Tab E, CPSC estimates that annual sales of new nursing pillows likely total approximately $67 million. New nursing pillows range in price from $15 to $100, with most products in the $25 to $65 range. The more expensive models tend to have removable covers. The Commission's estimate of $67 million per year in sales of new nursing pillows assumes an average price of approximately $50 and annual sales of 1.34 million units. Some parents, however, may already own a pillow that was purchased for an older child, make a pillow, or buy a used pillow to use for nursing. Used nursing pillows and replacement covers for nursing pillows are commonly available from secondary marketplaces such as eBay and Mercari, where prices are observed to range from less than $7 to more than $120. The widespread availability of replacement covers extends the useful life and durability of nursing pillows, allowing covers to be cleaned or replaced as needed.

Although more than a thousand businesses sell nursing pillows and nursing pillow covers online, just nine companies supply the models commonly sold in brick-and-mortar stores. Individual stores typically have fewer than four models of nursing pillows in stock, which limits consumers' ability to assess the safety-related characteristics of the products and to make selections on that basis.

In 1992, pursuant to the Commission's authority under the Federal Hazardous Substances Act (FHSA), the Commission issued its Infant Pillow Ban. 57 FR 27912 (June 23, 1992). The Infant Pillow Ban bans “infant cushions,” “infant pillows,” and similar articles that are:

• loosely filled with granular material, including but not limited to, polystyrene beads or pellets;

• easily flattened;

• capable of conforming to the body or face of an infant; and

• intended or promoted for use by children under 1 year of age.

This proposed rule for nursing pillows does not change the FHSA ban. That ban was limited to infant cushions and infant pillows defined in the Infant Pillow Ban and the specific hazard presented by products with loosely filled granular material such as polystyrene beads or pellets.

In 2008, the Commission approved an exemption to the Infant Pillow Ban. 73 FR 77493 (Dec. 19, 2008). The exemption applies to Boston Billow Nursing Pillows and substantially similar nursing pillows that are designed to be used only as nursing aids for breastfeeding mothers. 16 CFR 1500.86(a)(9). Examples of products that fall within this exemption include nursing pillows that are tubular in form, C- or crescent-shaped to fit around a caregiver's waist, round in circumference, and filled with granular material. The exemption applies only to the Infant Pillow Ban and is not applicable to this proposed rule. In approving the exemption, the Commission assessed the utility of nursing pillows and the risk of harm based on data from January 1992 to May 2008. The Commission found that the data available at that time did not support a ban on the sale of all nursing pillows under the FHSA. Termination of Rulemaking Other Than With Respect to Boston Billow Nursing Pillow and Substantially Similar Nursing Pillows, 73 FR 51386, 51387 (Sept. 3, 2008).

Unlike the Infant Pillow Ban, this proposed rule sets a performance standard pursuant to the CPSIA that allows for the sale of nursing pillows that meet the requirements in the standard. As described below, this proposed rule is based in part on new data concerning incidents that occurred between January 2010 through December 2022, many of which were fatal. The proposed rule does not alter either the Infant Pillow Ban at 16 CFR 1500.18(a)(16) or the exemption codified at 16 CFR 1500.86(a)(9), both of which would remain in place. Thus, products that are not banned under the Infant Pillow Ban but that meet this proposed rule's definition of a nursing pillow would need to comply with the proposed rule.

CPSC staff searched the Consumer Product Safety Risk Management System (CPSRMS)  7 and National Electronic Injury Surveillance System (NEISS)  8 databases for fatalities, incidents, and concerns associated with nursing pillows and involving infants up to 12 months old, reported to have occurred between January 1, 2010, and December 31, 2022. Commission staff identified 154 fatal incidents and 88 nonfatal incidents and consumer concerns reported to CPSC during this time. Because reporting is ongoing, the number of reported fatalities and nonfatal incidents during this period may increase, especially for years 2021 and 2022. Tab A of Staff's NPR Briefing Package describes the incident and hazard patterns associated with nursing pillows.

The Commission is aware of 242 incident reports associated with nursing pillows. Table 1 groups the reported cases by severity. Of the 242 reports, 154 (64 percent) involved a fatality. 9 Of the 88 nonfatal incidents, 64 (73 percent) resulted in an injury, and 24 (27 percent) reported no injury. Among the reported incidents without injury, some included concerns such as product integrity or the smell of the nursing pillow that are unrelated to the hazards this proposed rule is intended to address. Table 1 provides the distribution of incidents by year.

As reflected in Table 2, nearly all (144 of the 154, or 94 percent) of the reported fatalities associated with nursing pillows involved infants 6 months old and younger, and most (110 out of 154, or 71 percent) were deaths of infants 3 months old or younger. For more than two-thirds of the nonfatal incidents and nearly all the incidents without injury, however, the victim's age is not available.

The official cause of death reported by the medical examiner in nearly all of the 154 reported fatalities was asphyxia, suffocation, overlay, sudden unexpected infant death (SUID), sudden infant death syndrome (SIDS; a sub-type of SUID), or a similar cause. Nearly all reported fatalities (142 of the 154) involved use of the nursing pillow for sleep, and these cases often involved additional unsafe sleep conditions including sleep-surface sharing—also known as co-sleeping—or the presence of other soft bedding such as pillows or blankets.

Nursing pillows are intended to be used for feeding when both infant and caregiver are awake, and the caregiver is able to ensure that the infant's airways are not covered by the pillow. However, because infants frequently fall asleep during or after feeding, nursing pillows are foreseeably misused for infant sleep, which creates a potential hazard for the infant. For example, if a sleeping infant rolls over so their face is pressed against the nursing pillow, the infant's airways may be blocked, causing suffocation. Similarly, if an infant falls into the opening where the caregiver is positioned during feeding, the infant can land face-down with the pillow surrounding their head, causing entrapment against the surface on which the pillow rests. Even if the infant remains with their back against the top of the nursing pillow, if the infant's position shifts so that their head falls against their chest or tilts backwards over the top of the pillow, the hyperextension or hyperflexion of the infant's neck can prevent breathing.

For the most part, there was no witness observing the fatal incidents, and 60 of the fatal cases (39 percent) had insufficient details to enable CPSC staff to determine the hazard pattern or scenario. However, CPSC staff classified the remaining 94 reported fatalities by hazard patterns, based on the best available information about the position in which the victim was found. Table 3 shows the distribution of the 154 reported fatalities by hazard scenario.

Sixty-two fatalities (40 percent) involved the nursing pillow product being used in another infant sleep product, such as a crib, portable playpen, or bassinet; 61 fatalities (40 percent) involved use of the product on an adult bed or mattress; and one fatality involved a mattress of unknown size. Eighteen reported fatalities (12 percent) involved the product being used on a couch, sofa, or loveseat; one fatality involved the product being used on the caregiver's lap in a recliner chair; and the use location for 11 fatalities is unknown. Table 4 displays fatal incidents by the location where the nursing pillow and infant were placed.

Of the 88 nonfatal incidents associated with nursing pillows, 64 resulted in an injury to the infant and 24 did not lead to a reported injury. Of the 64 injury victims, 19 infants were known to have been treated and released from the emergency department. All 19 of these injuries involved the infant falling or rolling off, or out, of the nursing pillow. An additional 3 injuries, one involving a burn, one due to a fall, and one due to cardiopulmonary arrest after the infant was laying on the nursing pillow, resulted in hospital admission. The remaining 42 injuries where the level of care was not known included falls, near suffocation, near strangulation, choking, and skin irritation or allergy. Table 5 summarizes the hazard patterns for the nursing pillow-related nonfatal incidents.

Table 6 displays nonfatal injuries by the location in which the nursing pillow and infant were placed. In 66 percent (42 of 64) of the nonfatal injuries, the location was unknown, but the most common locations among the remaining incidents were couches and beds.

CPSC awarded a contract to Boise State University (BSU) for infant biomechanics and suffocation research and consultancy services. One task under this contract was for research on pillows intended for infant care and use, and an analysis of the risk of injury or death to infants associated with the use of infant pillows marketed as aiding infants during activities such as feeding, nursing, sleeping, propping, and lounging; that is, nursing pillows and infant support cushions.

BSU delivered its final report on June 30, 2022 (the BSU Final Report). 11 The BSU Final Report provides recommendations and conclusions related to the performance and design of nursing pillows, including:

• Firmness Testing. The BSU Final Report recommends that all nursing pillows be required to undergo firmness testing, because products that lack firmness are more likely to conform around an infant's nose and mouth and to present a suffocation hazard. The report recommends testing using a 3-inch diameter, anthropometry-based hemispheric probe that is geometrically similar to, and sized to represent the breadth of, an infant's face. The report suggests that this probe should be applied to the product at three locations: the location of maximum thickness, the location of minimum thickness, and a third location that seems particularly soft or is otherwise most likely to result in failure. The force required to displace the probe 1 inch into the product at each location must exceed 10 Newtons (N). Passing this requirement would mean that the product has firmness comparable to crib mattresses, which are generally considered the safest place for an infant to sleep.

• Airflow Testing. The BSU Final Report recommends that products that do not pass firmness testing be required to pass an airflow test. Passing the airflow test would mean that the product has airflow characteristics comparable to current mesh crib liners, which the BSU researchers believe would mitigate the suffocation hazard. However, the report also recommends that airflow testing is not required for products that pass their proposed firmness testing, because a firm product is unlikely to form a seal around an infant's nose and mouth.

• Sagittal-Plane Testing. BSU developed prototype sagittal-plane testing devices to allow for more comprehensive assessments of infant positioning in and on nursing pillows and infant support cushions. 12 The BSU Final report emphasizes that further research is needed to determine appropriate worst-case positions for testing and to set threshold values for acceptable body positions that would not negatively impact infant breathing.

• Nursing Pillow Shape. The BSU Final Report advises that nursing pillows that are firm and feature sharper corners, rather than cylindrical sides, are likely the safest option for infants, because there would be no reasonable way for consumers to use such a product for lounging, thereby limiting the hazards associated with sagittal-plane positioning in a nursing pillow.

CPSC considered the BSU Final Report and its recommendations when developing this proposed rule for nursing pillows. Tab B of Staff's NPR Briefing Package contains CPSC staff's assessment of how the proposed rule reflects the report's conclusions and recommendations.

There are no published U.S. voluntary standards for nursing pillows. However, on March 20, 2023, ASTM issued ballot F15.16 (23-01), which included the ASTM draft standard. The ballot closed on April 20, 2023, and received 11 negative votes with comments and 6 other comments. Although not adopted, the ASTM draft standard reflects the types of performance requirements that are under consideration by industry, with input from CPSC staff. 14 It includes general requirements typically found in other ASTM juvenile product standards, such as requirements for lead, including lead in paints; prohibitions against small parts, hazardous sharp edges or points, and removable protective components; requirements to prevent injury from scissoring, shearing, and pinching; requirements for toy accessories that are attached to, removable from, or sold with the products; and permanency requirements for labels and warnings.

The ASTM draft standard also includes four performance requirements intended to address safety hazards specifically associated with nursing pillows:

• Infant Restraints: This requirement prohibits infant feeding supports from including an infant restraint system, which may entangle an infant and could invite misuse by suggesting to caregivers that it is acceptable to leave an infant unattended on the nursing pillow.

• Fabric/Mesh Integrity: This requirement is intended to address product integrity issues such as seam failures and material breakage.

• Firmness: This requirement places limits on the extent to which certain portions of the product can deflect when a 3-inch diameter hemispheric probe is applied to the product with a certain force. The proposed requirement and test method address the suffocation hazard when a nursing pillow conforms to an infant's face, and are based on the firmness recommendations in the BSU Final Report. 11 However, the BSU researchers' recommended requirements were applied not only to the top infant support surface, but also to the inner wall of the crescent-like opening of these products. Testing is performed at three locations on each of these two surfaces.

• Occupant Containment: This requirement applies a 9-inch diameter head probe to the opening of an infant feeding support; when moved laterally through this opening, the probe must not contact the side walls of the product. The requirement is intended to reduce the potential for an infant's head to become entrapped within this opening. This requirement also is intended to reduce the extent to which these products are used for infant propping or lounging, by limiting the amount of lateral support available to young infants if they were placed within the opening.

The ASTM draft standard also includes marking, labeling, and instructional literature requirements. These include requirements for warnings that must appear on nursing pillows and other infant feeding supports covered by the standard. Figure 1 illustrates the ASTM draft standard's required warning statements that must appear on all nursing pillows:

The ASTM draft standard requires the warnings to be “permanent” and “conspicuous,” which the draft standard defines as a “label that is visible, when the infant feeding support is in a manufacturer's recommended use position, to a person sitting near the infant feeding support at any position around the infant feeding support.”

The draft voluntary standard also includes requirements for package warnings against using nursing pillows for sleep or in sleep products, and to state the manufacturer's recommended weight, height, age, developmental level, or combination thereof, of the infant. In addition, the package cannot include warnings, statements, or graphics that indicate or imply that the infant may be left in the product without an adult caregiver in attendance.

Lastly, ASTM's draft voluntary standard includes requirements for instructional literature to accompany products covered by the standard. In addition to the warnings on the product, there must be instructions to consumers to: (1) read all instructions before using the product; (2) keep the instructions for future use; and (3) not use the product if it is damaged or broken. The instructions also must indicate the manufacturer's recommended maximum weight, height, age, developmental level, or combination thereof, of the infant. If the product is not intended for use by a child for a specific reason ( e.g., a disability that would prevent safe use of the product), the instructions must state this limitation.

To address established risks of death and injury associated with infant suffocations, entrapments, and falls, and as required in section 104 of the CPSIA, the Commission is issuing this proposed rule to establish mandatory performance and labeling requirements for nursing pillows. The proposed rule addresses:

(1) suffocation hazards associated with nursing pillows, by requiring nursing pillows to be sufficiently firm so that the product is unlikely to conform to an infant's face and occlude its airways;

(2) entrapment hazards posed when the product restricts an infant's head movements, via performance standards requiring testing to assess this hazard;

(3) suffocation and fall risks due to infant restraints that could suggest that infants can safely be left unattended in the product; and

(4) the risks of suffocation, entrapment, or fall when an infant is left unattended in the product by requiring labeling and instructional literature to better communicate risks.

The text of the proposed rule is based on an evaluation of the nursing pillow market, the existing Infant Pillow Ban and its associated exemption, the ASTM draft standard for infant feeding supports that is under development, and the recommendations of the BSU Final Report. The proposed rule would apply to all nursing pillows, as defined below. The proposed rule is summarized below and explained in more detail in Tabs B and C of Staff's NPR Briefing Package.

Section 1242.2 of the proposed rule defines “nursing pillow” as:

Any product intended, marketed, or designed to position and support an infant close to a caregiver's body while breastfeeding or bottle feeding. These products rest upon, wrap around, or are worn by a caregiver in a seated or reclined position.

The definition of “nursing pillow” excludes maternity pillows, also known as pregnancy pillows, which staff defines as “a large body pillow intended, marketed, and designed to provide support to a pregnant adult's body during sleep or while lying down,” and sling carriers, as defined in 16 CFR part 1228, which are already required to meet CPSC's sling carrier safety standard.

This definition is intended to encompass all nursing pillows on the market and within the available incident data, while excluding products that are not intended primarily for nursing (maternity pillows) or that might be used for nursing but whose hazards are already addressed by another standard (sling carriers). This definition is similar to the definition developed by the ASTM infant feeding supports subcommittee for the ASTM draft standard. The proposed rule, however, does not include additional language used in the ASTM draft standard's definition of “infant feeding support,” which states that these products are commonly U-Shaped in appearance. That language is not needed because all products that meet the definition in the proposed rule are subject to the same hazards and should be considered within the scope of the proposed rule regardless of the details of their shape.

The proposed rule includes many of the general requirements included in the ASTM draft standard for infant feeding supports to address the potential hazards associated with lead in paints; small parts; sharp edges or points; toy accessories that are attached to, removable from, or sold with the nursing pillow; and the removal of protective components. However, the requirement in the ASTM draft standard to prevent the removal of protective components has been augmented in the proposed rule to include other possibly detachable components that are present, such as zipper pulls and buttons. If detached, these components can expose the infant to hazards such as sharp points, sharp edges, and choking hazards.

The proposed rule also includes the warning permanency requirements in the ASTM draft standard, with an additional permanency requirement for “free-hanging” labels that attach to the product at only one end and are particularly susceptible to attempts at removal or alteration by consumers. Section 1242.3(e)(4) of the proposed rule includes the following warning permanency requirement:

Warning labels that are attached to the fabric of nursing pillows with seams shall remain in contact with the fabric around the entire perimeter of the label, when the product is in all manufacturer-recommended use positions, when tested in accordance with [reference to existing test method for assessing permanency of warning labels attached with seams].

To address a potential entanglement hazard, the proposed rule prohibits nursing pillows from including an infant restraint system. The draft ASTM voluntary standard for infant feeding supports includes a similar requirement. Proper use of a nursing pillow involves actively attending to the infant during use, and the presence of restraints could suggest to consumers that infants properly can be left unattended on the product.

Under the proposed rule nursing pillow seams would be subject to a tension test similar to that applied to toys intended for children up to 18 months old under ASTM F963, Standard Consumer Safety Specification for Toy Safety (the toy standard), 16 but tested at a higher tension force of 15 pounds rather than 10 pounds, because nursing pillows may be used for multiple children or passed on to other caregivers, meaning these products would be subject to stress over a usable life that can span more than a single infant's use. CPSC is aware of one injury associated with seam failures, where an infant reportedly choked on filling that came out of the product, and has received additional reports of nonfatal incidents involving product integrity issues such as seam failures See Staff's NPR Briefing Package at Tab A. The seam strength requirement and test method in the proposed rule would address such incidents.

To address the potential for infant falls if the buckled belts, straps, or other features intended to secure the product to the caregiver fails, the proposed rule includes a requirement and test method for the strength of caregiver attachments. Specifically, the proposed rule would require that each element of the caregiver attachment system ( e.g., strap or buckle) that is included on nursing pillows be required to withstand a static load equal to the recommended weight limit of the product, or 20 pounds, whichever is greater.

The proposed rule includes a firmness requirement that applies to each nursing pillow's infant support surface, as well as the inner wall of the nursing pillow opening ( e.g., within the crescent-like opening). As explained in Tab B of Staff's NPR Package, the proposed firmness requirement and test method is based on the recommendations of the BSU Final Report, with modifications including the addition of a requirement to test the inner wall of the opening. The test applies a 3-inch diameter hemispheric probe, which is similar in size and shape to an infant's face, to three test locations on each surface. To meet the firmness requirement, the force required to displace the probe 1 inch into each test location must exceed 10 N (about 2.25 pounds), which results in product firmness that is comparable to crib mattresses. The diagrams in Figure 2, below, illustrate the firmness test being applied to the two surfaces of a nursing pillow. This requirement is intended to reduce the likelihood that the infant support surface or the interior opening of the nursing pillow can conform to an infant's face and suffocate the child.

ASTM's draft voluntary standard includes a firmness requirement similar to the firmness requirement in the proposed rule, including for the inner wall of the nursing pillow opening.

The proposed rule requires nursing pillow openings to be of a size that is more appropriate for an adult user, rather than an infant, and limits the amount of lateral support for young infants who might be placed within the nursing pillow opening. This requirement also reduces the potential for an infant's head to become entrapped in the nursing pillow's opening or for the product to restrict a young infant's head movements, should the infant find themselves in the opening.

As shown in Figure 3, a 9-inch probe is used to ensure that the product opening is wider than the probe and that the probe can be moved outward from inside the nursing pillow without contacting its surface.

The subject of the public hearing is the notice of proposed rulemaking (REG-105954-22) that was published in the Federal Register on Wednesday, March 29, 2023, (FR 88 18446).

The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit an outline of the topics to be discussed and the time to be devoted to each topic by October 11, 2023.

A period of 10 minutes will be allotted to each person for making comments. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing, and via the Federal eRulemaking Portal ( www.Regulations.gov ) under the title of Supporting & Related Material. If no outline of the topics to be discussed at the hearing is received by October 11, 2023, the public hearing will be cancelled. If the public hearing is cancelled, a notice of cancellation of the public hearing will be published in the Federal Register .

Individuals who want to testify in person at the public hearing must send an email to publichearings@irs.gov to have your name added to the building access list. The subject line of the email must contain the regulation number REG-105954-22 and the language TESTIFY In Person. For example, the subject line may say: Request to TESTIFY In Person at Hearing for REG-105954-22.

Individuals who want to testify by telephone at the public hearing must send an email to publichearings@irs.gov to receive the telephone number and access code for the hearing. The subject line of the email must contain the regulation number REG-105954-22 and the language TESTIFY Telephonically. For example, the subject line may say: Request to TESTIFY Telephonically at Hearing for REG-105954-22.

Individuals who want to attend the public hearing in person without testifying must also send an email to publichearings@irs.gov to have your name added to the building access list. The subject line of the email must contain the regulation number REG-105954-22 and the language ATTEND In Person. For example, the subject line may say: Request to ATTEND Hearing In Person for REG-105954-22. Requests to attend the public hearing must be received by 5 p.m. ET by October 20, 2023.

Individuals who want to attend the public hearing by telephone without testifying must also send an email to publichearings@irs.gov to receive the telephone number and access code for the hearing. The subject line of the email must contain the regulation number REG-105954-22 and the language ATTEND Hearing Telephonically. For example, the subject line may say: Request to ATTEND Hearing Telephonically for REG-105954-22. Requests to attend the public hearing must be received by 5 p.m. ET by October 20, 2023.

Hearings will be made accessible to people with disabilities. To request special assistance during a hearing please contact the Publications and Regulations Branch of the Office of Associate Chief Counsel (Procedure and Administration) by sending an email to publichearings@irs.gov (preferred) or by telephone at (202) 317-6901 (not a toll-free number) by October 20, 2023. Any questions regarding speaking at or attending a public hearing may also be emailed to publichearings@irs.gov .

Inspection of Public Comments: Comments received before the close of the comment period will be available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. The Departments will post comments on the following website as soon as possible after they have been received: https://www.regulations.gov . Follow the search instructions on that website to view public comments. The Departments will not post on Regulations.gov public comments that make threats to individuals or institutions or suggest that the commenter will take actions to harm an individual. The Departments continue to encourage individuals not to submit duplicative comments. The Departments will post acceptable comments from multiple unique commenters even if the content is identical or nearly identical to other comments.

On December 27, 2020, the CAA was enacted. 1 Title I, also known as the No Surprises Act, and title II (Transparency) of Division BB of the CAA amended chapter 100 of the Internal Revenue Code (Code), Part 7 of the Employee Retirement Income Security Act (ERISA), and title XXVII of the Public Health Service Act (PHS Act). The No Surprises Act provides Federal protections against surprise billing by limiting out-of-network cost sharing and prohibiting balance billing in many of the circumstances in which surprise bills most frequently arise. In particular, the No Surprises Act added new provisions applicable to group health plans and health insurance issuers offering group or individual health insurance coverage. Section 102 of the No Surprises Act added section 9816 of the Code, 2 section 716 of ERISA, 3 and section 2799A-1 of the PHS Act, 4 which contain limitations on cost sharing and requirements regarding the timing of initial payments and notices of denial of payment by plans and issuers for emergency services furnished by nonparticipating providers and nonparticipating emergency facilities, and for non-emergency services furnished by nonparticipating providers for patient visits to participating health care facilities, generally defined as hospitals, hospital outpatient departments, critical access hospitals, and ambulatory surgical centers. 5

Section 103 of the No Surprises Act established a Federal IDR process that plans and issuers and nonparticipating providers and facilities may utilize to resolve certain disputes regarding out-of-network rates under section 9816 of the Code, 6 section 716 of ERISA, 7 and section 2799A-1 of the PHS Act. 8 Section 9816(c)(8) of the Code, 9 section 716(c)(8) of ERISA, 10 and section 2799A-1(c)(8) of the PHS Act  11 provide that each party to a determination under the Federal IDR process shall pay a fee for participating in the Federal IDR process, and the amount of the fee is an amount established by the Departments in a manner such that the total amount of fees paid by all parties is estimated to be equal to the amount of expenditures estimated to be made by the Departments for the year in carrying out the Federal IDR process.

Section 105 of the No Surprises Act added section 9817 of the Code, 12 section 717 of ERISA, 13 and section 2799A-2 of the PHS Act. 14 These sections contain limitations on cost sharing and requirements for the timing of initial payments and notices of denial of payment by plans and issuers for air ambulance services furnished by nonparticipating providers of air ambulance services, and allow plans and issuers and nonparticipating providers of air ambulance services to utilize the Federal IDR process.

The No Surprises Act also added provisions to title XXVII of the PHS Act in a new part E  15 that apply to health care providers, facilities, and providers of air ambulance services, such as prohibitions on balance billing for certain items and services and requirements related to disclosures about balance billing protections.

The Departments of the Treasury, Labor, and Health and Human Services (HHS) (the Departments), along with the Office of Personnel Management (OPM), have issued rulemakings in 2021 and 2022 to implement various provisions of the No Surprises Act. More specifically relevant to this proposed rulemaking, the Departments and OPM issued interim final rules (July 2021 interim final rules  16 and October 2021 interim final rules  17 ) and final rules (August 2022 final rules  18 ) implementing provisions of sections 9816 and 9817 of the Code, 19 sections 716 and 717 of ERISA, 20 and sections 2799A-1 and 2799A-2 of the PHS Act. 21 These rules implement provisions to protect consumers from surprise medical bills for emergency services, non-emergency services furnished by nonparticipating providers for patient visits to participating facilities  22 in certain circumstances, and air ambulance services furnished by nonparticipating providers of air ambulance services. These rules also implement provisions to establish a Federal IDR process to determine payment amounts when there is a dispute between plans or issuers and providers, facilities, or providers of air ambulance services about the out-of-network rate for these services if a specified State law as defined in 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30 or an applicable All-Payer Model Agreement under section 1115A of the Social Security Act does not provide a method for determining the total amount payable.

The July 2021 interim final rules and October 2021 interim final rules generally apply to plans and issuers (including grandfathered health plans) for plan years (in the individual market, policy years) beginning on or after January 1, 2022, and to health care providers, facilities, and providers of air ambulance services for items and services furnished during plan years (in the individual market, policy years) beginning on or after January 1, 2022. 23 The August 2022 final rules became effective October 25, 2022, and are applicable for items or services provided or furnished on or after October 25, 2022 for plan years (in the individual market, policy years) beginning on or after January 1, 2022.

The October 2021 interim final rules implement the Federal IDR process under sections 9816(c) and 9817(b) of the Code, 24 sections 716(c) and 717(b) of ERISA, 25 and sections 2799A-1(c) and 2799A-2(b) of the PHS Act. 26 The rules apply to emergency services, non-emergency services furnished by nonparticipating providers for patient visits to certain types of participating health care facilities  27 (unless an individual has been provided notice and waived the individual's surprise billing protections, in accordance with 45 CFR 149.410 or 149.420, as applicable), and air ambulance services furnished by nonparticipating providers of air ambulance services, for situations in which neither a specified State law as defined in 26 CFR 54.9816-3T, 29 CFR 2590.716-3, and 45 CFR 149.30 nor an All-Payer Model Agreement under section 1115A of the Social Security Act applies.

To implement the Federal IDR process, the October 2021 interim final rules include requirements governing the costs of the Federal IDR process. Under section 9816(c)(5)(F)(i) of the Code, 28 section 716(c)(5)(F)(i) of ERISA, 29 section 2799A-1(c)(5)(F)(i) of the PHS Act, 30 and the October 2021 interim final rules, the party whose offer is not selected is responsible for the payment of the fee charged by the certified IDR entity (certified IDR entity fee). 31 Under the October 2021 interim final rules, as a condition of certification, the certified IDR entity must notify the Departments of the amount of the certified IDR entity fees it intends to charge for payment determinations, which is limited to a fixed certified IDR entity fee amount for single determinations and a separate fixed certified IDR entity fee amount for batched determinations. 32 Each of these fixed certified IDR entity fees must be within a range set forth in guidance by the Departments, unless the certified IDR entity receives written approval from the Departments to charge a certified IDR entity fee outside that range. 33 The October 2021 interim final rules describe the considerations that the Departments will use to develop the certified IDR entity fee ranges, including the anticipated time and resources needed for certified IDR entities to meet the requirements of those interim final rules, the volume of payment determinations, and the adequacy of the Federal IDR process capacity to efficiently handle the volume of IDR initiations and payment determinations, and discuss that the Departments will review and update the allowable fee ranges annually based on these factors, the impact of inflation, and other cost increases. Those rules also provide that on an annual basis, the certified IDR entity may update its certified IDR entity fees within the ranges set forth in current guidance and seek approval from the Departments to charge fixed certified IDR entity fees beyond the upper or lower limits for certified IDR entity fees. 34

Additionally, pursuant to section 9816(c)(8) of the Code, 35 section 716(c)(8) of ERISA, 36 and section 2799A-1(c)(8) of the PHS Act, 37 and under the October 2021 interim final rules, each party must pay an administrative fee for participating in the Federal IDR process. The administrative fee is established in guidance in a manner so that, in accordance with the requirements of section 9816(c)(8)(B) of the Code, 38 section 716(c)(8)(B) of ERISA, 39 and section 2799A-1(c)(8)(B) of the PHS Act, 40 the total administrative fees paid for a year are estimated to be equal to the amount of expenditures estimated to be made by the Departments to carry out the Federal IDR process for that year. 41

Contemporaneously with the October 2021 interim final rules, the Departments released the Calendar Year 2022 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act (October 2021 guidance), setting the administrative fee for both parties to a dispute at $50 per party. 42 The October 2021 guidance also established the range for fixed certified IDR entity fees for single determinations as $200-$500, and the range for fixed certified IDR entity fees for batched determinations as $268-$670, unless otherwise approved by the Departments. In October 2022, the Departments released the Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act (October 2022 guidance), again setting the administrative fee for both parties to a dispute at $50 per party. 43 The October 2022 guidance explained that the data available regarding take-up and usage of the Federal IDR process was not reliable enough to support a change to either the estimated number of payment determinations for which administrative fees would be paid or the estimated ongoing program costs for 2023; therefore, the 2023 administrative fee amount due from each party for participating in the Federal IDR process would remain the same as the 2022 administrative fee. The October 2022 guidance permits certified IDR entities to charge a fee between $200 and $700 for single determinations and between $268 and $938 for batched determinations, unless the Departments otherwise grant approval for the certified IDR entity to charge a fee outside of these ranges. In addition, to account for the heightened workload for batched determinations, the October 2022 guidance permits a certified IDR entity to charge the following percentage of its approved certified IDR entity batched determination fee (“batching percentage”) for batched determinations, which are based on the number of line items initially submitted in the batch:

• 2-20 line items: 100 percent of the approved batched determination fee;

• 21-50 line items: 110 percent of the approved batched determination fee;

• 51-80 line items: 120 percent of the approved batched determination fee; and

• 81 line items or more: 130 percent of the approved batched determination fee.

In December 2022, the Departments released the Amendment to the Calendar Year 2023 Fee Guidance for the Federal Independent Dispute Resolution Process Under the No Surprises Act (December 2022 guidance), which amended the $50 per party administrative fee set in the October 2022 guidance to $350 for calendar year 2023. 44 The change in the administrative fee for 2023 reflected the additional costs to the Departments to carry out the Federal IDR process as a result of the Departments' enhanced role in calendar year 2023 in conducting pre-eligibility reviews to allow the certified IDR entities to complete their eligibility determinations more efficiently, 45 as well as systemic improvements that allowed for the aggregation of data needed to estimate the rate at which disputes were determined eligible for the Federal IDR process and the rate at which one or both parties paid the administrative fee for purposes of calculating the administrative fee. The December 2022 guidance did not amend the certified IDR entity fee ranges.

On November 30, 2022, the Texas Medical Association, Tyler Regional Hospital, and a Texas physician filed a lawsuit ( TMA III )  46 against the Departments and OPM, asserting that the July 2021 interim final rules  47 and certain related guidance documents were in conflict with the statutory language, including the regulations governing how the qualifying payment amount (QPA) should be calculated. On August 24, 2023, the U.S. District Court for the Eastern District of Texas (Texas District Court) issued a memorandum opinion and order  48 that vacated certain portions of the July 2021 interim final rules and associated regulatory provisions  49 and portions of guidance documents, 50 including those portions that provided the methodology for calculating the QPA and interpretations for certified IDR entities related to the processing of disputes for air ambulance services.

On January 30, 2023, the Texas Medical Association, Houston Radiology Associated, Texas Radiological Society, Tyler Regional Hospital, and a Texas physician filed a lawsuit ( TMA IV )  51 against the Departments and OPM, asserting that the December 2022 guidance was unlawfully issued without notice and comment rulemaking. 52 On August 3, 2023, the Texas District Court issued a memorandum opinion and order  53 that vacated the portion of the December 2022 guidance  54 that increased the administrative fee for the Federal IDR process to $350 per party for disputes initiated during the calendar year beginning January 1, 2023. The Texas District Court also vacated certain provisions of the October 2021 interim final rules setting forth the batching criteria under which multiple IDR items or services are treated as related to the “treatment of a similar condition.”  55

As a result of the TMA IV opinion and order, on August 3, 2023, the Departments instructed certified IDR entities to pause all work in the Federal IDR portal until the Departments updated the Federal IDR process guidance, systems, and related documents to make them consistent with the TMA IV opinion and order. Subsequently, on August 7, 2023, the Departments directed certified IDR entities to resume processing all single and bundled disputes for which the administrative fee had already been paid and all batched disputes for which the certified IDR entity had already determined the dispute to be eligible and administrative fees had been paid (or the deadline for collecting fees had expired) before August 3, 2023. On August 8, 2023, the Departments directed certified IDR entities to resume processing single and bundled disputes initiated in 2022 for which the administrative fee had not been paid before August 3, 2023. On August 11, 2023, the Departments released guidance  56 to reflect the TMA IV decision related to the administrative fee and to clarify the applicability of the $50 per party per dispute administrative fee amount for 2023, as provided in the October 2022 guidance. On the same date, the Departments directed certified IDR entities to resume processing single and bundled disputes initiated in 2023 for which the administrative fees had not been paid before August 3, 2023. As a result of the TMA III opinion and order issued on August 24, 2023, the Departments again paused all IDR-related activities in order to evaluate the Texas District Court's order and review current Federal IDR processes, templates, and system updates that are necessary to comply with the order. As of the publication of this proposed rulemaking, the Departments have directed certified IDR entities only to perform limited Federal IDR process functions.

These rules propose amendments to 26 CFR 54.9816-8(d)(2)(ii) and (e)(2)(vii), 29 CFR 2590.716-8(d)(2)(ii) and (e)(2)(vii), and 45 CFR 149.510(d)(2)(ii) and (e)(2)(vii) to provide that the administrative fee amount and the ranges for certified IDR entity fees for single and batched disputes would be set by the Departments through notice and comment rulemaking, rather than in guidance published annually. This rulemaking also proposes to set forth the methodology used to calculate the administrative fee and the considerations used to develop the certified IDR entity fee ranges. These rules would also propose the administrative fee amount and certified IDR entity fee ranges for disputes initiated on or after the later of the effective date of these rules or January 1, 2024.

Under section 9816(c)(8)(A) of the Code, 57 section 716(c)(8)(A) of ERISA, 58 section 2799A-1(c)(8)(A) of the PHS Act, 59 and the October 2021 interim final rules, 60 each party to a determination for which a certified IDR entity is selected must pay an administrative fee for participating in the Federal IDR process. Under section 9816(c)(8)(B) of the Code, 61 section 716(c)(8)(B) of ERISA, 62 section 2799A-1(c)(8)(B) of the PHS Act, 63 and the October 2021 interim final rules, 64 the administrative fee is established in a manner such that the total administrative fees paid for a year are estimated to be equal to the amount of expenditures estimated to be made by the Departments to carry out the Federal IDR process for that year.

In TMA IV, 65 the Texas District Court issued an opinion and order holding that the process by which the Departments amended the 2023 administrative fee guidance to increase the administrative fee for the Federal IDR process from $50 to $350 per party for disputes initiated during the calendar year beginning January 1, 2023  66 was a violation of the Departments' obligation under the Administrative Procedure Act to give affected parties notice of and an opportunity to comment on the administrative fee. 67 In light of the Texas District Court's opinion and order, as well as the Departments' reassessment regarding the practicability of establishing the administrative fee through notice and comment rulemaking, the Departments propose to establish the amount of the administrative fee through notice and comment rulemaking. To reflect this, the Departments propose to amend 26 CFR 54.9816-8(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii) to state that the Departments will set the administrative fee through notice and comment rulemaking.

The Departments also propose at 26 CFR 54.9816-8(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii) that, for disputes initiated on or after the later of the effective date of these rules or January 1, 2024, the proposed administrative fee amount would be $150 per party per dispute, which would remain in effect until changed by subsequent rulemaking. Under this proposed rule, the Departments propose to retain the flexibility to update the administrative fee more frequently or less frequently than annually. With this flexibility, the Departments intend to update the administrative fee amount when the total projected amount of administrative fees paid or projected expenditures made by the Departments to carry out the Federal IDR process changes, such that a new administrative fee amount would be required for the Departments to cover the costs of carrying out the Federal IDR process. For example, the Departments' expenditures may be impacted by changes to regulations governing the Federal IDR process or the implementation of that process, the volume of disputes initiated and closed under the Federal IDR process, and the Departments' costs. In such cases, the Departments would propose a different administrative fee amount in notice and comment rulemaking before applying a new administrative fee amount. Thus, the proposal to amend the current regulation to remove the requirement to set the administrative fee amount annually would help mitigate the risk of the Departments being unable to collect administrative fees sufficient to carry out the Federal IDR process in response to evolving conditions, such as the rates at which disputes are being initiated and closed. Additionally, the Departments could determine that the projected amount of administrative fees paid at the current fee amount will equal the projected expenditures made to carry out the Federal IDR process in a subsequent year, and therefore, no adjustment of the fee amount in rulemaking would be necessary. This proposed approach would comport with the statutory requirement to set the administrative fee amount in a manner such that the total amount of fees paid in a year is estimated to be equal to the amount of expenditures estimated to be made by the Departments in such year in carrying out the Federal IDR process.

The Departments propose to set the administrative fee amount by projecting the amount of expenditures to be made by the Departments in carrying out the Federal IDR process and dividing this by the projected number of administrative fees to be paid by the parties. The Departments project the number of administrative fees to be paid based on the total volume of disputes to be closed. Under the current Federal IDR process and the policies proposed in these proposed rules, both the initiating and non-initiating parties to a dispute are required to pay the non-refundable administrative fee in full, and therefore the total amount of administrative fees paid is calculated to reflect that both parties to a dispute pay the administrative fee. In calculating the Departments' estimated administrative fee, the Departments use the total volume of disputes projected to be closed, rather than the total volume of disputes projected to be initiated, because the total volume of closed disputes is more indicative of the total volume of disputes for which fees are paid under the Departments' current collections process. 68

For the purposes of calculating the administrative fee amount proposed in this rulemaking, the Departments project approximately 225,000 disputes will be closed annually. This projection is based on Federal IDR process data from February 2023 through July 2023, which is the most recent 6-month period before Federal IDR process operations were temporarily paused in August 2023. 69 Using this projected volume of disputes, the Departments assume a prospective reduction of approximately 25 percent in the volume of closed disputes to account for the impact of the TMA IV opinion and order's vacatur of the batching regulations at 26 CFR 54.9816-8T(c)(3)(i)(C), 29 CFR 2590.716-8(c)(3)(i)(C), and 45 CFR 149.510(c)(3)(i)(C). The Departments anticipate that the vacatur of the batching regulations as a result of TMA IV discussed in sections I.C. and II.B. of this preamble may result in the initiation and closure of fewer disputes due to the possibility that batched disputes may involve more line items and take more time to close.

Additionally, to calculate the administrative fee amount proposed in this rulemaking, the Departments projected the expenditures to carry out the Federal IDR process. These projected expenditures include the Federal resources needed to carry out the Federal IDR process, such as personnel costs, as well as activities included as part of contract costs, such as resources used for targeted improvements of the overall process. The costs to the Departments for carrying out the Federal IDR process in 2024 are projected to be approximately $70 million, 70 which includes contract costs and Federal resources associated with:

• Maintaining the Federal IDR portal, which is intended to make the parties' and certified IDR entities' experiences using the portal more efficient, clear, and streamlined;

• Certifying IDR entities and collecting data from them, which is intended to increase the number of certified IDR entities, improving the speed of eligibility and payment determinations, and to assist the Departments in understanding where some efficiencies may still be gained in the process;

• Conducting program integrity activities, such as QPA audits and IDR decision audits, which are intended to ensure program integrity of the Federal IDR process by reducing and preventing errors in the Federal IDR process;

• Investigating relevant complaints, which is intended to ensure compliance with the Federal IDR process;

• Providing outreach to parties and technical assistance to certified IDR entities, which is intended to streamline the experience and further improve the speed and integrity of eligibility and payment determinations;

• Collecting administrative fees, which is intended to operationalize, maintain, and oversee administrative fee collections from certified IDR entities;

• Assisting with eligibility determinations when the volume of disputes submitted exceeds the capacity of certified IDR entities to perform those determinations, which is intended to expedite and facilitate eligibility reviews conducted by certified IDR entities;  71 and

• Retaining and making available Federal personnel dedicated to carrying out Federal IDR process activities.

Using this methodology, as proposed in paragraphs 26 CFR 54.9816-8(d)(2)(ii), 29 CFR 2590.716-8(d)(2)(ii), and 45 CFR 149.510(d)(2)(ii), the proposed administrative fee for disputes initiated on or after the later of the effective date of these rules or on January 1, 2024, and continuing until changed by subsequent rulemaking, would be calculated by dividing the projected annual expenditures of approximately $70 million to be made by the Departments in carrying out the Federal IDR process by the projected annual number of administrative fees to be paid by the disputing parties. As previously explained, the projected total number of administrative fees is calculated using the projected volume of disputes closed and reflects that both parties to a dispute pay the administrative fee. We project 225,000 closed disputes in calendar year 2024. Therefore,450,000 administrative fees would be paid by the parties in the year, because initiating and non-initiating parties to a dispute are required to pay the full administrative fee under the current Federal IDR process. This would result in a proposed administrative fee amount of $150 per party per dispute. 72 This administrative fee amount is based on the most current collections data (February through July 2023), which the Departments have determined to be the best available data for estimation of future collections, and the Departments' projected expenditures as of the publication of these proposed rules. These projections may change between the publication of the proposed and final rules based on more recent data available at that time; thus, the Departments propose to finalize an administrative fee amount methodology proposed here, as finalized, using the updated data, if applicable.

The Departments continue to consider improvements to the Federal IDR process, including how collection of the administrative fee could be more efficient and how the administrative fee amount could better ensure equitable access to the Federal IDR process across the various parties seeking to initiate disputes. Accordingly, the Departments intend to propose additional policies related to the administrative fee in future notice and comment rulemaking, including policies that would change the manner and timeframe in which the administrative fee is paid, reduce the administrative fee amount for disputes that are determined ineligible or that involve low-dollar claims, and codify the consequences of failing to pay the administrative fee. Therefore, it is likely that these potential future proposals could require changes to the administrative fee amount, and any such change would be set forth in future notice and comment rulemaking.

The Departments solicit comments on this proposal, including the methodology used to calculate the administrative fee amount and the proposed administrative fee amount for disputes initiated on or after the later of the effective date of these rules or on January 1, 2024, as well as any potential effects on interested parties as a result of increasing the administrative fee from $50 to $150 per party. For example, the Departments solicit comments on whether this proposed administrative fee amount could be cost prohibitive for certain parties disputing low-dollar items and services, and whether it would reduce the number of disputes initiated in calendar year 2024 and beyond. The Departments also solicit comment on the proposal to set the administrative fee amount more frequently or less frequently than annually and whether the Departments should instead retain the current policy that the administrative fee amount is set annually. Additionally, the Departments seek comment on any implications of TMA III and TMA IV that could impact these administrative fee proposals that are not already noted in this proposed rulemaking.

Finally, the Departments solicit comment on whether, in future years, they should apply an inflationary adjustment, such as the consumer price index for all urban consumers (CPI-U), to the projected expenditures to be made by the Departments in carrying out the Federal IDR process when calculating the administrative fee amount each year and set forth the adjusted administrative fee amount in guidance, rather than in notice and comment rulemaking, as long as there are no other changes to the methodology.

Under current regulations at 26 CFR 54.9816-8T(e)(2)(vii), 29 CFR 2590.716-8(e)(2)(vii), and 45 CFR 149.510(e)(2)(vii), the certified IDR entity fees for single determinations and batched determinations are set by the certified IDR entities within the upper and lower limits of ranges for each as set forth in guidance issued annually by the Departments.

The Departments propose to amend the provisions of the regulations establishing the ranges for certified IDR entity fees for single and batched disputes to refer to the ranges being established in notice and comment rulemaking, rather than in guidance. These changes would be reflected at 26 CFR 54.9816-8(e)(2)(vii), 29 CFR 2590.716-8(e)(2)(vii), and 45 CFR 149.510(e)(2)(vii), which would specify that certified IDR entities must, on an annual basis, provide a fixed fee for single determinations and separate fixed fees for batched determinations within the upper and lower limits for each as set in notice and comment rulemaking. Further, the proposed rules would provide that the certified IDR entity fee ranges established by the Departments in rulemaking would remain in effect until new certified IDR entity fee ranges are changed by a subsequent notice and comment rulemaking. Under this approach, the Departments would retain the discretion to update the certified IDR entity fee ranges more or less frequently than annually. Consistent with the current process, the certified IDR entity could not charge a fee outside the limits set forth in rulemaking unless the certified IDR entity or IDR entity seeking certification receives advance written approval from the Secretary to charge a fixed fee beyond the upper or lower limits. Finally, the Departments propose that the certified IDR entity or IDR entity seeking certification may seek advance written approval from the Departments to update its fees more frequently than once annually.

The Departments propose that for disputes initiated on or after the later of the effective date of these rules or January 1, 2024, certified IDR entities would be permitted to charge a fixed certified IDR entity fee for single determinations within the range of $200 to $840. This fee range represents a 20 percent increase to the upper limit from the 2023 single determination fee range. 73 The Departments anticipate that the proposed range for single determinations would only minimally impact the fixed fees selected by certified IDR entities. This is because the process of arbitrating single determinations should remain relatively predictable in 2024, as these disputes have not been impacted by the TMA IV decision. The Departments expect that certified IDR entities would continue to price their single determination fees competitively despite the proposed increase in range. Nonetheless, the Departments are of the view that an increase to the upper limit of the range is necessary to allow certified IDR entities flexibility to set their fees in alignment with their operating costs.

The Departments propose that for disputes initiated on or after the later of the effective date of these proposed rules, or January 1, 2024, certified IDR entities would be permitted to charge a fixed certified IDR entity fee for batched determinations within the range of $268 to $1,173, unless a fee not within that range is approved by the Departments pursuant to paragraphs 26 CFR 54.9816-8T(e)(2)(vii)(A) and (B), 29 CFR 2590.716-8(e)(2)(vii)(A) and (B), and 45 CFR 149.510(e)(2)(vii)(A) and (B). This fee range represents a 25 percent increase to the upper limit from the 2023 batched determination fee range. 74 The Departments propose to continue to use a tiered fee structure based on the number of line items within the batch. 75 Under this proposed rule, the certified IDR entities would be permitted to charge a fixed tiered fee within the range of $75 to $250 for every additional 25 line items within a batched dispute beginning with the 26th line item. A certified IDR entity's batched determination fee would be applied to all batched disputes that have between 2 and 25 line items. For batched disputes with more than 25 line items, the certified IDR entity fee would be able to increase the base amount for every additional 25 line items by a fixed value between $75 and $250, as determined by the certified IDR entity. Unlike the fixed certified IDR entity fee for single and batched determinations, certified IDR entities would not be able to seek approval to charge a fee outside of the tiered fee range for batched determinations. It is the Departments' view that the ability to seek approval to charge a fee outside of the fixed certified IDR entity batched fee range is sufficiently flexible to address any potential cost concerns. This is because the certified IDR entities only need the ability to set a fee outside one of the two batched ranges' upper and lower limits to set their overall batched fee in a manner that allows them to cover their expenses. Further, for batched determinations, the fee range would not restrict the application of the additional fixed tiered fee for batched disputes. For example, if a certified IDR entity had, in 2024, set its batched determination fee at $1,000 (which would be within the fee range of $268 to $1,173) and its tiered fee at $200 (which would be within the tiered fee range of $75 to $250) for each additional increment of 25 line items, and were to be selected for a batched determination with 53 line items (which corresponds to 2 increments of 25 line items within the tiered fee structure plus the batched determination fee) it would be permitted to charge $1,400 ($1,000 + ($200 × 2)) as its batched determination fee in calendar year 2024.

Further, the Departments propose that the batched determination fee would continue to be based on the number of line items included in the initiating party's initial submission of the batched dispute to the Federal IDR process. This would account for the time and effort required of certified IDR entities in determining eligibility for all line items within a batched dispute such that they can ultimately make a payment determination. These fee ranges would apply until another set of fee ranges were proposed and finalized through subsequent notice and comment rulemaking.

If a certified IDR entity wishes to charge a fee outside either of these proposed ranges, it would continue to follow the existing process for requesting written approval from the Departments to do so outlined in 26 CFR 54.9816-8T(e)(2)(vii)(A) and (B), 29 CFR 2590.716-8(e)(2)(vii)(A) and (B), and 45 CFR 149.510(e)(2)(vii)(A) and (B), which the Departments do not propose to change in this rulemaking.

During calendar year 2023, certified IDR entities continue to incur high administrative costs due to the volume of disputes and the complexity in determining eligibility, as described in the December 2022 guidance. 76 These proposed ranges reflect the significant administrative burden, ongoing eligibility determination challenges, 77 and the Departments' desire to allow more flexibility for certified IDR entities to determine a fee that best reflects their operating costs. Given the wide variability of certified IDR entities' operations, structures, staffing patterns, and expenses, it is the Departments' position that the ranges should not overly restrict the certified IDR entities' ability to set their fees commensurate with their costs. Instead, broad ranges that allow certified IDR entities flexibility to set their fees in accordance with their own circumstances would allow them to remain financially viable and encourage their continued participation in the Federal IDR process. The Departments acknowledge that broadening the certified IDR entity fee ranges could have some impact on the cost to parties to engage in the Federal IDR process (discussed in section IV.D.2. of this preamble) which could implicate access to the Federal IDR process. However, access to the Federal IDR process is dependent on certified IDR entities' voluntary participation in that process. Voluntary participation by certified IDR entities is only possible if they are able to set their fees within ranges necessary to cover their operating expenses. If the Departments were to set fee ranges that could not support the certified IDR entities' financial viability and certified IDR entities declined to participate in the Federal IDR process altogether, the goal of access would be impaired. 78 Therefore, the Departments have endeavored to judiciously balance access concerns with certified IDR entities' interests and seek comment on the balance proposed. In setting the certified IDR entity ranges for disputes initiated on or after the later of the effective date of these rules or on January 1, 2024, the Departments considered:

• The anticipated time and resources needed for certified IDR entities to make payment determinations meeting the requirements of the statute, rules, and guidance;

• The anticipated time and resources needed for data reporting;

• The anticipated time and resources needed for complying with audit requirements;

• The anticipated volume of Federal IDR initiations and payment determination quality assessments;

• The anticipated volume of Federal IDR initiations ineligible for the Federal IDR process; and

• The level of complexity in determining the eligibility of items and services for the Federal IDR process.

After reviewing these considerations, the Departments are of the opinion that a 20 percent increase in the upper limit of the certified IDR entity fee range for single determinations (from $200 to $840), would provide certified IDR entities an appropriate amount of flexibility in setting a fixed fee for single determinations, taking into account the anticipated increase in operational cost. The Departments relied on these same considerations to develop the proposed 25 percent increase in the upper limit of the certified IDR entity fee range for batched determinations, but also took into account the TMA IV opinion and order when proposing the range for batched determinations and the associated tiered fee based on the number of line items. In particular, the Departments have considered the impact of the TMA IV opinion and order on the anticipated complexity of batched determinations to inform the proposed increased base range of $268 to $1,173 and proposed tiered fee range of $75 to $250 based on the number of line items in a batched dispute. Section 9816(c)(3)(A) of the Code, 79 section 716(c)(3)(A) of the ERISA, 80 and section 2799A-1(c)(3)(A) of the PHS Act  81 direct the Departments to specify criteria under which multiple qualified IDR items and services are permitted to be considered jointly as part of a single determination by a certified IDR entity for purposes of encouraging the efficiency (including minimizing costs) of the Federal IDR process. These sections further require that items and services may be considered as part of a batched determination only if the items and services are furnished by the same provider or facility; payment for the items and services are made by the same group health plan or health insurance issuer; such items and services are related to the treatment of a similar condition; and the items and services were furnished during the 30-day period following the date on which the first item or service included in the batched determination was furnished, or during an alternative period as determined by the Departments, for use in limited situations, such as by the consent of the parties or in the case of low-volume items and services, to encourage procedural efficiency and minimize health plan and provider administrative costs.

Since the TMA IV opinion and order vacated 26 CFR 54.9816-8T(c)(3)(i)(C), 29 CFR 2590.716-8(c)(3)(i)(C), and 45 CFR 149.510(c)(3)(i)(C), which established standards for determining when multiple items or services relate to “the treatment of a similar condition” for the purpose of batched disputes, 82 the certified IDR entities may no longer rely on the regulatory guidance provided to assist certified IDR entities when reviewing batched disputes. Certified IDR entities must now only rely upon statutory language when determining whether multiple items or services are related to the treatment of a similar condition and are therefore appropriate to batch.

As explained in the preamble to the October 2021 interim final rules, the Departments originally adopted the batching standards in those rules to avoid combinations of unrelated claims of providers, facilities, providers of air ambulance services and plans and issuers in a single dispute that could unnecessarily complicate an IDR payment determination and create inefficiencies in the Federal IDR process. The Departments further intended to reduce redundant IDR proceedings and streamline the certified IDR entities' decision-making processes. The Departments anticipate that the change in batching parameters introduced by the vacatur of 26 CFR 54.9816-8T(c)(3)(i)(C), 29 CFR 2590.716-8(c)(3)(i)(C), and 45 CFR 149.510(c)(3)(i)(C) will make certified IDR entities' responsibilities and processes for eligibility and payment determinations under the Federal IDR process more complex and less certain. This unpredictability increases the systemic burden for certified IDR entities in the administration of their duties. In addition, the vacatur of 26 CFR 54.9816-8T(c)(3)(i)(C), 29 CFR 2590.716-8(c)(3)(i)(C), and 45 CFR 149.510(c)(3)(i)(C) will also likely increase the number of items or services batched. Certified IDR entities have indicated to the Departments that making determinations on large batches of dissimilar items and services is particularly complex and burdensome. Based on certified IDR entities' experiences during the early stages of implementing the Federal IDR process, prior to the Departments having provided guidance regarding the batching parameters in August 2022, 83 the Departments observed that confusion related to the batching standards for the same or similar items or services contributed to increased complexity in determining eligibility, which added time and cost for certified IDR entities and contributed to processing delays. 84 The Departments anticipate that the changes to batching standards will require certified IDR entities to update their operations, processes, and systems, demand greater staff resources, and increase the time needed to render eligibility determinations, including determinations of whether items or services may be submitted as a batch. Therefore, the proposal to increase the fee range for batched determinations and apply a tiered fee for batched disputes based on the number of line items would allow certified IDR entities to be appropriately compensated and ensure that Federal IDR process costs are clear to parties in advance of initiating the Federal IDR process.

In finalizing the fee amounts, the Departments intend to take into account any updated data or assumptions as applied to the factors considered in this preamble to set the fee ranges.

The Departments do not propose to change the process for certified IDR entities to set their fees. 85 Certified IDR entities will continue to be permitted to set their fees within the ranges proposed in these proposed rules, if finalized. Under these proposed rules, a certified IDR entity must receive the Departments' advance written approval to modify its fixed fees more than once annually. If requesting to set its fee more than once annually, the certified IDR entity must submit to the Departments for approval: (1) the fixed fee that the certified IDR entity is seeking to charge; (2) a description that reasonably explains the circumstances that require a change to its fee; and (3) a detailed description that reasonably explains how the change to its fee will be used to mitigate the effects of these circumstances. The Departments would use their discretion to determine if the explanations included in the request demonstrate that the change would ensure the certified IDR entity's financial viability and would not impose on parties an undue barrier to accessing the Federal IDR process. It is appropriate to permit certified IDR entities to change their fees more than once annually, with advance approval from the Departments, as some certified IDR entities may adopt more efficiencies throughout the year that would allow them to charge a lower fee, or if conditions of the Federal IDR process fluctuate throughout the year, some certified IDR entities may need to increase their fees to cover operating expenses.

The Departments seek comment on these proposals, including the proposed fee ranges themselves. The Departments solicit comment on whether in future years they should apply an inflationary adjustment consideration, such as the CPI-U, to the considerations used to develop the certified IDR entity fee ranges each year and set forth the adjusted fee amount in guidance, rather than notice and comment rulemaking. The Departments also seek comment on whether certified IDR entities should be allowed to set their fees based on a structure other than a fixed fee range for single disputes and tiered fees for batched disputes within the ranges proposed in these rules. Specifically, the Departments seek comment on whether certified IDR entities should have flexibility to set a per line item fee or a per unique service code fee. The Departments have considered that allowing a per line item fee or a per unique service code fee could better address the concern of unpredictable batching practices imposing high burdens on certified IDR entities. However, the Departments acknowledge that these pricing structures for batching could decrease the accessibility of the Federal IDR process for parties, particularly small providers. In addition, the Departments seek comment on the proposed number of line items in each additional batched tier. The Departments seek comment on whether the tiers should be set at 10 line items, 50 line items, or a different number than the proposed tiered increments of 25 line items. The Departments acknowledge the need to strike the correct balance between the line item increment and the amount of resources expended by the certified IDR entities to review those line items. The Departments have considered if increments of 25 line items or higher might impose too great a burden on the certified IDR entities so as not to be commensurate with the proposed tiered fee range available to them. However, the Departments also acknowledge that setting the line item increments lower than 25 line items would further impact the cost to parties of submitting a dispute, and that the proposed tiered fee range of $75 to $250 may not be appropriate at smaller line item increments. The Departments seek comment on whether the tiered fee for batched disputes should be set at a percentage of the certified IDR entity's batched determination fee, similar to how the tiering for the 2023 calendar year were implemented, rather than a dollar value range. The Departments also seek comment on whether to provide a fixed fee that all certified IDR entities must charge beyond the proposed 25 line items per additional 25 line items rather than permitting a range for certified IDR entities to choose from. More specifically, the Departments seek comment on whether certified IDR entities should be permitted to set their batched determination fee between $268 and $1,173 and then be permitted to charge only an additional fixed dollar amount (for example, $125, $150, $200, etc.) per additional 25 line items. The Departments seek comment on the appropriateness of setting a fixed dollar tiered fee structure for batched disputes, since this could impact the certified IDR entities' operational flexibility, and would limit their ability to competitively price their fees. However, the Departments are considering whether establishing a fixed dollar tiered fee might mitigate the risk of one or a few certified IDR entities pricing their tiered fee for batched disputes so low that they become inundated with large batches and thus provide greater consistency across certified IDR entities. The Departments are considering if this alternate approach would provide more consistency regarding the fees charged by different certified IDR entities and avoid potentially overburdening IDR entities that select a low tiered fee for batched disputes.

In the event that any portion of these proposed rules, if finalized as proposed, is declared invalid, the Departments intend that the various aspects of the administrative fee proposals and certified IDR entity fee proposals, as finalized, be severable. For example, if a court were to find unlawful all of the administrative fee proposals, the Departments would still intend for the certified IDR entity fee proposals to stand, and vice versa. As another example, if a court were to find unlawful the proposals to establish both the administrative fee and the certified IDR entity fee ranges more or less frequently than annually, the Departments would still intend for the administrative fee amount and certified IDR entity fee ranges to be (1) established through notice and comment rulemaking and (2) established in the amount and ranges as proposed in these proposed rules. Likewise, if a court were to find unlawful the proposed administrative fee amount or methodology or the certified IDR entity fee ranges or considerations used to determine the fee ranges as proposed in these proposed rules, the Departments would still intend for the administrative fee amount and certified IDR entity ranges to be (1) established through notice and comment rulemaking and (2) established more or less frequently than annually.

Thus, the Departments propose at new paragraph 26 CFR 54.9816-8(d)(3)(i), 29 CFR 2590.716-8(d)(3)(i), and 45 CFR 149.510(d)(3)(i) that any provision of paragraph (d) or paragraphs (e)(2)(vii) through (e)(2)(ix) held to be invalid or unenforceable as applied to any person or circumstance shall be construed so as to continue to give the maximum effect to the provision permitted by law, including as applied to persons not similarly situated or to dissimilar circumstances, unless such holding is that the provision of these paragraphs is invalid and unenforceable in all circumstances, in which event the provision shall be severable from the remainder of these paragraphs and shall not affect the remainder thereof. The Departments further propose at new paragraph 26 CFR 54.9816-8(d)(3)(ii), 29 CFR 2590.716-8(d)(3)(ii), and 45 CFR 149.510(d)(3)(ii) that the provisions in paragraphs (d) and (e)(2)(vii) through (ix) are intended to be severable from each other.

The Departments are of the view that each of the proposals for the administrative fee amount and the certified IDR entity fee ranges would still function sensibly even if one or more of the proposals in these proposed rules, as finalized, were found unlawful. For example, the proposals to establish the administrative fee amount and certified IDR entity fee ranges in notice and comment rulemaking would not depend on either the lawfulness of the methodology used to determine the administrative fee amount or the lawfulness of the considerations used in determining the certified IDR entity fee ranges, or whether both would be established on an annual basis or more or less frequently than annually. The proposal to use notice and comment rulemaking to establish the fees specifies only the method the Departments would use and does not determine how frequently the fees would be established or the methodology for the administrative fee amount or the considerations used to determine the certified IDR entity fee ranges.

The Departments seek comment on this approach.

These proposed rules would establish the administrative fee amount and the certified IDR entity fee ranges in notice and comment rulemaking, as well as propose the methodology for setting both fees.

The Departments have examined the effects of these proposed rules as required by Executive Order 13563 (76 FR 3821, January 21, 2011, Improving Regulation and Regulatory Review); Executive Order 12866 (58 FR 51735, October 4, 1993, Regulatory Planning and Review); Executive Order 14094 entitled “Modernizing Regulatory Review” (April 6, 2023); the Regulatory Flexibility Act (Pub. L. 96-354, enacted September 19, 1980, Pub. L. 96-354); section 1102(b) of the Social Security Act (42 U.S.C. 1102(b)); section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995, Pub. L. 104-4); and Executive Order 13132 (64 FR 43255, August 10, 1999, Federalism).

Executive Orders 12866, 13563, and 14094 direct Federal 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). Executive Order 14094 entitled “Modernizing Regulatory Review” (hereinafter, the Modernizing E.O.) amends section 3(f)(1) of Executive Order 12866 (Regulatory Planning and Review). The amended section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action that is likely to result in a rule: (1) having an annual effect on the economy of $200 million or more in any 1 year (adjusted every 3 years by the Administrator of OMB's Office of Information and Regulatory Affairs (OIRA) for changes in gross domestic product), or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, territorial, or tribal governments or communities; (2) creating a serious inconsistency or otherwise interfering with an action taken or planned by another agency; (3) materially altering the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raising legal or policy issues for which centralized review would meaningfully further the President's priorities or the principles set forth in this Executive Order, as specifically authorized in a timely manner by the Administrator of OIRA in each case.

A regulatory impact analysis (RIA) must be prepared for rules deemed significant under section 3(f)(1) ($200 million or more in any 1 year). Although based on the Departments' estimates, OMB's OIRA has determined these rules are not significant under section 3(f)(1), the Departments have prepared an RIA that to the best of their ability presents the costs and benefits of these rules. OMB has reviewed these proposed regulations, and the Departments have provided the following assessment of their impact.

The Departments propose to amend the certified IDR entity and administrative fee provisions of the rules for the Federal IDR process to set the administrative fee and the certified IDR entity fee ranges in notice and comment rulemaking, as well as propose the methodology for setting the administrative fee and the considerations for developing the certified IDR entity fee ranges. The Departments are of the view that these proposals would ensure that disputing and other parties are sufficiently notified and provided an opportunity to comment on the fees associated with the Federal IDR process.

The expected benefits and costs of these proposed rules are summarized in Table 1 and discussed in this section of the preamble. In accordance with OMB Circular A-4, Table 1 depicts an accounting statement summarizing the Departments' assessment of the benefits, costs, and transfers associated with this regulatory action. The Departments are unable to quantify all benefits and costs of these proposed rules but have sought, where possible, to describe these non-quantified impacts. The effects in Table 1 reflect non-quantified impacts and estimated direct monetary costs resulting from the provisions of these proposed rules.

I. Background

The Copyright Office (“Office”) issues this supplemental notice of proposed rulemaking (“SNPRM”) subsequent to a notice of proposed rulemaking (“NPRM”) published in the Federal Register on October 25, 2022, pursuant to the Orrin G. Hatch-Bob Goodlatte Music Modernization Act (“MMA”). 1 In the NPRM, the Office proposed regulations regarding the applicability of the derivative works exception (“Exception”) to termination rights under the Copyright Act to the statutory mechanical blanket license established by the MMA (“blanket license”). 2 This SNPRM assumes familiarity with the prior NPRM and the public comments received in response to the NPRM. 3

The Office commenced this proceeding in response to the adoption by he Mechanical Licensing Collective (“MLC”) of a termination dispute policy that conflicted with prior guidance given by the Office and that embodied an erroneous application of the Exception. 4 As a result of the MLC's adoption of this policy, the Office concluded it was necessary to revisit the termination issue more directly and to squarely resolve the question of how termination law intersects with the blanket license. 5 The NPRM explained that the Office “seeks to provide clarity concerning the application of the Exception to the blanket license,” as “[d]oing so would provide much needed business certainty to music publishers and songwriters” and “would enable the MLC to appropriately operationalize the distribution of post-termination royalties in accordance with existing law.”  6 The NPRM contained a detailed discussion of the procedural background leading to this rulemaking, 7 the Office's regulatory authority, 8 and legal background about the Copyright Act's termination provisions and the Exception. 9

The Office then analyzed the application of the Exception in the context of the blanket license and preliminarily concluded “that the MLC's termination dispute policy is inconsistent with the law.”  10 It explained that “[w]hether or not the Exception applies to a [digital music provider's (“DMP's”)] blanket license (and the Office concludes that the Exception does not), the statute entitles the current copyright owner to the royalties under the blanket license, whether pre- or post-termination.”  11 This means that “the post-termination copyright owner ( i.e., the author, the author's heirs, or their successors, such as a subsequent publisher grantee) is due the post-termination royalties paid by the DMP to the MLC.”  12

Consequently, the Office proposed a rule to clarify the appropriate payee under the blanket license to whom the MLC must distribute royalties following a statutory termination. 13 Because the Office concluded that the MLC's termination dispute policy is contrary to law, it also proposed to require the MLC to immediately repeal its policy in full. 14 The Office further proposed to require the MLC to adjust any royalties distributed under the policy within 90 days to make copyright owners whole for any distributions the MLC made based on “an erroneous understanding and application of current law.”  15